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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, 2000 or
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[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from ________________________ to _____________________
Commission file number 0-23656
Wells Real Estate Fund VI, L. P
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(Exact name of registrant as specified in its charter)
Georgia 58-2022628
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Suite 250
Norcross, Georgia 30092
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(Address of Principal executive offices) (Zip code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12(b)
of the Act:
Title of each class Name of exchange on which registered
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None None
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Securities registered pursuant to Section 12(g) of the Act:
Class A Unit
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(Title of Class)
Class B Unit
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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 non-affiliates:
Not Applicable
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PART I
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ITEM 1. BUSINESS.
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General
Wells Real Estate Fund VI, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia
non-public limited partnership, as General Partners. The Partnership was formed
on December 1, 1992, for the purpose of acquiring, developing, constructing,
owning, operating, improving, leasing and otherwise managing for investment
purposes income-producing commercial or industrial properties.
On April 5, 1993, the Partnership commenced a public offering of its limited
partnership units pursuant to a Registration Statement filed on Form S-11 under
the Securities Act of 1933. The Partnership terminated its offering on April 4,
1994, and received gross proceeds of $25,000,000 representing subscriptions from
2,500,000 Limited Partners units, composed of two classes of limited partnership
interests, Class A and Class B limited partnership units.
The Partnership owns interests in properties through its equity ownership in the
following joint ventures: Fund V and Fund VI Associates, a joint venture between
the Partnership and Wells Real Estate Fund V, L.P. ( the "Fund V - Fund VI Joint
Venture"); (ii) Fund V, Fund VI, and Fund VII Associates, a joint venture
between the Partnership, Wells Real Estate Fund V, L.P. and Wells Real Estate
Fund VII, L.P. (the "Fund V-VI-VII Joint Venture"); (iii) Fund VI and Fund VII
Associates, a joint venture between the Partnership and Wells Real Estate Fund
VII, L.P. (the "Fund VI-VII Joint Venture"); (iv) Fund II, Fund III, Fund VI and
Fund VII Associates, a joint venture between the Partnership, Fund II and Fund
III Associates, and Wells Real Estate Fund VII, L.P., (the "Fund II,III,VI,VII
Joint Venture"); (v) Fund VI, Fund VII and Fund VIII Associates, a joint venture
between the Partnership, Wells Real Estate Fund VII, L.P. and Wells Real Estate
Fund VIII, L.P. (the "Fund VI,VII,VIII Joint Venture"); and (vi) Fund I, II,
II-OW, VI, VII Associates, a joint venture between the Partnership, Wells Real
Estate Fund I, Wells Real Estate Fund II, Wells Real Estate Fund II-OW, and
Wells Real Estate Fund VII, L.P. (the "Fund I,II,II-OW,VI,VII Joint Venture").
As of December 31, 2000, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a four
story office building located in Hartford, Connecticut (the "Hartford Building")
and (ii) two retail buildings located in Clayton County, Georgia (the
"Stockbridge Village II") which are owned by the Fund V - Fund VI Joint Venture;
(iii) a three-story office building located in Appleton Wisconsin (the "Marathon
Building") which is owned by the Fund V-VI-VII Joint Venture; (iv) two retail
buildings located in Clayton County, Georgia (the "Stockbridge Village III")
which are owned by the Fund VI - Fund VII Joint Venture; (v) a shopping center
expansion located in Clayton County, Georgia (the "Stockbridge Village I
Expansion") which is owned by the Fund VI - Fund VII Joint Venture; (vi) an
office/retail center located in Roswell, Georgia (the "Holcomb Bridge Road
Project") which is owned by the Fund II-III-VI-VII Joint Venture; (vii) a four
story office building located in Jacksonville, Florida (the "BellSouth
Property") which is owned by the Fund VI, VII, VIII Joint Venture; (viii) a
shopping center located in Clemmons, North
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Carolina (the "Tanglewood Commons") which is owned by the Fund VI, VII, VIII
Joint Venture; and (ix) a retail shopping center located in Cherokee County,
Georgia (the "Cherokee Commons") which is owned by the Fund I-II-II-OW-VI-VII
Joint Venture. All of the foregoing properties were acquired on an all cash
basis.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
the sole General Partner of Wells Partners, L.P., a General Partner of the
Partnership, perform a full range of real estate services including leasing and
property management, accounting, asset management and investor relations for the
Partnership. See item 11 - "Compensation of General Partners and Affiliates" for
a summary of the compensation and fees paid to the General Partners and their
affiliates during the fiscal year ended December 31, 2000.
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management of
the registrant, the properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES.
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The Partnership owns interests in nine properties through its investment in
joint ventures of which three are office buildings and six are retail buildings.
The Partnership does not have control over the operations of the joint ventures,
however, it does exercise significant influence. Accordingly, investment in
joint ventures is recorded on the equity method. As of December 31, 2000, these
properties were 99% occupied, as compared to 98% as of December 31, 1999 and 95%
as of December 31, 1998.
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 2000, assuming no exercise of renewal options
or termination rights:
3
Partnerships
Year of Number of Annualized Share of Percentage of Percentage of
Lease Leases Square Base Annualized Total Square Total Annualized
Expiration Expiring Feet Expiring Rent(1) Gross Base Rent Feet Expiring Base Rent
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2001 12 42,294 667,105 205,364 10.6% 11.7%
2002 26 49,914 823,793 255,576 12.5% 14.4%
2003 (2) 16 95,924 1,071,308 502,026 24.1% 18.8%
2004 7 25,428 403,864 139,151 6.4% 7.1%
2005 7 20,682 311,232 124,859 5.2% 5.5%
2006 (3) 5 160,328 2,385,422 903,257 40.3% 41.7%
2007 1 3,600 46,793 5,007 0.9% 0.8%
2008 0 0 0 0 0.0% 0.0%
2009 0 0 0 0 0.0% 0.0%
2010 0 0 0 0 0.0% 0.0%
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74 398,170 $5,709,517 $2,135,240 100.0% 100.0%
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of Hartford Fire Insurance Company lease of 71,000 square feet.
(3) Expiration of Marathon lease of 76,000 square feet and BellSouth lease of
69,424 square feet.
The following describes the properties in which the Partnership owns an interest
as of December 31, 2000:
Fund V - Fund VI Joint Venture
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On December 27, 1993, the Partnership and Wells Real Estate Fund V, L.P. ("Wells
Fund V"), a Georgia public limited partnership affiliated with the Partnership
through common general partners, entered into a joint venture agreement known as
Fund V and Fund VI Associates (the "Fund V - Fund VI Joint Venture"). The
investment objectives of Wells Fund V are substantially identical to those of
the Partnership. As of December 31, 2000, the Partnership had contributed
approximately $5,329,541, and Wells Fund V had contributed approximately
$4,544,601 to the Fund V - Fund VI Joint Venture. The Partnership holds an
approximately 54% equity interest, and Wells Fund V currently holds an
approximately 46% equity interest in the Fund V - Fund VI Joint Venture. The
Partnership owns interests in the following two properties through the Fund V -
Fund VI Joint Venture:
4
The Hartford Building
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On December 29, 1993, the Fund V - Fund VI Joint Venture purchased the Hartford
Building, a four-story office building containing approximately 71,000 rentable
square feet from Hartford Accident and Indemnity Company for a purchase price of
$6,900,000. The Hartford Building is located on 5.56 acres of land in
Southington, Hartford County, Connecticut. The funds used by the Fund V - Fund
VI Joint Venture to acquire the Hartford Building were derived from capital
contributions made by the Partnership and Wells Fund V totaling $3,432,707 and
$3,508,797, respectively, for total capital contributions to the Fund V - Fund
VI Joint Venture of $6,941,504.
The entire building is leased to Hartford Fire Insurance Company for a period of
nine years and eleven months commencing on December 29, 1993. The annual base
rent during the initial term is $458,400 payable in equal monthly installments
of $38,200 for the first three months, and $724,200 payable in equal monthly
installments of $60,350 commencing April 1, 1994 and continuing through the
expiration of the initial term of the lease under the terms of its lease.
Hartford also has the option to extend the initial term of the lease for two
consecutive five year periods. Under the terms of its lease, Hartford is
responsible for property taxes, operating expenses, general repair and
maintenance work and a pro rata share of capital expenditures based upon the
number of years remaining in the lease.
The occupancy rate at the Hartford Building was 100% as of years ended December
31 2000, 1999 and 1998. The average effective annual rental per square foot at
the Hartford Building is $10.11 for 2000, 1999, 1998, 1997 and 1996.
Stockbridge Village II
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On November 12, 1993, Wells Fund V purchased 2.46 acres of real property located
in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells Fund V
contributed the property as capital contribution to the Fund V - Fund VI Joint
Venture.
Construction of a 5,400 square foot retail building was completed in November,
1994. A second retail building containing approximately 10,423 square feet was
completed in June, 1995. The entire first building was leased by Apple
Restaurants, Inc. for nine years and eleven months beginning in December 9,
1994. The annual base rent under the lease is $125,982 until December 15, 1999,
at which time the annual base rent increased to $137,700.
The total construction cost of the second building in Stockbridge Village II was
approximately $2,933,000. As of December 31, 2000, the Partnership contributed
$1,896,834, and Wells Fund V contributed $1,035,804 to the Fund V - Fund VI
Joint Venture for the acquisition and development of Stockbridge Village II.
The occupancy rate at the Stockbridge Village II Property at year end was 100%
for 2000 and 1999 and 72% for 1998. The average effective annual rental per
square foot at the Stockbridge Village II Property was $19.70 for 2000, $19.66
for 1999, $14.90 for 1998, $14.88 for 1997 and $12.43 for 1996.
5
Fund V-VI-VII Joint Venture
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On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate Fund
VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships affiliated
with the Partnership through common general partners, entered into a joint
venture agreement known as Fund V, Fund VI and Fund VII Associates (the "Fund
V-VI-VII Joint Venture"). The investment objectives of Wells Fund VII are
substantially identical to those of the Partnership. The Partnership owns a 42%
interest in the following property through the Fund V-VI-VII Joint Venture:
The Marathon Building
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On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a three-story
office building containing approximately 76,000 rentable square feet, located on
approximately 6.2 acres of land in Appleton, Wisconsin (the "Marathon Building")
for a purchase price of $8,250,000 excluding acquisition costs.
The funds used by the Fund V-VI-VII Joint Venture to acquire the Marathon
Building were derived from capital contributions made by the Partnership, Wells
Fund V and Wells Fund VII totaling $3,470,958, $1,337,505, and $3,470,958,
respectively, for total contributions to the Fund V-VI-VII Joint Venture of
$8,279,421 including acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a period
of twelve years, three and one-half months, with options to extend the lease for
two additional five-year periods. The annual base rent is $910,000. The current
lease expires December 31, 2006. The lease agreement is a net lease in that the
tenant is responsible for the operating expenses including real estate taxes.
The occupancy rate at the Marathon Building was 100% for the years ended 2000,
1999 and 1998. The average effective annual rental per square foot in the
Marathon Building is $$12.78 for 2000, 1999 and 1998, $12.74 for 1997 and $12.78
for 1996.
Fund VI - Fund VII Joint Venture
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On December 9, 1994, the Partnership and Wells Fund VII entered into a Joint
Venture Agreement known as Fund VI and Fund VII Associates (the "Fund VI-Fund
VII Joint Venture"). As of December 31, 2000, the Partnership contributed
$2,710,639, including its cost to acquire land, and Wells Fund VII contributed
$3,358,633 to the Fund VI - Fund VII Joint Venture for the acquisition and
development of the Stockbridge Village III Project and the Stockbridge Village I
Expansion. As of December 31, 2000, the Partnership's equity interest in the
Fund VI - VII Joint Venture was approximately 44.8%, and Wells Fund VII's equity
interest in the Fund VI - VII Joint Venture was approximately 55.2%. The
Partnership owns interests in the following two properties through the Fund
VI-Fund VII Joint Venture:
6
Stockbridge Village III
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In April 1994, the Partnership purchased 3.27 acres of real property located on
the north side of Georgia State Route 138 at Mt. Zion Road, Clayton County,
Georgia for a cost of $1,015,673. This tract of land is located directly across
Route 138 from the Stockbridge Village Shopping Center which was developed and
is owned by an affiliate of the Partnership. On December 9, 1994, the
Partnership contributed the property as a capital contribution to the Fund
VI-Fund VII Joint Venture.
As of December 31, 2000, the Partnership had contributed $1,033,285, and Wells
Fund VII contributed $1,917,483 to the Fund VI-Fund VII Joint Venture for the
acquisition and development of the Stockbridge Village III Property.
The first building is a 3,200 square foot restaurant which was completed in
March 1995, at a cost of approximately $400,000 excluding land. The space is now
being leased by RMS / Fazoli's, which signed a 13 year lease that commenced on
December 10, 1998.
Construction began in January, 1995, on a second outparcel building containing
approximately 15,000 square feet for approximately $1,500,000 excluding land. In
October 1995, Damon's Clubhouse occupied a 6,732 square foot restaurant. The
term of the lease is for nine years and eleven months commencing October, 1995.
The initial annual base rent is $102,375 through March, 2001 and $115,375
thereafter.
The occupancy rate at the Stockbridge Village III Property at year end was 100%
for the year ended 2000, 1999, and 1998. The average effective annual rental per
square foot at the Stockbridge Village III Property was $17.05 for 2000, $17.08
for 1999, $13.08 for 1998, $15.67 for 1997 and $14.15 for 1996.
Stockbridge Village I Expansion
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On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of
real property located in Clayton County, Georgia for a total price of
approximately $718,000. The Stockbridge Village I Expansion consists of a
multi-tenant shopping center containing approximately 29,200 square feet.
