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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999 or
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[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to ________________________ to _________________
Commission file number 0-25731
WELLS REAL ESTATE FUND XI, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2250094
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
Class A Units
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(Title of Class)
Class B Units
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _
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Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
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PART I
ITEM 1. BUSINESS
General
Wells Real Estate Fund XI, 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
June 20, 1996, for the purpose of acquiring, developing, constructing, owning,
operating, improving, leasing and otherwise managing for investment purposes
income-producing commercial or industrial properties.
On December 31, 1997, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10 per unit) pursuant to a
registration statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations on March 3, 1998, when it received and
accepted subscriptions for 125,000 units. The offering was terminated on
December 31, 1998 at which time the Partnership had sold 1,314,906 Class A
status units and 338,374 Class B status units held by a total of 1,250 and 95
Class A and B limited partners, respectively, for total limited partner capital
contributions of $16,532,802. As of December 31, 1999, the Partnership has paid
$578,648 in acquisition and advisory fees and acquisition expenses, $2,066,600
in selling commissions and organization and offering expenses, and invested
$3,357,436 in the Fund IX-X-XI-REIT Joint Venture, $2,398,767 in Fund X-XI Joint
Venture, and $8,131,351 in the Fund XI-XII-REIT Joint Venture.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
a General Partner of Wells Partners, L.P., perform a full range of real estate
services including leasing and property management, accounting, asset management
and investor relations for the Partnership.
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management,
the properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements, and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES
The Partnership owns interests in properties through equity ownership in the
following joint ventures: (i) Fund X and Fund XI Joint Venture, a joint venture
between the Partnership and Wells Real Estate
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Fund X, L.P. (the "Fund X-XI Joint Venture"); (ii) the Fund IX-X-XI-REIT Joint
Venture, a joint venture among the Partnership, Wells Real Estate Fund IX, L.P.
("Wells Fund IX"), Wells Real Estate Fund X, L.P. ("Wells Fund X"), and Wells
Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership having
Wells Real Estate Investment Trust, Inc., as general partner (the "Fund IX-X-XI-
REIT Joint Venture"); and (iii) the Fund XI-XII-REIT Joint Venture, a joint
venture among the Partnership and Wells Real Estate Fund XII, L.P., and Wells OP
(the "Fund XI-XII REIT 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 three-
story office building in Knoxville, Tennessee (the "ABB Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture; (ii) a two-story office building
in Boulder County, Colorado (the "Ohmeda Building"), which is owned by the Fund
IX-X-XI-REIT Joint Venture; (iii) a three-story office building located in
Broomfield, Colorado (the "360 Interlocken Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture; (iv) a one-story office building located in
Oklahoma City, Oklahoma (the "Lucent Technologies Building"), which is owned by
the Fund IX-X-XI-REIT Joint Venture; (v) a single-story warehouse and office
building located in Ogden, Weber County, Utah (the "Iomega Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture; (vi) a two-story office building
located in Fremont, California (the "Fairchild Building"), which is owned by
Wells/Fremont Associates (the "Fremont Joint Venture"), a joint venture between
the Fund X-XI Joint Venture and Wells OP; (vii) a one-story office and warehouse
building located in Fountain Valley, California (the "Cort Building"), which is
owned by Wells/Orange County Associates (the "Cort Joint Venture"), a joint
venture between the Fund X-XI Joint Venture and Wells OP; (viii) a two-story
manufacturing and office building located in Fountain Inn, South Carolina (the
"EYBL CarTex Building"), which is owned by Fund XI-XII-REIT Joint Venture; (ix)
a three-story office building located in Leawood, Johnson County, Kansas (the
"Sprint Building"), which is owned by Fund XI-XII-REIT Joint Venture; (x) a one-
story office building and warehouse located in Tredyffin Township, Chester
County, Pennsylvania (the "Johnson Matthey Building"), which is owned by Fund
XI-XII-REIT Joint Venture; and (xi) a two-story office building located in Ft.
Myers, Lee County, Florida (the "Gartner Building"), which is owned by Fund XI-
XII-REIT Joint Venture.
The following table shows lease expirations during each of the next ten years as
of December 31, 1999, assuming no exercise of renewal options or termination
rights:
Partnership Percentage
Number Share of of Total Percentage
Year of of Square Annualized Annualized Square of Total
Lease Leases Feet Gross Base Gross Base Feet Annualized
Expiration Expiring Expiring Rent (1) Rent (1) Expiring Base Rent
- ------------ ---------- ---------- ------------ ------------- ------------ ------------
2000 0 0 $ 0 $ 0 0.0% 0.0%
2001 2 20,739 328,620 29,186 2.2 2.1
2002 3 12,606 248,508 22,071 1.3 1.6
2003(2) 2 69,146 1,072,828 120,693 7.3 8.7
2004(3) 1 58,424 902,946 101,581 6.2 7.3
2005(4) 1 106,750 1,027,320 98,316 11.3 7.2
2006 0 0 0 0 0.0 0.0
2007(5) 3 280,723 3,101,682 628,032 29.7 45.4
2008(6) 3 289,096 2,137,368 320,931 30.6 23.2
2009(7) 1 108,250 696,876 61,892 11.4 4.5
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16 945,734 $9,516,148 $1,382,702 100.0% 100.0%
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(1) Average monthly gross rent over the life of the lease, annualized.
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(2) Expiration of Cort Furniture lease, Fountain Valley, California and
ODS Technologies lease, Broomfield, Colorado.
(3) Expiration of Fairchild lease, Fremont, California
(4) Expiration of Ohmeda lease, Louisville, Colorado
(5) Expiration of ABB lease, Knoxville, Tennessee; Sprint lease, Leawood,
Kansas; and the Johnson Matthey lease, Chester County, Pennsylvania
(6) Expiration of Lucent Technologies lease, Oklahoma City, Oklahoma;
Gartner lease, Ft. Myers; and EYBL CarTex lease, Fountain Inn, South
Carolina
(7) Expiration of Iomega lease, Ogden, Utah
The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:
Fund IX-X-XI-REIT Joint Venture
On June 11, 1998, Fund IX and Fund X Associates (the "Joint Venture"), a
joint venture between Wells Real Estate Fund IX and Wells Real Estate Fund
X, L.P. ("Wells Fund IX-X"), a Georgia public limited partnership, was
amended and restated to admit the Partnership, a Georgia public limited
partnership, and Wells Operating Partnership, L.P. ("Wells OP), a Delaware
limited partnership having Wells Real Estate Investment Trust, Inc. (the
"Wells REIT"), a Maryland corporation, as its General Partner. Wells Fund
IX, Wells Fund X, Wells OP and the Wells REIT are all Affiliates of the
Wells Fund XI and its General Partners.
The Joint Venture, which changed its name to the Fund IX-X-XI-REIT Joint
Venture, had previously acquired and owned the following three properties:
(i) the ABB Building located in Knoxville, Knox County, Tennessee, (ii) the
Ohmeda Building located in Louisville, Boulder County, Colorado, and (iii)
the 360 Interlocken Building located in Broomfield, Boulder County,
Colorado. On June 24, 1998, the Fund IX-X-XI-REIT Joint Venture purchased
the Lucent Technologies Building located in Oklahoma City, Oklahoma County,
Oklahoma. On July 1, 1998, the Fund X contributed the Iomega Building
located in Ogden, Weber County, Utah to the Fund IX-X-XI-REIT Joint
Venture.
As of December 31, 1999, Fund XI had contributed $3,357,436 and held an
approximate 8.9% equity interest in the Fund IX-X-XI-REIT Joint Venture.
As of December 31, 1999 Wells Fund IX had an approximate 39% equity
interest, Wells Fund X had an approximate 48.3% equity interest, and Wells
OP had an approximate 3.7% equity interest in the Fund IX-X-XI-REIT Joint
Venture.
The ABB Building
On March 20, 1997, the Fund IX-X Joint Venture began construction on a
three-story office building containing approximately 83,885 rentable square
feet (the "ABB Building") on a 5.62 acre tract of real property in
Knoxville, Knox County, Tennessee. The land purchase and construction
costs totalling approximately $8,012,711 were funded by capital
contributions of $4,177,711 by Wells Fund IX and $3,835,000 by Wells Fund
X.
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ABB Environmental Systems, a subsidiary of ABB, Inc., has executed its
lease space of 56,012 rentable square feet comprising approximately 67% of
the building in December 1997. The initial term of the lease is 9 years
and 11 months commencing in December, 1997. ABB has the option under its
lease to extend the initial term of the lease for two consecutive five year
periods. The annual base rent payable during the initial term is $646,250
payable in equal monthly installments of $53,854 during the first five
years and $728,750 payable in equal monthly installments of $60,729 during
the last four years and 11 months of the initial term. The annual base
rent for each extended term will be at market rental rates. In addition to
the base rent, ABB is required to pay additional rent equal to its share of
operating expenses during the lease term.
Commencing December 1, 1999, ABB Environmental exercised its right of first
refusal to lease an additional 23,992 square feet of space vacated by the
Associates in September 1999. This addition increases their rentable floor
area from 57,831 square feet to 81,823 square feet. ABB will pay base rent
at the same terms and conditions of their original lease.
It is currently anticipated that the remaining cost to complete this
project which includes the final buildout of remaining space will be
approximately $89,000, which will be contributed by Wells Fund IX. The
average effective annual rental per square foot at the ABB Building was
$11.82 for 1999, $9.97 for 1998, and $8.16 for 1997, respectively, the
first year of occupancy. The occupancy rate at year end was 98% for 1999,
95% for 1998, and 67% for 1997 respectively.
Ohmeda Building
On February 13, 1998, the Fund IX-X Joint Venture acquired a two story
office building that was completed in 1988 with approximately 106,750
rentable square feet (the "Ohmeda Building") on a 15-acre tract of land
located in Louisville, Boulder County, Colorado. The purchase price for
the Ohmeda Building was $10,325,000. The Fund IX-X Joint Venture also
incurred additional acquisition expenses in connection with the purchase of
the Ohmeda Building, including attorneys' fees, recording fees, and other
closing costs. As of December 31, 1999, Wells Fund IX had contributed
$3,460,192 and Wells Fund X had contributed $6,900,878 towards the purchase
of this building.
The entire 106,750 rentable square feet of the Ohmeda Building is currently
under a net lease dated February 26, 1987, as amended by First Amendment to
Lease dated December 3, 1987, as amended by Second Amendment to Lease dated
October 20, 1997 (the "Lease") with Ohmeda, Inc., a Delaware corporation.
The lease was assigned to the Joint Venture at the closing. The lease
currently expires in January 2005, subject to (i) Ohmeda's right to
effectuate an early termination of the lease under the terms and conditions
described below, and (ii) Ohmeda's right to extend the lease for two
additional five year periods of time at the then current market rental
rates.
The monthly base rental payable under the lease is $83,709.79 through
January 31, 2003; $87,890.83 from February 1, 2003 through January 31,
2004; and $92,249.79 from February 1, 2004 through January 31, 2005. Under
the lease, Ohmeda is responsible for all utilities, taxes, insurance, and
other operating costs with respect to the Ohmeda Building during the term
of the lease. In addition, Ohmeda shall pay a $21,000 per year management
fee for maintenance and administrative services of the Ohmeda Building.
The Fund IX-X-XI-REIT Joint Venture, as landlord, is responsible for
maintenance of the roof, exterior and structural walls, foundation, other
structural members and floor slab, provided that the landlord's obligation
to make repairs specifically excludes items of cosmetic and routine
maintenance such as the painting of walls.
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The average effective annual rental per square foot at the Ohmeda Building
was $9.62 for 1999 and 1998, the first year of occupancy. The occupancy
rate at year end was 100% for 1999 and 1998.
360 Interlocken Building
On March 20, 1998 the Fund IX-X Joint Venture acquired a three-story multi-
tenant office building containing approximately 51,974 rentable square feet
(the "360 Interlocken Building") on a 5.1 acre tract of land in Broomfield,
Boulder County, Colorado for a purchase price of $8,275,000 excluding
acquisition costs. The project was funded by capital contributions of
$6,642,466 by Wells Fund IX and $1,632,534 by Wells Fund X.
The 360 Interlocken Building was completed in December 1996. The first
floor has multiple tenants and contain 15,599 rentable square feet; the
second floor is leased to ODS Technologies, L.P. and contains 17,146
rentable square feet; and the third floor is leased to Transecon, Inc. and
contains 19,229 rentable square feet.
As stated, the entire third floor of the Interlocken building containing
19,229 rentable square feet is currently under lease to Transecon and
expires in October 2001, subject to Transecon's right to extend for one
additional term of five years upon 180 days' notice. The monthly lease
rent payable under the Transecon lease is approximately $24,000 for the
initial term of the lease. Under the lease Transecon is responsible for
its share of utilities, taxes, insurance, and other operating expenses with
respect to the Interlocken Building. In addition, Transecon has a right of
first floor space proposed to be leased by the landlord.
The entire second floor of the Interlocken building containing 17,146
rentable square feet is currently under lease to ODS and expires in
September 2003, subject to ODS's right to extend for one additional term of
three years. The monthly base rent payable under the ODS lease is $22,100
through January 1998; $22,150 through January 1999; $22,600 through January
2000; $23,100 through January 2001; $23,550 through January 2002; $24,050
through January 2003, and $245,550 through September 2003. The rental
payments to be made by the tenant under the ODS lease are also secured by
the assignment of a $275,000 letter of credit which may be drawn upon by
the landlord in the event of a tenant default under the lease. Under the
lease, ODS is responsible for its share of utilities, taxes, insurance, and
other operating costs with respect to the Interlocken building.
The average effective annual rental per square foot at the 360 Interlocken
Building was $15.97 for 1999 and 1998, the first year of occupancy. The
occupancy rate at year end was 100% for 1999 and 1998.
Lucent Technologies Building
On May 30, 1997, the Fund IX-X Joint Venture entered into an agreement for
the purchase and sale of real property with Wells Development Corporation
("Wells Development"), an affiliate of the General Partners, for the
acquisition and development of a one-story office building containing
57,186 net rentable square feet on 5.3 acres of land (the "Lucent
Technologies Building"). On June 24, 1998, the Fund IX-X Joint Venture
purchased this property for a purchase price of $5,504,276. The purchase
price was funded by capital contributions of $2,482,810 by the Partnership,
$657,804 by Wells Fund IX, $950,392 by Wells Fund X, and $1,421,466 by
Wells OP.
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Lucent Technologies, a world-wide leader in telecommunications technology
producing a variety of communication products, has occupied the entire
Lucent Technologies Building. The initial term of the lease is ten years
commencing January 5, 1998. Lucent Technologies has the option to extend
the initial term of the lease for two additional five year periods. The
annual base rent payable during the initial term is $508,383 payable in
equal monthly installments of $42,365 during the first five years and
$594,152 payable in equal monthly installments of $49,513 during the second
five years of the lease term. The annual base rent for each extendable
term will be at market rental rates. In addition to the base rent, Lucent
Technologies will be required to pay additional rent equal to its share of
operating expenses during the lease term.
The average effective annual rental per square foot at the Lucent
Technologies Building was $10.19 for 1999 and 1998, the first year of
occupancy. The occupancy rate at year-end was 100% for 1999 and 1998.
Iomega Building
On July 1, 1998, Fund X contributed a single story warehouse and office
building with 108,250 rentable square feet (the "Iomega Building") and was
credited with making a capital contribution to the IX-X-XI-REIT Joint
Venture in the amount of $5,050,425, which represents the purchase price of
$5,025,000 plus acquisition expenses of $25,425 originally paid by Fund X
for the Iomega Building on April 1, 1998.
