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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 2000 or
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[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to _______________ To ________________
Commission file number 0-14463
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WELLS REAL ESTATE FUND I
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(Exact name of registrant as specified in its charter)
Georgia 58-1565512
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(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
CLASS A UNITS
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(Title of Class)
CLASS B UNITS
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
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Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
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PART I
ITEM 1. BUSINESS
General
Wells Real Estate Fund I (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Capital, Inc., a Georgia
corporation, as General Partners. The Partnership was formed on April 26, 1984,
for the purpose of acquiring, developing, constructing, owning, operating,
improving, leasing and otherwise managing for investment purposes income-
producing commercial or industrial properties.
On September 6, 1984, the Partnership commenced a public offering of its limited
partnership units pursuant to a Registration Statement filed on Form S-11 under
the Securities Act of 1933. The Partnership terminated its offering on
September 5, 1986, and received gross proceeds of $35,321,000 representing
subscriptions from 4,895 Limited Partners, composed of two classes of limited
partnership interests, Class A and Class B limited partnership units.
The Partnership owns interests in the following joint ventures: (i) Wells-Baker
Associates, a joint venture between the Partnership and Wells & Associates (the
"Wells-Baker Joint Venture"), (ii) Fund I-Fund II Tucker, and (iii) the Fund I,
II, II-OW, VI, VII Joint Venture
As of December 31, 2000, the Partnership owned, directly or through its
ownership in joint ventures, interests in the following properties: (i) Paces
Pavilion, a medical office building located in Atlanta, Georgia, owned by the
Partnership, (ii) The Crowe's Crossing Property, a shopping center located in
DeKalb County, Georgia, owned by the Partnership, (iii) The Black Oak Plaza
Property, a shopping center located in Knoxville, Tennessee, owned by the
Partnership, (iv) The Peachtree Place Property, a commercial office building
located in Atlanta, Georgia, owned by the Wells-Baker Joint Venture, (v) The
Tucker Property, a retail shopping and commercial office complex located in
Tucker, Georgia, owned by Fund I-Fund II Tucker, and (vi) The Cherokee Property,
a shopping center located in Cherokee County, Georgia, owned by the Fund I, II,
II-OW, VI, VII Joint Venture. All of the foregoing properties were acquired on
an all cash basis.
Wells-Baker Joint Venture sold one of its commercial office buildings, 3875
Peachtree Place, on August 31, 2000, for $772,915.
The Crowe's Crossing Property was sold on January 11, 2001 for $6,785,000.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
a General Partner of the Partnership, perform a full range of real estate
services including leasing and property management, accounting, asset management
and investor relations for the Partnership. See Item 11--"Compensation of
General Partners and Affiliates" for a summary of the fees paid to the General
Partners and their affiliates during the fiscal year ended December 31, 2000.
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Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management,
the properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements, and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES
The Partnership owns six properties directly or through its ownership in joint
ventures of which two are office buildings, three are retail buildings, and one
is a combined office and retail project. The Partnership does not have control
over the operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investment in joint ventures is recorded on the equity
method. The Wells-Baker Associate joint venture is consolidated with Fund I
since the ownership is 89.95%. As of December 31, 2000 these properties were
82.2% occupied, up from 80% at December 31, 1999 and 78.8% at December 31, 1998.
The following table shows lease expirations during each of the next ten years as
of December 31, 2000, assuming no exercise of renewal options or termination
rights:
Partnership Percentage Percentage
Number Share of of Total of Total
Year of of Square Annualized Annualized Square Annualized
Lease Leases Feet Gross Base Gross Base Feet Gross Base
Expiration Expiring Expiring Rent (1) Rent (1) Expiring Rent
- ------------ ----------- ----------- ------------ -------------- ------------- -------------
2001 23 34,137 $ 590,765 $ 371,560 20.98% 24.38%
2002(2) 19 39,296 547,355 546,428 24.15 22.58
2003 20 37,118 494,465 311,822 22.81 20.40
2004 13 24,621 394,915 245,012 15.13 16.29
2005 5 10,722 144,035 105,284 6.59 5.94
2006 0 0 0 0 0.00 0.00
2007 2 7,352 129,743 94,190 4.52 5.35
2008 1 2,400 27,384 15,086 1.47 1.13
2009 1 3,540 33,123 33,123 2.18 1.37
2010 1 3,531 61,969 34,139 2.17 2.56
----------- ----------- ------------ -------------- ------------- -------------
85 162,717 $2,423,754 $1,756,644 100.00% 100.00%
=========== =========== ============ ============== ============= =============
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Lease expiring is ground lease only with McDonald's.
