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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
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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
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Commission file number 0-22039
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Wells Real Estate Fund IX, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2126622
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway
Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
Class A Units
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(Title of Class)
Class B Units
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No___
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Aggregate market value of the voting stock held by 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 IX, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P., a non-public
Georgia limited partnership, as General Partners. The Partnership was formed on
August 15, 1994, for the purpose of acquiring, developing, constructing, owning,
operating, improving, leasing, and otherwise managing for investment purposes
income- producing commercial properties or industrial properties.
On January 5, 1996, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations on February 12, 1996, when it received
and accepted subscriptions for 125,000 units. The offering was terminated on
December 30, 1996, at which time the Partnership had sold 2,935,931 Class A
Units, and 564,069 Class B Units, held by a total of 1,877 and 241 Class A and
Class B Limited Partners respectively, for total Limited Partner capital
contributions of $35,000,000. After payment of $1,400,000 in acquisition and
advisory fees and expenses, payments of $5,254,603 in selling commissions and
organization and offering expenses, the investment by the Partnership of
$13,289,359 in the Fund VIII - Fund IX Joint Venture and the investment by the
Partnership of $14,982,434 in the Fund IX-X-XI-REIT Joint Venture, as of
December 31, 2000, the Partnership was holding net offering proceeds of $73,604
available for investment in properties.
The Partnership owns interests in properties through equity ownership in the
following joint ventures: (i) Fund VIII and Fund IX Associates, a joint venture
between the Partnership and Wells Real Estate Fund VIII, L.P. (the "Fund VIII -
Fund IX Joint Venture"), (ii) The Fund IX-X-XI-REIT Associates, a joint Venture
among the Partnership, Wells Real Estate Fund X, L.P., Wells Real Estate Fund
XI, L.P.,Wells Operating Partnership, L.P., ("Wells OP"), a Delaware limited
partnership having Wells Real Estate Investment Trust, Inc. (the Wells "REIT"),
as its general partner, (the "Fund IX-X-XI-REIT Joint Venture); and (iii) the
Fund VIII-IX-REIT Joint Venture, a joint venture between Wells OP and the Fund
VIII-IX 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 in Madison, Wisconsin (the "US Cellular Office
Building"), which is owned by the Fund VIII - IX Joint Venture; (ii) a one-story
office building in Farmer's Branch, Texas (the "TCI Building"), which is owned
by the Fund VIII - IX Joint Venture; (iii) a three-story office building in
Knoxville, Tennessee (the "Alston Power-Knoxville" formerly the "ABB Building"),
which is owned by the Fund IX-X-XI-REIT Joint Venture; (iv) a two-story office
building in Orange County, California, (the "Quest Building", formerly the "Bake
Parkway Building", previously owned by Fund VIII-IX Joint Venture), which is now
owned by the Fund VIII-IX-REIT Joint Venture; (v) a two-story office building in
Boulder County, Colorado (the "Cirrus Logic Building"), which is owned by the
Fund VIII - IX Joint Venture; (vi) a two-story office building in Boulder
County, Colorado (the "Ohmeda Building"), which is owned by the Fund
IX-X-XI-REIT Joint Venture; (vii) a three-story office building located in
Boulder County, Colorado (the "360 Interlocken Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture; (viii) a one-story office building located in
Oklahoma City, Oklahoma (the "Avaya" formerly the "Lucent Technologies
2
Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture; and (ix) a
single-story warehouse and office building located in Ogden, Weber County, Utah
(the "Iomega Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture.
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 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, eight of which are office 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
100% occupied, up from 99.8% at December 31, 1999, and 99.43% at 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
Partnership Percentage of
Share of Total
Number of Annualized Annualized Percentage of Annualized
Year of Lease Leases Square Feet Gross Base Gross Base Total Square Gross Base
Expiration Expiring Expiring Rent (1) Rent (1) Feet Expiring Rent
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2001 - - $ - $ - - -
2002 6 59,061 497,829 214,384 10.3% 9.4%
2003(2) 1 17,146 207,810 81,283 3.0% 3.9%
2004 1 65,006 1,207,992 460,124 11.3% 22.8%
2005(3) 1 106,750 83,710 32,742 18.6% 1.6%
2006(4) 1 76,276 $ 959,148 $ 433,567 13.3% 18.1%
2007(5) 1 84,404 $1,014,309 $ 396,740 14.7% 19.1%
2008(6) 1 57,186 $ 632,752 $ 243,290 10.0% 11.9%
2009(6) 1 108,250 $ 696,876 $ 272,248 18.8% 13.2%
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13 574,079 5,300,426 2,134,378 100% 100%
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of ODS Technologies in the 360 Interlocken Building in
Broomfield, Colorado
(3) Expiration of Ohmeda lease, Louisville, Colorado
(4) Expiration of US Cellular lease, Madison, Wisconsin
(5) Expiration of Alston Power lease, Knoxville, Tennessee
(6) Expiration of Avaya lease, Oklahoma City, Oklahoma
(7) Expiration of Iomega lease, Ogden, Utah
The following describes the properties in which the Partnership owns an interest
as of December 31, 2000:
Fund VIII - Fund IX Joint Venture
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On June 10, 1996, the Partnership 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
Fund VIII and Fund IX Associates (the "Fund VIII - Fund IX Joint Venture"). The
investment objectives of Wells Fund VIII are substantially identical to those of
the Partnership. As of December 31, 2000, Fund VIII had contributed $15,987,323
for an approximately 55% equity interest, and the Partnership had contributed
$13,289,358 for an approximately 45% equity interest in the Fund VIII - Fund IX
Joint Venture.
US Cellular Building
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On June 17, 1996, the Fund VIII - Fund IX Joint Venture purchased a 7.09 acre
tract of real property in Madison, Dane County, Wisconsin for a total cost of
$859,255 including closing costs. Construction has been completed on a
four-story office building containing approximately 101,727 rentable square feet
(the "US Cellular Building").
In June, 1997, US Cellular, a subsidiary of BellSouth Corporation, occupied its
leased space of 76,276 rentable square feet comprising approximately 75% of the
building. The initial term of the lease is 9 years and 11 months beginning in
June 1997, with the option to extend the initial term of the lease for two
consecutive five year periods. The annual base rent payable during the initial
term is $902,418 payable in equal monthly installments of $75,201 during the
first five years and $1,016,822 payable in equal monthly installments of $84,735
during the last four years and 11 months of the initial term. The annual base
rent for each extended term will be at market
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rental rates. US Cellular is required to pay additional rent equal to its share
of operating expenses during the lease term.
The land purchase and construction costs have been funded by capital
contributions of $3,912,444 by the Partnership and $6,573,342 by Wells Fund VIII
for a total cost of approximately $10,650,000.
The average effective annual rental per square foot at the US Cellular Building
was $12.60 for 2000, 1999 and 1998 and $8.87 for 1997, the first year of
occupancy. The occupancy rate at year end was 100% in 2000, 1999 and 1998.
The TCI Building
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On October 10, 1996, the Fund VIII - Fund IX Joint Venture purchased a one-story
office building containing approximately 40,000 rentable square feet, located on
approximately 4.864 acres of land in Farmer's Branch, Dallas County, Texas for a
purchase price of $4,450,000 excluding acquisition costs (the "TCI Building").
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the TCI
Building were derived from capital contributions made by the Partnership and
Wells Fund VIII totaling $2,236,530 and $2,238,170, respectively, for total
contributions to the Fund VIII - Fund IX Joint Venture with respect to this
building of $4,474,700, including acquisition costs.
The TCI Building is leased to TCI Valwood Limited Partnership I for a period of
fifteen years, with options to extend the lease for three consecutive five-year
periods. The annual base rent is $430,001 during the first five years, $454,001
during the next five years and $482,001 during the last five years. The TCI
lease commenced on July 19, 1996 and was assigned by the seller to the Fund VIII
- - Fund IX Joint Venture on October 10, 1996. 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 TCI Building at year end was 100% in 2000, 1999, and
1998. The average effective rental per square foot in the TCI Building is $11.38
for 2000 and 1999 and $11.49 for 1998, 1997 and 1996, the first year of
ownership.
The Cirrus Logic Building
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On February 20, 1997, the Fund VIII - Fund IX Joint Venture acquired a 4.26 acre
tract of real property in Broomfield, Colorado, located in Boulder County in the
Denver/Boulder metropolitan area (the "Denver Property"). A two-story office
building containing approximately 49,460 rentable square feet has been
constructed on the Denver Property (the "Cirrus Logic Building"). The Denver
Property is part of the Interlocken Business Park, a 963-acre business
development for advanced technology and research/development oriented companies.
The purchase price paid for the Cirrus Logic Building was $7,029,000, excluding
acquisition costs. Construction of the Cirrus Logic building was substantially
completed in March 1997 with Cirrus Logic, Inc. occupying the entire building.
The lease, as well as Cirrus Logic's obligation to pay rent, commenced on the
date upon which Cirrus Logic took occupancy of the building. The lease with
Cirrus Logic provides for a term of 15 years from the commencement date. Cirrus
Logic has the option to renew the lease for two
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additional terms of five years each. The base rental payable during any such
extended term would be 95% of the then current market rental rate for comparable
office buildings in the Boulder County area. The initial annual base annual rent
payable by Cirrus Logic under its lease is $667,755. The base annual rent will
be increased by 10% beginning with the sixth year of the lease and will be
increased another 10% beginning with the eleventh year of the lease.
Under its lease, Cirrus Logic is responsible for all utilities, cleaning, taxes
and other operating expenses and for maintaining property and liability
insurance on the Cirrus Logic Building. The Fund VIII - Fund IX Joint Venture
shall maintain for its own benefit liability insurance for the Cirrus Logic
Building as well as insurance for fire, vandalism and malicious mischief.
The funds used by the Fund VIII - IX Joint Venture to acquire the Cirrus Logic
Building were derived entirely from capital contributions made to the Fund VIII
- - IX Joint Venture by the Partnership and Wells Fund VIII. The Partnership and
Wells Fund VIII each made capital contributions of approximately $3,532,275 and
$3,555,495, respectively, to fund the purchase of the property, for total
capital contributions to the Fund VIII - Fund IX Joint Venture with respect to
the Cirrus Logic Building of approximately $7,087,770.
The average effective rental rate per square foot at the Cirrus Logic Building
was $14.92 for 2000, 1999, 1998 and $13.25 for 1997, the first year of
occupancy. The occupancy rate at year end was 100% in 2000, 1999 and 1998.
Fund VIII-IX-REIT Joint Venture
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On January 10, 1997, the Fund VIII - Fund IX Joint Venture acquired a two story
office building containing approximately 65,006 rentable square feet on a 4.4
acre tract of land located at 15253 Bake Parkway, in the Irvine Spectrum planned
business community in metropolitan Orange County, California (the "Quest
Building", formerly the Bake Parkway Building). The total consideration paid for
the building was $7,193,000 excluding acquisition expenses.
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the Quest
Building were derived entirely from capital contributions made to the Fund VIII
- - Fund IX Joint Venture by the Partnership and Wells Fund VIII. The Partnership
and Wells fund VIII made capital contributions of approximately $3,620,316 and
$3,608,109, respectively, to fund the purchase of the building, for total
capital contributions to the Fund VIII Fund IX joint Venture with respect to the
Quest Building of approximately $7,228,425.