Construction was substantially complete in April, 1996 with Cici's Pizza
occupying a 4,000 square foot restaurant. The term of the CiCi's lease is for
nine years and eleven months commencing in April, 1996. The initial base rent is
$48,000. In the third year, the annual base rent increases to $50,000, in the
sixth year to $52,000, and in the ninth year to $56,000. Fourteen additional
tenants have occupied the remaining square feet at the property in 2000.
As of December 31, 2000, the Partnership contributed a total of $1,677,354, and
Wells Fund VII contributed a total of $1,441,150 for a total cost of
approximately $3,118,504 toward the development and construction of the
Stockbridge Village I Expansion.
The occupancy rate at the Stockbridge Village I Expansion was 100% at year end
2000, 86% for 1999 and 81% at year end 1998. The average effective annual rental
per square foot was
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$11.97 for 2000, $10.74 for 1999, $10.08 for 1998, $6.82 for 1997 and $2.69 for
1996, the first year of occupancy.
Fund II - III - VI - VII Joint Venture/Holcomb Bridge Road Project
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On January 10, 1995, the Partnership, Fund II-Fund III Joint Venture, and Wells
Fund VII entered into a Joint Venture Agreement known as Fund II, III, VI and
VII Associates ("Fund II-III-VI-VII Joint Venture"). The Fund II-Fund III Joint
Venture is a joint venture between Wells Real Estate Fund III, L.P., a Georgia
public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as
general partners, and an existing joint venture (the "Fund II-Fund II-OW Joint
Venture") formed by Wells Real Estate Fund II ("Wells Fund II"), a Georgia
public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as
general partners, and Wells Real Estate Fund II-OW ("Wells Fund II-OW"), a
Georgia public limited partnership having Leo F. Wells, III and Wells Capital,
Inc. as general partners. The investment objectives of Wells Fund II, Wells Fund
II-OW and Wells Fund III are substantially identical to those of the
Partnership.
In January 1995, the Fund II-Fund III Joint Venture contributed to the Fund
II-III-VI-VII Joint Venture approximately 4.3 acres of land at the intersection
of Warsaw Road and Holcomb Bridge Road in Roswell, Fulton County, Georgia (the
"Holcomb Bridge Road Property") including land improvements for the development
and construction of two buildings with a total of 49,534 square feet. As of
December 31, 2000, Fourteen tenants occupied the Holcomb Bridge property for an
occupancy rate of 92% for 2000, 100% for 1999 and 94% for 1998. The average
effective annual rental per square foot was $17.55 for 2000, $19.26 for 1999,
$17.62 for 1998, $13.71 for 1997 and $9.87 for 1996, the first year of
occupancy.
As of December 31, 2000, Fund II-Fund III Joint Venture contributed $1,729,116
in land and improvements for an equity interest of approximately 24.1%, the
Partnership contributed $1,929,541 for an equity interest of approximately
26.9%, and Wells Fund VII contributed $3,525,041 for an equity interest of
approximately 49.0%. The total cost to develop the Holcomb Bridge Road Property
was approximately $5,454,582, excluding land.
Fund VI-VII-VIII Joint Venture
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On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund
VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership affiliated
with the Partnership through common general partners, formed a joint venture
known as the Fund VI, Fund VII, and Fund VIII Associates (the "Fund VI-VII-VIII
Joint Venture"). The investment objectives of Wells Fund VII and Wells Fund VIII
are substantially identical to those of the Partnership. As of December 31,
2000, the Partnership contributed approximately $6,067,688 for an approximately
34.3% equity interest in the Fund VI-VII-VIII Joint Venture, which owns an
office building in Jacksonville, Florida and a multi-tenant retail center in
Clemmons, North Carolina. As of December 31, 2000, Wells Fund VIII contributed
$5,700,000 for an equity interest in the Fund VI-VII-VIII Joint Venture of
approximately 32.3%, and Wells Fund VII contributed approximately $5,932,312 for
an equity interest in the Fund VI-VII-VIII Joint
8
Venture of approximately 33.4%. The total cost to complete both properties is
approximately $17,700,000.
BellSouth Property
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On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55 acre
parcel of land in Jacksonville, Florida for a total of $1,245,059 including
closing costs. In May 1996, the 92,964 square foot office building was completed
with BellSouth Advertising and Publishing Corporation, a subsidiary of BellSouth
Company, occupying approximately 66,333 square feet and American Express Travel
Related Services Company, Inc. occupying approximately 22,607 square feet.
BellSouth occupied an additional 3,901 square feet in December 1996. The land
purchase and construction costs, totaling approximately $9,000,000, were funded
by capital contributions of $3,500,000 by the Partnership, $3,500,000 by Wells
Fund VII and $2,000,000 by the Wells Fund VIII.
The BellSouth lease is for a term of nine years and eleven months with an option
to extend for an additional five years at the then market rate. The annual base
rent during the initial term is $1,094,426 during the first five years and
$1,202,034 for the balance of the initial lease term. The American Express lease
is for a term of five years at an annual base rent of $369,851. BellSouth and
American Express are required to pay additional rent equal to their shares of
operating expenses during their respective lease terms.
The average effective annual rental per square foot at the BellSouth Property at
year end was $16.36 for 2000, 1999 and 1998, $16.40 for 1997 and $14.15 for
1996, the first year of occupancy. The occupancy rate at year end was 100% for
2000, 1999 and 1998.
Tanglewood Commons Shopping Center
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On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre
tract of real property located in Clemmons, Forsyth County, North Carolina. The
Fund VI-VII-VIII Joint Venture constructed one large strip shopping center
building containing approximately 67,320 gross square feet on a 12.48 acre
tract. The remaining 2.2 acre portion of the property consists of four
outparcels which have been graded and will be held for future development or
resale. As of December 31, 2000, the Partnership contributed $2,567,688, Wells
Fund VII contributed $2,432,312 and Wells Fund VIII had contributed $3,700,000
for the development of this project.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping center
is approximately $8,700,000. Construction of the project began in March, 1996,
and was substantially completed in the first quarter of 1997.
Harris Teeter, Inc., a regional supermarket chain, executed a lease for a
minimum of 45,000 square feet with an initial term of 20 years with extention
options of four successive five year periods with the same terms as the initial
lease. The annual base rent during the initial term is
9
$488,250. In addition, Harris Teeter has agreed to pay percentage rents equal to
one percent of the amount by which Harris Teeter's gross sales at this location
exceed $35,000,000 for any lease year.
The year-end occupancy rate at Tanglewood Commons was 100% for 2000 and 91% for
1999 and 1998. The average effective annual rental per square foot at Tanglewood
Commons was $12.53 for 2000, $11.48 for 1999, $10.96 for 1998 and $9.12 for
1997, the first year of occupancy.
Fund I - II - II-OW - VI - VII Joint Venture
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On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund I"), a
Georgia public limited partnership , the Fund II-Fund II-OW Joint Venture and
Wells Fund VII, entered into a joint venture agreement known as Fund I, II,
II-OW, VI and VII Associates (the "Fund I-II-II-OW-VI-VII Joint Venture"), which
was formed to own and operate the Cherokee Property described below. Wells Fund
I is a Georgia limited partnership having Leo F. Wells, III and Wells Capital,
Inc., as general partners. The investment objectives of Wells Fund I, the Fund
II-Fund II-OW Joint Venture and Wells Fund VII are substantially identical to
those of the Partnership.
The Cherokee Property
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The Cherokee Property consists of a retail shopping center known as the
"Cherokee Commons Shopping Center" located in metropolitan Atlanta, Cherokee
County, Georgia (the "Cherokee Property "). The Cherokee Property has been
expanded to consist of approximately 103,755 net leasable square feet. The
Cherokee Property was initially developed through a joint venture between Wells
Fund I and the Fund II-Fund II-OW Joint Venture, which contributed the Cherokee
Property to the Fund I-II-II-OW-VI-VII Joint Venture on August 1, 1995 to
complete the required funding for the expansion.
As of December 31, 2000, Wells Fund I contributed property with a book value of
$2,139,900, the Fund II-Fund II-OW Joint Venture contributed property with a
book value of $4,860,100, the Partnership contributed cash in the amount of
$953,798, and Wells Fund VII contributed cash in the amount of $953,798 to the
Fund I-II-IIOW-VI-VII Joint Venture. As of December 31, 2000, the equity
interest in the Fund I - II - II-OW - VI - VII Joint Venture were as follows:
Wells Fund I 24%, Fund II-Fund II-OW Joint Venture 54%, Wells Fund VII 11% and
the Partnership 11%.
The Cherokee Property is anchored by a 67,115 square foot lease with Kroger
Food/Drug ("Kroger") which expires in 2011. Kroger's original lease was for
45,528 square feet. In 1994, Kroger expanded to the current 67,115 square feet
which is approximately 65% of the total rentable square feet in the property. As
of December 31, 2000, the Cherokee Property was approximately 98% occupied by 22
tenants, including Kroger. Kroger, a retail grocery chain, is the only tenant
occupying 10% or more of the rentable square footage. The other tenants in the
shopping center provide typical retail shopping services.
10
The Kroger lease calls for an annual rent of $392,915 which increased to
$589,102 on August 16, 1995 due to the expansion from 45,528 square feet to
67,115 square feet. The lease expires March 31, 2011 with Kroger entitled to
five successive renewals each for a term of five years at the same rental as the
original lease.
The occupancy rate at year end for the Cherokee Property was 98% in 2000, 97% in
1999 and 91% for 1998. The average effective annual rental per square foot at
the Cherokee Property was $9.31 for 2000, $9.11 for 1999, $8.78 for 1998, $8.49
for 1997 and $8.59 for 1996.
ITEM 3. LEGAL PROCEEDINGS.
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There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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No matters were submitted to a vote of the Limited Partners for the year of
2000.
PART II
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ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
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As of February 28, 2001, the Partnership had 2,198,970 outstanding Class A Units
held by a total of 1,654 Limited Partners and 301,030 outstanding Class B Units
held by a total of 183 Limited Partners. The capital contribution per unit is
$10.00. There is no established public trading market for the Partnership's
limited partnership units, and it is not anticipated that a public trading
market for the units will develop. Under the Partnership Agreement, the General
Partners have the right to prohibit transfers of units.
The General Partners have estimated the investment value of properties held by
the Partnership, as of December 31, 2000 be $10.10 per Class A Unit and $14.70
per Class B Units based on market conditions existing in early December 2000.
The methodology used for this valuation was to estimate the amount a holder of
Partnership Units would receive if the Partnership's properties were all sold in
the ordinary course of business as of December 31, 2000, and the proceeds from
such sales (without reduction for selling expenses), together with Partnership
funds held as of such date, were distributed in a liquidation of the
Partnership. The value was confirmed as reasonable by an independent MAI
appraiser, David L. Beal Company, although no actual MAI appraisal was performed
due to the inordinate expense involved with such an undertaking. The valuation
does not include any fractional interest valuation.
11
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners elect to have their cash distributions
paid monthly. Under the Partnership Agreement, distributions from net cash from
operations are allocated first to the Limited Partners holding Class A Units
(and limited partners holding Class B units that have elected a conversion right
that allows them to share in the distribution rights of limited partners holding
Class A units) until they have received 10% of their adjusted capital
contributions. Net Cash From Operations, as defined in the Partnership Agreement
to mean Cash Flow, less adequate cash reserves for other obligations of the
Partnership for which there is no provision, but are initially allocated none of
the depreciation, amortization, cost recovery and interest expense. These items
are allocated to Class B Unit holders until their capital account balances have
been reduced to zero. Cash available for distribution is then distributed to the
General Partners until they have received an amount equal to 10% of cash
distributions previously distributed to the limited partners. Any remaining cash
available for distribution is split between the Limited Partners holding Class A
units and the General Partners on a basis of 90% and 10% respectively. No
distributions will be made to the Limited Partners holding Class B Units. No
distribution has been made to the General Partner as of December 31, 2000.
Cash distributions made to Limited Partners holding Class A Units (and limited
partners holding Class B Units that have elected a conversion right) during the
two most recent fiscal years were as follows:
Per Class A Unit
----------------
Distributions For Total Cash Investment Return of
Quarter Ended Distribution Income Capital
------------- ------------ ------- --------
March 31, 1999 $427,108 $ 0.20 $0.00
June 30, 1999 $449,797 $ 0.21 $0.00
Sept. 30, 1999 $460,616 $ 0.11 $0.10
Dec. 31, 1999 $475,835 $ 0.12 $0.10
March 31, 2000 $494,887 $ 0.12 $0.11
June 30, 2000 $494,941 $ 0.11 $0.11
Sept. 30, 2000 $494,957 $ 0.12 $0.11
Dec. 31, 2000 $481,146 $ 0.11 $0.10
Fourth quarter distributions were accrued for accounting purposes in 2000, and
was not actually paid to the limited partners holding Class A Units until
February 2001.
ITEM 6. SELECTED FINANCIAL DATA.
- --------------------------------
The Partnership commenced the offering on April 5, 1993, but did not commence
active operations until it received and accepted subscriptions for a minimum of
125,000 units in May, 1993.
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 2000, 1999, 1998, 1997 and 1996.
12
2000 1999 1998 1997 1996
------------- ------------- ------------- ------------- -------------
Total assets $17,602,253 $18,532,975 $19,328,676 $20,218,514 $20,880,163
Total revenues 1,107,788 1,056,568 939,519 884,802 675,782
Net income 1,027,798 969,613 855,788 795,654 589,053
Net income allocated to
Class A Limited Partners 1,027,798 1,274,859 1,770,058 1,677,826 1,234,717
Net loss allocated to
Class B Limited Partners 0 (305,246) (914,270) (882,172) (645,664)
Net income per weighted
average (1) Class A
Limited Partner Unit .47 .58 .81 .78 .59
Net loss per weighted
average (1) Class B
Limited Partner Unit 0 (.99) (2.80) (2.47) (1.60)
Cash Distributions per
weighted average (1)
Class A Limited Partner Unit:
Investment Income .46 .64 .80 .73 .57
Return of Capital .43 .20 .00 .00 .00
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased or
converted by Limited Partners in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATION.