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The following describes the properties in which the Partnership owns an interest
as of December 31, 2000:
Paces Pavilion Property
On December 27, 1985, the Partnership acquired a three-story medical office
building on 1.65 acres of land located on Howell Mill Road in metropolitan
Atlanta, Fulton County, Georgia, directly across from the West Paces Ferry
Hospital (the "Paces Pavilion Property") for a purchase price of
$3,443,203. The Paces Pavilion Property contains approximately 32,339 of
net rentable square feet, and the entire building was leased to HCA
Realty, Inc. and Hospital Corporation of America (collectively, "HCA")
until December 31, 1996. Although efforts were made to negotiate a new
lease, HCA vacated the premises as of December 31, 1996. Management has
hired an outside firm to engage a tenant. Rental income is currently being
generated from four (4) leaseholders occupying 10,239 square feet.
Drs. King, Sanderson, Heidecker and Sanderson, dentists, are the only
tenant occupying ten percent or more of the rentable square footage. The
lease is for 3,752 square feet. The lease, which commenced in December
2000, calls for rent of $13,825 for 2000 and $82,950 for 2001. The lease
expires December 31, 2007. The other tenants provide various medical
services.
The occupancy rate at the Paces Pavilion Property was 33.23% in 2000,
19.15% in 1999, and 12.6% in 1998.
The average effective annual rental per square foot at the Paces Pavilion
Property was $3.84 for 2000, $3.31 for 1999, $2.44 for 1998, $4.17 for
1997, and $16.86 for 1996.
Crowe's Crossing Property/Fund I
On December 31, 1986, the Partnership acquired a retail shopping center
known as "Crowe's Crossing Shopping Center" located in metropolitan
Atlanta, DeKalb County, Georgia (the "Crowe's Crossing Property"). The
Crowe's Crossing Property consists of approximately 93,728 net rentable
square feet. The Crowe's Crossing Property is anchored by a 45,528 square
foot lease with Kroger Food/Drug which expires in 2011. The annual base
rent payable under the Kroger lease is $295,932. The remaining 48,200
square feet of the center is composed of 31 separate retail spaces whose
tenants operate retail businesses typical of multi-tenant shopping centers.
The occupancy rate at the Crowe's Crossing Property was 100% in 2000, 96%
in 1999, and 94% in 1998.
The average annual rental per square foot at the Crowe's Crossing Property
was $8.81 for 2000, $7.64 for 1999, $7.98 for 1998, $7.40 for 1997, and
$7.92 for 1996.
As of December 31, 2000, the Partnership had expended a total of $8,357,591
for the acquisition of the Crowe's Crossing Property.
The Crowe's Crossing Property was sold on January 11, 2001 for $6,785,000.
The net proceeds to the Partnership were $6,387,000. The Partnership
recorded a gain of $1,100,000 from this sale.
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Black Oak Plaza Property/Fund I
On December 31, 1986, the Partnership acquired a retail shopping center
known as "Black Oak Plaza" located in Metropolitan Knoxville, Knox County,
Tennessee. Black Oak Plaza was initially developed in 1981. Although
Black Oak Plaza contained a total of approximately 175,000 square feet of
space including a K-Mart department store and a Kroger Food/Drug, the
Partnership acquired only the space located in the shopping center other
than the space occupied by K-Mart and Kroger. The portion of the shopping
center owned and operated by the Partnership contains approximately 68,414
net rentable square feet. As of December 31, 2000, Black Oak Plaza was
approximately 70% leased to 20 tenants. The occupancy rate at Black Oak
Plaza was 70% in 2000, 70% in 1999, and 73% in 1998. The average annual
rental per square foot at Black Oak Plaza was $6.01 in 2000, $5.53 in 1999,
$6.41 in 1998, $6.53 in 1997, and $6.08 for 1996.
As of December 31, 2000, the Partnership had expended a total of $4,581,743
for the acquisition of Black Oak Plaza.
Peachtree Place Property/Fund I and Wells & Associates, Inc.