On February 18, 1999, Wells OP entered into a Rental Income Guaranty Agreement
with Fund VIII and Fund IX Associates, whereby Wells OP guaranteed the VIII-IX
Joint Venture that it would receive rental income on the Quest Building
previously leased to Matsushita Avionics at least equal to the rental building
expenses that the VIII-IX Joint Venture would have received over the remaining
term of its original lease with Matsushita Avionics. Wells OP had paid
approximately $543,000 in rental income guaranty payments to the VIII-IX Joint
Venture through December 31, 2000, but has since ceased making such payments
since the Bake Parkway Building is now fully leased to Quest.
On June 15, 2000, the Fund VIII-IX-REIT Joint Venture was formed between Wells
OP and Fund VIII and Fund IX Associates. On July 1, 2000, the Fund VIII-IX Joint
Venture contributed
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its interest in the Bake Parkway Property to the Fund VIII-IX-REIT Joint
Venture. At December 31, 2000, the Partnership held an equity interest in the
VIII-IX-REIT Joint Venture of 38.1%.
A 42-month lease for the entire Bake Parkway Building has been signed by Quest
Software, Inc. Occupancy occurred on August 1, 2000. Quest is a publicly traded
corporation that provides software database management and disaster recovery
services for its clients.
Construction of tenant improvements required under the Quest lease cost
approximately $1,231,000 and was funded by Wells OP.
The average effective rental per square foot at the Quest building is $13.72 for
2000, $10.11 for 1999 and $10.32 for 1998. The occupancy rate at year end was
100% in 2000, 1999 and 1998.
Fund IX-X-XI-REIT Joint Venture
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On June 11, 1998, Fund IX and Fund X Associates (the "Joint Venture"), a joint
venture between the Partnership and Wells Real Estate Fund X, L.P. ("Wells Fund
X"), a Georgia public limited partnership, was amended and restated to admit
Wells Real Estate Fund XI, L.P. ("Wells Fund XI"), a Georgia public limited
partnership, and Wells Operating Partnership, L.P., a Delaware limited
partnership having Wells Real Estate Investment Trust, Inc. (the "Wells REIT"),
a Maryland corporation, as its General Partner. Wells Fund X, Wells Fund XI,
Wells OP and the Wells REIT are all Affiliates of the Partnership and its
General Partners.
The IX-X Joint Venture, which changed its name to the Fund IX-X-XI-REIT Joint
Venture, had previously acquired and owned the following three properties: (i)
the Alston Power Building, formerly ABB Building, located in Knoxville, Knox
County, Tennessee, (ii) the Ohmeda Building located in Louisville, Boulder
County, Colorado, and (iii) the 360 Interlocken Building located in Broomfield,
Boulder County, Colorado. On June 24, 1998, the Fund IX-X-XI-REIT Joint Venture
purchased the Avaya Building, formerly the Lucent Technologies Building, in
Oklahoma City, Oklahoma County, Oklahoma. On July 1, 1998, Wells Fund X
contributed a single-story warehouse and office building with 108,250 rentable
square feet (the "Iomega Building") to the Fund IX-X-XI-REIT Joint Venture as a
capital contribution.
As of December 31, 2000, the Partnership held an approximately 39.1% equity
interest in the Fund IX-X-XI-REIT Joint Venture. As of December 31, 2000, Wells
Fund X held an approximate 48.3% equity interest, Wells Fund XI held an
approximate 8.9% equity interest, and Wells OP held an approximate 3.7% equity
interest in the Fund IX-X-XI-REIT Joint Venture.
The Alston Power Knoxville Building
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On March 20, 1997, the Fund IX-X Joint Venture began construction on a
three-story office building containing approximately 84,404 rentable square feet
(the " Alston Power Building") on a 5.62 acre tract of real property in
Knoxville, Knox County, Tennessee. The land purchase and construction costs
totaling approximately $8,137,994 were funded by capital contributions of
$4,221,973 by the Partnership and $3,916,021 by Wells Fund X.
Alston Power, Inc. successor in interest to ABB Environmental Systems, a
subsidiary of ABB, Inc., occupied its lease space of 56,012 rentable square feet
comprising approximately 67% of the building in December 1997. The initial term
of the lease is 9 years and 11 months commencing
7
in December of 1997. Alston Power has the option under its lease to extend the
initial term of the lease for two consecutive five year periods. The annual base
rent payable during the initial term is $646,250 payable in equal monthly
installments of $53,854 during the first five years and $728,750 payable in
equal monthly installments of $60,729 during the last four years and 11 months
of the initial term. The annual base rent for each extended term will be at
market rental rates. In addition to the base rent, Alston Power is required to
pay additional rent equal to its share of operating expenses during the lease
term.
Commencing December 1, 1999, ABB Environmental exercised its right of first
refusal to lease an additional 23,992 square feet of space vacated by The
Associates in September, 1999. This addition increased their rentable floor area
from 57,831 square feet to 81,823 square feet. On May 19, 2000, Alston Power,
Inc. successor in interest to ABB Flak, Inc. executed the third amendment to
lease agreement for the remaining 2,581 square feet of rentable floor area on
the second floor of the building. Accordingly, Alston Power now occupies 100% of
the building, and will pay lease rent at the same terms and conditions of their
original lease.
The average effective annual rental per square foot at the Alston Power Building
was $14.05 for 2000, $11.77 for 1999, $9.97 for 1998 and $8.16 for 1997, the
first year of occupancy. The occupancy rate at year end was 100% for 2000, 98%
for 1999 and 95% for 1998.
Ohmeda Building
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On February 13, 1998, the Fund IX-X Joint Venture acquired a two-story building
that was completed in 1998 with approximately 106,750 rentable square feet (the
"Ohmeda Building") on a 15-acre tract of land located in Louisville, Boulder
County, Colorado. The purchase price for the Ohmeda Building was $10,325,000.
The Fund IX-X Joint Venture also incurred additional acquisition expenses in
connection with the purchase of the Ohmeda Building, including attorney's fees,
recording fees and other closing costs. As of December 31, 2000, the Partnership
had contributed $3,460,192 and Wells Fund X had contributed $6,900,878 to this
property.
The entire 106,750 rentable square feet of the Ohmeda Building is currently
under a net lease dated February 26, 1987, as amended by First Amendment to
Lease dated December 3, 1987 and as amended by Second Amendment to Lease dated
October 20, 1997 (the "Lease") with Ohmeda, Inc., a Delaware corporation. The
lease was assigned to the Joint Venture at the closing. The lease currently
expires in January 2005, subject to (i) Ohmeda's right to effectuate an early
termination of the lease under the terms and conditions described below, and
(ii) Ohmeda's right to extend the lease for two additional five year periods of
time at the then current market rental rates.
The monthly base rental payable under the lease is $83,709.79 through January
31, 2003; $87,890.83 from February 1, 2003 through January 31, 2004; and
$92,249.79 from February 1, 2004 through January 31, 2005. Under the Lease,
Ohmeda is responsible for all utilities, taxes, insurance and other operating
cost with respect to the Ohmeda Building during the term of the lease. In
Addition, Ohmeda shall pay a $21,000 per year management fee for maintenance and
administrative services of the Ohmeda Building. The Fund IX-X-XI-REIT Joint
Venture, as landlord, is responsible for maintenance of the roof, exterior and
structural walls, foundation, other structural members and floor slab, provided
that the landlord's obligation to make repairs specifically excludes items of
cosmetic and routine maintenance such as the painting of walls.
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The average effective annual rental rate per square foot at the Ohmeda Building
was $9.62 for 2000, 1999 and 1998, the first year of occupancy. The occupancy
rate at year end was 100% for 2000, 1999 and 1998.
360 Interlocken Building
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On March 20, 1998, the Fund IX-X Joint Venture acquired a three-story
multi-tenant office building containing approximately 51,974 rentable square
feet (the "360 Interlocken Building") on 5.1 acre tract of land in Broomfield,
Boulder County, Colorado for a purchase price of $8,275,000, excluding
acquisition costs. The project was funded by capital contributions of $6,642,466
by the Partnership and $1,674,271 by Wells Fund X.
The 360 Interlocken Building was completed in December 1996. The first floor has
multiple tenants and contain 15,599 rentable square feet; the second floor is
leased to ODS Technologies, L.P. and contains 17,146 rentable square feet; and
the third is leased to Transecon, Inc. and contains 19,229 rentable square feet.
As stated, the entire third floor of the Interlocken Building containing 19,229
rentable square feet is currently under lease to Transecon and expires in
October 2001, subject to Transecon's right to extend for one additional term of
five years upon 180 days notice. The monthly lease rent payable under the
Transecon lease is approximately $24,000 for the initial term of the lease.
Under the lease, Transecon is responsible for its share of utilities, taxes,
insurance and other operating expenses with respect to the Interlocken Building.
In addition, Transecon has a right of first refusal under the lease for any
second floor space proposed to be leased by the landlord.
The entire second floor of the Interlocken building containing 17,146 rentable
square feet is currently under lease to ODS and expires in September, 2003,
subject to ODS's right to extend for one additional term of three years. The
monthly lease is $22,100 through January 1998; $22,150 through January, 1999;
$22,600 through January 2000; $23,100 through January 2001; $23,550 through
January 2002; $24,050 through January 2003 and $24,550 through September, 2003.
The rental payments to be made by the tenant under the ODS lease and also
secured by the assignment of a $275,000 letter of credit which may be drawn upon
by the landlord in the event of a tenant default under the lease. Under the
lease, ODS is responsible for its share of utilities, taxes, insurance and other
operating costs with respect to the Interlocken Building.
The average effective annual rental rate per square foot at the 360 Interlocken
Building was $16.23 for 2000, $15.97 for 1999 and 1998, the first year of
occupancy. The occupancy rate at year-end was 100% for 2000, 1999 and 1998.
Avaya Building (formerly Lucent Technologies Building)
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On May 30, 1997, the Fund IX-X Joint Venture entered into an agreement for the
purchase and sale of real property with Wells Development Corporation ("Wells
Development"), an affiliate of the General Partners, for the acquisition and
development of a one-story office building containing 57,186 net rentable square
feet on 5.3 acres of land (the "Avaya Building"). On June 24, 1998, the Fund
IX-X-XI-REIT Joint Venture purchased this property for a purchase price of
$5,504,276. The purchase price was funded by capital contributions of $657,804
by the Partnership, $950,392 by Fund X, $2,482,810 by Fund XI and $1,421,466 by
Wells OP.
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Avaya, a world-wide leader in the telecommunications technology producing a
variety of communication products, has occupied the entire Avaya Building. The
initial item of the lease will be ten years commencing January 5, 1998. Avaya
has the option to extend the initial term of the lease for two additional five
year periods. The annual base rent payable during the initial term is $508,383
payable in equal monthly installments of $42,365 during the first five years and
$594,152 payable in equal monthly installments of $49,513 during the second five
year lease term. The annual base rent for each extended term will be at market
rental rates. In addition to the base rent, Avaya will be required to pay
additional rent equal to its share of operating expenses during the lease term.
The average effective annual rental per square foot at the Avaya Building was
$10.19 for 2000, 1999 and $9.69 for 1998, the first year of occupancy. The
occupancy rate at year end was 100% for 2000, 1999 and 1998.
Iomega Building
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On July 1, 1998, Wells Fund X, contributed a single story warehouse and office
building with 108,250 rentable square feet (the "Iomega Building") and was
credited with making a capital contribution to the IX-X-XI-REIT Joint Venture in
the amount of $5,050,425, which represents the purchase price of $5,025,000 plus
acquisition expenses of $25,425 originally paid by Wells Fund X for the Iomega
Building on April 1, 1998.