- ------------
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statements
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
13
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
Gross revenues of the Partnership were $1,107,788 for the fiscal year ended
December 31, 2000, as compared to $1,056,568 for the fiscal year ended December
31, 1999 and $939,519 for the fiscal year ended December 31, 1998. The increase
for 2000 over 1999 and 1998 was due primarily to increased income from the Joint
Venture due to increased occupancy at some of the properties.
Expenses of the Partnership were $79,990 for 2000, as compared to $86,955 for
1999 and $83,731 for 1998. The slight change in expenses for 2000, as compared
to 1999 and 1998 was primarily due to fluctuations in legal and accounting
expenses and decreases in partnership administration.
Net income of the Partnership was $1,027,798 for the fiscal year ended December
31, 2000, as compared to $969,613 for the fiscal year ended December 31, 1999
and $855,788 for the year ended December 31, 1998. The increase in net income
for 2000 over 1999 and 1998 is due primarily to increased earnings from joint
ventures.
The Partnership made cash distributions to the limited partners holding Class A
Units of $.89 for fiscal year 2000 as compared to $.83 per Class A Unit for
fiscal year 1999 and $.80 for fiscal year 1998. Distributions accrued for the
fourth quarter of 2000 to the limited partners holding Class A Units were paid
in February, 2001. No cash distributions were made to limited partners holding
Class B Units.
14
Property Operations
- -------------------
As of December 31, 2000, the Partnership's ownership interest in Fund I, II,
II-OW, VI and VII Joint Venture was 10.7%, in Fund II, III, VI and VII Joint
Venture was 26.9%, in Fund V and VI Joint Venture was 53.6%, in Fund V,VI, and
VII Joint Venture was 41.8%, in Fund VI and VII Joint Venture was 44.8% and in
Fund VI,VII and VIII Joint Venture was 34.3%.
As of December 31, 2000, the Partnership owned interests through interests in
the following properties through its investment in joint ventures:
The Hartford Building - Fund V - Fund VI Joint Venture
- ------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $717,499 $717,499 $717,499
Interest income 750 0 0
---------- ---------- ----------
718,249 717,499 717,499
---------- ---------- ----------
Expenses
Depreciation 292,031 292,031 292,032
Management & leasing expenses 29,133 28,968 27,719
Other operating expenses 12,251 11,282 10,530
---------- ---------- ----------
333,415 332,281 330,281
---------- ---------- ----------
Net income $384,834 $385,218 $387,218
========== ========== ==========
Occupied % 100% 100% 100%
Partnership's Ownership % 53.6% 53.6% 53.5%
Cash Distribution to the Partnership $366,371 $366,351 $365,986
Net Income Allocated to the
Partnership $206,260 $206,339 $207,076
Revenues, net income and cash distributions to the Partnership remained
relatively stable in 2000, as compared to 1999 and 1998.
The Partnership's ownership in the Fund V-Fund VI Joint Venture increased from
53.5% in 1998, to 53.6% in 1999 and 2000, due to additional fundings by the
Partnership, which increased the Partnership's ownership interest and decreased
Wells Fund V's ownership interest in the Fund V - Fund VI Joint Venture.
Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.
15
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.
Stockbridge Village II - Fund V - Fund VI Joint Venture
- -------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $311,788 $311,112 $235,776
-------- -------- --------
Expenses
Depreciation 104,960 104,962 101,971
Management & leasing expenses 38,221 36,199 29,648
Other operating expenses 27,940 43,637 32,156
-------- -------- --------
171,121 184,798 163,775
-------- -------- --------
Net income $140,667 $126,314 $ 72,001
======== ======== ========
Occupied % 100% 100% 72%
Partnership's Ownership % 53.6% 53.6% 53.5%
Cash Distribution to the Partnership $134,233 $114,220 $ 89,458
Net Income Allocated to the Partnership $ 75,393 $ 67,666 $ 38,513
Net income and cash distributions allocated to the Partnership are greater in
2000 and 1999, as compared to 1998, due primarily to increased occupancy.
Expenses decreased in 2000, as compared to 1999, due to an increase in common
area maintenance billings to the tenants in 2000. Tenants are billed an
estimated amount for the current year common area maintenance which is then
reconciled the following year and the difference billed to the tenant.
The Partnership's ownership percentage in the Fund V - Fund VI Joint Venture
increased to 53.6% in 2000 and 1999 as compared to 53.5% in 1998 due to
additional investments by the Partnership which increased the Partnership's
ownership interest in the Fund V-Fund VI Joint Venture.
The Stockbridge Village II Project incurred property taxes of $23,975 for 2000,
$24,121 for 1999 and $23,508 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.
16
The Marathon Building/Fund V-VI-VII Joint Venture
- -------------------------------------------------
For the Year Ended December 31
2000 1999 1998
---- ---- ----
Revenues:
Rental income $971,050 $971,051 $971,447
-------- -------- --------
Expenses:
Depreciation 350,585 350,585 350,585
Management & leasing expenses 9,442 39,659 34,632
Other operating expenses 20,791 19,441 12,261
-------- -------- --------
380,818 409,685 397,478
-------- -------- --------
Net income $590,232 $561,366 $573,969
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % 41.8% 41.8% 41.8%
Cash Distribution to the Partnership $397,137 $385,063 $388,557
Net Income Allocated to the
Partnership $246,894 $234,819 $236,782
Rental income remained relatively stable in 2000, 1999 and 1998. Management and
leasing fees decreased, as compared to 1999, due to a lower rate charged
starting in October 1999. The management and leasing agreement reduces fees to
1% after five years on triple-net leases of ten years or more. As a result, net
income and cash distribution to the Partnership increased.
Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, See Item 1, Business, page 2. For additional information on tenants,
etc., refer to Item 2, Properties, Page 3.
17
Stockbridge Village III/Fund VI - Fund VII Joint Venture
- --------------------------------------------------------
For the Year Ended December 31,
-------------------------------
2000 1998 1999
---- ---- ----
Revenues:
Rental income $310,374 $310,887 $238,093
-------- -------- --------
Expenses:
Depreciation 85,635 86,459 91,053
Management and leasing expenses 38,094 36,146 32,844
Other operating expenses 14,843 26,158 145,402
-------- -------- --------
138,572 148,763 269,299
-------- -------- --------
Net income(loss) $171,802 $162,124 $(31,206)
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % 44.8% 43.7% 43.7%
Cash Distribution to the Partnership $116,226 $108,126 $ 27,885
Net Income (Loss) Allocated to the Partnership $ 75,679 $ 70,851 $(13,520)
Rental income remained stable, as compared to 1999, due to 100% occupancy for
the two whole years at the property.
Net income and cash distributions have increased, as compared to 1999, due
primarily to decreased expenses for legal fees and administrative salaries.
Other operating expenses were higher in 1998 due to bad debt expense recorded in
1998.
The Stockbridge Village III Property incurred property taxes of 25,508 for 2000,
$26,211 for 1999 and $25,248 for 1998.
The Partnership's ownership in the Fund VI-Fund VII Joint Venture increased to
44.8%, as compared to 43.7% in 1999 and 1998, due to additional funding by the
Partnership, which increased the Partnership's ownership in the Fund VI-Fund VII
Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
18
Stockbridge Village I Expansion/Fund VI - Fund VII Joint Venture
- ----------------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $349,557 $313,566 $294,318
-------- -------- --------
Expenses:
Depreciation 147,577 149,132 141,843
Management & leasing expenses 46,590 43,918 44,398
Other operating expenses 38,142 12,461 18,181
-------- -------- --------
232,309 205,511 204,422
-------- -------- --------
Net income $117,248 $108,055 $ 89,896
======== ======== ========
Occupied % 93% 86% 81%
Partnership's Ownership % 44.8% 43.7% 43.7%
Cash Distribution to Partnership $123,453 $122,586 $ 96,809
Net Income Allocated to the
Partnership $ 51,787 $ 47,222 $ 38,827
Rental income increased as compared to 1999 and 1998 due to increased rental
renewal rates this year and increased occupancy.
Other operating expenses increased due to increased legal fees and decreases in
common area maintenance billing to tenants. In 1999, monthly common area
maintenance billing to tenants were overcharged. Tenants are billed an estimated
amount for the current year common area maintenance which is then reconciled the
following year and the difference billed to the tenant.
The Stockbridge Village I Expansion incurred property taxes of $25,919 for 2000,
$23,085 for 1999, and $22,565 for 1998.
The Partnership's ownership in the Fund VI-Fund VII Joint Venture increased to
44.8%, as compared to 43.7% in 1999 and 1998, due to additional funding by the
Partnership, which increased the Partnership's ownership in the Fund VI-Fund VII
Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
refer to Item 2, Properties, page 3.
19
Holcomb Bridge Road Property / Fund II - III - VI - VII Joint Venture
---------------------------------------------------------------------
For the Year Ended December 31,
-------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 869,390 $ 953,952 $ 872,978
Other income 0 23,843 36,000
---------- ---------- ----------
869,390 977,795 908,978
---------- ---------- ----------
Expenses:
Depreciation 355,293 415,165 376,290
Management & leasing expenses 111,567 129,797 97,701
Other operating expenses 171,997 93,535 107,418
---------- ---------- ----------
638,857 638,497 581,409
---------- ---------- ----------
Net income $ 230,533 $ 339,298 $ 327,569
========== ========== ==========
Occupied % 92% 100% 94%
Partnership's Ownership % 26.9% 26.9% 26.9%
Cash Distribution to Partnership $ 174,934 $ 204,085 $ 199,946
Net Income Allocated to the
Partnership $ 61,921 $ 91,135 $ 87,914
Rental income decreased in 2000, as compared to 1999 and 1998, due to decreased
occupancy. Depreciation expense was higher in 1999, as compared to 1998 and
2000, due to increased tenant improvement for new tenants for 1999 and some
tenant improvement becoming fully depreciated in 1999. Other operating expenses
increased due to appraisal fees for this property and a bad debt recorded in
this year.
The Holcomb Bridge Property incurred property taxes of $52,887 for 2000, $53,896
for 1999, and $52,162 for 1998.
This property is currently being marketed for sale by CB Richard Ellis. The
marketing piece is being broadly distributed to investors throughout the
country. The Partnership's goal is to have this property sold by the end of
2002.
For comments on the general competitive conditions to which the property may be
subject, see Item, Business page 2. For additional information on tenants, etc.
refer to Item 2, Properties, page 3.
20
BellSouth Property / Fund VI - VII - VIII Joint Venture
- -------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 1,521,109 $ 1,521,109 $ 1,521,109
Interest income 1,997 4,763 7,806
Other income 360 360 9,373
----------- ------------ ------------
1,523,466 1,526,232 1,538,288
----------- ------------ ------------
Expenses:
Depreciation 446,430 446,429 444,448
Management & leasing expenses 193,474 192,716 190,025
Other operating expenses 430,664 415,562 436,403
----------- ------------ ------------
1,070,568 1,054,707 1,070,876
----------- ------------ ------------
Net income $ 452,898 $ 471,525 $ 467,412
=========== ============ ============
Occupied % 100% 100% 100%
=========== ============ ============
Partnership's Ownership % 34.3% 34.3% 34.3%
=========== ============ ============
Cash Distribution to Partnership $ 319,450 $ 325,961 $ 323,745
=========== ============ ============
Net Income Allocated to Partnership $ 155,118 $ 161,499 $ 160,090
=========== ============ ============
Rental income, depreciation and management and leasing expenses have remained
relatively stable in 2000, 1999 and 1998, while other operating expenses have
increased, as compared to 1999, due primarily to increased janitorial expenses
and expenses for an application of water repellent on the building. As a result,
net income and cash distribution to the Partnership decreased in 2000.
The BellSouth Property incurred property taxes of $168,751 for 2000, $166,706
for 1999 and $171,629 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
Tanglewood Commons / Fund VI - VII - VIII Joint Venture
- -------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 843,761 $ 772,907 $ 737,862
Interest income 1,988 10,174 17,610
---------- ------------ ----------
845,749 783,081 755,472
---------- ------------ ----------
Expenses:
Depreciation 268,972 255,456 244,311
Management & leasing expenses 80,158 66,637 61,562
Other operating expenses (19,909) 67,726 49,338
---------- ------------ ----------
329,221 389,819 355,211
---------- ------------ ----------
Net income $ 516,528 $ 393,262 $ 400,261
========== ============ ==========
Occupied % 100% 91% 91%
========== ============ ==========
Partnership's Ownership % 34.3% 34.3% 34.3%
========== ============ ==========
Cash Distribution to Partnership $ 271,576 $ 223,973 $ 218,408
========== ============ ==========
Net Income Allocated to Partnership $ 176,914 $ 134,694 $ 137,091
========== ============ ==========
Rental income, depreciation, and management and leasing expenses increased in
2000, as compared to 1999 and 1998, due to increased occupancy at the property.
Other operating expenses decreased due to monthly common area maintenance
billings to the tenants were increased in 2000 to offset 1999 under billing.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference
billed to the tenant. As a result, net income and cash distribution to the
Partnership increased.
The Tanglewood Commons Property incurred property taxes of $54,005 for 2000,
$53,259 in 1999 and $52,229 for 1998.
For comments on the general competitive conditions to which the property may be
subject, see Item, Business, page 2. For additional information on the tenants,
etc. refer to Item 2, Properties page 3.