In 1985, the Partnership acquired an interest in two commercial office
buildings located at Holcomb Bridge Road, Norcross, Gwinnett County,
Georgia (the "Peachtree Place Property"). The Peachtree Place Property,
which contains approximately 17,245 net rentable square feet, is owned
through a joint venture between the Partnership and Wells & Associates,
Inc., a Georgia corporation affiliated with the General Partners (the
"Wells-Baker Joint Venture"). The land upon which the Peachtree Place
Property was developed was originally purchased by Wells & Associates, Inc.
for a purchase price of $187,087. Upon the formation of the joint venture
with the Partnership, Wells & Associates, Inc. contributed the land to the
joint venture as its capital contribution. As of December 31, 2000, the
Partnership had made total capital contributions of $1,526,798 to the joint
venture. The Partnership holds a 89.95% equity interest in the joint
venture, and Wells & Associates, Inc. holds a 10.05% equity interest in the
joint venture.
Wells-Baker Joint Venture sold one of its commercial office buildings, 3875
Peachtree Place, on August 31, 2000, for $772,915. The net proceeds
generated from this sale were $704,496.
The Peachtree Place Property currently contains approximately 11,006 net
rentable square feet. As of December 31, 2000, the building at the
Peachtree Place Property was 81% leased to six tenants.
Four tenants occupy 10% or more of the rentable square footage, Keen and
Good, financial advisors, Adevco Corporation, a commercial developing
company, Flying Fotos, Inc., an aerial photo company, and David Reale and
Associates, Inc., a janitorial services company.
Keen and Good's lease represents 1,512 rentable square feet. The annual
base rent is $25,704 for 2000. The lease expires January 31, 2002.
Adevco Corporation's lease represents 1,512 rentable square feet. The
annual base rent is $24,540 for 2000. The lease expires June 30, 2002.
Flying Fotos, Inc.'s lease represents 1,449 rentable square feet. The base
rent is $5,867 for 2000 and $35,201 for 2001. The lease expires January
31, 2004.
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David Reale and Associates, Inc.'s lease represents 2,582 rentable square
feet. The annual base rent is $30,564 for 2000. The lease expires March
31, 2005.
The occupancy rate at the Peachtree Place Property was 81% in 2000, 100% in
1999, and 74% in 1998.
The average annual rental per square foot at the Peachtree Place Property
was $12.85 in 2000, $13.86 in 1999, $15.51 for 1998, $15.88 for 1997, and
$16.08 for 1996.
Tucker Property/Fund I--Fund II Tucker Joint Venture
The Tucker Property consists of a retail shopping center and a commercial
office building complex located in Tucker, DeKalb County, Georgia (the
"Tucker Property"). The retail shopping center at the Tucker Property
contains approximately 29,858 net rentable square feet. The commercial
office space at the Tucker Property, which is divided into seven separate
buildings, contains approximately 67,465 net rentable square feet.
On September 4, 1986, the Partnership acquired an 11.17 acre tract of land
located at Hugh Howell Road and Tucker Industrial Boulevard, Tucker, DeKalb
County, Georgia. In January 1987, the Partnership transferred and
contributed this tract of land to a joint venture (the "Tucker Joint
Venture"), which was formed in 1987 between the Partnership and Wells Real
Estate Fund II ("Wells Fund II"). Wells Fund II is a Georgia public
limited partnership affiliated with the Partnership through common general
partners. The investment objectives of Wells Fund II are substantially
identical to those of the Partnership. On March 1, 1988, Wells Fund II
formed a joint venture (the "Fund II-Fund II-OW Joint Venture") with Wells
Real Estate Fund II-OW ("Wells Fund II-OW"). Wells Fund II-OW is a Georgia
public limited partnership affiliated with the Partnership through common
general partners. The investment objectives of Wells Fund II-OW are
substantially identical to those of the Partnership. Upon the formation of
the Fund II-Fund II-OW Joint Venture, Wells Fund II contributed its joint
venture interest in the Tucker Joint Venture to the Fund II-Fund II-OW
Joint Venture as part of its capital contribution. On January 1, 1991, the
Cherokee Joint Venture, which is defined below, was merged into the Tucker
Joint Venture forming a new joint venture ("Tucker-Cherokee Joint
Venture"). As described below, the Cherokee Joint Venture was also a joint
venture between the Partnership and the Fund II-Fund II-OW Joint Venture.
Under the terms of the Amended and Restated Joint Venture Agreement of Fund
I and Fund II Tucker-Cherokee, the Partnership's percentage interest in the
Tucker Property remained unchanged as a result of the merger of the Tucker
Joint Venture into the Tucker-Cherokee Joint Venture.
On August 1, 1995, the Partnership and the Fund II-Fund II-OW Joint Venture
entered into another amendment to effect the contribution of the Cherokee
Project to the Fund I, II, II-OW, VI, VII Joint Venture, as described
below. As a result, the name of the joint venture owning the Tucker
Property was changed back to "Fund I and Fund II Tucker". The
Partnership's percentage interest in the Tucker Property remained unchanged
as a result of the transaction.