The building is 100% occupied by one tenant with a ten year lease term that
expires on July 30, 2006. The monthly base rent payable under the lease is
$40,000 through November 12, 1999. Beginning on the 40/th/ and 80/th/ months of
the lease term, the monthly base rent payable under the lease will be increased
to reflect an amount equal to 100% of the increase in the Consumer Price Index
(as defined in the lease) during the preceding 40 months; provided however, that
in no event shall the base rent be increased with respect to any one year by
more than 6% or by less than 3% per annum, compounded annually, on a cumulative
basis from the beginning of the lease term. The lease is a triple net lease,
whereby the terms require the tenant to reimburse the IX-X-XI-REIT Joint Venture
for certain operating expenses, as defined in the lease, related to the
building.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a 4 acre tract
of vacant land adjacent to the Iomega Building located in Ogden, Utah. This site
is being used for additional parking and loading dock area which includes at
least 400 new parking stalls and new site work for truck maneuver space, in
accordance with the requirements of the tenants and City of Ogden. The project
was completed on July 1, 1999. The tenant, Iomega Corporation, has agreed to
extend the term of its lease to April 30, 2009 and will pay an additional base
rent, an amount equal to thirteen percent (13%) per annum payable in monthly
installments of the direct and indirect cost of acquiring the property and
constructing the improvements. This additional base rent commenced on May 1,
1999.
The land was purchased at a cost of $212,000, excluding acquisition costs. The
funds used to acquire the land and for the improvements were funded entirely out
of capital contributions from Wells Fund XI to the Fund IX-X-XI-REIT Joint
Venture in the amount of $874,625. The project was completed at a total cost of
$874,625.
10
The average effective annual rental per square foot at the Iomega Building was
$5.18 for 2000, 1999 and $4.60 for 1998, the first year of occupancy. The
occupancy rate at year end was 100% for 2000, 1999 and 1998.
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
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.
- -----------------------------------------------------------
No matters were submitted to a vote of the Limited Partners during the year
2000.
PART II
-------
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
- --------------------------------------------------------------------------
The offering for sale of Units in the Partnership terminated on December 30,
1996, at which time the Partnership had 2,935,931 outstanding Class A Units held
by a total of 1841 Limited Partners and 564,069 outstanding Class B Units held
by a total of 257 Limited Partners. As of February 28, 2001, the Partnership had
3,110,159 outstanding Class A Units held by a total of 1,905 Limited partners
and 389,841 outstanding Class B Units held by a total of 212 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 to be $10.68 per A unit and $13.78 per B
unit 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. This
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.
Class A Limited Partners are entitled to a distribution from Net Cash From
Operations, as defined in the Partnership Agreement to mean cash flow, less
adequate cash reserves for other obligations of the Partnership for which there
is no provision, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of Net Cash From Operations equal to 10% of the total amount
of Net Cash From Operations distributed. Thereafter, the Limited Partners
holding Class A Status Units will receive 90% of Net Cash From Operations and
the General Partners will receive 10%. No Net Cash From Operations will be
distributed to Limited Partners holding Class B Status Units. Holders of
11
Class A Status Units will, except in limited circumstances, be allocated none of
the Partnership's net loss, depreciation, and amortization deductions. These
deductions will be allocated to the Class B Status Units, until their capital
account balances have been reduced to zero. No distributions have been made to
the General Partners as of December 31, 2000.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A Status Limited Partners during the
two most recent fiscal years were as follows:
Per Class A Status Unit
-------------------------------------------------------------------------
Distribution for Total Cash Investment Return of
Quarter Ended Distributed Income Capital
------------- ----------- ------ -------
March 31, 1999 $ 694,497 $ 0.23 $ 0.00
June 30, 1999 $ 695,564 $ 0.23 $ 0.00
September 30, 1999 $ 687,145 $ 0.23 $ 0.00
December 31, 1999 $ 623,076 $ 0.20 $ 0.00
March 31, 2000 $ 672,619 $ 0.22 $ 0.00
June 30, 2000 $ 692,840 $ 0.23 $ 0.00
September 30, 2000 $ 714,179 $ 0.23 $ 0.00
December 31, 2000 $ 719,081 $ 0.23 $ 0.00
The fourth quarter distribution was accrued for accounting purposes in 2000, and
was not actually paid to Limited Partners until February, 2001. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Status Units will continue in 2001 at a level
at least comparable with 2000 cash distributions on an annual basis.
(Remainder of this page left intentionally blank)
12
ITEM 6. SELECTED FINANCIAL DATA.
- -------------------------------
The Partnership did not commence active operations until it received and
accepted subscriptions for a minimum of 125,000 Units on February 12, 1996.
The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 2000, 1999 and 1998 and 1997:
2000 1999 1998 1997
---- ---- ---- ----
Total assets $ 27,001,398 $ 29,211,164 $ 27,944,553 $ 29,945,898
Total revenues 1,836,768 1,561,456 1,593,734 1,199,300
Net income 1,758,676 1,449,955 1,490,331 1,091,766
Net loss allocated
to General Partners $ 0 $ 0 $ 0 $ (206)
Net income allocated to
Class A Limited Partners $ 2,858,806 $ 2,597,938 $ 2,713,636 $ 1,564,778
Net loss allocated to
Class B Limited Partners $ (1,100,130) $ (1,147,983) $ (1,223,305) $ (472,806)
Net income per weighted
average (1) Class A
Limited Partner Unit $ 0.93 $ 0.89 $ 0.88 $ 0.53
Net loss per weighted
average (1) Class B
Limited Partner Unit $ (2.67) $ (2.72) $ (2.18) $ (0.77)
Cash Distributions per
Weighted average (1)
Class A Limited Partner
Unit:
Investment Income $ 0.91 $ 0 .89 $ 0.82 $ 0.46
Return of Capital $ 0.00 $ 0 .00 $ 0.00 $ 0.00
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased 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
13
complete certain projects, amounts of cash distributions anticipated to be
distributed to Limited Partners in the future and certain other matters. Readers
of this Report should be aware that there are various factors that could cause
actual results to differ materially from any forward-looking statement made in
the Report, which include construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants upon the
expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
- -------
The Partnership commenced active operations on February 24, 1996, when it
received and accepted subscriptions for 125,000 units. The offering was
terminated on December 30, 1996, at which time the Partnership had sold
2,935,931 Class A Status Units and 564,069 Class B Status Units, held by a total
of 1,841 and 257 Limited Partners respectively, for total Limited Partner
contributions of $35,000,000. After payment of $1,400,000 in acquisition and
advisory fees and expenses, payment of $5,254,603 in selling commissions and
organization and offering expenses, the investment by the Partnership of
$13,289,359 in the Fund VIII - Fund IX Joint Venture, and the investment of
$14,982,434 in the Fund IX-X-XI-REIT Joint Venture, as December 31, 2000, the
Partnership was holding net offering proceeds of $73,604 available for
investments in properties.
Gross revenues of the Partnership were $1,836,768 for the year ended December
31, 2000, $1,593,734 for the year ended December 31, 1999 and $1,561,456 for the
year ended December 31, 1998. This increase was attributable primarily to
increased revenues at Alston Power Building as well as the overall decrease in
expenses at the properties in the Joint Ventures. Expenses of the Partnership
were $78,092 for 2000, $103,403 for 1999 and $111,501 for 1998, and consisted
primarily of legal, accounting and partnership administrative costs. Net income
of the Partnership was $1,758,676 for the 14 year ended December 31, 2000,
$1,490,331 for the year ended December 31, 1999 and $1,449,955 for the year
ended December 31, 1998.
The Partnership made cash distributions of investment income to Limited Partners
holding Class A Status Units of $0.91 for Class A Status Unit for the year ended
December 31, 2000, $0.89 per Class A Status Unit for the year ended December 31,
1999 and $0.82 per Class A Status Unit for the year ended December 31, 1998. The
General Partners anticipate distributions per Unit to Limited Partners holding
Class A Status Units will continue in 2001 at a level at least comparable with
2000 cash distributions on an annual basis. Distributions accrued for the fourth
quarter of 2000 to the Limited partners holding Class A Status Units were paid
in February, 2001. No cash distributions were made to Limited Partners holding
Class B Status Units.
14
Property Operations
- -------------------
The Partnership's ownership interest in the Fund VIII - Fund IX Joint Venture is
45.2%, the Partnership's ownership interest in the Fund VIII-IX-REIT Joint
Venture is 38.1% and the Partnership's ownership interest in the Fund IX-X-XI-
REIT Joint Ventures is 39.1%
As of December 31, 2000, the Partnership owned interests in the following
operational properties:
The TCI Building - Fund VIII -Fund IX Joint Venture
- ---------------------------------------------------
For the Year Ended December 31,
------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 455,177 $ 455,178 $ 455,177
Interest income 34,740 25,995 32,194
---------- ---------- ----------
489,917 481,173 487,371
---------- ---------- ----------
Expenses:
Depreciation 166,596 166,593 166,594
Management & leasing expenses 17,487 17,370 17,199
Other operating expenses 11,299 10,044 9,236
---------- ---------- ----------
195,382 194,007 193,029
---------- ---------- ----------
Net income $ 294,535 $ 287,166 $ 294,342
========== ========== ==========
Occupied % 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 45.2% 45.2% 45.2%
Cash distribution to Partnership $ 197,066 $ 193,733 $ 200,708
Net income allocated to the Partnership $ 133,139 $ 129,808 $ 135,548
Rental income and expenses remained relatively constant. Total revenue and net
income increased in 2000 due to fluctuations in interest income rates.
Real estate taxes and primarily 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.
15
The US Cellular Building/Fund VIII - Fund IX Joint Venture
- ----------------------------------------------------------
Year Ended December 31,
-----------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 1,282,076 $ 1,282,078 $1,282,076
----------- ------------ ----------
Expenses:
Depreciation 601,651 601,652 601,509
Management & leasing expense 139,718 129,474 139,396
Other operating expenses (80,889) 84,345 (118,009)
----------- ------------ ----------
660,480 815,471 622,896
----------- ------------ ----------
$ 621,596 $ 466,607 $ 659,180
=========== ============ ==========
Occupied % 100% 100% 100%
Partnership's Ownership % 45.2% 45.2% 45.2%
Cash distribution to Partnership $ 550,168 $ 469,668 $ 550,715
Net income allocated to Partnership $ 280,982 $ 210,922 $ 303,943
Net income increased for the year ended December 31, 2000, as compared to 1999,
due to an increase in common area maintenance reimbursements billed to tenants
due to a large credit for 1998, that was applied to the tenants in 1999 but not
in 2000. Net income decreased for the year ended December 31, 1999, as compared
to 1998, due to a decreased in common area maintenance reimbursements billed to
tenants in 1999, due to overbilling of property tax in 1998. The credit for 1998
was approximately $100,000 and was credited to the tenants in 1999. Tenants are
billed an estimated amount for the current year common area maintenance which is
then reconciled in the following year and the difference billed to the tenant.
Management fee reimbursement is also included in operating costs. The building
incurred property taxes of $47,654 for 2000, $49173 for 1999 and $50,825 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 Cirrus Logic Building/Fund VIII - Fund IX Joint Venture
- -----------------------------------------------------------
For the Year Ended December 31,
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 738,156 $ 738,156 $ 738,156
---------- ---------- ---------
Expenses:
Depreciation 291,063 291,063 291,064
Management & leasing expense 48,513 44,329 39,149
Other operating expenses 5,833 (81,061) 62,038
---------- ---------- ---------
345,409 254,331 392,251
---------- ---------- ---------
Net income $ 392,747 $ 483,825 $ 345,905
========== ========== =========
Occupied % 100% 100% 100%
Partnership's Ownership % 45.2% 45.2% 45.2%
Cash distribution to Partnership $ 280,868 $ 322,028 $ 265,441
Net income allocated to Partnership $ 177,534 $ 218,705 $ 160,123
Rental income, depreciation, and management and leasing fees remained relatively
stable while other operating expenses increased for the year ended December 31,
2000, as compared to the same period in 1999, due primarily to an adjustment for
common-area maintenance billing to the tenants. Tenants are billed an estimated
amount for the current year common area maintenance which is then reconciled in
the following year and the difference billed to the tenants. The decrease in
other operating expenses from 1998 to 1999 was due to an adjustment for property
taxes billed to tenants. Management fees reimbursed by the tenant are also
included in other operating expenses.