The building is 100% occupied by one tenant with a ten year lease term that
expires on July 31, 2006. The monthly base rent payable under the lease is
$40,000 through November 12, 1999. Beginning on the 40th and 80th months
of the lease term, the monthly base rent payable under the lease will be
increased to reflect an amount equal to 100% of the increase in the
Consumer Price Index (as defined in the lease) during the preceding 40
months; provided however, that in no event shall the base rent be increased
with respect to any one year by more than 6% or by less than 3% per annum,
compounded annually, on a cumulative basis from the beginning of the lease
term. The lease is a triple net lease, whereby the terms require the
tenant to reimburse the IX-X-XI-REIT Joint Venture for certain operating
expenses, as defined in the lease, related to the building.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a four-
acre tract of vacant land adjacent to the Iomega Building located in Ogden,
Utah. This site is intended to be additional parking and a loading-dock
area, and will include at least 400 new parking stalls and new site work
for truck maneuver space, in accordance with the requirements of the
tenants and the city of Ogden. The project was completed on July 31, 1999.
The tenant, Iomega Corporation, has agreed to extend the term of its lease
to April 30, 2009 and will pay an additional base rent, an amount equal to
13% per annum payable in monthly installments of the direct and indirect
cost of acquiring the property and construction of improvements. This
additional base rent commenced on May 1, 1999.
The land was purchased at a cost of $212,000, excluding acquisition costs.
The funds used to acquire the land and for the improvements are funded
entirely out of capital contributions made by Wells Real Estate Fund XI,
L.P. to the Fund IX-X-XI-REIT Joint Venture in the amount of $874,625. The
project was completed at a total cost of $874,625.
The average effective annual rental per square foot at the Iomega Building
was $5.18 for 1999 and $4.60 for 1998, the first year of occupancy. The
occupancy rate at year end was 100% for 1999 and 1998.
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Fund X-XI Joint Venture
On July 17, 1998 the Partnership and Wells Real Estate Fund X, L.P. ("Wells
Fund X"), a Georgia public limited partnership, affiliated with the
Partnership through common general partners, formed a joint venture known
as Fund X and Fund XI Associates (the "Fund X-XI Joint Venture"). The
investment objectives of Wells Fund X are substantially identical to those
of the Partnership. As of December 31, 1999 the Partnership had
contributed $2,398,767 and Wells Fund X had contributed $3,296,233 for
total contributions of $5,695,000 to the Fund X-Fund XI Joint Venture. At
this time, the Partnership's equity interest in the Fund X-Fund XI Joint
Venture is approximately 42% and Wells Fund X's equity interest in the Fund
X-Fund XI Joint Venture is approximately 58%.
Wells/Fremont Joint Venture - Fairchild Building
On July 15, 1998, Wells OP entered into a joint venture agreement known as
Wells/Fremont Associates ("Fremont Joint Venture") with Wells Development
Corporation, a Georgia Corporation ("Wells Development"). Wells
Development is an affiliate of the Partnership and its General Partners.
On July 21, 1998, the Fremont Joint Venture acquired the Fairchild
Building, a 58,424 square-foot warehouse and office building located in
Fremont, California (the "Fairchild Building"), for a purchase price of
$8,900,000 plus acquisition expenses of approximately $60,000. The
Partnership contributed $1,000,000, Wells Fund X contributed $1,000,000,
and Wells OP contributed $6,900,000 towards the purchase of this building.
The Fairchild Building is 100% occupied by one tenant with a seven-year
lease term that commenced on December 1, 1997 (with an early possession
date of October 1, 1997) and expires on November 30, 2004. The monthly
base rent payable under the lease is $68,128 with a 3% increase on each
anniversary of the commencement date. The lease is a triple net lease,
whereby the terms require the tenant to reimburse the landlord for certain
operating expenses, as defined in the lease, related to the building.
On July 17, 1998 a joint venture between the Partnership and Wells Fund X
(the "Fund X-XI Joint Venture") entered into an agreement for the purchase
and sale of Wells Development's interest in the Fremont Joint Venture.
On October 8, 1998, the Fund X-XI Joint Venture exercised its rights under
the Fremont Joint Venture Contract and purchased Wells Development's
interest in the Fremont Joint Venture and became a joint venture partner
with Wells OP in the ownership of the Fairchild Building.
As of December 31, 1999, Wells OP had contributed $6,983,110 and held an
approximate 78% equity percentage interest in the Fremont Joint Venture,
and Fund X-XI Joint Venture had contributed $2,000,000 and held an
approximate 22% equity percentage interest in the Fremont Joint Venture.
The average effective annual rental per square foot at the Fairchild
Building was $15.46 for 1999 and 1998, the first year of occupancy. The
occupancy rate at year end was 100% for 1999 and 1998.
Wells/Orange County Joint Venture
In July 1998, Wells OP entered into a joint venture agreement known as
Wells/Orange County Associates ("Cort Joint Venture") with Wells
Development Corporation. On July 31, 1998, the
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Cort Joint Venture acquired the Cort Building for a purchase price of
$6,400,000 plus acquisition expenses of approximately $150,000. The
Partnership contributed $1,398,767, Wells Fund X contributed $2,296,233,
and Wells OP contributed $2,871,430 towards the purchase of this building.
The Cort Building is a 52,000-square-foot warehouse and office building
located in Fountain Valley California. The building is 100% occupied by
one tenant with a 15-year lease term that commenced on November 1, 1988 and
expires on October 31, 2003. The monthly base rent payable under the lease
is $63,247 through April 30, 2001, at which time the monthly base rent will
be increased 10% to $69,574 for the remainder of the lease term. The lease
is a triple net lease, whereby the terms require the tenant to reimburse
the Cort Joint Venture for certain operating expenses, as defined in the
lease, related to the building.
On July 30, 1998, the Fund X-XI Joint Venture entered into an Agreement for
the Purchase and Sale of Wells Development's interest in the Cort Joint
Venture. On September 1, 1998, the Fund X-XI Joint Venture exercised its
rights under the Cort JV Contract and purchased Wells Development's
interest in the Cort Joint Venture and became a joint venture partner with
Wells OP in the ownership of the Cort Furniture Building.
As of December 31, 1999, the Wells Operating Partnership had made total
capital contributions of $2,871,430 and held an approximate 44% equity
percentage interest in the Cort Joint Venture, and the Fund X-XI Joint
Venture had contributed $3,695,000 and held an approximate 56% equity
percentage interest in the Cort Joint Venture.
The average effective annual rental per square foot at the Cort Building
was $15.30 for 1999 and 1998, the first year of occupancy. The occupancy
rate at year end was 100% for 1999 and 1998.
Fund XI-XII-REIT Joint Venture
On June 21, 1999, Fund XI-REIT Joint Venture, a joint venture between the
Partnership and Wells Operating Partnership, L.P. ("Wells OP"), a Delaware
limited partnership, was amended and restated to admit the Wells Real
Estate Fund XII L.P. ("Wells Fund XII"), a Georgia public limited
partnership. Wells Fund XII and Wells OP are all affiliates of the
Partnership and its general partners. The XI-REIT Joint Venture which
changed its name to Wells Fund XI-XII-REIT Joint Venture had previously
acquired and owned the EYBL CarTex Building located in Greenville, South
Carolina. As of December 31, 1999 the Partnership had contributed
$8,131,351 for an approximate 26.1% equity interest in the Fund XI-XII-REIT
Joint Venture, Wells Fund XII had made capital contributions of $5,300,000
for an approximate 17.1% equity interest, and Wells OP had contributed
$17,585,310 for an approximate 56.8% interest in the Fund XI-XII-REIT Joint
Venture.
EYBL CarTex Building
On May 18, 1999, Wells Real Estate, LLC-SC I ("Wells LLC"), a Georgia
limited liability company wholly owned by the Wells Fund XI-XII-REIT Joint
Venture (the "Joint Venture"), acquired a manufacturing and office building
located in Fountain Inn, unincorporated Greenville County, South Carolina
(the "EYBL CarTex Building"). Wells LLC purchased the EYBL CarTex Building
from Liberty Property Limited Partnership, a Pennsylvania limited
partnership (the "Seller").
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The rights under the Contract were assigned by Wells Capital, Inc., an
affiliate of the Partnership and the original purchaser under the Contract,
to Wells LLC at closing. The purchase price for the EYBL CarTex Building
was $5,085,000. Wells LLC also incurred additional acquisitions expenses
in connection with the purchase of the EYBL CarTex Building including
attorney's fees, recording fees, and other closing costs, of approximately
$37,000. The purchase cost was funded by capital contributions of
$1,530,000 by the Partnership and $3,591,827 by Wells OP.
The EYBL CarTex Building is a manufacturing and office building consisting
of a total of 169,510 square feet comprised of approximately 140,580 square
feet of manufacturing space, 25,300 square feet of two-story office space
and 3,360 square feet of cafeteria/training space. An addition was
constructed to the EYBL CarTex Building in 1989, which consisted of an
additional 64,000 square feet of warehouse space.
The property, located at 111 SouthChase Boulevard, was developed in the
early 1980s on a site of approximately 11.94 acres. The site is located in
the SouthChase Industrial Park, which is located adjacent to I-385 in
southwest Greenville with easy access to I-85. The current configuration
of the parking lot allows for approximately 252 spaces for vehicles, which
has proven adequate for current tenant. The landscaping at the facility is
in good condition and is consistent with the quality level of the entire
complex.
The entire 169,510 rentable square feet of the EYBL CarTex Building is
currently under an Agreement of Lease (the "Lease") with EYBL CarTex, Inc.,
a South Carolina corporation ("EYBL CarTex"). The Lease was assigned to
Wells LLC at the closing.
The initial term of the Lease is ten years which commenced on March 1, 1998
and expires in February 2008. EYBL CarTex has the right to extend the
Lease for two additional five year periods of time. Each extension option
must be exercised by giving notice to the landlord at least 12 months prior
to the expiration date of the then current lease term. The annual lease
rent payable during the first four years of the lease is $508,530 in equal
monthly installments of $42,377.50. The annual lease rent for years five
and six is $550,907.50, year seven and eight is $593,285, and years nine
and ten is $610,236.
Under the lease, EYBL CarTex is required to pay as additional rent all real
estate taxes, special assessments, utilities, taxes, insurance, and other
operating costs with respect to the EYBL CarTex Building during the term of
the Lease. In addition, EYBL CarTex is responsible for all routine
maintenance and repairs to the EYBL CarTex Building. Wells LLC, as
landlord, is responsible for maintenance of the footings and foundations
and the structural steel columns and girders associated with the building.
Pursuant to a lease commission agreement dated February 12, 1998 between
Seller and The McNamara Company, Inc., Wells LLC is required to pay on or
before March 1 of each year an amount equal to $13,787 as a brokerage fee
to the McNamara Company, Inc. through March 1, 2007.
The average effective annual rental per square foot at the EBYL CarTex
Building was $3.31 the first year of occupancy. The occupancy rate at year
end was 100% for 1999.
For additional information regarding the EYBL CarTex Building, refer to the
Partnership's Form 8-K dated May 18, 1999, which was filed with the
Commission on June 2, 1999 (Commission File No. 0-25731).
-10-
The Sprint Building
On July 2, 1999, the Fund XI-XII-REIT Joint Venture acquired a three-story
office building with approximately 68,900 rentable square feet on a 7.12-
acre tract of land located in Leawood, Johnson County, Kansas, from Bridge
Information Systems America, Inc.
The purchase price for the Sprint Building was $9,500,000. The Fund XI-
XII-REIT Joint Venture also incurred additional acquisition expenses in
connection with the purchase of the Sprint Building, including attorneys'
fees, recording fees, and other closing costs, of approximately $46,210.
As of December 31, 1999, the Partnership had contributed $3,000,000, Wells
Fund XII had contributed $1,000,000 and Wells OP had contributed $5,500,000
to the purchase of this property.
The entire 68,900 rentable square feet of the Sprint Building is currently
under a net lease agreement with Sprint Communications, Inc. ("Sprint")
dated February 14, 1997. The landlord's interest in the lease was assigned
to the Fund XI-XII-REIT Joint Venture at the closing. The initial term of
the lease is ten years which commenced on May 19, 1997 and expires on May
18, 2007. Sprint has the right to extend the lease for two additional
five-year periods of time. The monthly base rent payable under the lease
is $83,254.17 ($14.50 per square foot) through May 18, 2002 and $91,866.67
($16.00 per square foot) for the remainder of the lease term. The monthly
base rent payable for each extended term of the lease will be equal to 95%
of the then "current market rate" which is calculated as a full-service
rental rate less anticipated annual operating expenses on a rentable square
foot basis charged for space of comparable location, size, and conditions
in comparable office buildings in the suburban south Kansas City, Missouri,
and south Johnson County, Kansas areas.
Under the lease, Sprint is required to pay as additional rent all real
estate taxes, special assessments, utilities, taxes, insurance, and other
operating costs with respect to the Sprint Building during the term of the
Lease. In additional, Sprint is responsible for all routine maintenance
and repairs including the interior mechanical and electrical systems, the
HVAC system, the parking lot, and the landscaping to the Sprint Building.
The Fund XI-XII-REIT Joint Venture, as landlord, is responsible for repair
and replacement of the exterior, roof, foundation, and structure.
The lease contains a termination option which may be exercised by Sprint
effective as of May 18, 2004 provided that Sprint has not exercised either
expansion option, as described below. Sprint must provide notice to the
Fund XI-XII-REIT Joint Venture of its intent to exercise its termination
option on or before August 21, 2003. If Sprint exercises its termination
option, it will be required to pay the Fund XI-XII-REIT Joint Venture a
termination payment equal to $6.53 per square foot, or $450,199.
Sprint also has an expansion option for an additional 20,000 square feet of
office space which may be exercised in two expansion phases. Sprint's
expansion rights involve building on unfinished grounded-level space that
is currently used as covered parking within the existing building footprint
and shell. At each exercise of an expansion option, the remaining lease
term will be extended to be a minimum of an additional five years from the
date of the completion of such expansion space.
The average effective annual rental per square foot at the Sprint Building
was $15.44 the first year of occupancy. The occupancy rate at year end was
100% for 1999.
-11-
For additional information regarding the Sprint Building, refer to Form 8-K
of Wells Real Estate Fund XI, L.P. dated July 2, 1999, which was filled
with the Commission on July 16, 1999 (Commission File No. 0-25731).
The Johnson Matthey Building
On August 17, 1999, the Fund XI-XII-REIT Joint Venture acquired a research
and development office and warehouse building (the "Johnson Matthey
Building") located in Chester County, Pennsylvania, from Alliance
Commercial Properties Ltd.
Wells Capital, Inc., as original purchaser under the agreement, assigned
its rights under the agreement to the Fund XI-XII-REIT Joint Venture at
closing. The purchase price paid for the Johnson Matthey Building was
$8,000,000. The Fund XI-XII-REIT Joint Venture also incurred additional
acquisition expenses in connection with the purchase of the Johnson Matthey
Building, including attorneys' fees, recording fees, and other closing
costs, of approximately $50,000. The purchase of the building was funded
by capital contributions of $3,494,727 by the Partnership, $1,500,000 by
Wells Fund XII and $3,061,594 by Wells OP.
The Johnson Matthey Building is a 130,000 square foot research and
development office and warehouse building that was first constructed in
1973 as a multi-tenant facility. It was subsequently converted into a
single-tenant facility in 1998. The site consists of a ten-acre tract of
land located at 434-436 Devon Park Drive in the Tredyffrin Township,
Chester County, Pennsylvania.