Both the Partnership and the Fund II-Fund II-OW Joint Venture have funded
the cost of completing the Tucker Property through capital contributions
which were paid as progressive stages of construction were completed. As
of December 31, 2000, the Partnership had contributed a total of
$6,194,634, and the Fund II-Fund II-OW Joint Venture had contributed a
total of $4,764,585 for the acquisition and development of the Tucker
Property. As of December 31, 2000, the Partnership had approximately a 55%
equity interest in the Tucker Property, and the Fund II--Fund II-OW Joint
Venture held approximately a 45% equity interest in
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the Tucker Property. As of December 31, 2000, the Tucker Property was 89%
occupied by 36 tenants.
There are no tenants in the property occupying ten percent or more of the
rentable square footage. The principal businesses, occupations, and
professions carried on in the building are typical retail
shopping/commercial office services.
The occupancy rate at the Tucker Property was 89% in 2000, 87% in 1999, and
94% in 1998.
The average effective annual rental per square foot at the Tucker Property
was $14.29 for 2000, $14.11 for 1999, $12.76 for 1998, $11.08 for 1997, and
$13.78 for 1996.
This property is currently being marketed for sale by The First Fidelity
Companies. The management team is considering separating the retail
portion of this property from the office portion and creating a condominium
for the office buildings. The legal and site work have been completed so
that the management team can market this property to investors. The
Partnership's goal is to have this property sold by the end of 2002.
Cherokee Property/Fund I, II, II-OW, VI, and VII Joint Venture
The Cherokee Property consists of a retail shopping center known as
"Cherokee Commons Shopping Center" located in metropolitan Atlanta,
Cherokee County, Georgia (the "Cherokee Property"). The Cherokee Property
consists of approximately 103,755 net rentable square feet.
On June 30, 1987, the Partnership acquired an interest in the Cherokee
Property through a joint venture (the "Cherokee Joint Venture") between the
Partnership and Wells Fund II-Fund II-OW Joint Venture. On January 1,
1991, the Cherokee Joint Venture merged with the Tucker Joint Venture to
form the Tucker-Cherokee Joint Venture. As described above, the Tucker
Joint Venture was also a joint venture between the Partnership and the Fund
II-Fund II-OW Joint Venture. Under the terms of the Amended and Restated
Joint Venture Agreement of Fund I and Fund II Tucker-Cherokee, the
Partnership's percentage interest in the Cherokee Property remained
unchanged as a result of the merger of the Cherokee Joint Venture into the
Tucker-Cherokee Joint Venture.
On August 1, 1995, the Partnership, Fund II--Fund II-OW Joint Venture,
Wells Real Estate Fund VI, L.P., a Georgia public limited partnership
having Leo F. Wells, III and Wells Partners, L.P., a Georgia limited
partnership, as General Partners ("Wells Fund VI"); and Wells Real Estate
Fund VII, L.P., a Georgia public limited partnership having Leo F. Wells,
III and Wells Partners, L.P., a Georgia limited partnership, as General
Partners ("Wells Fund VII') entered into a joint venture agreement known as
Fund I, II, II-OW, VI, and VII Associates (the "Fund I, II, II-OW, VI, VII
Joint Venture"), which was formed to own and operate the Cherokee Property.
Wells Partners, L.P. is a private limited partnership having Wells Capital,
Inc., a General Partner of the Partnership, as its sole general partner.
The investment objectives of Fund II-Fund II-OW, Wells Fund VI and Wells
Fund VII are substantially identical to those of the Partnership.
As of December 31, 2000, the Partnership had contributed property with a
book value of $2,139,900, the Fund II-Fund II-OW Joint Venture had
contributed property with a book value of $4,860,100, Wells Fund VI had
contributed cash in the amount of $953,798 and Wells Fund VII had
contributed cash in the amount of $953,798 to the Fund I, II, II-OW, VI,
VII Joint Venture. As of December 31, 2000, the equity interests in the
Fund I, II, II-OW, VI, VII Joint Venture
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were as follows: the Partnership--24%, Fund II-Fund II-OW Joint Venture--
54%, Wells Fund VI 11% and Wells Fund VII--11%.
The Cherokee Property is anchored by a 67,115 square foot lease with Kroger
Food/Drug ("Kroger") which expires in 2011. Kroger's original lease was
for 45,528 square feet. In 1994, Kroger expanded to the current 67,115
square feet which is approximately 65% of the total rentable square feet in
the Property. As of December 31, 2000, the Cherokee Property was
approximately 98% occupied by 22 tenants, including Kroger.