22
Cherokee Commons Shopping Center / Fund I - II - II-OW - VI - VII Joint Venture.
- --------------------------------------------------------------------------------
For the Year Ended December 31
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental Income $ 965,306 $ 945,222 $ 909,831
Interest Income 78 68 84
---------- ----------- ----------
965,384 945,290 909,915
---------- ----------- ----------
Expenses:
Depreciation 442,250 447,969 444,660
Management & leasing expenses 74,422 94,149 82,517
Other operating expenses 54,090 68,089 84,676
---------- ----------- ----------
570,762 610,207 611,853
---------- ----------- ----------
Net income $ 394,622 $ 335,083 $ 298,062
========== =========== ==========
Occupied % 98% 97% 91%
Partnership's Ownership % 10.7% 10.7% 10.7%
Cash Distribution to Partnership $ 89,038 $ 83,485 $ 79,238
Net Income Allocated to the Partnership $ 42,256 $ 35,881 $ 31,916
Rental income increased in 2000, as compared to 1999 and 1998, due to an
increase in occupancy and rental renewals. Management and leasing expenses
decreased in 2000, as compared to 1999, due to decreased leasing commission.
Management and leasing expenses increased in 1999 as compared to 1998, due to an
increase in occupancy and rental rates. Depreciation expense decreased in 2000
as compared to 1999 due to some tenant improvements becoming fully depreciated
in 1999. Operating expenses decreased in 2000, as compared to 1999, due to a
reimbursable tenant improvement write-off in 1999, and decreased in 1999 as
compared to 1998, due to increased CAM billings to tenants that were
under-accrued in 1998, offset by increased expenses for tenant improvements,
HVAC repairs, and a partial demolition of a tenant suite in 1999. Tenants are
billed an estimate amount for the current year common area maintenance which is
then reconciled the following year and the difference is billed to the tenant.
Real estate taxes were $82,048 for 2000, $87,411 for 1999 and $77,311 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.
23
Liquidity and Capital Resources
- -------------------------------
During its offering, which terminated on April 4, 1994, the Partnership raised a
total of $25,000,000 in capital through the sale of 2,500,000 units. No
additional units will be sold by the Partnership. From the original funds
raised, the Partnership incurred $4,619,157 in commissions, acquisition fees,
organization and offering costs; invested $20,354,775 in properties; and
reserved $26,068 as working capital reserves.
Pursuant to the terms of the Partnership Agreement, the Partnership is required
to maintain working capital reserves in an amount equal to the cash operating
expenses required to operate the Partnership for a six-month period not to be
reduced below 1% of Limited Partners' capital contributions. As set forth above,
in order to fund tenant improvements at Stockbridge Village II, Stockbridge
Expansion and at the Holcomb Bridge Road Property, the General Partners have
used $223,932 of the Partnership's working capital reserves to reduce the
balance below this minimum amount, rather than funding the tenant improvements
out of operating cash flow, which would have the effect of reducing cash flow
distributions to Limited Partners. The General Partners anticipate that the
remaining $26,068 in working capital reserves will be sufficient to meet its
future needs.
The Partnership net cash used in operating activities increased from $70,649 for
the year ended December 31, 1998 to $80,493 for the year ended December 31, 1999
but decreased to $64,324 for the year ended December 31, 2000 primarily due to
increased interest income and decreased expenses in 2000. Net cash provided by
investing activities increased from $1,693,826 in 1998 to $1,855,362 in 1999 and
to $1,898,256 in 2000 due primarily to decreased investments in joint ventures
and increases in distributions received from joint ventures. Cash flow from
financing activities varied from ($1,960,520) in 2000 to ($1,765,314) in 1999
and ($1,745,626) in 1998 due to increases in distributions to partners.
The Partnership's distributions paid and payable through the fourth quarter of
2000 have been paid from net cash from operations and from a return of capital.
The Partnership anticipates that distributions will continue to be paid on a
quarterly basis from such sources. No cash distributions were paid to Class B
Unit holders for 2000.
The Partnership is unaware of any known demands, commitments, events or capital
expenditures other than that which is required for the normal operations of the
properties in which it owns a joint venture interest that will result in the
Partnership's liquidity increasing or decreasing in any material way. The
Partnership expects to meet liquidity requirements and budget demands through
cash flow from operations.
Inflation
- ---------
The real estate market has not been affected significantly by inflation in the
past three years due to the relatively low inflation rate. There are provisions
in the majority of tenant leases to protect the partnership from the impact of
inflation. Most leases contain common area maintenance charges, real estate tax
and insurance reimbursements on a per square foot basis, or in some cases,
annual reimbursement of operating expenses above a certain per square foot
allowance. These provisions should reduce the Partnership's exposure to
increases in costs and operating expenses resulting from
24
inflation. In addition, a number of the Partnership's leases are for terms of
less than five years which may permit the Partnership to replace existing leases
with new leases at higher base rental rates if the existing leases are below
market rate. There is no assurance, however, that the Partnership would be able
to replace existing leases with new leases at higher base rentals.
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 2000.
25
PART III
--------
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP.
- ---------------------------------------------
Wells Partners, L.P. Wells Partners, L.P. is a private Georgia limited
- --------------------
partnership formed on October 25, 1990. The sole General Partner of Wells
Partners, L.P. is Wells Capital, Inc., a Georgia corporation. The executive
offices of Wells Capital, Inc. are located at 6200 The Corners Parkway, Suite
250, Norcross, Georgia 30092.
Leo F. Wells, III. Mr. Wells is a resident of Atlanta, Georgia, is 57 years of
- -----------------
age and holds a Bachelor of Business Administration Degree in Economics from the
University of Georgia. Mr. Wells is the President and sole Director of Capital.
Mr. Wells is the President of Wells & Associates, Inc., a real estate brokerage
and investment company formed in 1976 and incorporated in 1978, for which he
serves as principal broker. Mr. Wells is also currently the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983. In addition, Mr. Wells is the President and Chairman of the
Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells
Management Company, Inc. which are affiliates of the General Partners. From 1980
to February 1985, Mr. Wells served as Vice-President of Hill-Johnson, Inc., a
Georgia corporation engaged in the construction business. From 1973 to 1976, he
was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he was
a real estate salesman and property manager for Roy D. Warren & Company, an
Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES.
- ---------------------------------------------------------
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 2000.
CASH COMPENSATION TABLE
(A) (B) (C)
Name of individual or Capacities in which served
number in group Form of Compensation Cash Compensation
- ---------------------- ---------------------------- -----------------
Wells Management Property Manager - $157,719
Company, Inc. Management and Leasing
Fees
(1) The majority of these fees are not paid directly by the Partnership but
are paid by the joint venture entities which own properties for which the
property management and leasing services relate and include management and
leasing fees, some of which were accrued for accounting purposes in 2000,
but not actually paid until January, 2001.
26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ------------------------------------------------------------------------
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of February 28, 2001.
(1) (2) (3) (4)
Amount and Nature
Name and Address of of Beneficial
Title of Class Beneficial Owner Ownership Percent of Class
- -------------- ----------------- --------- ----------------
Class A Units Leo F. Wells, III 1327.37 units (IRA, less than 1%
401(k)Plan)
No arrangements exist which would, upon operation, result in a change in control
of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
The compensation and fees paid or to be paid by the Partnership to the General
Partners and their affiliates in connection with the operation of the
Partnership are as follows:
Interest in Partnership Cash Flow and Net Sale Proceeds. The General
-------------------------------------------------------
Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited
Partners holding Class A Units have received preferential distributions
equal to 10% of their adjusted capital contribution. The General
Partners will also receive a subordinated participation in net sale
proceeds and net financing proceeds equal to 20% of residual proceeds
available for distribution after Limited Partners holding Class A Units
have received a return of their adjusted capital contributions plus a
10% cumulative return on their adjusted capital contributions and
Limited Partners holding Class B Units have received a return of their
adjusted capital contribution plus a 15% cumulative return on their
adjusted capital contribution; however, that in no event shall the
General Partners receive in the aggregate in excess of 15% of net sale
proceeds and net financing proceeds remaining after payments to Limited
Partners from such proceeds of amounts equal to the sum of their
adjusted capital contributions plus a 6% cumulative return on their
adjusted capital contributions. The General Partners received no
distribution from cash flow or from net sales proceeds in 2000.
Property Management and Leasing Fees. Wells Management Company, Inc.,
------------------------------------
an affiliate of the General Partners, will receive compensation for
supervising the management of the Partnership properties equal to the
lesser of: (A)(i) 3% of the gross revenues for leasing (aggregate
maximum of 6%) plus a separate one-time fee for
27
initial rent-up or leasing-up of newly constructed properties in an
amount not to exceed the fee customarily charged in arm's-length
transactions by other rendering similar services in the same geographic
area for similar properties; and (ii) in the cash of industrial and
commercial properties which are leased on a long-term basis (ten or
more years), 1% of the gross revenues except for initial leasing fees
equal to 3% of the gross revenues over the first five years of the
lease term; or (B) the amounts charged by unaffiliated persons
rendering comparable services in the same geographic area. Wells
Management Company, Inc. accrued $157,719 in property management and
leasing fees relating to the Partnership in 2000.
Real Estate Commissions. In connection with the sale of Partnership
-----------------------
properties, the General Partners or their affiliates may receive
commissions not exceeding the lesser of (A) 50% of the commissions
customarily charged by other brokers in arm's-length transactions
involving comparable properties in the same geographic area or (B) 3%
of the gross sales price of the property, and provided that payments of
such commissions will be made only after Limited Partners have received
prior distributions totaling 100% of their capital contributions plus a
6% cumulative return on their adjusted capital contributions. The
General Partners or their affiliates received no real estate
commissions in 2000.
28
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- --------------------------------------------------------------------------
(a) 1. Financial Statements
The Financial Statements are contained on pages F-2 through F-33 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. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission for the year of
2000.
(c) The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(d) See (a) 2 above.
29
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this 27th day of March,
2001.
Wells Real Estate Fund VI, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
---------------------------------
Individual General Partner and as
President and Chief Financial Officer
of Wells Capital, Inc., the General
Partner of Wells Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacity as and on the date indicated.
Signature Title
- --------- -----
/s/ Leo F. Wells, III Individual General Partner, March 27, 2001
- ------------------------
Leo F. Wells, III President and Sole Director
of Wells Capital, Inc., the
General Partner of Wells
Partners, L.P.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT
TO SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting
of security holders has been sent to security holders
30
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
INDEX TO THE FINANCIAL STATEMENTS
Financial Statements Page
- -------------------- ----
Independent Auditors' Reports F2
Balance Sheets as of December 31, 2000 and 1999 F3
Statements of Income for the Years Ended
December 31, 2000, 1999 and 1998 F4
Statements of Partners' Capital for the Years Ended
December 31, 2000, 1999 and 1998 F5
Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998 F6
Notes to Financial Statements for December 31, 2000,
1999, and 1998 F7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VI,
L.P. (a Georgia public limited partnership) as of December 31, 2000 and 1999 and
the related statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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 Wells Real Estate Fund VI, L.P.
as of December 31, 2000 and 1999 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 30, 2001
F-2
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
------------- -------------
INVESTMENT IN JOINT VENTURES $17,090,238 $17,884,649
CASH AND CASH EQUIVALENTS 28,855 155,443
DUE FROM AFFILIATES 480,960 492,276
ACCOUNTS RECEIVABLE 2,200 0
DEFERRED PROJECT COSTS 0 307
PREPAID EXPENSES AND OTHER ASSETS 0 300
------------- -------------
Total assets $17,602,253 $18,532,975
============= =============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Partnership distributions payable $ 481,447 $ 476,036
Accounts payable 2,000 0
------------- -------------
Total liabilities 483,447 476,036
------------- -------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--2,198,969 units and 2,195,969 units as of December 31, 2000
and 1999, respectively 17,118,806 18,056,939
Class B--301,031 units and 304,031 units as of December 31, 2000 and
1999, respectively 0 0
------------- -------------
Total partners' capital 17,118,806 18,056,939
------------- -------------
Total liabilities and partners' capital $17,602,253 $18,532,975
============= =============
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
------------- ------------- -------------
REVENUES:
Equity in income of joint ventures $1,092,222 $ 1,050,106 $ 928,000
Interest income 15,566 6,462 11,519
------------- ------------- -------------
1,107,788 1,056,568 939,519
------------- ------------- -------------
EXPENSES:
Partnership administration 50,167 53,350 58,706
Legal and accounting 17,950 23,619 15,481
Amortization of organization costs 0 0 1,563
Computer costs 11,873 9,986 7,981
------------- ------------- -------------
79,990 86,955 83,731
------------- ------------- -------------
NET INCOME $1,027,798 $ 969,613 $ 855,788
============= ============= =============
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $1,027,798 $ 1,274,859 $ 1,770,058
============= ============= =============
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ 0 $ (305,246) $ (914,270)
============= ============= =============
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.47 $ 0.58 $ 0.81
============= ============= =============
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ 0.00 $ (0.99) $ (2.80)
============= ============= =============
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED
PARTNER UNIT $ 0.89 $ 0.83 $ 0.80
============= ============= =============
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Limited Partners
---------------------------------------------------------
Class A Class B Total
----------------------------- -------------------------- Partners
Units Amount Units Amount Capital
------------- -------------- ----------- ------------- --------------
BALANCE, December 31, 1997 2,158,895 $18,525,190 341,105 $1,260,483 $19,785,673
Net income (loss) 0 1,770,058 0 (914,270) 855,788
Partnership distributions 0 (1,740,780) 0 0 (1,740,780)
Class B conversion elections 28,862 53,854 (28,862) (53,854) 0
------------- -------------- ----------- ------------- --------------
BALANCE, December 31, 1998 2,187,757 18,608,322 312,243 292,359 18,900,681
Net income (loss) 0 1,274,859 0 (305,246) 969,613
Partnership distributions 0 (1,813,355) 0 0 (1,813,355)
Class A conversion elections (1,751) (14,903) 1,751 14,903 0
Class B conversion elections 9,963 2,016 (9,963) (2,016) 0
------------- -------------- ----------- ------------- --------------
BALANCE, December 31, 1999 2,195,969 18,056,939 304,031 0 18,056,939
Net income 0 1,027,798 0 0 1,027,798
Partnership distributions 0 (1,965,931) 0 0 (1,965,931)
Class B conversion elections 3,000 0 (3,000) 0 0
------------- -------------- ----------- ------------- --------------
BALANCE, December 31, 2000 2,198,969 $17,118,806 301,031 $ 0 $17,118,806
============= ============== =========== ============= ==============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,027,798 $ 969,613 $ 855,788
------------- ------------- -------------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (1,092,222) (1,050,106) (928,000)
Amortization of organization costs 0 0 1,563
Changes in assets and liabilities:
Accounts receivable (2,200) 0 0
Prepaid expenses and other assets 300 0 0
Accounts payable and accrued expenses 2,000 0 0
------------- ------------- -------------
Total adjustments (1,092,122) (1,050,106) (926,437)
------------- ------------- -------------
Net cash used in operating activities (64,324) (80,493) (70,649)
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures (105,416) (13,943) (135,602)
Distributions received from joint ventures 2,003,672 1,869,305 1,829,428
------------- ------------- -------------
Net cash provided by investing activities 1,898,256 1,855,362 1,693,826
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners in excess of accumulated
earnings (940,621) (41,177) 0
Distributions to partners from accumulated earnings (1,019,899) (1,724,137) (1,745,626)
------------- ------------- -------------
Net cash used in financing activities (1,960,520) (1,765,314) (1,745,626)
------------- ------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (126,588) 9,555 (122,449)
CASH AND CASH EQUIVALENTS, beginning of year 155,443 145,888 268,337
------------- ------------- -------------
CASH AND CASH EQUIVALENTS, end of year $ 28,855 $ 155,443 $ 145,888
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 307 $ 581 $ 1,778
============= ============= =============
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999, AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VI, L.P. (the "Partnership") is a public limited
partnership organized on December 1, 1992 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P.