The entire 130,000 rentable square feet of the Johnson Matthey Building is
currently leased to Johnson Matthey. The Johnson Matthey lease was
assigned to the Fund XI-XII-REIT Joint Venture at the closing with the
result that the joint venture is now the landlord under the lease. The
annual base rent payable under the Johnson Matthey lease for the remainder
of the lease term is as follows: year three--$789,750, year four--
$809,250, year five--$828,750, year six--$854,750, year seven--$874,250,
year eight--$897,000, year nine--$916,500, and year ten--$939,250. The
current lease term expires in June 2007. Johnson Matthey has the right to
extend the lease for two additional three-year periods of time.
Under the lease, Johnson Matthey is required to pay as additional rent all
real estate taxes, special assessments, utilities, taxes, insurance, and
other operating costs with respect to the Johnson Matthey Building during
the term of the lease. In addition, Johnson Matthey is responsible for all
routine maintenance and repairs to the Johnson Matthey Building. The Fund
XI-XII-REIT Joint Venture, as landlord, is responsible for maintenance of
the footings and foundations and the structural steel columns and girders
associated with the building.
Johnson Matthey has a right of first refusal to purchase the Johnson
Matthey Building in the event that the Fund XI-XII-REIT Joint Venture
desires to sell the building to an unrelated third party. The joint
venture must give Johnson Matthey written notice of its intent to sell the
Johnson Matthey Building, and Johnson Matthey will have ten days from the
date of such notice to provide written notice of its intent to purchase the
building. If Johnson Matthey exercises its right of first refusal, it must
purchase the Johnson Matthey Building on the same terms contained in the
offer.
The average effective annual rental per square foot at the Johnson Matthey
Building was $6.67 the first year of occupancy. The occupancy rate of year
end was 100% for 1999.
-12-
For additional information regarding the Johnson Matthey Building, refer to
Form 8-K of Wells Real Estate Fund XI, L.P. dated August 17, 1999, which
was filed with the Commission on September 1, 1999 (Commission File No. 0-
25731).
The Gartner Building
On September 20, 1999, the Fund XI-XII-REIT Joint Venture acquired a two-
story office building with approximately 62,400 rentable square feet on a
4.9-acre tract of land located at 12600 Gateway Boulevard in Fort Myers,
Lee County, Florida, from Hogan Triad Ft. Myers I, Ltd., a Florida limited
partnership.
The rights under the contract were assigned by Wells Capital, Inc., the
original purchaser under the contract, to the Fund XI-XII-REIT Joint
Venture at closing. The purchase price for the Gartner Building was
$8,320,000. The Fund XI-XII-REIT Joint Venture also incurred additional
acquisition expenses in connection with the purchase of the Gartner
Building, including attorneys' fees, recording fees, and other closing
costs, of approximately $27,600. The purchase was funded by capital
contributions of $106,554 by the Parntership, $2,800,000 by Wells Fund XII
and $5,441,064 by Wells OP.
The entire 62,400 rentable square feet of the Gartner Building is currently
under a net lease agreement with Gartner dated July 30, 1997 (the "Gartner
Lease"). The landlord's interest in the Gartner Lease was assigned to the
Fund XI-XII-REIT Joint Venture at the closing.
The initial term of the Gartner Lease is ten years which commenced on
February 1, 1998 and expires on January 31, 2008. Gartner has the right to
extend the Gartner Lease for two additional five-year periods of time. The
yearly base rent payable for the remainder of the Gartner Lease term is
$642,798 through January 2000, $790,642 through January 2001, and
thereafter will increase by 2.5% through the remainder of the Gartner
Lease.
Under the Gartner Lease, Gartner is required to pay as additional rent all
real estate taxes, special assessments, utilities, taxes, insurance, and
other operating costs with respect to the Gartner Building during the term
of the Gartner Lease. In addition, Gartner is responsible for all routine
maintenance and repairs to the Gartner Building. The Fund XI-XII-REIT
Joint Venture, as landlord, is responsible for repair and replacement of
the roof, structure, and paved parking areas.
Gartner also has two expansion options for additional buildings under the
Gartner Lease. The two option plans are described in the Gartner Lease as
the "Small Option Building" and the "Large Option Building."
The "Small Option Building" expansion option allows Gartner the ability to
expand into a separate, free-standing facility on the property containing
between 30,000 and 32,000 rentable square feet to be constructed by the
Fund XI-XII-REIT Joint Venture. Gartner may exercise its expansion right
for the "Small Option Building" by providing notice in writing to the Fund
XI-XII-REIT Joint Venture on or before February 15, 2002.
The "Large Option Building" expansion option allows Gartner the ability to
expand into a separate, free-standing facility on the property containing
between 60,000 and 75,000 rentable square feet to be constructed by the
Fund XI-XII-REIT Joint Venture. Gartner may exercise its expansion right
for the Small Option Building" by providing notice in writing to the Fund
XI-XII-REIT Joint Venture on or before February 5, 2002.
-13-
The average effective annual rental per square foot at the Gartner Building
was $13.68 the first year of occupancy. The occupancy rate at year end was
100% for 1999.
ITEM 3. LEGAL PROCEEDINGS
There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Limited Partners during the year
1999.
(THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
-14-
PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
The offering for sale of Units in the Partnership terminated on December 30,
1998, at which time the Partnership had 1,302,942 outstanding Class A status
units held by a total of 1,250 Limited Partners and 350,338 outstanding Class B
status units held by a total of 95 Limited Partners. The capital contribution
per unit is $10.00. There is no established public trading for the Partnership's
limited partnership units, and it is not anticipated that a public trading
market for the units will develop. Under the Partnership Agreement, the General
Partners have the right to prohibit transfers of units.
Class A status limited partners are entitled to a distribution from 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, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of net cash From operations equal to 10% of the total amount
of net cash from operations distributed. Thereafter, the Limited Partners
holding Class A status units will receive 90% of net cash from operations and
the General Partners will receive 10%. No net cash from operations will be
distributed to Limited Partners holding Class B status units. Holders of Class A
status units will, except in limited circumstances, be allocated none of the
Partnership's net loss, depreciation and amortization deductions. These
deductions will be allocated to the Class B Status Units, until their capital
account balances have been reduced to zero. No distributions have been made to
the General Partners as of December 31, 1999.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A status limited partners during 1998
and 1999 and were as follows:
Distribution Per Class A Unit
-------------------------
for Quarter Total Cash Investment Return of General
Ended Distributed Income Capital Partner
-------------------------------------------------------------------------
March 31, 1998 $ 0 $0.00 $0.00 $0.00
June 30, 1998 0 0.00 0.00 0.00
September 30, 1998 99,874 0.15 0.00 0.00
December 31, 1998 141,007 0.15 0.00 0.00
March 31, 1999 195,440 0.15 0.00 0.00
June 30, 1999 196,635 0.15 0.00 0.00
September 30, 1999 262,930 0.20 0.00 0.00
June 30, 1999 275,736 0.21 0.00 0.00
The fourth quarter distribution was accrued for accounting purposes in 1999, and
was not actually paid to Limited Partners until February, 2000. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Status Units will continue in 2000 at a level
at least comparable with 1999 cash distributions on an annual basis.
-15-
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 1999 and 1998:
1999 1998
----------- -----------
Total assets $14,440,800 $14,844,515
Total revenues 766,586 262,729
Net income 630,528 143,295
Net loss allocated to General Partners 0 (500)
Net income allocated to Class A Limited Partners 1,009,368 254,862
Net loss allocated to Class B Limited Partners (378,840) (111,067)
Net income per weighted average (1) Class A Limited Partner unit $ 0.77 $ 0.50
Net loss per weighted average (1) Class B Limited Partner unit (1.12) (0.77)
Cash distribution per weighted average (1) Class A Limited Partner unit:
Investment income 0.71 0.30
Return of capital 0.00 0.00
(1) The weighted average unit is calculated by averaging units over the
period they are outstanding during the time units are still being
purchased by Limited Partners in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS
RESULTS OF OPERATION
The following discussion and analysis should be read in conjunction with the
selected financial data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statement
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
General
The Partnership commenced active operations on March 3, 1998, when it received
and accepted subscriptions for 125,000 units. An aggregate requirement of
$2,500,000 of offering proceeds was reached on March 30, 1998, thus allowing for
the admission of New York and Pennsylvania investors into the Partnership. As
of December 31, 1999, the Partnership had sold 1,336,906 Class A status units
and 316,374 Class B status units, held by a total of 1,255 Class A and 90 Class
B limited partners, for total limited partner contributions of $16,532,802.
After payment of $578,648 in acquisition and advisory fees and expenses, payment
of $2,066,600 in selling commissions and organization and offering expenses, the
Partnership invested $3,357,436 in the Fund IX-X-XI-REIT Joint Venture,
$2,398,767 in Fund X-XI Joint Venture, and $8,131,351 in the Fund XI-XII-REIT
Joint Venture.
-16-
It is anticipated that an additional investment in the Fund IX-X-XI-REIT Joint
Venture of approximately $89,000 will be required to complete the ABB Property
and this investment will be contributed by Wells Fund IX.
Gross revenues of the Partnership of $766,586 for the year ended December 31,
1999 and $262,729 for the year ended December 31, 1998, were attributable
primarily to interest income earned on funds held by the Partnership prior to
the investment in joint ventures, and increased equity in earnings of joint
ventures. The increase was due primarily to increased investments in joint
ventures.
Expenses of the Partnership were $136,058 for the year ended December 31, 1999
and $119,434 for the year ended December 31, 1998, and consisted primarily of
legal, accounting, and partnership administrative costs. In conformity with the
recent accounting pronouncements outlined below, organizational costs which were
previously capitalized were completely written off in 1999, hence the increase
in total expenses. Net income of the Partnership was $630,528 and $143,295 for
the years ended December 31, 1999 and 1998, respectively.
Since the Partnership did not commence active operations until it received and
accepted subscriptions for a minimum of 125,000 Units on March 3, 1998, there is
no comparative financial data available from the prior fiscal year.
Recent Accounting Pronouncements
Effective April 3, 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 is effective for fiscal years beginning after December
15, 1998, and initial application is required to be reported as a cumulative
effect of change in accounting principle. This SOP provides guidance on the
financial reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as incurred.
Adoption of this Statement by the Partnership in the first quarter of 1999
resulted in the write-off of certain capitalized organization costs.
-17-
Property Operations
As of December 31, 1999, the Partnership owned interests in the following
operational properties:
The ABB Building-Fund IX-X-XI-REIT Joint Venture
One Month
For the Year Ended Ended
December 31 December 31,
----------------------
1999 1998 1997
---------- -------- --------
Revenues: $ 987,327 $836,746 $ 28,512
Rental income 58,768 20,192 0
---------- -------- --------
Interest income 1,046,095 856,938 28,512
---------- -------- --------
Expenses:
Depreciation 537,799 475,020 36,863
Management and leasing expense 120,325 107,338 1,711
Operating costs, net of reimbursements (2,532) (40,641) 10,118
---------- -------- --------
655,592 541,717 48,692
---------- -------- --------
Net income (loss) $ 390,503 $315,221 $(20,180)
========== ======== ========
Occupied percentage 98% 95% 67%
========== ======== ========
Partnership's ownership percentage in the Fund
IX-X-XI-REIT Joint Venture 8.9% 6.7% 49.7%
========== ======== ========
Cash distribution to partnership $ 78,795 $ 36,360 $ 0
========== ======== ========
Net income (loss) allocated to Partnership $ 32,707 $ 16,508 $(10,035)
========== ======== ========
Rental income increased in 1999 over 1998 due primarily to the increased
occupancy level of the property. Other operating expenses were negative for 1999
and 1998 due to an offset of tenant reimbursements in operating costs, as well
as management and leasing reimbursements. Tenants are billed an estimated amount
for current year common area maintenance which is then reconciled the second
quarter of the following year and the difference billed to the tenant. Total
expenses increased for 1999 over 1998 due to increased depreciation and
management and leasing fees as the building was leased up.
Cash distributions and net income allocated to the Partnership increased in 1999
over prior year levels due to the lease up of the project. The Partnership's
ownership in the Fund IX-X-XI-REIT Joint Venture decreased in 1999 as compared
to 1998 due to additional funding by Wells Fund XI to the Joint Venture in 1999.
The ABB Building incurred property taxes of $47,616 for 1999, and $36,771 for
1998.
It is currently anticipated that Wells Fund IX will contribute approximately
$89,000 to complete the building. Since the ABB Project was opened in December
1977, comparative income and expense figures for 1997 are available for a one-
month period.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 3. For additional information on tenants,
etc, refer to Item 2, Properties, page 3.
-18-
Iomega Building/Fund IX-X-XI-REIT Joint Venture
For the Nine Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $560,906 $373,420
-------- --------
Expenses:
Depreciation 204,925 145,975
Management and leasing expenses 24,295 23,058
Other operating expenses, net of reimbursements 9,368 (4,579)
-------- --------
238,588 164,454
-------- --------
Net income $322,318 $208,966
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage in the Fund IX-X-XI-REIT
Joint Venture 8.9% 6.7%
======== ========
Cash distribution to the Partnership $ 43,660 $ 15,803
======== ========
Net income allocated to the Partnership $ 27,511 $ 10,197
======== ========
Since the Iomega Building was purchased in April 1998, comparable income and
expense figures for the prior year are available for only nine months. Other
operating expenses for 1998 are negative due to tenant reimbursement reflected
in this category which includes management and leasing expense reimbursement.
Tenants are billed an estimated amount for current year common area maintenance
which is then reconciled the second quarter of the following year and the
difference billed to the tenant. The Iomega Building incurred property taxes of
$73,020 for 1999 and $44,559 for 1998.
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.
-19-
The Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
For the Seven Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $583,009 $291,508
-------- --------
Expenses:
Depreciation 183,204 106,871
Management and leasing expenses 21,479 11,281
Other operating expenses, net of reimbursements 15,809 9,883
-------- --------
220,492 128,035
-------- --------
Net income $362,517 $163,473
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage in the
Fund IX-X-XI-REIT Joint Venture 8.9% 6.7%
======== ========
Cash distribution to the Partnership $ 42,442 $ 26,677
======== ========
Net income allocated to the Partnership $ 30,779 $ 11,025
======== ========
The Lucent Technologies Building was completed in January 1998 with Lucent
Technologies occupying the entire building. Under the terms of the lease, the
tenant is responsible for all utilities, property taxes and other operating
expenses.
Since the Lucent Technologies Building was purchased by the IX-X-XI REIT Joint
Venture in June 1998, comparable income and expense figures for the prior year
are available for only seven months.
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.
-20-
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
For the Ten Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $829,827 $665,405
Interest income 0 246
-------- --------
829,827 665,651
Expenses:
Depreciation 286,680 238,299
Management and leasing expenses 73,129 55,130
Other operating expenses, net of reimbursements 42,431 (55,654)
-------- --------
402,240 237,775
-------- --------
Net income $427,587 $427,876
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage in the Fund IX-X-XI-REIT
Joint Venture 8.9% 6.7%
======== ========
Cash distribution to the Partnership $ 60,233 $ 31,653
======== ========
Net income allocated to the Partnership $ 36,366 $ 21,963
======== ========
The 360 Interlocken Building was completed in December 1996. The first floor has
multiple tenants and contains 15,599 rentable square feet; the second floor is
leased to ODS Technologies, L.P. and contains 17,146 rentable square feet; and
the third floor is leased to Transecon, Inc. and contains 19,229 rentable square
feet.
Since the 360 Interlocken Building was purchased in March 1998, comparable
income and expense figures for the prior year are available for only ten months.