The building incurred property taxes of $231,696 for 2000, $215,174 for 1999 and
$101,229 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.
17
The Quest Building (formerly the Bake Parkway Building)/Fund VIII - IX - REIT
- -----------------------------------------------------------------------------
Joint Venture
- -------------
For the Year Ended December 31,
-------------------------------
2000 1999 1998
---- ---- ----
Revenues:
Rental income $ 891,807 $ 657,513 $ 670,792
-------------- -------------- -------------
Expenses:
Depreciation 295,726 215,670 215,669
Management & leasing expense 52,123 24,902 26,050
Other operating expenses 93,312 9,388 16,180
-------------- -------------- -------------
441,161 249,960 257,899
-------------- -------------- -------------
Net income $ 450,646 $ 407,553 $ 412,893
============== ============== =============
Occupied % 100% 100% 100%
Partnership's Ownership % 38.1% 45.2% 45.2%
Cash distribution to Partnership $ 313,417 $ 311,420 $ 306,434
Net income allocated to Partnership $ 192,457 $ 184,227 $ 190,139
On June 15, 2000, the Fund VIII-IX-REIT Joint Venture was formed between Wells
OP and Fund VIII and Fund IX Associates, a Georgia joint venture partnership
between Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.
(the "fund VIII-IX Joint Venture"). On July 1, 2000, the Fund VIII-IX Joint
Venture contributed its interest in the Bake Parkway Property to the Fund
VIII-IX-REIT Joint Venture. The Bake Parkway Building is a two-story office
building containing approximately 65,006 rentable square feet in Irvine,
California.
A 42-month lease for the entire Bake Parkway Building has been signed by Quest
Software, Inc. Occupancy occurred on August 1, 2000. Quest is a publicly trade
corporation that provides software database management and disaster recovery
services for its clients.
Construction of tenant improvements required under the Quest lease cost
approximately $1,231,000 and was funded by Wells OP.
Rental income and management and lease fees have increased in 2000 as compared
to 1999 and 1998 due to the increased rental rate on the Quest lease.
Depreciation has increased due to the tenant improvement placed in service in
2000. Other operating expenses increased in 2000 due primarily to a write off of
prior year straight line rent related to a prior tenant.
18
The Alston Power Building (formerly the ABB Building)/ Fund IX-X-XI-REIT Joint
- ------------------------------------------------------------------------------
Venture
- -------
For The Year Ended
December 31, 2000 December 31, 1999 December 31, 1998
----------------- ----------------- -----------------
Revenues:
Rental income $ 1,185,573 $ 987,327 $ 836,746
Interest Income 73,676 58,768 20,192
-------------- -------------- -------------
1,259,249 1,046,095 856,938
-------------- -------------- -------------
Expenses:
Depreciation 394,998 537,799 475,020
Management & leasing expense 149,378 120,325 107,338
Operating costs,
net of reimbursements (77,526) (2,532) (40,641)
-------------- -------------- -------------
466,850 655,592 541,717
-------------- -------------- -------------
Net income $ 792,399 $ 390,503 $ 315,221
============== ============== =============
Occupied % 100% 98% 95%
Partnership's Ownership % 39.1% 39.1% 39.8%
Cash distribution to partnership $ 463,586 $ 364,642 $ 312,163
Net income allocated to Partnership $ 310,271 $ 152,956 $ 134,866
Rental income increased in 2000, over 1999 and 1998, due primarily to the
increased occupancy level of the property. Other operating expenses were
negative for 2000, 1999 and 1998 due to an offset of tenant reimbursements in
operating costs, as well as management and leasing fee reimbursements. Tenants
are billed an estimated amount for current year common area maintenance which is
then reconciled the following year and the difference billed to the tenant.
Total expenses decreased in 2000 due to a decrease in depreciation expense but,
increased for 1999, over 1998, due to increased depreciation and management and
leasing fees as the building was leased up. The decrease in depreciation
resulted form an accelerated depreciation on tenant improvement for a short term
lease in 1999 for 23,092 square feet.
Cash distributions and net income allocated to the Partnership increased in 2000
over prior year levels due to a combination of increased rental income and
decreased operating expenses. The Alston Power - Knoxville Building incurred
property taxes of $63,198 for 2000, $47,616 for 1999 and $36,771 for 1998.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 3. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
19
The Avaya Building (formerly the Lucent Technologies Building) / Fund IX-X-XI-
- ------------------------------------------------------------------------------
REIT Joint Venture
- ------------------
For the Year Ended For the Year Ended Seven Months Ended
December 31, 2000 December 31, 1999 December 31, 1998
----------------- ----------------- -----------------
Revenues:
Rental income $ 583,009 $ 583,009 $ 291,508
------------ ------------ -----------
Expenses:
Depreciation 183,204 183,204 106,871
Management & leasing expenses 21,479 21,479 11,281
Operating costs, net of
reimbursement 12,753 15,809 9,883
------------ ------------ -----------
217,436 220,492 128,035
------------ ------------ -----------
Net Income $ 365,573 $ 362,517 $ 163,473
============ ============ ===========
Occupied % 100% 100% 100%
Partnership's Ownership % 39.1% 39.1% 39.8%
Cash distribution to Partnership $ 197,234 $ 195,545 $ 157,332
Net income allocated to the
Partnership $ 143,137 $ 141,870 $ 65,200
Rental income, depreciation and management and leasing fees remained stable in
2000, as compared to 1999, while other operating expenses are slightly lower,
due primarily to a one-time charge for consulting fees in 1999, which did not
occur in 2000. Net income and cash distributions allocated to the Partnership
increased in 2000, compared to 1999, due primarily to the increase in net
income. The tenant is responsible for property taxes. Since the Avaya Building
was purchased in June 1998, comparative income and expense figures are available
for only seven months of 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.
20
The Ohmeda Building / Fund IX-X-XI-REIT Joint Venture
- -----------------------------------------------------
For the Year Ended For the Year Ended Eleven Months Ended
December 31, 1999 December 31, 1999 December 31, 1998
----------------- ----------------- -----------------
Revenues:
Rental income $ 1,027,314 $ 1,027,314 $ 898,901
------------- ------------- ------------
Expenses:
Depreciation 326,305 326,304 299,112
Management & leasing expenses 54,482 46,911 41,688
Operating costs, net of Reimbursement 65,152 (15,183) 2,863
------------- ------------- ------------
445,939 358,032 343,663
------------- ------------- ------------
Net Income $ 581,375 $ 669,282 $ 555,238
============= ============= ============
Occupied % 100% 100% 100%
Partnership's Ownership % 39.1% 39.1% 39.8%
Cash distribution to Partnership $ 346,457 $ 380,627 $ 360,390
Net income allocated to the
Partnership $ 227,626 $ 261,867 $ 243,597
Rental income remained stable in 2000, as compared to 1999. Total expenses
increased significantly due in part to a significant rise in real estate taxes,
which stemmed from the revaluation of the property by Boulder County authorities
in 1999. A later reduction in taxes resulting from an appeal in 2000 was offset
by a common area maintenance reimbursement credit to the tenant. The Ohmeda
Building incurred property taxes of $227,495 for 2000, $249,707 for 1999 and
$143,962 for 1998.
Cash distributions and net income allocated to the Partnership decreased in 2000
as compared to 1999, due to decreased net income.
For comments on the general competitive conditions to which the property may be
subject, see Item I, Business, page 2. For additional information on tenants,
etc. refer to item 2, Properties, page 3.
21
The 360 Interlocken Building / Fund IX-X-XI-REIT Joint Venture
- --------------------------------------------------------------
For the Year Ended For the Year Ended Ten Months Ended
December 31, 2000 December 31, 1999 December 31, 1998
----------------- ----------------- -----------------
Revenues:
Rental income $ 843,675 $ 829,827 $ 665,405
Interest Income 0 0 246
----------- ------------ -----------
843,675 829,827 665,651
----------- ------------ -----------
Expenses:
Depreciation 286,680 286,680 238,299
Management & leasing expenses 108,275 73,129 55,130
Operating costs, net of Reimbursement (75,208) 42,431 (55,654)
----------- ------------ -----------
319,747 402,240 237,775
----------- ------------ -----------
Net Income $ 523,928 $ 427,587 $ 427,876
=========== ============ ===========
Occupied % 100% 100% 100%
Partnership's Ownership % 39.1% 39.1% 39.8%
Cash distribution to Partnership $ 319,194 $ 277,124 $ 282,781
Net income allocated to the Partnership $ 205,155 $ 167,284 $ 188,147
Rental income increased due to a tenant occupying additional space previously
leased to another tenant at a lower rate. Other operating expenses are negative
due to an offset of tenant reimbursements in operating costs as well as
management and leasing fee reimbursement. Tenants are billed an estimated amount
for current year common area maintenance, which is then reconciled the following
year and the difference billed to the tenants. Management and leasing expenses
increased in 2000 as compared to 1999 due to differences in adjustment for prior
year billings to tenants. The 360 Interlocken Building incurred property taxes
of $268,744 for 2000, $244,025 for 1999 and $96,747 for 1998.
Net income and cash distributions allocated to the Partnership increased in 2000
as compared to 1999 due primarily to the increase in net income.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
22
The Iomega Building / Fund IX-X-XI-REIT Joint Venture
- -----------------------------------------------------
For the Year Ended For the Year Ended Nine Months Ended
December 31, 2000 December 31, 1999 December 31, 1998
----------------- ----------------- -----------------
Revenues:
Rental income $ 673,000 $ 560,906 $ 373,420
------------ ------------ ------------
Expenses:
Depreciation 220,248 204,925 145,975
Management & leasing expenses 29,159 24,295 23,058
Operating costs, net of
Reimbursement 17,725 9,368 (4,579)
------------ ------------ ------------
267,132 238,588 164,454
------------ ------------ ------------
Net Income $ 405,868 $ 322,318 $ 208,966
============ ============ ============
Occupied % 100% 100% 100%
Partnership's Ownership % 39.1% 39.1% 39.8%
Cash distribution to Partnership $ 237,579 $ 200,208 $ 93,461
Net income allocated to the Partnership $ 158,915 $ 126,095 $ 60,311
Rental income increased in 2000, as compared to 1999, due to the completion of
the parking lot complex in the second quarter of 1999. Total expenses increased
in 2000, over 1999, due to an increase in depreciation and real estate tax
expenses relating to the new parking lot. Other operating expenses for 1998 are
negative due to tenant reimbursement reflected in this category which includes
management and leasing expense reimbursement. The Iomega Building incurred
property taxes of $76,754 for 2000, $73,020 for 1999 and $44,559 for 1998, the
first year of occupancy.
Net income and cash distributions allocated to the Partnership increased in
2000, as compared to 1999, due primarily to the increase in net income.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenant,
etc. refer to Item 2, Properties, page 3.