("Wells Partners"), a Georgia nonpublic limited partnership. The Partnership
has two classes of limited partnership interests, Class A and Class B units.
Limited partners shall have the right to change their prior elections to have
some or all of their units treated as Class A units or Class B units once
every five years. Limited partners may vote to, among other things, (a) amend
the partnership agreement, subject to certain limitations, (b) change the
business purpose or investment objectives of the Partnership, and (c) remove
a general partner. A majority vote on any of the above described matters will
bind the Partnership, without the concurrence of the general partners. Each
limited partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real properties,
including properties which are to be developed, are currently under
development or construction, are newly constructed, or have operating
histories. The Partnership owns an interest in the following properties
through joint ventures between the Partnership and other Wells Real Estate
Funds: (i) a shopping center located in Cherokee County, Georgia ("Cherokee
Commons"), (ii) an office/retail center in Roswell, Georgia, (iii) the
Hartford Building, a four-story office building located in Southington,
Connecticut, (iv) the Stockbridge Village II property, two retail buildings
located in Clayton County, Georgia, (v) the Marathon Building, a three-story
office building located in Appleton, Wisconsin, (vi) the Stockbridge Village
III Retail Center, two retail buildings located in Stockbridge, Georgia,
(vii) a retail center expansion in Stockbridge, Georgia, (viii) the BellSouth
property, a four-story office building in Jacksonville, Florida, and (ix) a
retail shopping center in Clemmons, Forsyth County, North Carolina.
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Partnership recently began considering selling its properties. Management
estimates that the net realizable value of each of the properties exceeds the
carrying value of the corresponding real estate assets; consequently, no
impairment loss has been recorded. In the event that the net sales proceeds
are less than the carrying value of the property sold the Partnership would
recognize a loss on the sale. Management is not contractually or financially
obligated to sell any of its properties, and it is management's current
intent to fully realize the Partnership's investment in real estate. The
success of the Partnership's future operations and the ability to realize the
investment in its assets will be dependent on the Partnership's ability to
maintain rental rates, occupancy, and an appropriate level of operating
expenses in future years. Management believes that the steps that it is
taking will enable the Partnership to realize its investment in its assets.
F-7
Income Taxes
The Partnership is not subject to federal or state income taxes, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
Distribution of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement, is
distributed to limited partners quarterly. In accordance with the partnership
agreement, distributions are paid first to limited partners holding Class A
units until they have received a 10% per annum return on their adjusted
capital contributions, as defined. Cash available for distribution is then
paid to the general partners until they have received an amount equal to 10%
of distributions. Any remaining cash available for distribution is split
between the limited partners holding Class A units and the general partners
on a basis of 90% and 10%, respectively. No distributions will be made to the
limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners, on a per unit basis, until each limited partner
has received 100% of its adjusted capital contribution, as defined
. To limited partners holding Class B units, on a per unit basis,
until they receive an amount equal to the net cash available for
distribution received by the limited partners holding Class A units
. To all limited partners, on a per unit basis, until they receive a
cumulative 10% per annum return on their adjusted capital
contributions, as defined
. To all limited partners, on a per unit basis, until they receive an
amount equal to their respective cumulative distributions, as
defined
. To the general partners until they have received 100% of their
capital contributions, as defined
. Thereafter, 80% to the limited partners and 20% to the general
partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership, excluding
deductions for depreciation and amortization. Net income, as defined, of the
Partnership will be allocated each year in the same proportions that net cash
from operations is distributed to the partners. To the extent the
Partnership's net income in any year exceeds net cash from operations, it
will be allocated 99% to the limited partners holding Class A units and 1% to
the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year will
be allocated as follows: (a) 99% to the limited partners holding Class B
units and 1% to the general partners until their capital accounts are reduced
to zero, (b) then to any partner having a positive balance in his capital
account in an amount not to exceed such positive balance, and (c) thereafter
to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to a qualified income offset
provision in the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero, (c) allocations to Class B limited partners in amounts
equal to deductions for
F-8
depreciation and amortization previously allocated to them with respect to
the specific partnership property sold, but not in excess of the amount of
gain on sale recognized by the Partnership with respect to the sale of such
property, and (d) allocations to Class A limited partners and general
partners in amounts equal to deductions for depreciation and amortization
previously allocated to them with respect to the specific partnership
property sold, but not in excess of the amount of gain on sale recognized by
the Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investments in joint ventures are recorded using the equity method of
accounting.
Real Estate Assets
Real estate assets held through investments in affiliated joint
ventures are stated at cost less accumulated depreciation. Major
improvements and betterments are capitalized when they extend the
useful lives of the related assets. All repairs and maintenance are
expensed as incurred.
Management continually monitors events and changes in circumstances
which could indicate that carrying amounts of real estate assets may
not be recoverable. When events or changes in circumstances are present
which indicate that the carrying amounts of real estate assets may not
be recoverable, management assesses the recoverability of real estate
assets by determining whether the carrying value of such real estate
assets will be recovered through the future cash flows expected from
the use of the asset and its eventual disposition. Management has
determined that there has been no impairment in the carrying value of
real estate assets held by the joint ventures as of December 31, 2000.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years.
Revenue Recognition
All leases on real estate held by the joint ventures are classified as
operating leases, and the related rental income is recognized on a
straight-line basis over the terms of the respective leases.
Partners' Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to
the Partnership by the joint ventures are made in accordance with the
terms of the individual joint venture agreements. Generally, these
items are allocated in proportion to the partners' respective ownership
interests. Cash is paid by the joint ventures to the Partnership
quarterly.
Deferred Lease Acquisition Costs
Costs incurred to procure operating leases are capitalized and
amortized on a straight-line basis over the terms of the related
leases.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents
F-9
include cash and short-term investments. Short-term investments are stated at
cost, which approximates fair value, and consist of investments in money
market accounts.
Per Unit Data
Net income (loss) per unit, with respect to the Partnership for the years
ended December 31, 2000, 1999, and 1998, is computed based on the weighted
average number of units outstanding during the period.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year financial statement presentation.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to Wells
Capital, Inc. (the "Company"), the general partner of Wells Partners, for
acquisition and advisory services. These payments, as stipulated by the
partnership agreement, can be up to 6% of the limited partner contributions,
subject to certain overall limitations contained in the partnership
agreement. Aggregate fees paid through December 31, 2000 were $932,216 and
amounted to 3.7% of the limited partner contributions received. These fees
are allocated to specific properties as they are purchased or developed and
are included in real estate assets at the joint ventures. Deferred project
costs at December 31, 1999 represent fees not yet applied to properties.
3. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 2000 and 1999 represents the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarters of 2000 and 1999, as follows:
2000 1999
---------- ----------
Fund V and VI Associates $115,089 $108,412
Fund V, VI, and VII Associates 99,030 99,430
Fund VI and VII Associates 64,313 56,972
Fund VI, VII, and VIII Associates 155,253 140,117
Fund I, II, II-OW, VI, and VII Associates--Cherokee 20,703 20,175
Fund II, III, VI, and VII Associates 26,572 67,170
---------- ----------
$480,960 $492,276
========== ==========
The Partnership entered into a property management agreement with Wells
Management Company, Inc. ("Wells Management"), an affiliate of the general
partners. In consideration for supervising the management of the
Partnership's properties, the Partnership will generally pay Wells Management
management and leasing fees equal to (a) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate fee for the one-time lease-up of newly constructed properties
in an amount not to exceed the fee customarily charged in arm's-length
transactions by others rendering similar services in the same geographic area
for similar properties or (b) in the case of commercial properties which are
leased on a long-term net basis (ten or more years), 1% of the gross revenues
except for initial leasing fees equal to 3% of the gross revenues over the
first five years of the lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $157,719, $161,779, and $124,660 for
the years ended December 31, 2000, 1999, and 1998, respectively, which were
paid to Wells Management.
F-10
The Company performs certain administrative services for the Partnership,
such as accounting and other partnership administration, and incurs the
related expenses. Such expenses are allocated among the various Wells Real
Estate Funds based on time spent on each fund by individual administrative
personnel. In the opinion of management, such allocation is a reasonable
estimation of such expenses.
The general partners are also general partners of other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners of other Wells Real Estate Funds
may be in competition with the Partnership for tenants in similar geographic
markets.
4. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 2000 and 1999 are summarized as follows:
2000 1999
------------------------------ -----------------------------
Amount Percent Amount Percent
--------------- -------------- --------------- -------------
Fund I, II, II-OW, VI, and VII
Associates--Cherokee $ 749,777 11% $ 796,558 11%
Fund II, III, VI, and VII Associates 1,456,418 26 1,569,430 26
Fund V and VI Associates 4,378,890 54 4,597,841 54
Fund V, VI, and VII Associates 2,812,771 42 2,963,015 42
Fund VI and VII Associates 2,392,014 44 2,398,436 44
Fund VI, VII, and VIII Associates 5,300,368 34 5,559,369 34
--------------- ---------------
$ 17,090,238 $ 17,884,649
=============== ===============
The following is a rollforward of the Partnership's investment in joint
ventures for the years ended December 31, 2000 and 1999:
2000 1999
------------- -------------
Investment in joint ventures, beginning of year $17,884,649 $18,753,866
Equity in income of joint ventures 1,092,222 1,050,106
Contributions to joint ventures 105,723 14,524
Distributions from joint ventures (1,992,356) (1,933,847)
------------- -------------
Investment in joint ventures, end of year $17,090,238 $17,884,649
============= =============
Fund I, II, II-OW, VI, and VII Associates--Cherokee
In August 1995, the Partnership entered into a joint venture agreement with
Wells Real Estate Fund I, Fund II and II-OW (a joint venture between Wells
Real Estate Fund II and Wells Real Estate Fund II-OW), and Wells Real Estate
Fund VII, L.P. ("Fund VII"). The joint venture, Fund I, II, II-OW, VI, and
VII Associates--Cherokee, was formed for the purpose of owning and operating
Cherokee Commons, a retail shopping center containing approximately 103,755
square feet, located in Cherokee County, Georgia. Until the formation of this
joint venture, Cherokee Commons was part of the Fund I and II Tucker--
Cherokee joint venture. Concurrent with the formation of the Fund I, II, II-
OW, VI, and VII Associates--Cherokee joint venture, Cherokee Commons was
transferred from the Fund I and II Tucker--Cherokee joint venture. Percentage
ownership interests in Fund I, II, II-OW, VI, and VII Associates--Cherokee
were determined at the time of formation based on contributions. Under the
terms of the joint venture agreement, Fund VI and Fund VII each contributed
approximately $1 million to the new joint venture in return for a 10.7%
ownership interest. Fund I's ownership interest in the Cherokee joint venture
changed from 30.6% to 24%, and Fund II and II-OW joint venture's ownership
interest changed from 69.4% to 54.6%. The $2 million in cash contributed to
Cherokee was used to fund an expansion of the property for an existing
tenant.