Other operating expenses for 1998 are negative due to tenant reimbursements
reflected in this category which include management and leasing expense
reimbursements. Tenants are billed an estimated amount for current year common
area maintenance which is then reconciled during the second quarter of the
following year and the difference billed to the tenant. The 360 Interlocken
Building incurred property taxes of $244,025 for 1999 and $96,747 for 1998.
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-
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
For the Eleven Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $1,027,314 $898,901
---------- --------
Expenses:
Depreciation 326,304 299,112
Management and leasing expenses 46,911 41,688
Other operating expenses, net of reimbursements (15,183) 2,863
---------- --------
358,032 343,663
---------- --------
Net income $ 669,282 $555,238
========== ========
Occupied percentage 100% 100%
========== ========
Partnership's ownership percentage in the
Fund IX-X-XI-REIT Joint Venture 8.9% 6.7%
========== ========
Cash distribution to the Partnership $ 82,761 $ 38,113
========== ========
Net income allocated to the Partnership $ 56,955 $ 25,656
========== ========
The entire Ohmeda Building is currently under a net lease with Ohmeda, Inc. and
was assigned to the Fund IX-X-XI-REIT Joint Venture at closing. The lease
currently expires in January 2005. The monthly base rental payable under the
lease is $83,709.79 through January 31, 2003; $87,890.83 from February 1, 2003
through January 31, 2004; and $92,249.79 from February 1, 2004 through January
31, 2005. Under the lease, Ohmeda is responsible for all utilities, taxes,
insurance and other operating costs with respect to the Ohmeda Building.
Since the Ohmeda Building was purchased in February, 1998, comparative income
and expense figures are available for only eleven months of the prior year.
Other operating expenses are negative due to tenant reimbursements reflected in
this category which includes management and leasing expense reimbursement.
Tenants are billed an estimated amount for current year common area maintenance
which is then reconciled the second quarter of the following year and the
difference is billed to the tenant. The Ohmeda Building incurred property taxes
of $249,707 for 1999 and $143,962 for 1998.
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.
-22-
Wells/Fremont Joint Venture (Fairchild)
For the Six Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $902,946 $401,058
Interest income 0 3,896
-------- --------
902,946 404,954
-------- --------
Expenses:
Depreciation 285,526 142,720
Management and leasing expenses 37,355 16,726
Interest expense 0 73,919
Other operating expenses, net of reimbursements 20,891 9,670
-------- --------
343,772 243,035
-------- --------
Net income $559,174 $161,919
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage 9.2% 9.2%
======== ========
Cash distribution to the Partnership $ 91,839 $ 21,314
======== ========
Net income allocated to the Partnership $ 66,390 $ 19,724
======== ========
The Partnership owns 42% in the Fund X-XI Joint Venture but owns 9.2% in the
Fairchild Building.
On July 21, 1998, the Wells/Fremont Joint Venture acquired a two-story warehouse
and office building containing approximately 58,424 rentable square feet on a
3.05 acre tract of land in Fremont, California (the "Fremont Building") for a
purchase price of $8,900,000 excluding acquisition costs.
The building is 100% occupied by Fairchild Technologies, U.S.A., Inc. with a
lease expiration of November 30, 2004. The monthly base rent payable under the
lease is $68,128 with a 3% increase on each anniversary of the commencement
date. The lease is a triple net lease, whereby the terms require the tenant to
reimburse the landlord for certain operating expenses, as defined in the lease,
related to the building. The tenant is responsible for property taxes.
Since the Fremont Building was purchased in July of 1998, comparable income and
expense figures for the prior year are not available. For further information,
refer to Item 2. Properties.
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-
Wells/Orange County Joint Venture (Cort)
For the Five Months
Year Ended Ended
December 31, December 31,
1999 1998
------------ ------------
Revenues:
Rental income $795,545 $331,477
Interest income 0 448
-------- --------
795,545 331,925
-------- --------
Expenses:
Depreciation 186,565 92,087
Management and leasing expenses 30,360 12,734
Interest expense 0 29,472
Other operating expenses, net of reimbursements 27,667 6,218
-------- --------
244,592 140,511
-------- --------
Net income $550,953 $191,414
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage 23.5% 23.5%
======== ========
Cash distribution to the Partnership $148,604 $124,435
======== ========
Net income allocated to the Partnership $116,802 $ 91,978
======== ========
The Partnership owns 42% of the Fund X-XI Joint Venture but owns 23.5% of the
Cort Building.
On July 31, 1998, the Cort Joint Venture acquired a one-story office and
warehouse building containing approximately 52,000 rentable square feet on a
3.65 acre tract of land in Fountain Valley, California (the "Cort Building") for
a purchase price of $6,400,000, excluding acquisition costs.
The Cort building is 100% occupied by one tenant with a 15-year lease term that
commenced on November 1, 1988 and expires on October 31, 2003. The monthly base
rent payable under the lease is $63,247 through April 30, 2001, at which time
the monthly base rent will be increased 10% to $69,574 for the remainder of the
lease term. The lease is a triple net lease, whereby the terms require the
tenant to reimburse the Cort Joint Venture for certain operating expenses, as
defined in the lease, related to the building.
Since the Cort Building was purchased in July 1988, comparable income and
expense figures for the prior year are available for only five months. The
tenant is responsible for property taxes.
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.
-24-
EYBL CarTex Building/Fund XI-XII-REIT Joint Venture
Eight Months
Ended
December 31,
1999
------------
Revenues:
Rental income $350,221
--------
Expenses:
Depreciation 133,072
Management and leasing expenses 20,384
Other operating expenses, net of reimbursements 10,868
--------
164,324
--------
Net income $185,897
========
Occupied percentage 100%
========
Partnership's ownership percentage 26.1%
========
Cash distribution to the Partnership $ 81,768
========
Net income allocated to the Partnership $ 53,319
========
On May 18, 1999, Wells Real Estate, LLC-SCI, a Georgia limited liability company
wholly owned by the Wells Fund XI-REIT Joint Venture (which later admitted Wells
Fund XII and changed its name to the Fund XI-XII-REIT Joint Venture), acquired a
manufacturing and office building containing 169,510 square feet located in
Fountain Inn, unincorporated Greenville County, South Carolina, for the purchase
price of $5,085,000, excluding acquisitions costs.
The building is 100% occupied by EYBL CarTex, Inc. with a lease expiration of
February 2008. The monthly base rent payable under the lease is $42,377.50 with
an increase to $45,905.95 in the fifth year, $49,440.42 in the seventh year, and
$50,853.00 in the ninth year. The lease is a triple net lease, whereby the terms
of the lease require the tenant to reimburse the landlord for certain operating
expenses, as defined in the lease, related to the building.
Since the EYBL CarTex Building was purchased in May of 1999, comparable income
and expense figures for the prior year are not available.
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.
-25-
Sprint Building/Fund XI-XII-REIT Joint Venture
Six Months
Ended
December 31,
1999
------------
Revenues:
Rental income $531,993
Expenses: --------
Depreciation 163,553
Management and leasing expenses 18,732
Other operating expenses, net of reimbursements 6,069
--------
188,354
--------
Net income $343,639
========
Occupied percentage 100%
========
Partnership's ownership percentage 26.1%
========
Cash distribution to the Partnership $134,825
========
Net income allocated to the Partnership $ 98,273
========
On July 2, 1999, the Fund XI-XII-REIT Joint Venture acquired a three-story
office building with approximately 68,900 rentable square feet located in
Leawood, Johnson County, Kansas, for a purchase price of $9,546,210.
The entire Sprint Building is currently under a net lease with Sprint and
expires on May 18, 2007. Sprint has the option under its lease to extend the
initial term for two consecutive five-year periods.
The annual base rent payable during the first five years of the initial term is
$999,050 in equal monthly installments of $83,254. The annual base rent during
the last five years of the lease is $1,102,400 in equal monthly installments of
$91,867. Under the lease, Sprint is responsible for all routine maintenance and
repairs. The Fund XI-XII-REIT Joint Venture, as landlord, is responsible for
repair and replacement of the exterior, roof, foundation, and structure.
Since the Sprint Building was purchased in July 1999, comparative income and
expense figures are not available for the prior year.
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.
-26-
Johnson Matthey Building/Fund XI-XII-REIT Joint Venture
Five Months
Ended
December 31,
1999
------------
Revenues:
Rental income $325,368
--------
Expenses:
Depreciation 106,461
Management and leasing expenses 11,846
Other operating expenses, net of reimbursements 4,841
--------
123,148
--------
Net income $202,220
========
Occupied percentage 100%
========
Partnership's ownership percentage 26.1%
========
Cash distribution to the Partnership $ 83,845
========
Net income allocated to the Partnership $ 56,720
========
On August 17, 1999, the Fund XI-XII-REIT Joint Venture acquired a research and
development office and warehouse building containing approximately 130,000
rentable square feet on a ten-acre tract of land located in the Tredyffrin
Township, Chester County, Pennsylvania, for a purchase price of $8,000,000
excluding acquisition costs.
The entire Johnson Matthey Building is currently under a net lease with Johnson
Matthey and was assigned to the Fund XI-XII-REIT Joint Venture at closing. The
lease currently expires in June 2007, and Johnson Matthey has the right to
extend the lease for two additional three-year periods of time.
The monthly base rent payable under the Johnson Matthey lease for the remainder
of the lease term is $65,812.50 through June 30, 2000, $67,437.50 through June
30, 2001, $69,062.50 through June 30, 2002, $71,229.17 through June 30, 2003,
$72,854.17 through June 30, 2006, and $78,270.84 through June 30, 2007.
Under the lease, Johnson Matthey is required to pay as additional rent all real
estate taxes, special assessments, utilities, taxes, insurance, and other
operating costs with respect to the Johnson Matthey Building. In addition,
Johnson Matthey is responsible for all routine maintenance and repairs to the
Johnson Matthey Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
responsible for maintenance of the footings and foundations and the structural
steel columns and girders associated with the building.
Since the Johnson Matthey Building was purchased in August 1999, comparative
income and expense figures are not available for the prior year.
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.
-27-
The Gartner Building/Fund XI-XII-REIT Joint Venture
Four Months
Ended
December 31,
1999
------------
Revenues:
Rental income $235,863
--------
Expenses:
Depreciation 103,496
Management and leasing expenses 8,268
Other operating expenses, net of reimbursements 2,783
--------
114,547
--------
Net income $121,316
========
Occupied percentage 100%
========
Partnership's ownership percentage 26.1%
========
Cash distribution to the Partnership $ 43,904
========
Net income allocated to the Partnership $ 31,722
========
On September 20, 1999, the Fund XI-XII-REIT Joint Venture acquired a two-story
office and building containing approximately 62,400 rentable square feet located
on a 4.9-acre tract of land in Ft. Myers, Florida, for a purchase price of
$8,320,000, excluding acquisition costs.
The entire 62,400 rentable square feet of the Gartner Building is currently
under a net lease agreement with Gartner and was assigned to the Fund XI-XII-
REIT Joint Venture at closing. The lease currently expires on January 31, 2008.
Gartner has the right to extend the lease for two additional five-year periods
of time.
The monthly base rent payable under the Gartner Lease for the remainder of the
lease term is $53,566.50 through January 31, 2000, $65,886.83 through January
31, 2001, $67,534.00 through January 31, 2002, $69,222.35 through January 31,
2003; $70,952.89 through January 31, 2004, $72,726.74 through January 31, 2005,
$74,544.92 through January 31, 2006, $76,408.54 through January 31, 2007, and
$78,318.71 through January 31, 2008.
Under the lease, Gartner is required to pay as additional rent all real estate
taxes, special assessment, utilities, taxes, insurance, and other operating
costs with respect to the Gartner Building during the term of the Gartner Lease.
In addition, Gartner is responsible for all routine maintenance and repairs to
the Gartner Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
responsible for repairs and replacement of the roof, structure, and paved
parking areas.
Since the Gartner Building was purchased in September 1999, comparative income
and expense figures are not available for the prior year.
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.
-28-
Liquidity and Capital Resources
The Partnership commenced active operations on March 3, 1998, when it received
and accepted subscriptions for 125,000 units.
The Partnership terminated its offering on December 30, 1998, the Partnership
raised $16,532,802 in capital through the sale of 1,653,280 units.
After payment of $578,648 in acquisition and advisory fees and expenses, payment
of $2,066,600 in selling commissions and organizational and offering expenses,
the Partnership invested $3,357,436 in Fund IX-X-XI-REIT Joint Venture,
$2,398,767 in the Fund X-XI Joint Venture, and $8,131,351 in the Fund XI-XII-
REIT Joint Venture
The Partnership's net cash provided by (used in) operating activities of $40,906
in 1999 and $50,858 in 1998 is due primarily to equity in income of joint
ventures and interest income earned on funds held by the Partnership prior to
investment in properties. Net cash used in investing activities increased to
$8,300,585 in 1999 up from $5,310,208 in 1998. This was primarily the result of
increased investment in the joint ventures. The net cash used in financing
activities of $1,010,770 in 1999 as compared to $14,653,266 which was provided
by financing activities in 1998 was as a result of the offering being terminated
in 1998, as well as distributions to partners from accumulated earnings which
was greater in 1999.
The Partnership's distributions to holders of Class A status units for the 4th
quarter ended December 31, 1999 were paid in February, 2000. Although there is
no assurance, the Partnership anticipates that distributions will continue to be
paid on a quarterly basis from such sources on a level at least consistent with
1999. No cash distributions were paid to holders of Class B status units in
1999.
The Partnership expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations which the
Partnership believes will continue to be adequate to meet both operating
requirements and distributions to limited partners. At this time, given the
nature of the joint ventures and properties in which the Partnership has
invested, there are no known improvements or renovations to the properties
expected to be funded from cash flow from operations.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
Inflation
Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. These leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, or in some cases, annual reimbursement of operating expenses
above a certain per square foot allowance. These provisions should reduce the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation.
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.
-29-
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.
-30-
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, 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 Wells Capital, Inc.
He is also the President, sole Director and sole shareholder of Wells Real
Estate Investment Funds, Inc., the parent corporation of Wells Capital, Inc.
Mr. Wells is also 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 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.
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999:
(A) (B) (C)
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
- ------------------------------ --------------------------- -------------
Property Manager-Management
Wells Management Company, Inc. and Leasing Fees $45,039(1)
(1) These fees are not paid directly by the Partnership but are paid by
the joint venture entities which owns the various properties with
respect to which the property management and leasing services relate
and include management and leasing fees which were accrued for
accounting purposes in 1999, but not actually paid until January,
2000.
ITEM 11. 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.
-31-
Set forth below is the security ownership of management as of December 31, 1999.
(1) (2) (3) (4)
Title of Class Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
- -------------------- ------------------- --------------------- ----------------
109.22 units (IRA,
Class A status units Leo F. Wells, III 401(k) Plan) Less than 1%
No arrangements exist which would, upon implementation, result in a change in
control of the Partnership.
ITEM 12. 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 status units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A status 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 contributions plus a 15% cumulative
return on their adjusted capital contributions; provided, however, that in no
event shall the General Partners receive in the aggregate in excess of 15% of
net sales 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 did not receive any distributions
from net cash flow from operations or net sales proceeds for the year ended
December 31, 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 lessor of (a) fees that would be paid to a comparable
outside firm or (b) 4.5% of the gross revenues generally paid over the life of
the lease plus a separate competitive fee for the one-time initial lease-up of
newly constructed properties generally paid in conjunction with the receipt of
the first month's rent. In the case of commercial properties which are leased
on a long-term (ten or more years) net basis, the maximum property management
fee from such leases shall be 1% of the gross revenues generally paid over the
life of the leases except for a one-time initial leasing fee of 3% of the gross
revenues on each lease payable over the first five full years of the original
lease term.