23
Liquidity and Capital Resources
- -------------------------------
The Partnership commenced active operations on February 24, 1996, when it
received and accepted subscriptions for 125,000 Units. As of December 31, 2000,
the Partnership raised $35,000,000 in capital through the sale of 3,500,000
Units. After payment of $1,400,000 in acquisition and advisory fees and
expenses, payment of $5,254,603 in selling commissions and organizational and
offering expenses, and the investment by the Partnership of $28,271,793 in joint
ventures, as of December 31, 2000, the Partnership was holding net offering
proceeds of approximately $73,604 available for investment in the properties.
The Partnership had net cash (used in) provided by operating activities in 2000
of ($66,145), 1999 of ($94,403) and 1998 of $80,147. Net cash provided by (used
in) by investing activities of $2,786,972 in 2000, $2,624,017 in 1999 and
($7,330,065) in 1998. This was primarily the result of reducing the
Partnership's investment in the joint ventures and receiving distributions from
its investments in Joint Venture. Net cash used in financing activities was
$2,707,684 in 2000, $2,753,442 in 1999 and $2,188,189 in 1998.
The Partnership's distributions paid and payable through the fourth quarter of
2000 have been paid from net cash from operations and from distributions
received from its equity investment in joint ventures. 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 expects to meet liquidity requirements and budget demands
through cash flow from operations.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
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 (CAM charges),
real estate tax and insurance reimbursements on a per square foot bases, or in
some cases, annual reimbursement of operating expenses above a certain per
square foot allowance. These provisions should reduce the Partnership's exposure
to increases in costs and operating expenses resulting from inflation.
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.
24
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 6200 The Corners Parkway, 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 Wells
Capital, Inc. Mr. Wells is the President of Wells & Associates, Inc., a real
estate brokerage and investment company formed in 1976 and incorporated in 1978,
for 25 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 (including
reimbursement of expenses) 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 Number in Capacities in which served Form Cash Compensation
Group of Compensation
- -----------------------------------------------------------------------------------------------------------------------
Wells Management Company, Inc. Property Manager - $212,225
Management & Leasing Fees
(1) These fees are not paid directly by the Partnership but are paid by the
joint venture entities which owns properties for which the property
management and leasing services relate and include management and leasing
fees.
25
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
(2) (3)
(1) Name and Address of Amount and Nature of (4)
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
Class A Units Leo F. Wells, III 2,128.70 Units Less than 1%
(IRA, 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 Sales Proceeds.
- --------------------------------------------------------
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners holding
Class A Status Units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A Status Units have received a return of
their adjusted capital contributions plus a 10% cumulative return on their
adjusted capital contributions and Limited Partners holding Class B Units have
received a return of their adjusted capital contributions plus a 15% cumulative
return on their adjusted capital contributions; provided, however, that in no
event shall the General Partners receive in the aggregate in excess of 15% of
net sales proceeds and net financing proceeds remaining after payments to
Limited Partners from such proceeds of amounts equal to the sum of their
adjusted capital contributions plus a 6% cumulative return on their adjusted
capital contributions. The General Partners did not receive any distributions
from net cash flow from operations or net sales proceeds for the year ended
December 31, 2000.
26
Property Management and Leasing Fees.
- ------------------------------------
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to the lessor of (A) (i) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate one-time fee for 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 others rendering similar services in the same
geographic area for similar properties; and (ii) in the case of industrial and
commercial properties which are leased on a long-term (ten or more years) net
basis, 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. received $212,225 in cash compensations for the
year ended December 31, 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. No real estate commissions were
paid to the General Partners or affiliates for the year ended December 31, 2000.
27
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- -------------------------------------------------------------------------
(a) 1. The Financial Statements are contained on Pages F-2 through F-24 of
this Annual Report on Form 10-K, and the list of the Financial
Statements contained herein is set forth on page F-1, which is hereby
incorporated by reference.
(a) 2. The Exhibits filed in response to Item 601 of Regulation S-K are
listed on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission during the 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.
28
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 IX, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
------------------------------
Leo F. Wells, III
Individual General Partner and
as President and Chief Financial
Officer of Wells Capital, Inc.,
the 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
- --------------------- President and Sole Director of
Leo F. Wells, III 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.
29
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Financial Statements Page
- -------------------- ----
Independent Auditors' Report F-2
Balance Sheets as of December 31, 2000 and 1999 F-3
Statements of Income for the Year Ended December 31, 2000, 1999 and 1998 F-4
Statements of Partners' Capital for the Year Ended December 31, 2000,
1999, and 1998 F-5
Statements of Cash Flows for the Year Ended December 31, 2000, 1999 and 1998 F-6
Notes to Financial Statements for December 31, 2000, 1999 and 1998 F-7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund IX, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND IX,
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 IX, 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 IX, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
----------- -----------
INVESTMENT IN JOINT VENTURES $26,166,688 $27,196,918
ACCOUNTS RECEIVABLE 1,458 0
CASH AND CASH EQUIVALENTS 115,337 102,194
DUE FROM AFFILIATES 714,195 639,956
DEFERRED PROJECT COSTS 3,720 5,485
----------- -----------
Total assets $27,001,398 $27,944,553
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 5,853 $ 0
Partnership distributions payable 719,081 628,046
----------- -----------
Total liabilities 724,934 628,046
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--3,110,159 units and 3,072,322 units as of December 31, 2000
and 1999, respectively 26,276,464 26,114,657
Class B--389,841 units and 427,678 units as of December 31, 2000 and
1999, respectively 0 1,201,850
----------- -----------
Total partners' capital 26,276,464 27,316,507
----------- -----------
Total liabilities and partners' capital $27,001,398 $27,944,553
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND IX, 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 $ 1,829,216 $ 1,593,734 $ 1,481,869
Interest income 7,552 0 79,587
------------ ----------- -----------
1,836,768 1,593,734 1,561,456
------------ ----------- -----------
EXPENSES:
Partnership administration 47,396 60,020 63,643
Legal and accounting 18,823 20,897 33,673
Amortization of organization costs 0 12,500 6,250
Computer costs 11,873 9,986 7,935
------------ ----------- -----------
78,092 103,403 111,501
------------ ----------- -----------
NET INCOME $ 1,758,676 $ 1,490,331 $ 1,449,955
============ =========== ===========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 2,858,806 $ 2,713,636 $ 2,597,938
============ =========== ===========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ (1,100,130) $(1,223,305) $(1,147,983)
============ =========== ===========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.93 $ 0.89 $ 0.88
============ =========== ===========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ (2.67) $ (2.72) $ (2.18)
============ =========== ===========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED
PARTNER UNIT $ 0.91 $ 0.89 $ 0.82
============ =========== ===========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND IX, 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 2,949,776 $25,322,591 550,224 $ 4,186,127 $ 29,508,718
Net income (loss) 0 2,597,938 0 (1,147,983) 1,449,955
Partnership distributions 0 (2,432,213) 0 0 (2,432,213)
Class B conversion elections 40,099 158,634 (40,099) (158,634) 0
------------ ----------- ---------- ------------ -------------
BALANCE, December 31, 1998 2,989,875 25,646,950 510,125 2,879,510 28,526,460
Net income (loss) 0 2,713,636 0 (1,223,305) 1,490,331
Partnership distributions 0 (2,700,284) 0 0 (2,700,284)
Class B conversion elections 82,447 454,355 (82,447) (454,355) 0
------------ ----------- ---------- ------------ -------------
BALANCE, December 31, 1999 3,072,322 26,114,657 427,678 1,201,850 27,316,507
Net income (loss) 0 2,858,806 0 (1,100,130) 1,758,676
Partnership distributions 0 (2,798,719) 0 0 (2,798,719)
Class B conversion elections 37,837 101,720 (37,837) (101,720) 0
------------ ----------- ---------- ------------ -------------
BALANCE, December 31, 2000 3,110,159 $26,276,464 389,841 $ 0 $ 26,276,464
============ =========== ========== ============ =============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND IX, 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 $ 1,758,676 $ 1,490,331 $ 1,449,955
------------- ------------ --------------
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in income of joint ventures (1,829,216) (1,593,734) (1,481,869)
Amortization of organizational costs 0 12,500 6,250
Changes in assets and liabilities:
Accounts receivable (1,458) 0 0
Other assets 0 0 102,311
Accounts payable and accrued expenses 5,853 (3,500) 3,500
------------- ------------ --------------
Total adjustments (1,824,821) (1,584,734) (1,369,808)
------------- ------------ --------------
Net cash (used in) provided by operating activities (66,145) (94,403) 80,147
------------- ------------ --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (44,357) (190,853) (10,611,655)
Sale of joint venture interest 0 0 1,156,101
Distributions received from joint ventures 2,831,329 2,814,870 2,125,489
------------- ------------ --------------
Net cash provided by (used in) investing activities 2,786,972 2,624,017 (7,330,065)
------------- ------------ --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (2,707,684) (2,753,442) (2,188,189)
------------- ------------ --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,143 (223,828) (9,438,107)
CASH AND CASH EQUIVALENTS, beginning of year 102,194 326,022 9,764,129
------------- ------------ --------------
CASH AND CASH EQUIVALENTS, end of year $ 115,337 $ 102,194 $ 326,022
============= ============ ==============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 1,765 $ 8,136 $ 509,657
============= ============ ==============
Earnest money deposit applied to investment in joint venture $ 0 $ 0 $ 650,000
============= ============ ==============
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND IX, 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 IX, L.P. (the "Partnership") is a public limited
partnership organized on August 15, 1994 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 began offering units for sale in the beginning of 1996. The
Partnership has two classes of limited partnership units. Upon
subscription for units, each limited partner must elect whether to have
their units treated as Class A units or Class B units. Thereafter, limited
partners shall have the right to change their prior elections to have some
or all of their units treated as Class A units or Class B units one time
during each quarterly accounting period. Limited partners may vote to,
among other things, (a) amend the partnership agreement, subject to
certain limitations, (b) change the business purpose or investment
objectives of the Partnership, and (c) remove a general partner. A
majority vote on any of the described matters will bind the Partnership,
without the concurrence of the general partners. Each limited partnership
unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed,
currently under development or construction, newly constructed, or have
operating histories. The Partnership owns an interest in the following
properties through joint ventures between the Partnership and other Wells
Real Estate Funds: (i) an office building in Madison, Wisconsin (the "U.S.
Cellular Building"); (ii) office building in Farmers Branch, Texas (the
"TCI Building"); (iii) a two-story office building in Boulder County,
Colorado (the "Cirrus Logic Building"); (iv) a two-story office building
in Orange County, California (the "Quest Building," formerly the
"Matsushita Building"); (v) a three-story office building in Knoxville,
Tennessee (the "Alstom Power Building," formerly the ABB Building); (vi) a
two-story office building in Louisville, Colorado (the "Ohmeda Building");
(vii) a three-story office building in Broomfield, Colorado (the "360
Interlocken Building"); (viii) a one-story warehouse facility in Ogden,
Utah (the "Iomega Corporation Building"); and (ix) a one-story office
building in Oklahoma City, Oklahoma (the "Avaya Building," formerly the
Lucent Technologies Building).
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The carrying values of real estate are based on management's current
intent to hold the real estate assets as long-term investments. The
success of the Partnership's future operations and the ability to realize
the investment in its assets will be dependent on the Partnership's
ability to maintain rental rates, occupancy, and an appropriate level of
operating expenses in future years. Management believes that the steps it
is taking will enable the Partnership to realize its investment in its
assets.
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.