F-11
Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
------------ ------------
Real estate assets, at cost:
Land $1,219,704 $1,219,704
Building and improvements, less accumulated depreciation of
$3,606,079 in 2000 and $3,163,829 in 1999 5,624,924 6,067,174
------------ ------------
Total real estate assets 6,844,628 7,286,878
Cash and cash equivalents 214,940 206,540
Accounts receivable 31,356 27,703
Prepaid expenses and other assets 100,866 89,846
------------ ------------
Total assets $7,191,790 $7,610,967
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 23,716 $ 16,295
Refundable security deposits 23,839 18,562
Partnership distributions payable 197,191 192,184
Due to affiliates 137,334 122,272
------------ ------------
Total liabilities 382,080 349,313
------------ ------------
Partners' capital:
Wells Real Estate Fund I 1,498,120 1,618,133
Fund II and II-OW 3,814,737 4,053,105
Wells Real Estate Fund VI 749,777 796,558
Wells Real Estate Fund VII 747,076 793,858
------------ ------------
Total partners' capital 6,809,710 7,261,654
------------ ------------
Total liabilities and partners' capital $7,191,790 $7,610,967
============ ============
F-12
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $965,305 $945,222 $909,831
Interest income 78 68 84
------------ ------------ ------------
965,383 945,290 909,915
------------ ------------ ------------
Expenses:
Depreciation 442,250 447,969 444,660
Operating costs, net of reimbursements 24,557 37,583 35,715
Partnership administration 23,352 24,882 22,934
Management and leasing fees 74,422 94,149 82,517
Legal and accounting 6,180 5,624 7,363
Bad debt expense 0 0 18,664
------------ ------------ ------------
570,761 610,207 611,853
------------ ------------ ------------
Net income $394,622 $335,083 $298,062
============ ============ ============
Net income allocated to Wells Real Estate Fund I $ 94,800 $ 80,496 $ 71,604
============ ============ ============
Net income allocated to Fund II and II-OW $215,310 $182,825 $162,626
============ ============ ============
Net income allocated to Wells Real Estate Fund VI $ 42,256 $ 35,881 $ 31,916
============ ============ ============
Net income allocated to Wells Real Estate Fund VII $ 42,256 $ 35,881 $ 31,916
============ ============ ============
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Fund II Wells Real Wells Real Total
Estate and Estate Estate Partners'
Fund I II-OW Fund VI Fund VII Capital
------------- ------------- ------------- ------------- -------------
Balance, December 31, 1997 $1,863,173 $4,536,781 $891,482 $888,782 $8,180,218
Net income 71,604 162,626 31,916 31,916 298,062
Partnership distributions (193,285) (403,744) (79,238) (79,238) (755,505)
------------- ------------- ------------- ------------- -------------
Balance, December 31, 1998 1,741,492 4,295,663 844,160 841,460 7,722,775
Net income 80,496 182,825 35,881 35,881 335,083
Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204)
------------- ------------- ------------- ------------- -------------
Balance, December 31, 1999 1,618,133 4,053,105 796,558 793,858 7,261,654
Net income 94,800 215,310 42,256 42,256 394,622
Partnership distributions (214,813) (453,678) (89,037) (89,038) (846,566)
------------- ------------- ------------- ------------- -------------
Balance, December 31, 2000 $1,498,120 $3,814,737 $749,777 $747,076 $6,809,710
============= ============= ============= ============= =============
F-13
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 394,622 $ 335,083 $ 298,062
------------ ------------ ------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 442,250 447,969 444,660
Changes in assets and liabilities:
Accounts receivable (3,653) 7,814 56,999
Prepaid expenses and other assets (11,020) 1,133 8,890
Accounts payable, accrued expenses, and refundable
security deposits 12,694 (72,272) 70,278
Due to affiliates 15,062 13,005 15,327
------------ ------------ ------------
Total adjustments 455,333 397,649 596,154
------------ ------------ ------------
Net cash provided by operating activities 849,955 732,732 894,216
------------ ------------ ------------
Cash flows from investing activities:
Investment in real estate 0 (14,148) (5,771)
------------ ------------ ------------
Cash flows from financing activities:
Distributions to joint venture partners (841,555) (734,858) (818,790)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 8,400 (16,274) 69,655
Cash and cash equivalents, beginning of year 206,540 222,814 153,159
------------ ------------ ------------
Cash and cash equivalents, end of year $ 214,940 $ 206,540 $ 222,814
============ ============ ============
F-14
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with
Fund II and III Associates, and Fund VII. The joint venture, Fund II, III, VI,
and VII Associates, was formed for the purpose of acquiring, developing,
operating, and selling real properties. During 1995, Fund II and III Associates
contributed a 4.3-acre tract of land from its 880 Property--Holcomb Bridge to
the Fund II, III, VI, and VII Associates joint venture. During 1996, 1997, and
1998, the Partnership and Fund VII made contributions to the joint venture.
Ownership percentage interests were recomputed accordingly. Development was
substantially completed in 1996 on two buildings containing a total of
approximately 49,500 square feet.
The following are the financial statements for Fund II, III, VI, and VII
Associates:
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
-------------- --------------
Real estate assets, at cost:
Land $1,325,242 $1,325,242
Building and improvements, less accumulated depreciation of $1,654,520 in
2000 and $1,299,227 in 1999 4,063,639 4,418,932
-------------- --------------
Total real estate assets 5,388,881 5,744,174
Cash and cash equivalents 88,044 189,404
Accounts receivable 151,886 162,464
Prepaid expenses and other assets 158,872 213,443
-------------- --------------
Total assets $5,787,683 $6,309,485
============== ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 82,072 $ 87,926
Partnership distributions payable 154,874 250,075
-------------- --------------
236,946 338,001
-------------- --------------
Partners' capital:
Fund II and III Associates 1,305,317 1,406,591
Wells Real Estate Fund VI 1,456,417 1,569,430
Wells Real Estate Fund VII 2,789,003 2,995,463
-------------- --------------
Total partners' capital 5,550,737 5,971,484
-------------- --------------
Total liabilities and partners' capital $5,787,683 $6,309,485
============== ==============
F-15
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $869,390 $953,952 $872,978
Other income 0 23,843 36,000
------------ ------------ ------------
869,390 977,795 908,978
------------ ------------ ------------
Expenses:
Depreciation 355,293 415,165 376,290
Operating costs, net of reimbursements 70,693 68,691 85,983
Management and leasing fees 111,567 129,798 97,701
Legal and accounting 4,513 4,952 6,509
Partnership administration 22,646 19,891 14,926
Bad debt expense 74,145 0 0
------------ ------------ ------------
638,857 638,497 581,409
------------ ------------ ------------
Net income $230,533 $339,298 $327,569
============ ============ ============
Net income allocated to Fund II and III Associates $ 55,489 $ 81,669 $ 78,791
============ ============ ============
Net income allocated to Wells Real Estate Fund VI $ 61,921 $ 91,135 $ 87,914
============ ============ ============
Net income allocated to Wells Real Estate Fund VII $113,123 $166,494 $160,864
============ ============ ============
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Fund II Wells Wells Real Total
and III Real Estate Estate Partners'
Associates Fund VI Fund VII Capital
-------------- -------------- -------------- -------------
Balance, December 31, 1997 $1,608,215 $1,789,811 $3,252,856 $6,650,882
Partnership contributions 0 4,600 154,049 158,649
Net income 78,791 87,914 160,864 327,569
Partnership distributions (179,199) (199,945) (365,964) (745,108)
-------------- -------------- -------------- -------------
Balance, December 31, 1998 1,507,807 1,682,380 3,201,805 6,391,992
Net income 81,669 91,135 166,494 339,298
Partnership distributions (182,885) (204,085) (372,836) (759,806)
-------------- -------------- -------------- -------------
Balance, December 31, 1999 1,406,591 1,569,430 2,995,463 5,971,484
Net income 55,489 61,921 113,123 230,533
Partnership distributions (156,763) (174,934) (319,583) (651,280)
-------------- -------------- -------------- -------------
Balance, December 31, 2000 $1,305,317 $1,456,417 $2,789,003 $5,550,737
============== ============== ============== =============
F-16
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 230,533 $ 339,298 $ 327,569
------------ ------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 355,293 415,165 376,290
Changes in assets and liabilities:
Accounts receivable 10,578 (51,004) (56,936)
Prepaid expenses and other assets 54,571 20,522 35,603
Accounts payable and accrued expenses (5,854) (104,146) 21,296
------------ ------------ ------------
Total adjustments 414,588 280,537 376,253
------------ ------------ ------------
Net cash provided by operating activities 645,121 619,835 703,822
------------ ------------ ------------
Cash flows from investing activities:
Investment in real estate 0 (19,772) (102,122)
------------ ------------ ------------
Cash flows from financing activities:
Contributions from joint venture partners 0 0 154,996
Distributions to joint venture partners (746,481) (719,447) (667,299)
------------ ------------ ------------
Net cash used in financing activities (746,481) (719,447) (512,303)
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (101,360) (119,384) 89,397
Cash and cash equivalents, beginning of year 189,404 308,788 219,391
------------ ------------ ------------
Cash and cash equivalents, end of year $ 88,044 $ 189,404 $ 308,788
============ ============ ============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 3,653
============ ============ ============
Fund V and VI Associates
On December 27, 1993, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund V, L.P. ("Fund V"). The joint venture, Fund V and VI
Associates, was formed for the purpose of investing in commercial real
properties. In December 1993, the joint venture purchased a 71,000-square-foot,
four-story office building known as the Hartford Building in Southington,
Connecticut. On June 26, 1994, Fund V contributed its interest in a parcel of
land, the Stockbridge Village II property, to the joint venture. The Stockbridge
Village II property consists of two separate restaurants and began operations
during 1995.Following are the financial statements for Fund V and VI Associates:
F-17
Fund V and VI Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
------------ ------------
Real estate assets, at cost:
Land $1,622,733 $1,622,733
Building and improvements, less accumulated depreciation of $2,372,711 in
2000 and $1,975,721 in 1999 6,410,985 6,807,975
------------ ------------
Total real estate assets 8,033,718 8,430,708
Cash and cash equivalents 197,279 177,657
Accounts receivable 109,677 135,229
Prepaid expenses and other assets 45,685 55,274
------------ ------------
Total assets $8,386,359 $8,798,868
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 18,615 $ 18,294
Partnership distributions payable 197,717 200,259
Due to affiliates 0 1,775
------------ ------------
Total liabilities 216,332 220,328
------------ ------------
Partners' capital:
Wells Real Estate Fund V 3,791,137 3,980,699
Wells Real Estate Fund VI 4,378,890 4,597,841
------------ ------------
Total partners' capital 8,170,027 8,578,540
------------ ------------
Total liabilities and partners' capital $8,386,359 $8,798,868
============ ============
F-18
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $1,029,287 $1,028,611 $953,275
Interest income 750 0 0
------------ ------------ ------------
1,030,037 1,028,611 953,275
------------ ------------ ------------
Expenses:
Depreciation 396,990 396,993 394,003
Operating costs, net of reimbursements 18,330 30,325 19,566
Management and leasing fees 67,354 65,167 57,368
Legal and accounting 7,677 7,400 9,107
Partnership administration 14,185 17,194 14,012
------------ ------------ ------------
504,536 517,079 494,056
============ ============ ============
Net income $ 525,501 $ 511,532 $459,219
============ ============ ============
Net income allocated to Wells Real Estate Fund V $ 243,848 $ 237,527 $213,630
============ ============ ============
Net income allocated to Wells Real Estate Fund VI $ 281,653 $ 274,005 $245,589
============ ============ ============
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Wells Real Totals'
Estate Estate Partners'
Fund V Fund VI Capital
------------- ------------- ------------
Balance, December 31, 1997 $4,342,324 $4,989,976 $9,332,300
Net income 213,630 245,589 459,219
Partnership contributions 0 9,762 9,762
Partnership distributions (396,186) (455,444) (851,630)
------------- ------------- ------------
Balance, December 31, 1998 4,159,768 4,789,883 8,949,651
Net income 237,527 274,005 511,532
Partnership contributions 0 14,524 14,524
Partnership distributions (416,596) (480,571) (897,167)
------------- ------------- ------------
Balance, December 31, 1999 3,980,699 4,597,841 8,578,540
Net income 243,848 281,653 525,501
Partnership distributions (433,410) (500,604) (934,014)
------------- ------------- ------------
Balance, December 31, 2000 $3,791,137 $4,378,890 $8,170,027
============= ============= ============
F-19
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ----------- ------------
Cash flows from operating activities:
Net income $525,501 $511,532 $459,219
------------ ----------- ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 396,990 396,993 394,003
Changes in assets and liabilities:
Accounts receivable 25,552 (38,399) 13,052
Prepaid expenses and other assets 9,589 (5,675) 6,403
Accounts payable 321 1,817 9,084
Due to affiliates (1,775) (5,034) (2,848)
------------ ----------- ------------
Total adjustments 430,677 349,702 419,694
------------ ----------- ------------
Net cash provided by operating activities 956,178 861,234 878,913
------------ ----------- ------------
Cash flows from investing activities:
Investment in real estate 0 (8,235) 0
------------ ----------- ------------
Cash flows from financing activities:
Contributions from joint venture partners 0 14,524 0
Distributions to joint venture partners (936,556) (903,049) (911,028)
------------ ----------- ------------
Net cash used in financing activities (936,556) (888,525) (911,028)
------------ ----------- ------------
Net increase (decrease) in cash and cash equivalents 19,622 (35,526) (32,115)
Cash and cash equivalents, beginning of year 177,657 213,183 245,298
------------ ----------- ------------
Cash and cash equivalents, end of year $197,279 $177,657 $213,183
============ =========== ============
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement
with Fund V and Fund VII. The joint venture, Fund V, VI, and VII Associates, was
formed for the purpose of investing in commercial real properties. In September
1994, Fund V, VI, and VII Associates purchased a 75,000-square-foot, three-story
office building known as the Marathon Building in Appleton, Wisconsin.