Wells Management Company, Inc. accrued $45,039 in cash compensations for the
year ended December 31, 1999.
-32-
Real Estate Commissions
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. During 1999, no real estate
commissions were paid to the General Partners or their affiliates.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
-33-
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-38 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 during 1999.
(c) The exhibits filed in response to Item 601 of Regulation S-K are listed on
the Exhibit Index attached hereto.
(d) See (a) 2 above.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-34-
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 XI, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
---------------------------------------------
Leo F. Wells, III
Individual General Partner and as President and
Chief Financial Officer of Wells Capital, Inc.,
the Corporate General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
Signature Title Date
- ------------------------ ---------------------------------- ---------------
/s/ Leo F. Wells, III
- ------------------------
Leo F. Wells, III Individual General Partner, March 27, 2000
President and Sole Director of
Wells Capital, Inc., the Corporate
General Partner
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
-35-
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- ---------------------------------------------------------------------------------------- ----
Independent Auditors' Report 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
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund XI, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND XI,
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 two 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund XI, L.P.
as of December 31, 1999 and 1998 and the results of its operations and its cash
flows for each of the two 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 XI, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
------------ -------------
INVESTMENT IN JOINT VENTURES $14,093,790 $ 4,997,787
CASH AND CASH EQUIVALENTS 22,351 9,292,800
DEFERRED PROJECT COSTS 0 375,246
ORGANIZATIONAL COSTS, less accumulated amortization of $31,250
and $6,250 in 1999 and 1998, respectively 0 25,000
DUE FROM AFFILIATES 314,099 126,692
ACCOUNTS RECEIVABLE 10,560 26,990
------------ ------------
Total assets $14,440,800 $14,844,515
============ ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Due to affiliate $ 65,000 $ 88,473
Partnership distributions payable 275,737 141,007
Sales commissions payable 0 214,609
------------ ------------
Total liabilities 340,737 444,089
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--1,336,906 units and 1,302,942 units as of
December 31, 1999 and 1998, respectively 11,804,940 11,439,315
Class B--316,374 units and 350,338 units as of
December 31, 1999 and 1998, respectively 2,295,123 2,961,011
Original limited partner 0 100
------------ ------------
Total partners' capital 14,100,063 14,400,426
------------ ------------
Total liabilities and partners' capital $14,440,800 $14,844,515
============ ============
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
------------ ------------
REVENUES:
Equity in income of joint ventures $ 607,579 $ 142,163
Interest income 159,007 120,566
------------ ------------
766,586 262,729
------------ ------------
EXPENSES:
Partnership administration 51,047 46,649
Legal and accounting 51,565 64,052
Amortization of organizational costs 25,000 6,250
Computer costs 8,446 2,483
------------ ------------
136,058 119,434
------------ ------------
NET INCOME $ 630,528 $ 143,295
============ ============
NET LOSS ALLOCATED TO GENERAL PARTNERS $ 0 $ (500)
============ ============
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 1,009,368 $ 254,862
============ ============
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ (378,840) $ (111,067)
============ ============
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.77 $ 0.50
============ ============
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ (1.12) $ (0.77)
============ ============
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED
PARTNER UNIT $ 0.71 $ 0.30
============ ============
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
Limited Partners
-------------------------------------------------
Class A Class B Total
------------------------------------------------- General Partners'
Original Units Amount Units Amount Partner Capital
-------- --------- ----------- ------- ---------- ------- ------------
BALANCE AT, December 31, 1997 $100 0 $ 0 0 $ 0 $ 500 $ 600
Net income (loss) 0 0 254,862 0 (111,067) (500) 143,295
Partnership distributions 0 0 (240,881) 0 0 0 (240,881)
Limited partner contributions 0 1,302,942 13,029,423 350,338 3,503,378 0 16,532,801
Sales commissions and discounts 0 0 (1,237,834) 0 (332,821) 0 (1,570,655)
Other offering expenses 0 0 (366,255) 0 (98,479) 0 (464,734)
-------- --------- ----------- ------- ---------- ------- ------------
BALANCE AT, December 31, 1998 100 1,302,942 11,439,315 350,338 2,961,011 0 14,400,426
Net income (loss) 0 0 1,009,368 0 (378,840) 0 630,528
Partnership distributions 0 0 (930,791) 0 0 0 (930,791)
Class B conversions 0 33,964 287,048 (33,964) (287,048) 0 0
Return of capital (100) 0 0 0 0 0 (100)
-------- --------- ----------- ------- ---------- ------- ------------
BALANCE AT, December 31, 1999 $ 0 1,336,906 $11,804,940 316,374 $2,295,123 $ 0 $14,100,063
======== ========= =========== ======= ========== ======= ============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 630,528 $ 143,295
----------- ------------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Equity in income of joint venture (607,579) (142,163)
Amortization of organizational costs 25,000 6,250
Changes in assets and liabilities:
Accounts receivable 16,430 (26,990)
Due to affiliates (23,473) 0
Organizational costs 0 (31,250)
----------- ------------
Total adjustments (589,622) (194,153)
----------- ------------
Net cash provided by (used in) operating activities 40,906 (50,858)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (9,005,979) (4,881,576)
Distributions received from joint ventures 705,394 102,662
Deferred project costs paid 0 (531,294)
----------- ------------
Net cash used in investing activities (8,300,585) (5,310,208)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Limited partners' contributions 0 16,532,801
Sales commissions and discounts paid (214,609) (1,356,046)
Offering costs paid 0 (423,615)
Distributions to partners in excess of accumulated earnings (10,816) 0
Distributions to partners from accumulated earnings (785,245) (99,874)
Return of capital (100) 0
----------- ------------
Net cash (used in) provided by financing activities (1,010,770) 14,653,266
----------- ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (9,270,449) 9,292,200
CASH AND CASH EQUIVALENTS, beginning of year 9,292,800 600
----------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 22,351 $ 9,292,800
=========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 375,246 $ 203,402
=========== ============
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund XI, L.P. (the "Partnership") is a public limited
partnership organized on June 20, 1996 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners,
L.P., a Georgia nonpublic limited partnership. The Partnership has two
classes of limited partnership units. Upon subscription for units, each
limited partner must elect whether to have their units treated as Class A
units or Class B units. Thereafter, 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 one time during each quarterly accounting
period. 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, (c) remove a
general partner, (d) elect a new general partner, (e) dissolve the
Partnership, and (f) approve a sale of assets, subject to certain
limitations. A majority vote on any of the described matters will bind the
Partnership, without concurrence of the general partners. Each limited
partnership unit has equal voting rights, regardless of class. The
Partnership commenced operations as of March 3, 1998.
The Partnership was formed to acquire and operate commercial real estate
properties, including properties which are either to be developed,
currently under development or construction, newly constructed, or have
operating histories. The Partnership owns an interest in several properties
through a joint venture between the Partnership, Wells Real Estate Fund IX,
L.P. ("Wells Fund IX"), Wells Real Estate Fund X, L.P. ("Wells Fund X"),
and Wells Operating Partnership, L.P. (the "Operating Partnership"), a
Delaware limited partnership having Wells Real Estate Investment Trust,
Inc. ("Wells REIT"), a Maryland corporation, as its general partner, which
is referred to as "Fund IX, X, XI, and REIT Joint Venture." The Partnership
also owns two properties through a joint venture between the Partnership
and Wells Fund X, referred to as "Fund X and XI Associates." In addition,
the Partnership owns an interest in several properties through a joint
venture between the Partnership, Wells Real Estate Fund XII, L.P. ("Wells
Fund XII") and the Operating Partnership, which is referred to as Fund XI,
XII, and REIT Joint Venture.
Through its investment in Fund IX, X, XI, and REIT Joint Venture, the
Partnership owns interests in the following properties: (i) a three-story
office building in Knoxville, Tennessee (the "ABB Building"), (ii) a two-
story office building in Louisville, Colorado (the "Ohmeda Building"),
(iii) a three-story office building in Broomfield, Colorado (the "360
Interlocken Building"), (iv) a one-story warehouse facility in Ogden, Utah
(the "Iomega Corporation Building"), and (v) a one-story office building in
Oklahoma City, Oklahoma (the "Lucent Technologies Building").
F-7
The following properties are owned by Fund X and XI Associates through
investment in joint ventures with the Operating Partnership: (i) a one-
story office and warehouse building in Fountain Valley, California (the
"Cort Building") and (ii) a warehouse and office building in Fremont,
California (the "Fairchild Building").
Through its investment in Fund XI, XII, and REIT Joint Venture, the
Partnership owns interests in the following properties: (i) a two-story
manufacturing and office building in Greenville County, South Carolina (the
"EYBL Cartex Building"), (ii) a three-story office building in Leawood,
Kansas (the "Sprint Building"), (iii) an office and warehouse building on
Chester County, Pennsylvania (the "Johnson Matthay Building"), and (iv) a
two-story office building in Fort Myers, Florida (the "Gartner Building").
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, and an appropriate level of operating expenses in
future years. Management believes that the steps 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.
Distributions of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement,
will be distributed to the limited partners on a quarterly basis. 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 net capital contributions, as defined. Then, such
distributions are paid to the general partners until they have received 10%
of the total amount distributed thus far. Any remaining cash available for
distribution is split 90% to the limited partners holding Class A units and
10% to the general partners. No such distributions will be made to the
limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds will be distributed in the
following order:
. To limited partners holding units which at any time have been
treated as Class B units until they receive an amount necessary to
equal the net cash available for distribution received by the
limited partners holding Class A units
. To limited partners on a per unit basis until each limited partner
has received 100% of their net capital contributions, as defined
F-8
. To all limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital
contributions, as defined
. To limited partners on a per unit basis until they receive an
amount equal to their preferential limited partner return (defined
as the sum of a 10% per annum cumulative return on net capital
contributions for all periods during which the units were treated
as Class A units and a 15% per annum cumulative return on net
capital contributions for all periods during which the units were
treated as Class B units)
. To the general partners until they have received 100% of their
capital contributions, as defined
. Then, if limited partners have received any excess limited partner
distributions (defined as distributions to limited partners over
the life of their investment in the Partnership in excess of their
net capital contributions, as defined, plus their preferential
limited partner return), to the general partners until they have
received distributions equal to 20% of the sum of any such excess
limited partner distributions plus distributions made to the
general partners pursuant to this provision
. Thereafter, 80% to the limited partners on a per unit basis 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 proportion 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 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 the qualified income offset provisions of the
partnership agreement; (b) allocations to partners having negative capital
accounts until all negative capital accounts have been restored to zero; and (c)
allocations to limited partners holding Class B units in amounts equal to the
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, the Partnership's investment in the joint ventures is recorded
using the equity method of accounting.
F-9
Real Estate Assets. Real estate assets held by the joint ventures are
stated at cost less accumulated depreciation. Major improvements and
betterments are capitalized when they extend the useful life of the related
asset. All repair 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 building and improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized over
the life of the related lease or the life of the asset, whichever is
shorter.
Revenue Recognition. All leases on real estate assets 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 agreement. Generally, these items are allocated in proportion
to the partners' respective ownership interests. Cash is paid from the
joint ventures to the Partnership on a quarterly basis.
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 include cash and
short-term investments. Short-term investments are stated at cost, which
approximate 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 and 1998 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 fees and expenses. These payments, as stipulated
by the partnership agreement can be up to 3.5% of the limited partner
contributions, subject to certain overall limitations contained in the
partnership agreement. Aggregate fees paid through December 31, 1999 were
$578,648 and amounted to 3.5% of the limited partners' contributions
received. These fees are allocated to specific properties as they are
purchased or developed and are included in capitalized assets of the joint
ventures.
F-10
3. DEFERRED OFFERING COSTS
Organization and offering expenses, to the extent they exceed 3% of gross
proceeds, will be paid by the Company and not by the Partnership.
Organization and offering expenses do not include sales or underwriting
commissions but do include such costs as legal and accounting fees,
printing costs, and other offering expenses.
As of December 31, 1999, the Company paid organization and offering
expenses on behalf of the Partnership in the aggregate amount of $935,771
of which the Company was reimbursed $495,979, which did not exceed the 3%
limitation. The Company absorbed $390,651 and $49,141 of the remaining
offering and organization expenses which exceeded the 3% limitation during
1999 and 1998, respectively.
4. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 1999 and 1998 represent the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarter of 1999 and 1998:
1999 1998
----------- -----------
Fund IX, X, XI, and REIT Joint Venture $ 76,413 $ 59,692
Fund X and XI Associates 59,768 67,000
Fund XI, XII, and REIT 177,918 0
-------- --------
$314,099 $126,692
======== ========
In December 1999 and 1998, the Partnership received distributions from Fund
IX-X-XI and REIT Joint Venture and Fund X and XI Associates, which are
included in due to affiliate at December 31, 1999 and 1998.
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 and leasing of
the Partnership's properties, the Partnership will pay Wells Management
management and leasing fees equal to the lesser of (a) fees that would be
paid to a comparable outside firm, or (b) 4.5% of the gross revenues
generally paid over the life of the lease plus a separate competitive fee
for the one-time initial lease-up of newly constructed properties generally
paid in conjunction with the receipt of the first month's rent. In the case
of commercial properties which are leased on a long-term net basis (ten or
more years), the maximum property management fee from such leases shall be
1% of the gross revenues generally paid over the life of the leases except
for a one-time initial leasing fee of 3% of the gross revenues on each
lease payable over the first five full years of the original lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $45,039 and $14,281 for the years
ended December 31, 1999 and 1998, respectively, which were paid to Wells
Management.
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.
F-11
The general partners are also general partners in other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
5. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1999 and 1998 are summarized as follows:
1999 1998
------------------------ ----------------------
Amount Percent Amount Percent
------------- ---------- ----------- ----------
Fund IX, X, XI, and REIT Joint Venture $ 3,308,403 9% $2,521,003 7%
Fund X and XI Associates 2,419,535 42 2,476,784 42
Fund XI, XII, and REIT 8,365,852 26 0 0
----------- ----------
$14,093,790 $4,997,787
=========== ==========
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 $ 4,997,787 $ 0
Equity in income of joint ventures 607,579 142,163
Contributions to joint ventures 9,381,187 5,084,978
Distributions from joint ventures (892,763) (229,354)
----------- ----------
Investment in joint ventures, end of year $14,093,790 $4,997,787
=========== ==========
Fund IX, X, XI, and REIT Joint Venture
On March 20, 1997, Wells Fund IX and Wells Fund X entered into a joint
venture agreement. The joint venture, Fund IX and X Associates, was formed
to acquire, develop, operate, and sell real properties. On March 20, 1997,
Wells Fund IX contributed a 5.62-acre tract of real property in Knoxville,
Tennessee, and improvements thereon, known as the ABB Building, to the Fund
IX and X Associates joint venture. A 83,885-square-foot, three-story
building was constructed and commenced operations at the end of 1997.
On February 13, 1998, the joint venture purchased a two-story office
building, known as the Ohmeda Building, in Louisville, Colorado. On March
20, 1998, the joint venture purchased a three-story office building, known
as the 360 Interlocken Building, in Broomfield, Colorado. On April 1, 1998,
Wells Fund X purchased a one-story warehouse facility, known as the Iomega
Corporation Building, in Ogden, Utah. On June 11, 1998, Fund IX and X
Associates was amended and restated to admit the Partnership and the
Operating Partnership. The joint venture was renamed Fund IX, X, XI, and
REIT Joint Venture. On June 24, 1998, the new joint venture purchased a
one-story office building, known as the Lucent Technologies Building, in
Oklahoma City, Oklahoma. On July 1, 1998, Wells Fund X contributed the
Iomega Corporation Building to Fund IX, X, XI, and REIT Joint Venture.