Distributions of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement,
is distributed to the limited partners quarterly. In accordance with the
partnership agreement, such distributions are paid first to limited
partners holding Class A units until they have received a 10% per annum
return on their net capital contributions, as defined. Then, such
distributions are paid to the general partners until they have received
10% of the total amount distributed thus far. Any remaining cash available
for distribution is split 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 will be distributed in
the following order:
. To limited partners holding units, which at any time have been
treated as Class B units, until they receive an amount necessary
to equal the net cash available for distribution received by the
limited partners holding Class A units
. To limited partners on a per unit basis until each limited partner
has received 100% of their net capital contribution, as defined
. To all limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital contribution,
as defined
. To limited partners on a per unit basis until they receive an
amount equal to their preferential limited partner return (defined
as the sum of a 10% per annum cumulative return on net capital
contributions for all periods during which the units were treated
as Class A units and a 15% per annum cumulative return on net
capital contributions for all periods during which the units were
treated as Class B units)
. To all general partners until they have received 100% of their
capital contributions; in the event that limited partners have
received aggregate cash distributions from the Partnership over
the life of their investment in excess of a return of their net
capital contributions plus their preferential partner return, then
the general partners shall receive an additional sum equal to 25%
of such excess
. Thereafter, 80% to the limited partners on a per unit basis and
20% to the general partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
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.
F-8
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: (i) allocations made pursuant to the qualified income
offset provisions of the partnership agreement; (ii) allocations to
partners having negative capital accounts until all negative capital
accounts have been restored to zero; and (iii) allocations to limited
partners holding Class B units in amounts equal to the deductions for
depreciation and amortization previously allocated to them with respect to
the specific Partnership property sold, but not in excess of the amount of
gain on sale recognized by the Partnership with respect to the sale of
such property.
Investment in Joint Ventures
Basis of Presentation
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
the Partnership's investment in joint ventures is recorded using the
equity method of accounting.
Real Estate Assets
Real estate assets held by the joint ventures are stated at cost less
accumulated depreciation. Major improvements and betterments are
capitalized when they extend the useful life of the related asset. All
ordinary 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
that indicate the carrying amounts of real estate assets may not be
recoverable, management assesses the recoverability of real estate
assets by determining whether the carrying value of such real estate
assets will be recovered through the future cash flows expected from
the use of the asset and its 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. Tenant improvements are amortized
over the life of the related lease or the life of the asset, whichever
is shorter.
Revenue Recognition
All leases on real estate assets held by the joint ventures are
classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective
leases.
Partners' Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to
the Partnership by the joint ventures are made in accordance with the
terms of the joint venture agreements. Generally, these items are
allocated in proportion to the partners' respective ownership
interests. Cash is paid from 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.
F-9
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership
considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents. Cash equivalents
include cash and short-term investments. Short-term investments are stated
at cost, which approximates fair value, and consist of investments in
money market accounts.
Per Unit Data
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 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 5% of the limited
partner contributions, subject to certain overall limitations contained in
the partnership agreement. Aggregate fees paid through December 31, 2000
were $1,390,055 and amounted to 4% of the limited partners' contributions
received. These fees are allocated to specific properties as they are
purchased or developed and are included in capitalized assets of the joint
venture. Deferred project costs at December 31, 2000 and 1999 represent
fees not yet applied to properties.
3. RELATED-PARTY TRANSACTIONS
Due from affiliate 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:
2000 1999
--------- --------
Fund VIII and IX Associates $ 318,775 $304,441
Fund IX, X, XI, and REIT Joint Venture 395,420 335,515
--------- --------
$ 714,195 $639,956
========= ========
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 initial
lease-up of newly constructed properties in an amount not to exceed the
fee customarily charged in arm's-length transactions by others rendering
similar services in the same geographic area for similar properties or (b)
in the case of commercial properties which are leased on a long-term net
basis (ten or more years), 1% of the gross revenues except for initial
leasing fees equal to 3% of the gross revenues over the first five years
of the lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $212,225, $184,427, and $166,317 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 in other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
4. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in ventures at
December 31, 2000 and 1999 are summarized as follows:
2000 1999
--------------------------- ------------------------
Amount Percent Amount Percent
------------ ------------- ------------ ---------
Fund VIII and IX Associates $12,048,885 45% $12,606,292 45%
Fund IX, X, XI, and REIT Joint
Venture 14,117,803 39 14,590,626 39
------------ ------------
$26,166,688 $27,196,918
============ ============
The following is a rollforward of the Partnership's investment in the
joint ventures for the years ended December 31, 2000 and 1999:
2000 1999
----------- -----------
Investment in joint ventures, beginning of year $27,196,918 $28,119,579
Equity in income of joint ventures 1,829,216 1,593,734
Contributions to joint ventures 46,122 198,989
Distributions from joint ventures (2,905,568) (2,715,384)
----------- -----------
Investment in joint ventures, end of year $26,166,688 $27,196,918
=========== ===========
Fund VIII and IX Associates
On June 10, 1996, the Partnership entered into a joint venture with Wells
Real Estate Fund VIII, L.P. ("Wells Fund VIII"). The joint venture, Fund
VIII and IX Associates, was formed to acquire, develop, operate, and sell
real properties. On June 19, 1996, the joint venture purchased a 7.09-acre
parcel of land in Madison, Wisconsin. The parcel was developed and
commenced operations as the U.S. Cellular Building in 1997. On October 10,
1996, the joint venture purchased a 40,000-square-foot, one-story office
building, known as the Dallas property, in Farmers Branch, Texas. On
January 10, 1997, the joint venture purchased a 63,417-square foot,
two-story office building, known as the Matsushita Building, in Orange
County, California. On February 20, 1997, the joint venture purchased a
two-story partially completed office building, known as the Cirrus Logic
Building, in Boulder County, Colorado. Construction of the
49,460-square-foot building was completed and commenced operations in
1997.
During 1998, Wells Fund VIII purchased a portion of the Partnership's
joint venture interest for $1,100,000. In addition, the related deferred
project costs of $56,101 were transferred from the Partnership to Wells
Fund VIII. In addition, Wells Fund VIII contributed $518,450 in 1998 to
Fund VIII and IX Associates, which included $32,352 of deferred project
costs that were applied. Ownership percentage interests were recomputed
accordingly.
F-11
On June 15, 2000, Fund VIII and IX Associated entered into a joint venture
with Wells Operating Partnership, L.P. (the "Operating Partnership"), a
Delaware limited partnership having Wells Real Estate Investment Trust,
Inc. ("Wells REIT"), a Maryland corporation, as its general partner. The
joint venture, Fund VIII, IX, and REIT Joint Venture, was formed to
acquire, develop, operate, and sell real properties. On July 1, 2000, Fund
VIII and IX contributed, at cost, the Quest building (formerly the
Matsushita Building) to the joint venture. The Quest Building is a
two-story office building containing approximately 65,006 rentable square
feet on a 4.4 acre tract of land in Irvine, California.
Following are the financial statements for Fund VIII and IX Associates:
Fund VIII and IX Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
---------------- --------------
Real estate assets, at cost:
Land $ 2,503,586 $ 4,724,579
Building and improvements, less accumulated depreciation of $3,907,439
in 2000 and $3,495,138 in 1999 16,611,991 22,416,032
---------------- --------------
Total real estate assets 19,115,577 27,140,611
Cash and cash equivalents 826,248 866,510
Accounts receivable 613,445 691,752
Due from affiliates 149,060 0
Investment in limited partnerships 6,835,000 0
Prepaid expenses and other assets 138,558 176,723
---------------- --------------
Total assets $ 27,677,888 $ 28,875,596
================ ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 288,369 $ 283,548
Due to affiliates 29,418 30,547
Partnership distributions payable 705,204 673,493
---------------- --------------
Total liabilities 1,022,991 987,588
---------------- --------------
Partners' capital:
Wells Real Estate Fund VIII 14,606,012 15,281,716
Wells Real Estate Fund IX 12,048,885 12,606,292
---------------- --------------
Total partners' capital 26,654,897 27,888,008
---------------- --------------
Total liabilities and partners' capital $ 27,677,888 $ 28,875,596
================ ==============
F-12
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---- ---- ----
Revenues:
Rental income $2,804,167 $3,132,925 $3,146,201
Equity in income of joint venture 285,006 0 0
Interest income 34,741 25,995 32,194
Other income 13,074 0 0
---------- ---------- ----------
3,136,988 3,158,920 3,178,395
---------- ---------- ----------
Expenses:
Depreciation 1,167,145 1,274,978 1,274,836
Management and leasing fees 203,445 216,075 221,794
Property administration expenses 35,378 30,249 29,299
Legal and accounting 17,461 15,632 22,806
Operating costs, net of reimbursements (21,078) (23,165) (82,660)
---------- ---------- ----------
1,402,351 1,513,769 1,466,075
---------- ---------- ----------
Net income $1,734,637 $1,645,151 $1,712,320
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 950,525 $ 901,489 $ 922,567
========== ========== ==========
Net income allocated to Wells Real Estate Fund IX $ 784,112 $ 743,662 $ 789,753
========== ========== ==========
Fund VIII and IX 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 VIII Fund IX Capital
------------ ------------ ------------
Balance, December 31, 1997 $14,906,093 $14,849,125 $29,755,218
Net income 922,567 789,753 1,712,320
Transfer of joint venture interest 1,156,101 (1,156,101) 0
Partnership contributions 518,450 0 518,450
Partnership distributions (1,550,904) (1,323,298) (2,874,202)
------------ ------------ ------------
Balance, December 31, 1998 15,952,307 13,159,479 29,111,786
Net income 901,489 743,662 1,645,151
Partnership distributions (1,572,080) (1,296,849) (2,868,929)
------------ ------------ ------------
Balance, December 31, 1999 15,281,716 12,606,292 27,888,008
Net income 950,525 784,112 1,734,637
Partnership distributions (1,626,229) (1,341,519) (2,967,748)
------------ ------------ ------------
Balance, December 31, 2000 $14,606,012 $12,048,885 $26,654,897
============ ============ ============
F-13
Fund VIII and IX 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 $ 1,734,637 $ 1,645,151 $ 1,712,320
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided
by operating activities:
Equity in income of joint venture (285,006) 0 0
Depreciation 1,167,145 1,274,978 1,274,836
Changes in assets and liabilities:
Accounts receivable 78,307 (187,144) (115,261)
Prepaid expenses and other assets 38,165 32,606 28,381
Accounts payable 4,821 94,407 49,288
Due to affiliates (1,129) 3,920 6,228
----------- ----------- -----------
Total adjustments 1,002,303 1,218,767 1,243,472
----------- ----------- -----------
Net cash provided by operating activities 2,736,940 2,863,918 2,955,792
----------- ----------- -----------
Cash flows from investing activities:
Decrease in construction payables 0 0 (248,870)
Investment in real estate 0 (3,500) (534,944)
Distributions received from joint venture 158,835 0 0
----------- ----------- -----------
Net cash provided by (used in) investing
activities 158,835 (3,500) (783,814)
----------- ----------- -----------
Cash flows from financing activities:
Contributions from joint venture partners 0 0 486,098
Distributions to joint venture partners (2,936,037) (2,901,686) (2,838,736)
----------- ----------- -----------
Net cash used in financing activities (2,936,037) (2,901,686) (2,352,638)
----------- ----------- -----------
Net decrease in cash and cash equivalents (40,262) (41,268) (180,660)
Cash and cash equivalents, beginning of year 866,510 907,778 1,088,438
----------- ----------- -----------
Cash and cash equivalents, end of year $ 826,248 $ 866,510 $ 907,778
=========== =========== ===========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 32,352
=========== =========== ===========
Real estate contributed to joint venture $ 6,857,889 $ 0 $ 0
=========== =========== ===========
Fund VIII, IX, and REIT Joint Venture
On June 15, 2000, Fund VIII and IX Associated entered into a joint venture with
Wells Operating Partnership, L.P. (the "Operating Partnership"), a Delaware
limited partnership having Wells Real Estate Investment Trust, Inc. ("Wells
REIT"), a Maryland corporation, as its general partner. The joint venture, Fund
VIII, IX, and REIT Joint Venture, was formed to acquire, develop, operate, and
sell real properties.