F-20
Following are the financial statements for Fund V, VI, and VII Associates:
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
-------------- --------------
Real estate assets, at cost:
Land $ 314,591 $ 314,591
Building and improvements, less accumulated depreciation of $2,057,369 in
2000 and $1,706,784 in 1999 6,310,535 6,661,120
-------------- --------------
Total real estate assets 6,625,126 6,975,711
Cash and cash equivalents 238,242 235,250
Due from affiliates 0 2,450
Accounts receivable 103,696 112,645
-------------- --------------
Total assets $6,967,064 $7,326,056
============== ==============
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 236,743 $ 237,700
Due to affiliates 5,648 4,506
-------------- --------------
Total liabilities 242,391 242,206
-------------- --------------
Partners' capital:
Wells Real Estate Fund V 1,106,655 1,165,776
Wells Real Estate Fund VI 2,812,772 2,963,015
Wells Real Estate Fund VII 2,805,246 2,955,059
-------------- --------------
Total partners' capital 6,724,673 7,083,850
-------------- --------------
Total liabilities and partners' capital $6,967,064 $7,326,056
============== ==============
F-21
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $971,050 $971,051 $971,447
------------ ------------ ------------
Expenses:
Depreciation 350,585 350,585 350,585
Management and leasing fees 9,442 39,659 34,632
Legal and accounting 5,750 5,750 3,450
Partnership administration 13,536 12,302 7,439
Operating costs 1,505 1,389 1,372
------------ ------------ ------------
380,818 409,685 397,478
------------ ------------ ------------
Net income $590,232 $561,366 $573,969
============ ============ ============
Net income allocated to Wells Real Estate Fund V $ 97,152 $ 92,401 $ 94,475
============ ============ ============
Net income allocated to Wells Real Estate Fund VI $246,894 $234,819 $240,091
============ ============ ============
Net income allocated to Wells Real Estate Fund VII $246,186 $234,146 $239,403
============ ============ ============
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund V Fund VI Fund VII Capital
-------------- -------------- -------------- --------------
Balance, December 31, 1997 $1,283,867 $3,263,121 $3,254,304 $7,801,292
Net income 94,475 240,091 239,403 573,969
Partnership distributions (153,446) (389,953) (388,835) (932,234)
-------------- -------------- -------------- --------------
Balance, December 31, 1998 1,224,896 3,113,259 3,104,872 7,443,027
Net income 92,401 234,819 234,146 561,366
Partnership distributions (151,521) (385,063) (383,959) (920,543)
-------------- -------------- -------------- --------------
Balance, December 31, 1999 1,165,776 2,963,015 2,955,059 7,083,850
Net income 97,152 246,894 246,186 590,232
Partnership distributions (156,273) (397,137) (395,999) (949,409)
-------------- -------------- -------------- --------------
Balance, December 31, 2000 $1,106,655 $2,812,772 $2,805,246 $6,724,673
============== ============== ============== ==============
F-22
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 590,232 $ 561,366 $ 573,969
------------ ------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 350,585 350,585 350,585
Changes in assets and liabilities:
Accounts receivable 8,949 8,949 8,983
Due from affiliates 2,450 (2,450) 0
Due to affiliates 1,142 (358) (1,302)
------------ ------------ ------------
Total adjustments 363,126 356,726 358,266
------------ ------------ ------------
Net cash provided by operating activities 953,358 918,092 932,235
Cash flows from financing activities:
Distributions to joint venture partners (950,366) (918,833) (927,476)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 2,992 (741) 4,759
Cash and cash equivalents, beginning of year 235,250 235,991 231,232
------------ ------------ ------------
Cash and cash equivalents, end of year $ 238,242 $ 235,250 $ 235,991
============ ============ ============
Fund VI and VII Associates
On December 9, 1994, the Partnership entered into a joint venture agreement with
Fund VII. The joint venture, Fund VI and VII Associates, was formed for the
purpose of investing in commercial properties. In December 1994, the Partnership
contributed its interest in a parcel of land, the Stockbridge Village III Retail
Center property, located in Stockbridge, Georgia, to the joint venture. The
Stockbridge Village III Retail Center property is comprised of two separate
outparcel buildings totaling approximately 18,500 square feet. One of the
outparcel buildings began operations during 1995. The other outparcel began
operations during 1996. On June 7, 1995, Fund VI and VII Associates purchased
3.38 acres of real property located in Stockbridge, Georgia. The retail center
expansion consists of a multi-tenant shopping center containing approximately
29,000 square feet.
During 2000, the Partnership made contributions to Fund VI and VII Associates;
during 1999 and 1998, the Partnership and Fund VII made contributions to the
joint venture. Ownership percentage interests were recomputed accordingly.
F-23
Following are the financial statements for Fund VI and VII Associates:
Fund VI and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
------------- -------------
Real estate assets, at cost:
Land $1,812,447 $1,812,447
Building and improvements, less accumulated depreciation of $1,066,010 in
2000 and $832,798 in 1999 3,354,898 3,485,011
------------- -------------
Total real estate assets 5,167,345 5,297,458
Cash and cash equivalents 118,152 113,621
Accounts receivable 130,094 126,982
Prepaid expenses and other assets 106,422 115,743
------------- -------------
Total assets $5,522,013 $5,653,804
============= =============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 38,969 $ 35,235
Partnership distributions payable 143,693 130,366
------------- -------------
Total liabilities 182,662 165,601
------------- -------------
Partners' capital:
Wells Real Estate Fund VI 2,392,014 2,398,436
Wells Real Estate Fund VII 2,947,337 3,089,767
------------- -------------
Total partners' capital 5,339,351 5,488,203
------------- -------------
Total liabilities and partners' capital $5,522,013 $5,653,804
============= =============
F-24
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $659,932 $624,453 $ 532,410
---------- ---------- ------------
Expenses:
Depreciation 233,212 235,591 232,896
Operating costs, net of reimbursements 4,652 (9,718) 36,099
Management and leasing fees 84,684 80,064 77,242
Partnership administration 23,259 33,090 22,119
Legal and accounting 25,075 15,247 26,676
Bad debt expense 0 0 78,689
------------ ------------ ------------
370,882 354,274 473,721
------------ ------------ ------------
Net income $289,050 $270,179 $ 58,689
============ ============ ============
Net income allocated to Wells Real Estate Fund VI $127,466 $118,073 $ 25,308
============ ============ ============
Net income allocated to Wells Real Estate Fund VII $161,584 $152,106 $ 33,381
============ ============ ============
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Wells Real Total
Estate Estate Partners'
Fund VI Fund VII Capital
------------ ------------ ------------
Balance, December 31, 1997 $2,487,443 $3,360,265 $5,847,708
Net income 25,308 33,381 58,689
Partnership contributions 123,018 5,291 128,309
Partnership distributions (124,695) (164,064) (288,759)
------------ ------------ ------------
Balance, December 31, 1998 2,511,074 3,234,873 5,745,947
Net income 118,073 152,106 270,179
Partnership distributions (230,711) (297,212) (527,923)
------------ ------------ ------------
Balance, December 31, 1999 2,398,436 3,089,767 5,488,203
Net income 127,466 161,584 289,050
Partnership contributions 105,723 0 105,723
Partnership distributions (239,611) (304,014) (543,625)
------------ ------------ ------------
Balance, December 31, 2000 $2,392,014 $2,947,337 $5,339,351
============ ============ ============
F-25
Funds VI and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 289,050 $ 270,179 $ 58,689
------------ ------------ ------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 233,212 235,591 232,896
Changes in assets and liabilities:
Accounts receivable (3,112) 6,152 58,720
Prepaid expenses and other assets 9,321 14,940 844
Accounts payable 3,734 (2,165) (27,644)
Due to affiliates 0 (5,338) 732
------------ ------------ ------------
Total adjustments 243,155 249,180 265,548
------------ ------------ ------------
Net cash provided by operating activities 532,205 519,359 324,237
------------ ------------ ------------
Cash flows from investing activities:
Decrease in construction payables 0 0 (30,000)
Investment in real estate (103,099) (497) (83,957)
------------ ------------ ------------
Net cash used in investing activities (103,099) (497) (113,957)
------------ ------------ ------------
Cash flows from financing activities:
Contributions from joint venture partners 105,723 0 128,309
Distributions to joint venture partners (530,298) (465,500) (312,251)
------------ ------------ ------------
Net cash used in financing activities (424,575) (465,500) (183,942)
------------ ------------ ------------
Net increase in cash and cash equivalents 4,531 53,362 26,338
Cash and cash equivalents, beginning of year 113,621 60,259 33,921
------------ ------------ ------------
Cash and cash equivalents, end of year $ 118,152 $ 113,621 $ 60,259
============ ============ ============
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Fund VII
and Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI,
VII, and VIII Associates, was formed to acquire, develop, operate, and sell real
properties. On April 25, 1995, the joint venture purchased a 5.55-acre parcel of
land in Jacksonville, Florida. A 92,964-square foot office building, known as
the BellSouth property, was completed and commenced operations in 1996. On May
31, 1995, the joint venture purchased a 14.683-acre parcel of land located in
Clemmons, Forsyth County, North Carolina. A retail shopping center was developed
and was substantially complete at December 31, 1997.
During 1996, the Partnership and Fund VII each withdrew $500,000 from the joint
venture in order to contribute needed funds to Fund II, III, VI, and VII
Associates. In addition, deferred project costs related to the Partnership and
Fund VII of $23,160 and $21,739, respectively, were unapplied when the
contributions were withdrawn. During 1996, Fund VIII made an additional
contribution of $2,815,965, which included $115,965 of deferred project costs
that were applied. Ownership percentage interests were recomputed accordingly.
F-26
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
-------------- --------------
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated depreciation of $3,031,152
in 2000 and $2,315,750 in 1999 10,074,417 10,657,052
Construction in progress 3,797 0
-------------- --------------
Total real estate assets 14,540,033 15,118,871
Cash and cash equivalents 606,802 736,202
Accounts receivable 330,031 255,221
Prepaid expenses and other assets 487,645 545,816
-------------- --------------
Total assets $15,964,511 $16,656,110
============== ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 65,442 $ 84,159
Partnership distributions payable 408,291 324,100
Due to affiliates 15,407 16,281
-------------- --------------
Total liabilities 489,140 424,540
-------------- --------------
Partners' capital:
Wells Real Estate Fund VI 5,300,368 5,559,369
Wells Real Estate Fund VII 5,168,016 5,420,549
Wells Real Estate Fund VIII 5,006,987 5,251,652
-------------- --------------
Total partners' capital 15,475,371 16,231,570
-------------- --------------
Total liabilities and partners' capital $15,964,511 $16,656,110
============== ==============
F-27
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------- ------------- -------------
Revenues:
Rental income $2,364,871 $2,294,016 $2,258,971
Interest income 3,985 14,937 25,416
Other income 360 360 9,373
------------- ------------- -------------
2,369,216 2,309,313 2,293,760
------------- ------------- -------------
Expenses:
Depreciation 715,402 701,885 688,759
Operating costs, net of reimbursements 371,191 444,156 451,299
Management and leasing fees 273,632 259,352 251,587
Legal and accounting 7,650 10,286 9,205
Partnership administration 30,330 27,804 25,109
Computer costs 1,585 1,043 128
------------- ------------- -------------
1,399,790 1,444,526 1,426,087
------------- ------------- -------------
Net income $ 969,426 $ 864,787 $ 867,673
============= ============= =============
Net income allocated to Wells Real Estate Fund VI $ 332,032 $ 296,193 $ 297,181
============= ============= =============
Net income allocated to Wells Real Estate Fund VII $ 323,741 $ 288,796 $ 289,760
============= ============= =============
Net income allocated to Wells Real Estate Fund VIII $ 313,653 $ 279,798 $ 280,732
============= ============= =============
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
-------------- -------------- --------------- ---------------
Balance, December 31, 1997 $6,058,082 $5,906,810 $5,722,761 $17,687,653
Net income 297,181 289,760 280,732 867,673
Partnership distributions (542,153) (528,615) (512,146) (1,582,914)
-------------- -------------- --------------- ---------------
Balance, December 31, 1998 5,813,110 5,667,955 5,491,347 16,972,412
Net income 296,193 288,796 279,798 864,787
Partnership distributions (549,934) (536,202) (519,493) (1,605,629)
-------------- -------------- --------------- ---------------
Balance, December 31, 1999 5,559,369 5,420,549 5,251,652 16,231,570
Net income 332,032 323,741 313,653 969,426
Partnership distributions (591,033) (576,274) (558,318) (1,725,625)
-------------- -------------- --------------- ---------------
Balance, December 31, 2000 $5,300,368 $5,168,016 $5,006,987 $15,475,371
============== ============== =============== ===============
F-28
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------- ------------- -------------
Cash flows from operating activities:
Net income $ 969,426 $ 864,787 $ 867,673
------------- ------------- -------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 715,402 701,885 688,759
Changes in assets and liabilities:
Accounts receivable (74,810) (71,269) (79,931)
Prepaid expenses and other assets 58,171 87,773 79,225
Accounts payable (18,717) 32,133 6,234
Due to affiliates (874) 6,546 4,558
------------- ------------- -------------
Total adjustments 679,172 757,068 698,845
------------- ------------- -------------
Net cash provided by operating activities 1,648,598 1,621,855 1,566,518
------------- ------------- -------------
Cash flows from investing activities:
Decrease in construction payables 0 0 (55,000)
Investment in real estate (136,564) (64,749) (140,590)
------------- ------------- -------------
Net cash used in investing activities (136,564) (64,749) (195,590)
------------- ------------- -------------
Cash flows from financing activities:
Distributions to joint venture partners (1,641,434) (1,621,225) (1,629,608)
------------- ------------- -------------
Net decrease in cash and cash equivalents (129,400) (64,119) (258,680)
Cash and cash equivalents, beginning of year 736,202 800,321 1,059,001
------------- ------------- -------------
Cash and cash equivalents, end of year $ 606,802 $ 736,202 $ 800,321
============= ============= =============
5. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended December
31, 2000, 1999, and 1998 is calculated as follows:
2000 1999 1998
------------- ------------- -------------
Financial statement net income $1,027,798 $ 969,613 $ 855,788
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 327,267 392,268 383,393
Expenses deductible when paid for income tax purposes,
accrued for financial reporting purposes 100 4,985 2,915
Rental income accrued for financial reporting purposes
in excess of amounts for income tax purposes (10,329) (44,181) (35,128)
------------- ------------- -------------
Income tax basis net income $1,344,836 $1,322,685 $1,206,968
============= ============= =============
F-29
The Partnership's income tax basis partners' capital at December 31, 2000,
1999, and 1998 is computed as follows:
2000 1999 1998
------------- ------------- -------------
Financial statement partners' capital $17,118,806 $18,056,939 $18,900,681
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 1,756,130 1,428,863 1,036,595
Joint venture change in ownership 8,730 8,730 8,730
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of
capital for financial reporting purposes 3,655,694 3,655,694 3,655,694
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for
income tax purposes (279,776) (269,447) (225,266)
Accumulated expenses deductible when paid for
income tax purposes, accrued for financial
reporting purposes 34,147 34,047 29,062
Partnership's distributions payable 481,448 476,036 427,995
------------- ------------- -------------
Income tax basis partners' capital $22,775,179 $23,390,862 $23,833,491
============= ============= =============
6. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases
at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 2,328,668
2002 2,144,554
2003 1,921,828
2004 1,415,410
2005 1,305,300
Thereafter 3,297,722
-------------
$12,413,482
=============
Three tenants contributed approximately 23%, 18%, and 14% of rental income.