F-12
Following are the financial statements for the Fund IX, X, XI, and REIT Joint
Venture:
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
-------------- --------------
Real estate assets, at cost:
Land $ 6,698,020 $ 6,454,213
Building and improvements, less accumulated depreciation of
$2,792,068 in 1999 and $1,253,156 in 1998 29,878,541 30,686,845
Construction in progress 0 990
----------- -----------
Total real estate assets 36,576,561 37,142,048
Cash and cash equivalents 1,146,874 1,329,457
Accounts receivable 554,965 133,257
Prepaid expenses and other assets 526,409 441,128
----------- -----------
Total assets $38,804,809 $39,045,890
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 704,914 $ 409,737
Due to affiliates 6,379 4,406
Partnership distributions payable 804,734 1,000,127
----------- -----------
Total liabilities 1,516,027 1,414,270
----------- -----------
Partners' capital:
Wells Real Estate Fund IX 14,590,626 14,960,100
Wells Real Estate Fund X 18,000,869 18,707,139
Wells Real Estate Fund XI 3,308,403 2,521,003
Wells Operating Partnership, L.P. 1,388,884 1,443,378
----------- -----------
Total partners' capital 37,288,782 37,631,620
----------- -----------
Total liabilities and partners' capital $38,804,809 $39,045,890
=========== ===========
F-13
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Income (Loss)
for the Years Ended December 31, 1999, 1998, and 1997
1999 1998 1997
------------ ------------ ---------
Revenues:
Rental income $3,932,962 $2,945,980 $ 28,512
Interest income 120,080 20,438 0
---------- ---------- --------
4,053,042 2,966,418 28,512
---------- ---------- --------
Expenses:
Depreciation 1,538,912 1,216,293 36,863
Management and leasing fees 286,139 226,643 1,711
Operating costs, net of reimbursements (43,501) (140,506) 10,118
Property administration expense 63,311 34,821 0
Legal and accounting 35,937 15,351 0
---------- ---------- --------
1,880,798 1,352,602 48,692
---------- ---------- --------
Net income (loss) $2,172,244 $1,613,816 $(20,180)
========== ========== ========
Net income (loss) allocated to Wells Real Estate Fund IX $ 850,072 $ 692,116 $(10,145)
========== ========== ========
Net income (loss) allocated to Wells Real Estate Fund X $1,056,316 $ 787,481 $(10,035)
========== ========== ========
Net income allocated to Wells Real Estate Fund XI $ 184,355 $ 85,352 $ 0
========== ========== ========
Net income allocated to Wells Operating Partnership, L.P. $ 81,501 $ 48,867 $ 0
========== ========== ========
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
Wells Real Wells Real Wells Real Wells Total
Estate Estate Estate Operating Partners'
Fund IX Fund X Fund XI Partnership, L.P. Capital
------------- ------------- ------------ ------------------- -------------
Balance, December 31, 1996 $ 0 $ 0 $ 0 $ 0 $ 0
Net loss (10,145) (10,035) 0 0 (20,180)
Partnership contributions 3,712,938 3,672,838 0 0 7,385,776
----------- ----------- ---------- ---------- -----------
Balance, December 31, 1997 3,702,793 3,662,803 0 0 7,365,596
Net income 692,116 787,481 85,352 48,867 1,613,816
Partnership contributions 11,771,312 15,613,477 2,586,262 1,480,741 31,451,792
Partnership distributions (1,206,121) (1,356,622) (150,611) (86,230) (2,799,584)
----------- ----------- ---------- ---------- -----------
Balance, December 31, 1998 14,960,100 18,707,139 2,521,003 1,443,378 37,631,620
Net income 850,072 1,056,316 184,355 81,501 2,172,244
Partnership contributions 198,989 0 911,027 0 1,110,016
Partnership distributions (1,418,535) (1,762,586) (307,982) (135,995) (3,625,098)
----------- ----------- ---------- ---------- -----------
Balance, December 31, 1999 $14,590,626 $18,000,869 $3,308,403 $1,388,884 $37,288,782
=========== =========== ========== ========== ===========
F-14
The Fund IX, X, XI, and REIT Joint Venture
(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 (loss) $ 2,172,244 $ 1,613,816 $ (20,180)
----------- ------------ -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,538,912 1,216,293 36,863
Changes in assets and liabilities:
Accounts receivable (421,708) (92,745) (40,512)
Prepaid expenses and other assets (85,281) (111,818) (329,310)
Accounts payable 295,177 29,967 379,770
Due to affiliates 1,973 1,927 2,479
----------- ------------ -----------
Total adjustments 1,329,073 1,043,624 49,290
----------- ------------ -----------
Net cash provided by operating activities 3,501,317 2,657,440 29,110
----------- ------------ -----------
Cash flows from investing activities:
Investment in real estate (930,401) (24,788,070) (5,715,847)
----------- ------------ -----------
Cash flows from financing activities:
Distributions to joint venture partners (3,820,491) (1,799,457) 0
Contributions received from partners 1,066,992 24,970,373 5,975,908
----------- ------------ -----------
Net cash (used in) provided by financing activities (2,753,499) 23,170,916 5,975,908
----------- ------------ -----------
Net (decrease) increase in cash and cash equivalents (182,583) 1,040,286 289,171
Cash and cash equivalents, beginning of year 1,329,457 289,171 0
----------- ------------ -----------
Cash and cash equivalents, end of year $ 1,146,874 $ 1,329,457 $ 289,171
=========== ============ ===========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 43,024 $ 1,470,780 $ 318,981
=========== ============ ===========
Contribution of real estate assets to joint venture $ 0 $ 5,010,639 $ 1,090,887
=========== ============ ===========
Fund X and XI Associates
On July 17, 1998, the Partnership and Wells Fund XI entered into a joint venture
agreement. The joint venture, Fund X and XI Associates, was formed to acquire,
develop, operate, and sell real properties. On July 15, 1998, the Operating
Partnership entered into a joint venture agreement with Wells Development
Corporation, referred to as Wells/Fremont Associates. On July 21, 1998,
Wells/Fremont Associates acquired a 58,424-square-foot warehouse and office
building located in Fremont, California, known as the Fairchild Building.
F-15
On October 1998, Fund X and XI Associates acquired Wells Development
Corporation's interest in Wells/Fremont Associates which resulted in Fund X and
XI Associates becoming a joint venture partner with the Operating Partnership in
the ownership of the Fairchild Building.
On July 27, 1998, the Operating Partnership entered into a joint venture
agreement with Wells Development Corporation, referred to as Wells/Orange County
Associates. On July 31, 1998, Wells/Orange County Associates acquired a
52,000-square-foot warehouse and office building located in Fountain Valley,
California, known as the Cort Building.
Fund X and XI Associates acquired Wells Development Corporation's interest in
Wells/Orange County Associates which resulted in Fund X and XI Associates
becoming a joint venture partner with the Operating Partnership in the ownership
of the Cort Building.
Following are the financial statements for Fund X and XI Associates:
Fund X and XI Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
------------ ------------
Investment in joint ventures $5,760,615 $5,896,921
Due from affiliates 142,299 142,120
------------ ------------
Total assets $5,902,914 $6,039,041
============ ============
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 142,299 $ 142,120
------------ ------------
Partners' capital:
Wells Real Estate Fund X 3,341,081 3,420,137
Wells Real Estate Fund XI 2,419,534 2,476,784
------------ ------------
Total partners' capital 5,760,615 5,896,921
------------ ------------
Total liabilities and partners' capital $5,902,914 $6,039,041
============ ============
F-16
Fund X and XI Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999 and 1998
1999 1998
---------- ----------
Equity in income of joint ventures $436,158 $138,885
Expenses 0 0
---------- ----------
Net income $436,158 $138,885
========== ==========
Net income allocated to Wells Real Estate Fund X $252,966 $ 82,074
========== ==========
Net income allocated to Wells Real Estate Fund XI $183,192 $ 56,811
========== ==========
Fund X and XI Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999 and 1998
Wells Real Wells Real Total
Estate Estate Partners'
Fund X Fund XI Capital
---------------- --------------- --------------
Balance, December 31, 1997 $ 0 $ 0 $ 0
Net income 82,074 56,811 138,885
Partnership contributions 3,447,890 2,498,716 5,946,606
Partnership distributions (109,827) (78,743) (188,570)
---------------- --------------- --------------
Balance, December 31, 1998 3,420,137 2,476,784 5,896,921
Net income 252,966 183,192 436,158
Partnership distributions (332,022) (240,442) (572,464)
---------------- --------------- --------------
Balance, December 31, 1999 $3,341,081 $2,419,534 $5,760,615
================ =============== ==============
F-17
Fund X and XI Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999 and 1998
1999 1998
-------------- ---------------
Cash flows from operating activities:
Net income $ 436,158 $ 138,885
Adjustments to reconcile net income to net cash provided by operating
activities:
Equity in income of joint ventures (436,158) (138,885)
-------------- ---------------
Net cash provided by operating activities 0 0
-------------- ---------------
Cash flows from investing activities:
Distributions received from joint ventures 572,285 46,450
Investment in joint ventures 0 (5,695,000)
-------------- ---------------
Net cash provided by (used in) investing activities 572,285 (5,648,550)
-------------- ---------------
Cash flows from financing activities:
Contributions received from partners 0 5,695,000
Distributions to joint venture partners (572,285) (46,450)
-------------- ---------------
Net cash (used in) provided by financing activities (572,285) 5,648,550
-------------- ---------------
Net increase in cash and cash equivalents 0 0
Cash and cash equivalents, beginning of year 0 0
-------------- ---------------
Cash and cash equivalents, end of year $ 0 $ 0
============== ===============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 251,606
============== ===============
Fund X and XI Associates' investment and percentage ownership in joint ventures
at December 31, 1999 and 1998 are summarized as follows:
1999 1998
------------------------ ------------------------
Amount Percent Amount Percent
------------ --------- ------------ ---------
Wells/Orange County Associates $3,732,262 56% $3,816,766 56%
Wells/Fremont Associates 2,028,353 22 2,080,155 22
------------ ------------
$5,760,615 $5,896,921
============ =============
F-18
The following is a rollforward of Fund X and XI Associates' investment in joint
ventures for the years ended December 31, 1999 and 1998:
1999 1998
-------------- -------------
Investment in joint venture, beginning or year $5,896,921 $ 0
Equity in income of joint venture 436,158 138,885
Contributions to joint venture 0 5,946,606
Distributions from joint venture (572,464) (188,570)
-------------- -------------
Investment in joint venture, end of year $5,760,615 $ 5,896,921
============== =============
Following are the financial statements for Wells/Orange County Associates:
Wells/Orange County Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
------------- ------------
Real estate assets, at cost:
Land $2,187,501 $2,187,501
Building, less accumulated depreciation of $278,652 in 1999 and $92,087
in 1998 4,385,463 4,572,028
------------- ------------
Total real estate assets 6,572,964 6,759,529
Cash and cash equivalents 176,666 180,895
Accounts receivable 49,679 13,123
------------- ------------
Total assets $6,799,309 $6,953,547
============= ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 0 $ 1,550
Partnership distributions payable 173,935 176,614
------------- ------------
Total liabilities 173,935 178,164
------------- ------------
Partners' capital:
Wells Operating Partnership, L.P. 2,893,112 2,958,617
Fund X and XI Associates 3,732,262 3,816,766
------------- ------------
Total partners' capital 6,625,374 6,775,383
------------- ------------
Total liabilities and partners' capital $6,799,309 $6,953,547
============= ============
F-19
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999 and 1998
1999 1998
--------- ---------
Revenues:
Rental income $795,545 $331,477
Interest income 0 448
--------- ---------
795,545 331,925
--------- ---------
Expenses:
Depreciation 186,565 92,087
Management and leasing fees 30,360 12,734
Operating costs, net of reimbursements 22,229 2,288
Interest 0 29,472
Legal and accounting 5,439 3,930
--------- ---------
244,593 140,511
--------- ---------
Net income $550,952 $191,414
========= =========
Net income allocated to Wells Operating Partnership, l.p. $240,585 $ 91,978
========= =========
Net income allocated to Fund X and XI Associates $310,367 $ 99,436
========= =========
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999 and 1998
Wells
Operating Fund X Total
Partnership, and XI Partners'
L.P. Associates Capital
------------ ---------- ----------
Balance, December 31, 1997 $ 0 $ 0 $ 0
Net income 91,978 99,436 191,414
Partnership contributions 2,991,074 3,863,272 6,854,346
Partnership distributions (124,435) (145,942) (270,377)
------------ ---------- ----------
Balance, December 31, 1998 2,958,617 3,816,766 6,775,383
Net income 240,585 310,367 550,952
Partnership distributions (306,090) (394,871) (700,961)
------------ ---------- ----------
Balance, December 31, 1999 $2,893,112 $3,732,262 $6,625,374
============ ========== ==========
F-20
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999 and 1998
1999 1998
-------------- ---------------
Cash flows from operating activities:
Net income $550,952 $ 191,414
-------------- ---------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 186,565 92,087
Changes in assets and liabilities:
Accounts receivable (36,556) (13,123)
Accounts payable (1,550) 1,550
-------------- ---------------
Total adjustments 148,459 80,514
-------------- ---------------
Net cash provided by operating activities 699,411 271,928
-------------- ---------------
Cash flows from investing activities:
Investment in real estate 0 (6,563,700)
-------------- ---------------
Cash flows from financing activities:
Issuance of note payable 0 4,875,000
Payment of note payable 0 (4,875,000)
Distributions to partners (703,640) (93,763)
Contributions received from partners 0 6,566,430
-------------- ---------------
Net cash (used in) provided by financing activities (703,640) 6,472,667
-------------- ---------------
Net (decrease) increase in cash and cash equivalents (4,229) 180,895
Cash and cash equivalents, beginning of year 180,895 0
-------------- ---------------
Cash and cash equivalents, end of year $176,666 $ 180,895
============== ===============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 287,916
============== ===============
F-21
Following are the financial statements for Wells/Fremont Associates:
Wells/Fremont Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
Assets
1999 1998
------------ -------------
Real estate assets, at cost:
Land $2,219,251 $2,219,251
Building, less accumulated depreciation of $428,246 in 1999 and
$142,720 in 1998 6,709,912 6,995,439
------------ -------------
Total real estate assets 8,929,163 9,214,690
Cash and cash equivalents 189,012 192,512
Accounts receivable 92,979 34,742
------------ -------------
Total assets $9,211,154 $9,441,944
============ =============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 2,015 $ 3,565
Due to affiliate 5,579 2,052
Partnership distributions payable 186,997 189,490
------------ -------------
Total liabilities 194,591 195,107
------------ -------------
Partners' capital:
Wells Operating Partnership, L.P. 6,988,210 7,166,682
Fund X and XI Associates 2,028,353 2,080,155
------------ -------------
Total partners' capital 9,016,563 9,246,837
------------ -------------
Total liabilities and partners' capital $9,211,154 $9,441,944
============ =============
F-22
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999 and 1998
1999 1998
---------- -----------
Revenues:
Rental income $902,946 $401,058
Interest income 0 3,896
---------- -----------
902,946 404,954
---------- -----------
Expenses:
Depreciation 285,526 142,720
Management and leasing fees 37,355 16,726
Operating costs, net of reimbursements 16,006 3,364
Interest 0 73,919
Legal and accounting 4,885 6,306
---------- -----------
343,772 243,035
---------- -----------
Net income $559,174 $161,919
========== ===========
Net income allocated to Wells Operating Partnership, L.P. $433,383 $122,470
========== ===========
Net income allocated to Fund X and XI Associates $125,791 $ 39,449
========== ===========
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999 and 1998
Wells
Operating Fund X Total
Partnership, and XI Partners'
L.P. Associates Capital
-------------- ------------- -------------
Balance, December 31, 1997 $ 0 $ 0 $ 0
Net income 122,470 39,449 161,919
Partner contributions 7,274,075 2,083,334 9,357,409
Partnership distributions (229,863) (42,628) (272,491)
-------------- ------------- -------------
Balance, December 31, 1998 7,166,682 2,080,155 9,246,837
Net income 433,383 125,791 559,174
Partnership distributions (611,855) (177,593) (789,448)
-------------- ------------- -------------
Balance, December 31, 1999 $6,988,210 $2,028,353 $9,016,563
============== ============ =============
F-23
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999 and 1998
1999 1998
----------- -------------
Cash flows from operating activities:
Net income $559,174 $ 161,919
----------- -------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 285,526 142,720
Changes in assets and liabilities:
Accounts receivable (58,237) (34,742)
Accounts payable (1,550) 3,565
Due to affiliate 3,527 2,052
----------- -------------
Total adjustments 229,266 113,595
----------- -------------
Net cash provided by operating activities 788,440 275,514
----------- -------------
Cash flows from investing activities:
Investment in real estate 0 (8,983,111)
----------- -------------
Cash flows from financing activities:
Issuance of note payable 0 5,960,000
Payment of note payable 0 (5,960,000)
Distributions to partners (791,940) (83,001)
Contributions received from partners 0 8,983,110
----------- -------------
Net cash (used in) provided by financing activities (791,940) 8,900,109
----------- -------------
Net (decrease) increase in cash and cash equivalents (3,500) 192,512
Cash and cash equivalents, beginning of year 192,512 0
----------- -------------
Cash and cash equivalents, end of year $189,012 $ 192,512
=========== =============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 374,299
=========== =============
Fund XI, XII, and REIT Joint Venture
On May 1, 1999, the Partnership entered into a joint venture with Wells Fund XII
and the Operating Partnership. On May 18, 1999, the joint venture purchased a
169,510 square foot, two-story manufacturing and office building, known as EYBL
CarTex, in Fountain Inn, South Carolina. On July 21, 1999, the joint venture
purchased a 68,900 square foot, three-story office building, known as the Sprint
Building, in Leawood, Kansas. On August 17, 1999, the joint venture purchased a
130,000 square foot office and warehouse building, known as the Johnson Matthey
Building, in Chester County Pennsylvania. On September 20, 1999, the joint
venture purchased a 62,400 square foot two-story office building, known as the
Gartner Building, in Fort Myers, Florida.