On July 1, 2000, Fund VIII and IX contributed the Quest Building (formerly the
Matsushita Building) to the joint venture. Fund VIII, IX, and REIT Joint Venture
recorded the net assets of the Quest Building at an amount equal to the
respective historical net book values. The Quest Building is a two-story office
building containing approximately 65,006 rentable square feet on a 4.4 acre
trace of land in Irvine, California.
F-14
Following are the financial statements for Fund VIII, IX, and REIT Joint
Venture:
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheet
December 31, 2000
Assets
Real estate assets, at cost:
Land $2,220,993
Building and improvements, less accumulated depreciation of $187,891 5,408,892
----------
Total real estate assets 7,629,885
Cash and cash equivalents 170,664
Accounts receivable 197,802
Prepaid expenses and other assets 283,864
----------
Total assets $8,282,215
==========
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 170,664
----------
Partners' capital:
Fund VIII and IX Associates 6,835,000
Wells Operating Partnership, L.P. 1,276,551
----------
Total partners' capital 8,111,551
----------
Total liabilities and partners' capital $8,282,215
==========
F-15
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Income
for the Six Months Ended December 31, 2000
Revenues:
Rental income $563,049
--------
Expenses:
Depreciation 187,891
Management and leasing fees 54,395
Property administration expenses 5,692
Operating costs, net of reimbursements 5,178
--------
253,156
--------
Net income $309,893
========
Net income allocated to Fund VIII and IX Associates $285,006
========
Net income allocated to Wells Operating Partnership, L.P. $ 24,887
========
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Partners' Capital
for the Six Months Ended December 31, 2000
Fund VIII Wells Total
and IX Operating Partners'
Associates Partnership, L.P. Capital
------------ ---------------- -------------
Balance, July 1, 2000 $ 0 $ 0 $ 0
Net income 285,006 24,887 309,893
Partnership contributions 6,857,889 1,282,111 8,140,000
Partnership distributions (307,895) (30,447) (338,342)
------------ ------------ ------------
Balance, December 31, 2000 $ 6,835,000 $ 1,276,551 $ 8,111,551
============ ============ ============
F-16
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Cash Flows
for the Six Months Ended December 31, 2000
Cash flows from operating activities:
Net income $ 309,893
-----------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 187,891
Changes in assets and liabilities:
Accounts receivable (197,802)
Prepaid expenses and other assets (283,864)
-----------
Total adjustments (293,775)
-----------
Net cash provided by operating activities 16,118
-----------
Cash flows from investing activities:
Investment in real estate (959,887)
-----------
Cash flows from financing activities:
Contributions from joint venture partners 1,282,111
Distributions to joint venture partners (167,678)
-----------
Net cash provided by financing activities 1,114,433
-----------
Net increase in cash and cash equivalents 170,664
Cash and cash equivalents, beginning of period 0
-----------
Cash and cash equivalents, end of year $ 170,664
===========
Supplemental disclosure of noncash activities:
Real estate contribution received from joint venture partner $ 6,857,889
===========
Fund IX, X, XI, and REIT Joint Venture
On March 20, 1997, the Partnership entered into a joint venture agreement with
Wells Real Estate Fund X, L.P. ("Wells Fund X"). The joint venture, Fund IX and
X Associates, was formed to acquire, develop, operate, and sell real properties.
On March 20, 1997, the Partnership contributed a 5.62-acre tract of real
property in Knoxville, Tennessee, and improvements thereon, known as the Alstom
Power Building, to the Fund IX and X Associates joint venture. A 84,404-square-
foot, three-story office building was constructed and commenced operations at
the end of 1997.
On February 13, 1998, the joint venture purchased a two-story office building,
known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, the
joint venture purchased a three-story office building, known as the 360
Interlocken Building, in Broomfield, Colorado. On June 11, 1998, Fund IX and X
Associates was amended and restated to admit Wells Real Estate Fund XI, L.P. and
Wells Operating Partnership, L.P. (the "Operating Partnership"), a Delaware
limited partnership having Wells Real Estate Investment Trust, Inc. ("Wells
REIT"), a Maryland corporation, as its general partner. The joint venture was
renamed Fund IX, X, XI, and REIT Joint Venture. On June 24, 1998, the new joint
venture purchased a one-story office building, known as the Avaya Building, in
Oklahoma City, Oklahoma. On April 1, 1998, Wells Fund X purchased a one-story
warehouse facility, known as the Iomega Corporation Building, in Ogden, Utah. On
July 1, 1998, Wells Fund X contributed the Iomega Corporation Building to Fund
IX, X, XI, and REIT Joint Venture.
F-17
Following are the financial statements for the Fund IX, X, XI, and REIT Joint
Venture:
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
----------- ------------
Real estate assets, at cost:
Land $ 6,698,020 $ 6,698,020
Building and improvements, less accumulated depreciation of $4,203,502
in 2000 and $2,792,068 in 1999 28,594,768 29,878,541
------------ ------------
Total real estate assets 35,292,788 36,576,561
Cash and cash equivalents 1,500,044 1,146,874
Accounts receivable 422,243 554,965
Prepaid expenses and other assets 487,276 526,409
------------ ------------
Total assets $ 37,702,351 $ 38,804,809
------------ ------------
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 568,517 $ 613,574
Refundable security deposits 99,279 91,340
Due to affiliates 9,595 6,379
Partnership distributions payable 931,151 804,734
------------ ------------
Total liabilities 1,608,542 1,516,027
------------ ------------
Partners' capital:
Wells Real Estate Fund IX 14,117,803 14,590,626
Wells Real Estate Fund X 17,445,277 18,000,869
Wells Real Estate Fund XI 3,191,093 3,308,403
Wells Operating Partnership, L.P. 1,339,636 1,388,884
------------ ------------
Total partners' capital 36,093,809 37,288,782
------------ ------------
Total liabilities and partners' capital $ 37,702,351 $ 38,804,809
============ ============
F-18
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---------- ---------- ----------
Revenues:
Rental income $4,198,388 $3,932,962 $2,945,980
Other income 116,129 61,312 0
Interest income 73,676 58,768 20,438
---------- ---------- ----------
4,388,193 4,053,042 2,966,418
---------- ---------- ----------
Expenses:
Depreciation 1,411,434 1,538,912 1,216,293
Management and leasing fees 362,774 286,139 226,643
Operating costs, net of reimbursements (154,001) (43,501) (140,506)
Property administration expense 78,420 63,311 34,821
Legal and accounting 20,423 35,937 15,351
---------- ---------- ----------
1,719,050 1,880,798 1,352,602
---------- ---------- ----------
Net income $2,669,143 $2,172,244 $1,613,816
========== ========== ==========
Net income allocated to Wells Real Estate Fund IX $1,045,094 $ 850,072 $ 692,116
========== ========== ==========
Net income allocated to Wells Real Estate Fund X $1,288,629 $1,056,316 $ 787,481
========== ========== ==========
Net income allocated to Wells Real Estate Fund XI $ 236,243 $ 184,355 $ 85,352
========== ========== ==========
Net income allocated to Wells Operating Partnership, L.P. $ 99,177 $ 81,501 $ 48,867
========== ========== ==========
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells
Wells Real Wells Real Wells Real Operating Total
Estate Estate Estate Partnership, Partners'
Fund IX Fund X Fund XI L.P. Capital
------------ ------------ ----------- ------------- ------------
Balance, December 31, 1997 $ 3,702,793 $ 3,662,803 $ 0 $ 0 $ 7,365,596
Net income 692,116 787,481 85,352 48,867 1,613,816
Partnership contributions 11,771,312 15,613,477 2,586,262 1,480,741 31,451,792
Partnership distributions (1,206,121) (1,356,622) (150,611) (86,230) (2,799,584)
------------ ------------ ----------- ------------- ------------
Balance, December 31, 1998 14,960,100 18,707,139 2,521,003 1,443,378 37,631,620
Net income 850,072 1,056,316 184,355 81,501 2,172,244
Partnership contributions 198,989 0 911,027 0 1,110,016
Partnership distributions (1,418,535) (1,762,586) (307,982) (135,995) (3,625,098)
------------ ------------ ----------- ------------- ------------
Balance, December 31, 1999 14,590,626 18,000,869 3,308,403 1,388,884 37,288,782
Net income 1,045,094 1,288,629 236,243 99,177 2,669,143
Partnership contributions 46,122 84,317 0 0 130,439
Partnership distributions (1,564,039) (1,928,538) (353,553) (148,425) (3,994,555)
------------ ------------ ----------- ------------- ------------
Balance, December 31, 2000 $ 14,117,803 $ 17,445,277 $ 3,191,093 $ 1,339,636 $ 36,093,809
============ ============ =========== ============= ============
F-19
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, and 1999, and 1998
2000 1999 1998
---------- ---------- ------------
Cash flows from operating activities:
Net income $ 2,669,143 $ 2,172,244 $ 1,613,816
----------- ----------- ------------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 1,411,434 1,538,912 1,216,293
Changes in assets and liabilities:
Accounts receivable 132,722 (421,708) (92,745)
Prepaid expenses and other assets 39,133 (85,281) (111,818)
Accounts payable, accrued liabilities and
refundable security deposits (37,118) 295,177 29,967
Due to affiliates 3,216 1,973 1,927
----------- ----------- ------------
Total adjustments 1,549,387 1,329,073 1,043,624
----------- ----------- ------------
Net cash provided by operating activities 4,218,530 3,501,317 2,657,440
----------- ----------- ------------
Cash flows from investing activities:
Investment in real estate (127,661) (930,401) (24,788,070)
----------- ----------- ------------
Cash flows from financing activities:
Distributions to joint venture partners (3,868,138) (3,820,491) (1,799,457)
Contributions received from partners 130,439 1,066,992 24,970,373
----------- ----------- ------------
Net cash (used in) provided by financing
activities (3,737,699) (2,753,499) 23,170,916
----------- ----------- ------------
Net increase (decrease) in cash and cash equivalents 353,170 (182,583) 1,040,286
Cash and cash equivalents, beginning of year 1,146,874 1,329,457 289,171
----------- ----------- ------------
Cash and cash equivalents, end of year $ 1,500,044 $ 1,146,874 $ 1,329,457
=========== =========== ============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 43,024 $ 1,470,780
=========== =========== ============
Contribution of real estate assets to joint venture $ 0 $ 0 $ 5,010,639
=========== =========== ============
F-20
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 $1,758,676 $1,490,331 $1,449,955
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 524,227 521,336 519,485
Rental income accrued for financial reporting purposes
in excess of amounts for income tax purposes (136,558) (89,669) (67,452)
Expenses deductible when paid for income tax purposes,
accrued for financial reporting purposes 749 2,544 4,023
Expenses capitalized for income tax purposes, deducted
for financial reporting purposes 0 0 0
---------- ---------- ----------
Income tax basis net income $2,147,094 $1,924,542 $1,906,011
========== ========== ==========
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 $26,276,464 $27,316,507 $28,526,460
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 1,766,357 1,242,130 720,794
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of
capital for financial reporting purposes 5,223,360 5,223,360 5,223,360
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for
income tax purposes (517,463) (380,905) (291,236)
Accumulated expenses deductible when paid for
income tax purposes, accrued for financial
reporting purposes 17,500 16,751 14,207
Accumulated expenses capitalized for income tax
purposes, deducted for financial reporting
purposes 10,145 10,145 10,145
Partnership's distributions payable 719,081 628,046 681,204
----------- ----------- -----------
Income tax basis partners' capital $33,495,444 $34,056,034 $34,884,934
=========== =========== ===========
F-21
6. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interest in the joint ventures under noncancelable operating
leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 3,250,527
2002 3,060,696
2003 2,901,630
2004 2,405,591
2005 1,967,603
Thereafter 6,258,214
-----------
$19,844,261
===========
Four tenants contributed approximately 14%, 14%, 12%, and 10% of rental
income. In addition, four tenants will contribute approximately 20%, 16%,
14%, and 11% of future minimum rental income.