In addition, two tenants will contribute approximately 24% and 18% of future
minimum rental income.
The future minimum rental income due Fund I, II, II-OW, VI, and VII
Associates--Cherokee under noncancelable operating leases at December 31,
2000 is as follows:
Year ending December 31:
2001 $ 951,376
2002 908,795
2003 819,757
2004 689,164
2005 653,219
Thereafter 3,159,986
------------
$ 7,182,297
============
F-30
One tenant contributed approximately 61% of rental income for the year ended
December 31, 2000 and will contribute approximately 84% of future minimum
rental income.
The future minimum rental income due Fund II, III, VI, and VII Associates
under noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 816,533
2002 539,270
2003 255,097
2004 219,319
2005 127,850
Thereafter 21,308
-------------
$1,979,377
=============
Three tenants contributed approximately 15%, 14%, and 13% of rental income
for the year ended December 31, 2000. In addition, four tenants will
contribute approximately 33%, 13%, 13%, and 11% of future minimum rental
income.
The future minimum rental income due Fund V and VI Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $1,035,037
2002 1,032,441
2003 966,017
2004 186,004
2005 96,689
Thereafter 99,173
--------------
$3,415,361
==============
Two tenants contributed approximately 70% and 13% of rental income for the
year ended December 31, 2000. In addition, three tenants will contribute
approximately 62%, 16%, and 15% of future minimum rental income.
The future minimum rental income due Fund V, VI, and VII Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 980,000
2002 990,000
2003 990,000
2004 990,000
2005 990,000
Thereafter 990,000
---------------
$5,930,000
===============
One tenant contributed 100% of rental income for the year ended December 31,
2000 and will contribute 100% of future minimum rental income.
F-31
The future minimum rental income due Fund VI and VII Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 713,760
2002 600,303
2003 428,888
2004 386,689
2005 360,359
Thereafter 691,945
--------------
$3,181,944
==============
Two tenants contributed approximately 16% and 10% of rental income for the
year ended December 31, 2000. In addition, two tenants will contribute
approximately 31% and 18% of future minimum rental income.
The future minimum rental income due Fund VI, VII, and VIII Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 2,145,470
2002 1,971,001
2003 1,890,449
2004 1,754,853
2005 1,688,144
Thereafter 6,379,813
---------------
$15,829,730
===============
Three tenants contributed approximately 46%, 23%, and 16% of rental income
for the year ended December 31, 2000. In addition, two tenants will
contribute approximately 55% and 40% of future minimum rental income.
7. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 2000 and 1999:
2000 Quarters End
------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ------------ -------------- -------------
Revenues $289,216 $269,631 $269,965 $282,976
Net income 263,183 243,852 255,374 265,389
Net income allocated to Class A limited
partners 263,183 243,852 255,374 265,389
Net income per weighted average Class A
limited partner unit $ 0.12 $ 0.11 $ 0.12 $ 0.12
Cash distribution per weighted average
Class A limited partner unit 0.23 0.23 0.23 0.20
F-32
1999 Quarters End
------------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ------------ -------------- --------------
Revenues $ 252,748 $282,555 $246,631 $274,634
Net income 221,316 258,378 232,429 257,490
Net income allocated to Class A limited
partners 452,565 332,375 232,429 257,490
Net loss allocated to Class B limited
partners (231,249) (73,997) 0 0
Net income per weighted average Class A
limited partner unit (a) $ 0.21 $ 0.15 $ 0.11 $ 0.12
Net loss per weighted average Class B
limited partner unit (a) (0.74) (0.24) 0.00 0.00
Cash distribution per weighted average
Class A limited partner unit 0.20 0.21 0.21 0.22
(a) The totals of the four quarterly amounts for the year ended
December 31, 1999 do not equal the totals for the year. This
difference results from the use of a weighted average to
compute the number of units outstanding for each quarter and
the year.
8. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
F-33
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VI, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*3(a) Certificate of Limited Partnership of Wells Real Estate Fund VI, N/A
L.P. (Exhibit 3(c) to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No.
33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate Fund VI, L.P. N/A
(Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the
fiscal year ended December 31, 1993, File No. 0-23656)
*10(a) Management Agreement between Wells Real Estate Fund VI, L.P. and N/A
Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real
Estate Fund VI, L.P. for the fiscal year ended December 31, 1993,
File No. 0-23656)
*10(b) Leasing and Tenant Coordinating Agreement between Wells Real Estate N/A
Fund VI, L.P. and Wells Management Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1993, File No. 0-23656)
*10(c) Custodial Agency Agreement dated March 25, 1993, between Wells Real N/A
Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to
Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1993, File No. 0-23656)
*10(d) Fund V and Fund VI Associates Joint Venture Agreement dated N/A
December 27, 1993 (Exhibit 10(g) to Post-Effective Amendment No. 1
to Registration Statement of Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P., File No. 33-55908)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(e) Sale and Purchase Agreement dated November 17, 1993, with Hartford N/A
Accident and Indemnity Company (Exhibit 10(h) to Post-Effective
Amendment No. 1 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(f) Lease with Hartford Fire Insurance Company December 29, 1993 N/A
(Exhibit 10(i) to Post-Effective Amendment No. 1 to Registration
Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P., File No. 33-55908)
*10(g) Amended and Restated Custodial Agency Agreement dated April 1, N/A
1994, between Wells Real Estate Fund VI, L.P. and NationsBank of
Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(h) First Amendment to Joint Venture Agreement of Fund V and Fund VI N/A
Associates dated July 1, 1994 (Exhibit 10(x) to Form 10-K of Wells Real
Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File
No. 0-21580)
*10(i) Land and Building Lease Agreement dated March 29, 1994, between N/A
Apple Restaurants, Inc. and NationsBank of Georgia, N.A., as Agent
for Wells Real Estate Fund V, L.P. (Exhibit 10(y) to Form 10-K of
Wells Real Estate Fund V, L.P. for the fiscal year ended
December 31, 1994, File No. 0-21580)
*10(j) Building Lease Agreement dated September 9, 1994, between Glenn's N/A
Open-Pit Bar-B-Que, Inc. and NationsBank of Georgia, N.A., as Agent
for Fund V and Fund VI Associates (Exhibit 10(z) to Form 10-K of
Wells Real Estate Fund V, L.P. for the fiscal year ended
December 31, 1994, File No. 0-21580)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(k) Joint Venture Agreement of Fund V, Fund VI and Fund VII Associates N/A
dated September 8, 1994, among Wells Real Estate Fund V, L.P.,
Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P. (Exhibit 10(j) to Post-Effective Amendment No. 6 to
Registration Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(l) Agreement for the Purchase and Sale of Property dated August 24, N/A
1994, between Interglobia Inc. - Appleton and NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit
10(k) to Post-Effective Amendment No. 6 to Registration Statement
of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
*10(m) Assignment and Assumption of Agreement for the Purchase and Sale of N/A
Real Property dated September 9, 1994, between NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates, and
NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund
VII Associates (Exhibit 10(l) to Post-Effective Amendment No. 6 to
Registration Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(n) Building Lease dated February 14, 1991, between Interglobia Inc. - N/A
Appleton and Marathon Engineers/Architects/Planners, Inc. (included
as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment
No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P.
and Wells Real Estate Fund VII, L.P., File No. 33-55908)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(o) Limited Guaranty of Lease dated January 1, 1993, by J. P. Finance N/A
OY and Fluor Daniel, Inc. for the benefit of Interglobia Inc. -
Appleton (included as Exhibit B to Assignment, Assumption and
Amendment of Lease referred to as Exhibit 10(p) below, which is
included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(p) Assignment, Assumption and Amendment of Lease dated January 1, N/A
1993, among Interglobia Inc. - Appleton, Marathon
Engineers/Architects/Planners, Inc. and Jaakko Poyry Fluor Daniel
(included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(q) Second Amendment to Building lease dated August 15, 1994, between N/A
Interglobia Inc. - Appleton and Jaakko Poyry Fluor Daniel
(successor-in-interest to Marathon Engineers/Architects/Planners,
Inc.) (included as Exhibit D-1 to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(r) Assignment and Assumption of Lease dated September 6, 1994, between N/A
Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as
Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(q) to
Post-Effective Amendment No. 6 to Registration Statement of Wells
Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P.,
File No. 33-55908)
*10(s) Agreement for the Purchase and Sale of Real Property dated April 7, N/A
1994, between 138 Industrial Ltd. and NationsBank of Georgia, N.A.,
as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K
of Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1994, File No. 0-23656)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(t) Land and Building Lease Agreement dated August 22, 1994, between N/A
KRR Stockbridge, Inc. d/b/a Kenny Rogers Roasters and NationsBank
of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P.
(Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the
fiscal year ended December 31, 1994, File No. 0-23656)
*10(u) Joint Venture Agreement of Fund VI and Fund VII Associates dated N/A
December 9, 1994 (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(v) Building Lease Agreement dated December 19, 1994, between Damon's N/A
of Stockbridge, LLC d/b/a Damon's Clubhouse and NationsBank of
Georgia, N.A., as Agent for Fund VI and Fund VII Associates
(Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the
fiscal year ended December 31, 1994, File No. 0-23656)
*10(w) Joint Venture Agreement of Fund II, III, VI and VII Associates dated N/A
January 10, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1995, File No. 0-23656)
*10(x) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII N/A
Associates dated April 17, 1995 (Exhibit 10(q) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(y) Agreement for the Purchase and Sale of Real Property dated N/A
February 13, 1995, between G.L. National, Inc. and Wells Capital,
Inc. (Exhibit 10(r) to Post-Effective Amendment No. 3 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(z) Agreement to Lease dated February 15, 1995, between NationsBank of N/A
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P. and
BellSouth Advertising & Publishing Corporation (Exhibit 10(s) to
Post-Effective Amendment No. 3 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(aa) Development Agreement dated April 25, 1995, between Fund VI, Fund N/A
VII and Fund VIII Associates and ADEVCO Corporation (Exhibit 10(t)
to Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(bb) Owner-Contractor Agreement dated April 24, 1995, between Fund VI, N/A
Fund VII and Fund VIII Associates, as Owner, and McDevitt Street
Bovis, Inc., as Contractor (Exhibit 10(u) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(cc) Architect's Agreement dated February 15, 1995, between Wells Real N/A
Estate Fund VII, L.P., as Owner, and Mayes, Suddereth & Etheredge,
Inc., as Architect (Exhibit 10(v) to Post-Effective Amendment No. 3
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(dd) First Amendment to Joint Venture Agreement of Fund VI and Fund VII N/A
Associates dated May 25, 1995 (Exhibit to Form 10-K of Wells Real
Estate Fund VI, L.P. for the fiscal year ended December 31, 1995,
File No. 0-23656)
*10(ee) First Amendment to Joint Venture Agreement of Fund VI, Fund VII and N/A
Fund VIII Associates dated May 30, 1995 (Exhibit 10(w) to Post
Effective Amendment No. 4 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
Exhibit Sequential
Number Description of Document Page Number
- ------ ----------------------- -----------
*10(ff) Real Estate Purchase Agreement dated April 13, 1995 (Exhibit 10(x) N/A
to Post Effective Amendment No. 4 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(gg) Lease Agreement dated February 27, 1995, between NationsBank of N/A
Georgia, N.A., as agent for Wells Real Estate Fund VII, L.P., and
Harris Teeter, Inc. (Exhibit 10(y) to Post Effective Amendment No.
4 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(hh) Development Agreement dated May 31, 1995, between Fund VI, Fund VII N/A
and Fund VIII Associates and Norcom Development, Inc. (Exhibit
10(z) to Post Effective Amendment No. 4 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(ii) Joint Venture Agreement of Fund I, II, II-OW, VI and VII N/A
Associates dated August 1, 1995 (Exhibit to Form 10-K of Wells
Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995,
File No. 0-23656)
*10(jj) Lease Modification Agreement No. 3 with The Kroger Co. dated N/A
December 31, 1993 (Exhibit 10(k) to Form 10-K of Wells Real Estate
Fund I for the fiscal year ended December 31, 1993, File No.
0-14463)