F-24
Following are the financial statements for the Fund XI, XII, and REIT Joint
Venture:
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheet
December 31, 1999
Assets
Real estate assets, at cost:
Land $ 5,048,797
Building and improvements, less accumulated depreciation of $506,582 26,811,869
---------------
Total real estate assets 31,860,666
Cash and cash equivalents 766,278
Accounts receivable 133,777
Prepaid assets and other expenses 26,486
---------------
Total assets $32,787,207
===============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 112,457
Partnership distributions payable 680,294
----------------
Total liabilities 792,751
----------------
Partners' capital:
Wells Real Estate Fund XI 8,365,852
Wells Real Estate Fund XII 5,467,634
Wells Operating Partnership, L.P. 18,160,970
----------------
Total partners' capital 31,994,456
----------------
Total liabilities and partners' capital $32,787,207
================
F-25
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Income
for the Year Ended December 31, 1999
Revenues:
Rental income $1,443,446
Other income 57
------------
1,443,503
------------
Expenses:
Depreciation 506,582
Management and leasing fees 59,230
Operating costs, net of reimbursements 6,433
Property administration 14,185
Legal and accounting 4,000
------------
590,430
------------
Net income $ 853,073
============
Net income allocated to Wells Real Estate Fund XI $ 240,031
============
Net income allocated to Wells Real Estate Fund XII $ 124,542
============
Net income allocated to Wells Operating Partnership, L.P. $ 488,500
============
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Partners' Capital
for the Year Ended December 31, 1999
Wells
Wells Real Wells Real Operating Total
Estate Estate Partnership, Partners'
Fund XI Fund XII L.P. Capital
------------- ------------ --------------- --------------
Balance, December 31, 1998 $ 0 $ 0 $ 0 $ 0
Net income 240,031 124,542 488,500 853,073
Partnership contributions 8,470,160 5,520,835 18,376,267 32,367,262
Partnership distributions (344,339) (177,743) (703,797) (1,225,879)
------------- ------------ --------------- --------------
Balance, December 31, 1999 $8,365,852 $5,467,634 $18,160,970 $31,994,456
============= ============ =============== ==============
F-26
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Cash Flows
for the Year Ended December 31, 1999
Cash flows from operating activities:
Net income $ 853,073
Adjustments to reconcile net income to net cash provided by operating activities: ---------------
Depreciation 506,582
Changes in assets and liabilities:
Accounts receivable (133,777)
Prepaid expenses and other assets (26,486)
Accounts payable 112,457
---------------
Total adjustments 458,776
---------------
Net cash provided by operating activities 1,311,849
---------------
Cash flows from financing activities:
Distributions to joint venture partners (545,571)
---------------
Net increase in cash and cash equivalents 766,278
Cash and cash equivalents, beginning of year 0
---------------
Cash and cash equivalents, end of year $ 766,278
===============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 1,294,686
===============
Contribution of real estate assets to joint venture $31,072,562
===============
6. Income tax basis net income and partners' capital
The Partnership's income tax basis net income for the years ended December
31, 1999 and 1998 is calculated as follows:
1999 1998
--------- ---------
Financial statement net income $630,528 $143,295
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in excess of amounts
for income tax purposes 135,648 45,158
Expenses deducted for financial reporting purposes, capitalized for income
tax purposes 502 347
Rental income accrued for financial reporting purposes in excess of
amounts for income tax purposes (62,570) (11,108)
--------- ---------
Income tax basis net income $704,108 $177,692
========= =========
F-27
The Partnership's income tax basis partners' capital at December 31, 1999 and
1998 is computed as follows:
1999 1998
------------ ------------
Financial statements partners' capital $14,100,063 $14,400,426
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes in excess of
amounts for income tax purposes 180,806 45,158
Capitalization of syndication costs for income tax purposes, which
are accounted for as cost of capital for financial reporting
purposes 2,035,389 2,035,389
Accumulated rental income accrued for financial reporting purposes
in excess of amounts for income tax purposes (73,678) (11,108)
Accumulated expenses deducted for financial reporting purposes,
capitalized for income tax purposes 849 347
Partnership's distributions payable 275,737 141,007
------------ ------------
Income tax basis partners' capital $16,519,166 $16,611,219
============ ============
7. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interest in the joint ventures under noncancelable operating
leases at December 31, 1999 is as follows:
Year ended December 31:
2000 $1,394,151
2001 1,415,406
2002 1,423,176
2003 1,422,559
2004 1,254,865
Thereafter 2,998,949
-----------
$9,909,106
===========
Two tenants contributed 20% and 13% of rental income. In addition, four
tenants will contribute 21%, 18%, 15%, and 12% of future minimum rental
income.
The future minimum rental income due Fund IX, X, XI, and REIT Joint Venture
under noncancelable operating leases at December 31, 1999 is as follows:
Year ended December 31:
2000 $ 3,666,570
2001 3,595,686
2002 3,179,827
2003 3,239,080
2004 3,048,152
Thereafter 5,181,003
------------
$21,910,318
============
F-28
Four tenants contributed 25%, 18%, 13%, and 12% of rental income for the year
ended December 31, 1999. In addition, four tenants will contribute 28%, 22%,
15%, and 10% of future minimum rental income.
The future minimum rental income due Wells/Orange County Associates under
noncancelable operating leases at December 31, 1999 is as follows:
Year ended December 31:
2000 $ 758,964
2001 809,580
2002 834,888
2003 695,740
------------
$3,099,172
============
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 Wells/Fremont Associates under
noncancelable operating leases at December 31, 1999 is as follows:
Year ended December 31:
2000 $ 869,492
2001 895,577
2002 922,444
2003 950,118
2004 894,833
------------
$4,532,464
============
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 from XI, XII and REIT under noncancelable
operating leases at December 31, 1999 is as follows:
Year ended December 31:
2000 $ 3,085,362
2001 3,135,490
2002 3,273,814
2003 3,367,231
2004 3,440,259
Thereafter 9,708,895
-------------
$26,011,051
=============
Four tenants contributed approximately 34%, 22%, 22%, and 12% of rental income
for the year ended December 31, 1999. In addition, four tenants will contribute
approximately 30%, 27%, 22%, and 18% of future minimum rental income.
F-29
8. 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 $160,499 $172,481 $ 218,150 $ 215,456
Net income 125,995 136,013 187,312 181,208
Net income allocated to Class A limited
partners 174,372 199,995 313,127 321,874
Net loss allocated to Class B limited partners (48,377) (63,983) (125,815) (140,665)
Net income per weighted average Class A
limited partner unit outstanding (a) $ 0.13 $ 0.15 $ 0.24 $ 0.24
Net loss per weighted average Class B limited
partner unit outstanding (a) (0.14) (0.19) (0.37) (0.45)
Cash distribution per weighted average
Class A limited partner unit outstanding 0.15 0.15 0.20 0.21
(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.
1998 Quarters Ended
-----------------------------------------------------
March 31 June 30 September 30 December 31
---------- ---------- -------------- -------------
Revenues $7,005 $81,604 $38,448 $135,672
Net income 4,681 46,011 18,563 74,040
Net loss allocated to general partners 0 (75) (381) (44)
Net income allocated to Class A limited partners 4,681 53,266 56,719 140,196
Net loss allocated to Class B limited partners 0 (7,180) (37,775) (66,112)
Net income per weighted average Class A limited
partner unit $0.04 $0.18 $0.14 $0.33
Net loss per weighted average Class B limited
partner unit 0.00 (0.10) (0.43) (0.75)
Cash distribution per weighted average Class A
limited partner unit 0.00 0.00 0.15 0.15
9. 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-30
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund IX, L.P.,
Wells Real Estate Fund X, L.P.,
Wells Real Estate Fund XI, L.P., and
Wells Real Estate Investment
Trust, Inc.:
We have audited the accompanying balance sheets of THE OHMEDA BUILDING as of
December 31, 1999 and 1998 and the related statements of income, partners'
capital, and cash flows for the year ended December 31, 1999 and for the period
from inception (February 13, 1998) to December 31, 1998. 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 Ohmeda Building as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for the year ended December 31, 1999 and for the period from inception (February
13, 1998) to December 31, 1998 in conformity with accounting principles
generally accepted in the United States.
Atlanta, Georgia
January 20, 2000
F-31
THE OHMEDA BUILDING
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
------------- -------------
REAL ESTATE ASSETS:
Land $ 2,746,894 $ 2,746,894
Building and improvements, less accumulated depreciation of
$625,416 in 1999 and $299,112 in 1998 7,532,186 7,858,490
----------- -----------
Total real estate assets 10,279,080 10,605,384
CASH AND CASH EQUIVALENTS 902,987 983,061
ACCOUNTS RECEIVABLE 198,583 13,969
----------- -----------
Total assets $11,380,650 $11,602,414
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 249,707 $ 157,691
Distributions payable to partners 815,107 825,380
----------- -----------
Total liabilities 1,064,814 983,071
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' CAPITAL:
Wells Real Estate Fund IX, L.P. 3,401,108 3,519,869
Wells Real Estate Fund X, L.P. 6,971,508 7,119,063
Wells Real Estate Fund XI, L.P. (38,262) (12,456)
Wells Real Estate Investment Trust, Inc. (18,518) (7,133)
----------- -----------
Total partners' capital 10,315,836 10,619,343
----------- -----------
Total liabilities and partners' capital $11,380,650 $11,602,414
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-32
THE OHMEDA BUILDING
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE PERIOD FROM INCEPTION
(FEBRUARY 13, 1998) TO DECEMBER 31, 1998
1999 1998
------------ ----------
REVENUES:
Rental income $1,027,314 $898,901
------------ ----------
EXPENSES:
Depreciation 326,304 299,112
Operating costs, net of reimbursements (18,633) 663
Management and leasing fees 46,911 41,688
Legal and accounting 3,450 2,200
------------ ----------
358,032 343,663
------------ ----------
NET INCOME $ 669,282 $555,238
============ ==========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND IX, L.P. $ 261,867 $243,597
============ ==========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND X, L.P. $ 325,357 $271,294
============ ==========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND XI, L.P. $ 56,955 $ 25,656
============ ==========
NET INCOME ALLOCATED TO WELLS REAL ESTATE INVESTMENT TRUST, INC. $ 25,103 $ 14,691
============ ==========
The accompanying notes are an integral part of these statements.
F-33
THE OHMEDA BUILDING
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE PERIOD FROM INCEPTION
(FEBRUARY 13, 1998) TO DECEMBER 31, 1998
Wells Real
Wells Real Wells Real Wells Real Estate Total
Estate Estate Estate Investment Partners'
Fund IX, L.P. Fund X, L.P. Fund XI, L.P. Trust, Inc. Capital
--------------- -------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1997 $ 0 $ 0 $ 0 $ 0 $ 0
Contributions 3,636,662 7,252,823 0 0 10,889,485
Net income 243,597 271,294 25,656 14,691 555,238
Distributions (360,390) (405,054) (38,112) (21,824) (825,380)
--------------- -------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1998 3,519,869 7,119,063 (12,456) (7,133) 10,619,343
Net income 261,867 325,357 56,955 25,103 669,282
Distributions (380,628) (472,912) (82,761) (36,488) (972,789)
--------------- -------------- --------------- ------------- -------------
BALANCE, DECEMBER 31, 1999 $3,401,108 $6,971,508 $(38,262) $(18,518) $10,315,836
=============== ============== =============== ============= =============
The accompanying notes are an integral part of these statements.
F-34
THE OHMEDA BUILDING
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
FOR THE PERIOD FROM INCEPTION
(FEBRUARY 13, 1998) TO DECEMBER 31, 1998
1999 1998
------------ ------------
Cash flows from operating activities:
Net income $669,282 $ 555,238
------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 326,304 299,112
Changes in assets and liabilities:
Accounts receivable (184,614) (13,969)
Accounts payable and accrued expenses 92,016 157,691
------------ ------------
Total adjustments 233,706 442,834
------------ ------------
Net cash provided by operating activities 902,988 998,072
------------ ------------
Cash flows from investing activities:
Investment in real estate 0 (10,904,496)
------------ ------------
cash flows from financing activities:
Contributions received from partners 0 10,889,485
Distributions paid to partners (983,062) 0
------------ ------------
Net cash (used in) provided by financing activities (983,062) 10,889,485
------------ ------------
net (decrease) increase in cash and cash equivalents (80,074) 983,061
cash and cash equivalents, beginning of period 983,061 0
------------ ------------
cash and cash equivalents, end of period $902,987 $ 983,061
============ ============
The accompanying notes are an integral part of this statement.