The future minimum rental income due Fund VIII and IX Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 2,332,892
2002 2,464,900
2003 2,205,354
2004 2,205,354
2005 2,205,354
Thereafter 9,142,772
-----------
$20,556,626
===========
Five tenants contributed 32%, 26%, 24%, 15%, and 12% of rental income. In
addition, three tenants will contribute approximately 42%, 31%, and 24% of
future minimum rental income.
Future minimum rental income due from Fund VIII, IX, and REIT Joint Venture
under noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 1,234,309
2002 1,287,119
2003 1,287,119
2004 107,260
-----------
$ 3,915,807
===========
Two tenants contributed 52% and 48% of rental income for the year ended
December 31, 2000. In addition, one tenant will contribute 100% of future
minimum rental income.
F-22
The future minimum rental income due Fund IX, X, XI, and REIT Joint Venture
under noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $ 4,413,780
2002 3,724,218
2003 3,617,437
2004 3,498,478
2005 2,482,821
Thereafter 5,436,524
-----------
$23,173,258
===========
Four tenants contributed 25%, 24%, 13%, and 13% of rental income. In
addition, four tenants will contribute 38%, 21%, 20%, and 19% 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 Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- --------- ------------ -----------
Revenues $ 461,867 $ 462,850 $ 455,304 $ 456,747
Net income 437,592 436,218 444,468 440,398
Net income allocated to Class A limited
partners 729,214 731,164 711,473 686,955
Net loss allocated to Class B limited
partners (291,622) (294,496) (267,005) (247,007)
Net income per weighted average Class A
limited partner unit (a) $ 0.24 $ 0.24 $ 0.23 $ 0.22
Net loss per weighted average Class B
limited partner unit (a) (0.71) (0.72) (0.65) (0.60)
Cash distribution per weighted average
Class A limited partner unit 0.22 0.23 0.23 0.23
(a) The totals of the four quarterly amounts for the year ended
December 31, 2000 do not equal the totals for the year. This
difference results from the use of a weighted average to compute
the number of units outstanding for each quarter and the year.
F-23
1999 Quarters Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- --------- ------------ -----------
Revenues $ 409,083 $ 420,584 $ 408,547 $ 355,520
Net income 380,224 386,758 390,959 332,390
Net income allocated to Class A limited
partners 685,045 689,221 693,905 645,465
Net loss allocated to Class B limited
partners (304,821) (302,463) (302,946) (313,075)
Net income per weighted average Class A
limited partner unit (a) $ 0.23 $ 0.23 $ 0.23 $ 0.21
Net loss per weighted average Class B
limited partner unit (a) (0.66) (0.66) (0.68) (0.73)
Cash distribution per weighted average
Class A limited partner unit 0.23 0.23 0.23 0.20
(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-24
EXHIBIT INDEX
-------------
(Wells Real Estate Fund IX, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Exhibit
Number Description of Document
- ------- -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real
Estate Fund IX, L.P. (Exhibit 3(a) to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund IX, L.P.
(Exhibit 3(c) to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as
amended to date, Commission File No. 33-83852)
*10(a) Leasing and Tenant Coordinating Agreement between Wells Real Estate
Fund IX, L.P. and Wells Management Company, Inc. (Exhibit 10(d) to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., as amended to date, Commission
File No. 33-83852)
*10(b) Management Agreement between Wells Real Estate Fund IX, L.P. and
Wells Management Company, Inc. (Exhibit 10(e) to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., as amended to date, Commission File No.
33-83852)
*10(c) Amended and Restated Custodial Agency Agreement between Wells Real
Estate Fund IX, L.P. and NationsBank of Georgia, N.A. (Exhibit 10(f)
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(d) Joint Venture Agreement of Fund VIII and Fund IX Associates dated
June 10, 1996 (Exhibit 10(aa) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., as amended to date, Commission
File No. 33-83852)
*10(e) Agreement for the Purchase and Sale of Real Property dated April 23,
1996, between American Family Mutual Insurance Company and Wells
Capital, Inc. (Exhibit 10(bb) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., as amended to date, Commission
File No. 33-83852)
*10(f) Agreement to Lease dated June 18, 1996, between Fund VIII and IX
Associates and Westel-Milwaukee, Inc., d/b/a Cellular One (Exhibit
10(cc) to Post-Effective Amendment No. 11 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(g) Development Agreement dated June 18, 1996, between Fund VIII and Fund
IX Associates and ADEVCO Corporation (Exhibit 10(dd) to
Post-Effective Amendment No. 11 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., as amended to date, Commission File No. 33-83852)
*10(h) Owner-Contractor Agreement dated June 18, 1996, with Kraemer
Brothers, Inc. (Exhibit 10(ee) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., as amended to date, Commission
File No. 33-83852)
*10(i) First Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated October 10, 1996 (Exhibit 10(ii) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as
amended to date, Commission File No. 33-83852)
*10(j) Agreement for the Purchase and Sale of Property dated October 10,
1996, between TCI Valwood Limited Partnership I and Fund VIII and
Fund IX Associates (Exhibit 10(ff) to Post-Effective Amendment No. 12
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(k) Build to Suite Industrial Lease Agreement dated November 1, 1995,
between Industrial Developments International, Inc. and TCI Central,
Inc., as amended July 16, 1996 and August 29, 1996 (Exhibit 10(gg) to
Post-Effective Amendment No. 12 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., as amended to date, Commission File No. 33-83852)
*10(l) Assignment and Assumption of Lease dated October 10, 1996, between
TCI Valwood Limited Partnership I and The Bank of New York, as Agent
for Fund VIII and Fund IX Associates (Exhibit 10(hh) to
Post-Effective Amendment No. 12 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., as amended to date, Commission File No. 33-83852)
*10(m) Real Estate Option Agreement dated December 9, 1996, between The
Development Corporation of Knox County and Wells Real Estate Fund IX,
L.P. (Exhibit 10(jj) to Post-Effective Amendment No. 13 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., as amended to date, Commission File No.
33-83852)
*10(n) Lease Agreement for the ABB Building dated December 10, 1996, between
Wells Real Estate Fund IX, L.P. and ABB Flakt, Inc. (Exhibit 10(kk)
to Post-Effective Amendment No. 13 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(o) Development Agreement relating to the ABB Building dated December 10,
1996, between Wells Real Estate Fund IX, L.P. and ADEVCO Corporation
(Exhibit 10(ll) to Post-Effective Amendment No. 13 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., as amended to date, Commission File No.
33-83852)
*10(p) Owner-Contractor Agreement relating to the ABB Building dated
November 1, 1996, between Wells Real Estate Fund IX, L.P. and Integra
Construction, Inc. (Exhibit 10(mm) to Post-Effective Amendment No. 13
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(q) Second Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated January 7, 1997 (Exhibit 10(ii) to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1997, Commission File No. 0-27888)
*10(r) Agreement for the Purchase and Sale of Property with Magellan Bake
Parkway Limited Partnership dated December, 1996 (Exhibit 10(jj) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, Commission File No. 0-27888)
*10(s) Office Lease with Matsushita Avionics Systems Corporation dated April
29, 1996 (Exhibit 10(kk) to Form 10-K of Wells Real Estate Fund VIII,
L.P. for the fiscal year ended December 31, 1997, Commission File No.
0-27888)
*10(t) Third Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated February 18, 1997 (Exhibit 10(ll) to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1997, Commission File No. 0-27888)
*10(u) Agreement for the Purchase and Sale of Property with Orix Prime West
Broomfield II Venture dated February 5, 1997 (Exhibit 10(mm) to Form
10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1997, Commission File No. 0-27888)
*10(v) Lease with Cirrus Logic, Inc. dated July 5, 1995 (Exhibit 10(nn) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, Commission File No. 0-27888)
*10(w) Joint Venture Agreement of Fund IX and Fund X Associates dated March
20, 1997 (Exhibit 10(g) to Post-Effective Amendment No. 1 to Form
S-11
Registration Statement of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P., as amended to date, Commission File
No. 333-7979)
*10(x) Agreement for the Purchase and Sale of Real Property relating to the
Lucent Technologies Building dated May 30, 1997, between Fund IX and
Fund X Associates and Wells Development Corporation (Exhibit 10(k) to
Post-Effective Amendment No. 2 to Form S-11 Registration Statement of
Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.,
as amended to date, Commission File No. 333-7979)
*10(y) Net Lease Agreement for the Lucent Technologies Building dated May
30, 1997, between Wells Development Corporation and Lucent
Technologies, Inc. (Exhibit 10(l) to Post-Effective Amendment No. 2
to Form S-11 Registration Statement of Wells Real Estate Fund X, L.P.
and Wells Real Estate Fund XI, L.P., as amended to date, Commission
File No. 333-7979)
*10(z) Development Agreement relating to the Lucent Technologies Building
dated May 30, 1997, between Wells Development Corporation and ADEVCO
Corporation (Exhibit 10(m) to Post-Effective Amendment No. 2 to Form
S-11 Registration Statement of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P., as amended to date, Commission File
No. 333-7979)
*10(aa) First Amendment to Net Lease Agreement for the Lucent Technologies
Building dated March 30, 1998 (Exhibit 10.10(a) to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc.,
as amended to date, Commission File No. 333-32099)
*10(bb) Amended and Restated Joint Venture Agreement of The Fund IX, Fund X,
Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint Venture")
dated July 11, 1998 (Exhibit 10.4 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No.333-32099)
*10(cc) Agreement for the Purchase and Sale of Real Property relating to the
Ohmeda Building dated November 14, 1997 between Lincor Centennial,
Ltd. and Wells Real Estate Fund X, L.P. (Exhibit 10.6 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc.,
as amended to date, Commission File No. 333-32099)
*10(dd) Agreement for the Purchase and Sale of Property relating to the 360
Interlocken Building dated February 11, 1998 between Orix Prime West
Broomfield Venture and Wells Development Corporation (Exhibit 10.7 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(ee) Purchase and Sale Agreement relating to the Iomega Building dated
February 4, 1998 with SCI Development Services Incorporated (Exhibit
10.11 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(ff) Lease Agreement for the Iomega Building dated April 9, 1996 (Exhibit
10.12 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10(gg) Temporary Lease Agreement for remainder of the ABB Building dated
September 10, 1998 between the IX-X-XI-REIT Joint Venture and
Associates Housing Finance, LLC (Exhibit 10.35 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc.,
as amended to date, Commission File No. 333-32099)
*10(hh) Rental Income Guaranty Agreement relating to the Bake Parkway
Building dated February 18, 1999, between Wells Operating
Partnership, L.P. and Fund VIII and Fund IX Associates (Exhibit 10.53
to Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(ii) Joint Venture Partnership Agreement of Fund VIII-IX-REIT Joint
Venture (Exhibit 10.47 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-44900)
*10(jj) Lease Agreement for the Quest Building (formerly the Bake Parkway
Building) (Exhibit 10.51 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-44900)