F-35
THE OHMEDA BUILDING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Ohmeda Building ("Ohmeda") is a two-story office building located in
Louisville, Colorado. The building is owned by Fund IX, X, XI, and REIT
Associates, a joint venture between Wells Real Estate Fund IX, L.P. ("Fund
IX"), Wells Real Estate Fund X, L.P. ("Fund X"), Wells Real Estate Fund XI,
L.P. ("Fund XI"), and Wells Real Estate Investment Trust, Inc. ("REIT"). As
of December 31, 1999, Fund IX, Fund X, Fund XI, and REIT owned 39%, 48%,
9%, and 4% of Ohmeda, respectively. 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
Ohmeda 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 Ohmeda as of December 31,
1999.
Depreciation is calculated using the straight-line method over 25 years.
F-36
Revenue Recognition
The lease on Ohmeda is classified as an operating lease, and the related
rental income is recognized on a straight-line basis over the term of the
lease.
Cash and Cash Equivalents
For the purpose of the statements of cash flow, Ohmeda 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.
2. RENTAL INCOME
The future minimum rental income due Ohmeda under noncancelable operating
leases at December 31, 1999 is as follows:
Year ending December 31:
2000 $1,004,517
2001 1,004,517
2002 1,004,517
2003 1,050,509
2004 1,102,639
Thereafter 92,250
--------------
$5,258,949
==============
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 IX, Fund X, Fund XI, and REIT Associates entered into a property
management agreement with Wells Management Company, Inc. ("Wells
Management"), an affiliate of Fund IX, Fund X, Fund XI, and REIT
Associates. In consideration for supervising management of the property,
Fund IX, Fund X, Fund XI, and REIT 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.
Ohmeda incurred management and leasing fees of $46,911 and $41,688 for the
years ended December 31, 1999 and 1998, respectively, which were paid to
Wells Management.
F-37
4. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against Ohmeda or its partners. In the
normal course of business, Ohmeda or its partners may become subject to
such litigation or claims.
F-38
Wells Real Estate Fund XI, 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
- --------------------------- --------- ------------ ------------- --------------- ---------------
ABB PROPERTY (a) 8.8% None $ 582,897 $ 744,164 $ 6,616,885
LUCENT TECHNOLOGIES (b) 8.8 None 1,002,723 4,386,374 242,241
360 INTERLOCKEN (c) 8.8 None 1,570,000 6,733,500 437,266
IOMEGA PROPERTY (d) 8.8 None 597,000 4,674,624 876,459
OHMEDA PROPERTY (e) 8.8 None 2,613,600 7,762,481 528,415
FAIRCHILD PROPERTY (f) 11 None 2,130,480 6,852,630 374,300
ORANGE COUNTY PROPERTY (g) 21 None 2,100,000 4,463,700 287,916
EYBL CARTEX PROPERTY (h) 26 None 330,000 4,791,828 211,962
SPRINT BUILDING (i) 26 None 1,696,000 7,850,726 397,783
JOHNSON MATTHEY (j) 26 None 1,925,000 6,131,392 335,686
GARTNER PROPERTY (k) 26 None 895,844 7,451,760 347,820
------------- ------------- ------------
Total $15,443,544 $61,843,179 $10,656,733
============= ============= ============
Gross Amount at Which Carried at December 31, 1999
-------------------------------------------------------------------
Buildings and Construction
DESCRIPTION Land Improvements in Progress Total
- --------------------------------- ------------- ------------- ------------ ------------
ABB PROPERTY (a) $ 607,930 $ 7,336,016 $0 $ 7,943,946
LUCENT TECHNOLOGIES (b) 1,051,138 4,580,200 0 5,631,338
360 INTERLOCKEN (c) 1,650,070 7,090,696 0 8,740,766
IOMEGA PROPERTY (d) 641,988 5,506,095 0 6,148,083
OHMEDA PROPERTY (e) 2,746,894 8,157,602 0 10,904,496
FAIRCHILD PROPERTY (f) 2,219,251 7,138,159 0 9,357,410
ORANGE COUNTY PROPERTY (g) 2,187,501 4,664,115 0 6,851,616
EYBL CARTEX PROPERTY (h) 343,750 4,990,040 0 5,333,790
SPRINT BUILDING (i) 1,766,667 8,177,842 0 9,944,509
JOHNSON MATTHEY (j) 2,005,209 6,386,868 0 8,392,077
GARTNER PROPERTY (k) 933,171 7,762,253 0 8,695,424
------------- ------------ ------------ ------------
Total $16,153,569 $71,789,886 $0 $87,943,455
============= ============ ============ ============
Life on Which
Accumulated Date of Date Depreciation
DESCRIPTION Depreciation Construction Acquired Is Computed (j)
- ------------------------------ ------------ ------------ --------- ---------------
ABB PROPERTY (a) $1,049,682 1998 12/10/96 20 to 25 years
LUCENT TECHNOLOGIES (b) 290,075 1998 6/24/98 20 to 25 years
360 INTERLOCKEN (c) 524,979 1996 3/20/98 20 to 25 years
IOMEGA PROPERTY (d) 301,196 1998 7/01/98 20 to 25 years
OHMEDA PROPERTY (e) 625,416 1998 2/13/98 20 to 25 years
FAIRCHILD PROPERTY (f) 428,246 1998 7/21/98 20 to 25 years
ORANGE COUNTY PROPERTY (g) 278,652 1998 7/31/98 20 to 25 years
EYBL CARTEX PROPERTY (h) 133,072 1998 5/18/99 20 to 25 years
SPRINT BUILDING (i) 163,553 1998 7/2/99 20 to 25 years
JOHNSON MATTHEY (j) 106,461 1973 8/17/99 20 to 25 years
GARTNER PROPERTY (k) 103,496 1998 9/20/99 20 to 25 years
----------
Total $4,004,828
==========
(a) The ABB Property is a 5.6-acre tract of real property under
construction in Knoxville, Tennessee. It is owned by Fund
IX-X-XI-REIT.
(b) The Lucent Technologies property consists of a one-story office
building located in Oklahoma City, Oklahoma. It is owned by Fund
IX-X-XI-REIT Joint Venture.
(c) The 360 Interlocken property consists of a three-story multi-
tenant office building located in Broomfield, Colorado. It is
owned by Fund IX-X-XI-REIT Joint Venture.
(d) The Iomega Property consists of a one-story warehouse and office
building located in Ogden, Utah. It is owned by Fund IX-X-XI-REIT
Joint Venture.
(e) The Ohmeda Property consists of a two-story office building
located in Louisville, Colorado. It is owned by Fund IX-X-XI-REIT
Joint Venture.
(f) The Fairchild Property consists of a two-story warehouse and
office building located in Fremont, California. It is owned by
Wells/Freemont Associates.
(g) The Orange County Property consists of a one-story warehouse and
office building located in Fountain Valley, California. It is
owned by Wells/Orange County Associates.
(h) The EYBL CarTex property consists of a one-story manufacturing
and office building located in Fountain Inn, South Carolina. It
is owned by Fund XI-XII-REIT Joint Venture.
(i) The Sprint Building consists of a three-story office building
located in Leawood Kansas. It is owned by Fund XI-XII-REIT Joint
Venture
(j) The Johnson Matthey Property consists of a one-story research and
development office and warehouse building located in Chester
County Pennsylvania. It is owned by Fund XI-XII-REIT Joint
Venture.
(k) The Gartner Property consists of a two-story office building
located in Ft. Myers, Florida. It is owned by Fund XI-XII-REIT
Joint Venture.
(l) Depreciation lives used for buildings are 25 years. Depreciation
lives used for land improvements are 20 years.
S-1
WELLS REAL ESTATE FUND XI, 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, 1997 $ 0 $ 0
1998 additions 54,604,231 1,487,963
----------- ----------
BALANCE AT DECEMBER 31, 1998 54,604,231 1,487,963
1999 additions 33,339,224 2,516,865
----------- ----------
BALANCE AT DECEMBER 31, 1999 $87,943,455 $4,004,828
=========== ==========
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund XI, 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
Number Description of Document
- ------ -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real
Estate Fund XI, L.P. (Exhibit 3(a) to Form S-11 Registration Statement
of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.,
as amended to date, Commission File No. 333-7979)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund XI, L.P.
(Exhibit 3(c) to Form S-11 Registration Statement of Wells Real Estate
Fund X, L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
Commission File No. 333-7979)
*10(a) Leasing and Tenant Coordinating Agreement with Wells Management
Company, Inc. (Exhibit 10(d) to Form S-11 Registration Statement of
Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
amended to date, Commission File No. 333-7979)
*10(b) Management Agreement with Wells Management Company, Inc. (Exhibit
10(e) to Form S-11 Registration Statement of Wells Real Estate Fund X,
L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
Commission File No. 333-7979)
*10(c) Custodial Agency Agreement with The Bank of New York (Exhibit 10(f) to
Form S-11 Registration Statement of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P., as amended to date, Commission File
No. 333-7979)
*10(d) Joint Venture Agreement of Fund IX and Fund X Associates dated March
20, 1997 (Exhibit 10(g) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund X, L.P. and Wells
Real Estate Fund XI, L.P., as amended to date, Commission File No.
333-7979)
*10(e) Lease Agreement for the ABB Building dated December 10, 1996, between
Wells Real Estate Fund IX, L.P. and ABB Flakt, Inc. (Exhibit 10(kk) to
Post-Effective Amendment No. 13 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
as amended to date, Commission File No. 33-83852)
*10(f) Development Agreement relating to the ABB Building dated December 10,
1996, between Wells Real Estate Fund IX, L.P. and ADEVCO Corporation
(Exhibit 10(ll) to Post-Effective Amendment No. 13 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-
83852)
*10(g) Owner-Contractor Agreement relating to the ABB Building dated November
1, 1996, between Wells Real Estate Fund IX, L.P. and Integra
Construction, Inc. (Exhibit 10(mm) to Post-Effective Amendment No. 13
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(h) Agreement for the Purchase and Sale of Real Property relating to the
Lucent Technologies Building dated May 30, 1997, between Fund IX and
Fund X Associates and Wells Development Corporation (Exhibit 10(k) to
Post-Effective Amendment No. 2 to Form S-11 Registration Statement of
Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
amended to date, Commission File No. 333-7979)
*10(i) Net Lease Agreement for the Lucent Technologies Building dated May 30,
1997 (Exhibit 10(l) to Post-Effective Amendment No. 2 to Form S-11
Registration Statement of Wells Real Estate Fund X, L.P. and Wells
Real Estate Fund XI, L.P., as amended to date, Commission File No.
333-7979)
*10(j) Development Agreement relating to the Lucent Technologies Building
dated May 30, 1997, between Wells Development Corporation and ADEVCO
Corporation (Exhibit 10(m) to Post-Effective Amendment No. 2 to Form
S-11 Registration Statement of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P., as amended to date, Commission File
No. 333-7979)
*10(k) First Amendment to Net Lease Agreement for the Lucent Technologies
Building dated March 30, 1998 (Exhibit 10.10(a) to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)
*10(l) Amended and Restated Joint Venture Agreement of The Fund IX, Fund X,
Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint Venture")
dated July 11, 1998 (Exhibit 10.4 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10(m) Agreement for the Purchase and Sale of Real Property relating to the
Ohmeda Building dated November 14, 1997 between Lincor Centennial,
Ltd. and Wells Real Estate Fund X, L.P. (Exhibit 10.6 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)
*10(n) Agreement for the Purchase and Sale of Property relating to the 360
Interlocken Building dated February 11, 1998 between Orix Prime West
Broomfield Venture and Wells Development Corporation (Exhibit 10.7 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(o) Purchase and Sale Agreement relating to the Iomega Building dated
February 4, 1998 with SCI Development Services Incorporated (Exhibit
10.11 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No. 333-
32099)
*10(p) Lease Agreement for the Iomega Building dated April 9, 1996 (Exhibit
10.12 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No. 333-
32099)
*10(q) Agreement for the Purchase and Sale of Property relating to the
Fairchild Building dated June 8, 1998 (Exhibit 10.13 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)
*10(r) Restatement of and First Amendment to Agreement for the Purchase and
Sale of Property relating to the Fairchild Building dated July 1, 1998
(Exhibit 10.14 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(s) Joint Venture Agreement of Wells/Fremont Associates (the "Fremont
Joint Venture") dated July 15, 1998 between Wells Development
Corporation and Wells Operating Partnership, L.P. (Exhibit 10.17 to
Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(t) Joint Venture Agreement of Fund X and Fund XI Associates dated July
15, 1998 (Exhibit 10.18 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10(u) Agreement for the Purchase and Sale of Joint Venture Interest relating
to the Fremont Joint Venture dated July 17, 1998 between Wells
Development Corporation and Fund X and Fund XI Associates (Exhibit
10.19 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No. 333-
32099)
*10(v) Lease Agreement for the Fairchild Building dated September 19, 1997
between the Fremont Joint Venture (as successor in interest by
assignment) and Fairchild Technologies USA, Inc. (Exhibit 10.20 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(w) First Amendment to Joint Venture Agreement of Wells/Fremont Associates
dated October 8, 1998 (Exhibit 10(w) to Form 10-K of Wells Real Estate
Fund X, L.P. for the fiscal year ended December 31, 1998, Commission
File No. 0-23719)
*10(x) Purchase and Sale Agreement and Joint Escrow Instructions relating to
the Cort Furniture Building dated June 12, 1998 between the Cort Joint
Venture (as successor in interest by assignment) and Spencer Fountain
Valley Holdings, Inc. (Exhibit 10.21 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended to
date, Commission File No. 333-32099)
*10(y) First Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions relating to the Cort Furniture Building dated July 16,
1998 between the Cort Joint Venture (as successor in interest by
assignment) and Spencer Fountain Valley Holdings, Inc. (Exhibit 10.22
to Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(z) Joint Venture Agreement of Wells/Orange County Associates (the "Cort
Joint Venture") dated July 27, 1998 between Wells Development
Corporation and Wells Operating Partnership, L.P. (Exhibit 10.25 to
Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(aa) Agreement for the Purchase and Sale of Joint Venture Interest relating
to the Cort Joint Venture dated July 30, 1998 between Wells
Development Corporation and Fund X and Fund XI Associates (Exhibit
10.26 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No. 333-
32099)
*10(bb) First Amendment to Joint Venture Agreement of Wells/Orange County
Associates dated September 1, 1998 (Exhibit 10(dd) to Form 10-K of
Wells Real Estate Fund X, L.P. for the fiscal year ended December 31,
1998, Commission File No. 0-23719)
*10(cc) Temporary Lease Agreement for remainder of the ABB Building dated
September 10, 1998 between the IX-X-XI-REIT Joint Venture and
Associates Housing Finance, LLC (Exhibit 10.35 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)
*10(dd) Amended and Restated Joint Venture Partnership Agreement of The Wells
Fund XI - Fund XII - REIT Joint Venture (Exhibit 10.29 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-83933)
*10(ee) Agreement of Sale and Purchase relating to the EYBL CarTex Building
(Exhibit 10.54 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(ff) Agreement of Purchase and Sale for the Sprint Building (Exhibit 10.5
to Form S-11 Registration Statement of Wells Real Estate Fund XII,
L.P., as amended to date, Commission File No. 33-66657)
*10(gg) Agreement of Sale and Purchase for the Johnson Matthey Building
(Exhibit 10.6 to Form S-11 Registration Statement of Wells Real Estate
Fund XII, L.P., as amended to date, Commission File No. 33-66657)
*10(hh) Fifth Amendment to Lease for the Johnson Matthey Building (Exhibit
10.7 to Form S-11 Registration Statement of Wells Real Estate Fund
XII, L.P., as amended to date, Commission File No. 33-66657)
*10(ii) Agreement of Purchase and Sale relating to the Gartner Building
(Exhibit 10.63 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission File No.
333-32009)
*10(jj) Lease Agreement for the Gartner Building (Exhibit 10.64 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)