Kroger is the only tenant occupying ten percent or more of the rentable
square footage. Kroger is a retail grocery chain. The other tenants in
the shopping center provide typical retail shopping services.
The Kroger lease called for an annual rent of $392,915 which increased to
$589,102 on August 16, 1995, due to the expansion from 45,528 square feet
to 67,115 square feet. The lease expires March 31, 2011 with Kroger
entitled to five successive renewals each for a term of five years, upon
the same terms and conditions.
The occupancy rate at the Cherokee Property was 98% in 2000, 97% in 1999,
and 91% in 1998.
The average annual rental per square foot at the Cherokee Property was
$9.31 for 2000, $9.11 for 1999, $8.78 for 1998, $8.49 for 1997, and $8.59
for 1996.
The property is currently being marketed for sale by CB Richard Ellis.
Marketing information on the Cherokee Property is being broadly distributed
to potential investors throughout the country. The Partnership's goal is
to have this property sold by the end of 2002.
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
(a) On approximately August 25, 2000, the Partnership mailed an Amended and
Restated Consent Solicitation Statement (the "Consent Solicitation") to the
Limited Partners of Wells Real Estate Fund I, which solicitation continued
throughout the fourth quarter of 2000.
(b) N/A.
(c) The Consent Solicitation was mailed to solicit the consent of each Class A
Limited Partner to proposed amendments to the Partnership Agreement to
change and clarify the manner in which net sale proceeds will be allocated
and distributed among Class A Limited Partners and Class B Limited Partners
in accordance with the original intent of the General Partners. This
Consent Solicitation is still being conducted by the General Partners.
(d) N/A.
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PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
As of February 28, 2001, the Partnership had 98,716 outstanding Class A Units
held by a total of 3,525 Limited Partners and 42,568 outstanding Class B Units
held by a total of 888 Limited Partners. The capital contribution per unit was
$250. There is no established public trading market for the Partnership's
limited partnership units, and it is not anticipated that a public trading
market for the units will develop. Under the Partnership Agreement, the General
Partners have the right to prohibit transfers of units.
Class A Unit holders are entitled to an annual 9% distribution preference over
Class B Unit holders as to distributions from Cash Available for Distribution
but are initially allocated none of the depreciation, amortization, cost
recovery, and interest expense. These items are allocated to Class B Unit
holders until their capital account balances have been reduced to zero.
Cash Available for Distribution to the Limited Partners is distributed on a
quarterly basis. To date, no cash distributions have been made to Limited
Partners holding Class B Units during 2000. The Partnership has reserved all
operating cash flow during 1998 and during the first half of 1999 which would
otherwise be available for distribution to fund the proposed reconfiguration of
the interior of the Paces Pavilion Building. Cash distributions made to the
Limited Partners holding Class A Units during the two most recent fiscal years
were as follows:
Per Class A Per Class A Per Class B
Distribution Total Unit Unit Unit
for Quarter Cash Investment Return of Return of General
Ended Distributed Income Capital Capital Partner
- --------------------- -------------- -------------- ------------- -------------- -------------
March 31, 1999 $ 0 $0.00 $0.00 $0.00 $0.00
June 30, 1999 0 0.00 0.00 0.00 0.00
September 30, 1999 320,363 3.25 0.00 0.00 0.00
December 31, 1999 324,141 3.28 0.00 0.00 0.00
March 31, 2000 308,486 0.03 3.09 0.00 0.00
June 30, 2000 347,969 0.00 3.52 0.00 0.00
September 30, 2000 370,184 2.42 1.34 0.00 0.00
December 31, 2000 370,000 0.17 3.58 0.00 0.00
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ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 2000, 1999, 1998, 1997, and 1996:
2000 1999 1998 1997 1996
------------- ------------- -------------- ------------- -------------
Total assets $21,709,463 $22,721,176 $23,098,782 $23,593,566 $24,968,886
Total revenues 2,176,831 1,710,741 1,636,172 1,643,943 1,967,743
Net income (loss) 208,078 (101,904) (337,675) (305,296) 101,804
Net income (loss)allocated to Class A 208,078 (101,904) (337,675) 1,059,405 1,416,538
limited partners
Net loss allocated to Class B limited 0 0 0 (1,364,701) (1,314,734)
partners
Net income (loss) per Class A limited $ 2.11 $ (1.03) $ (3.42) $ 10.73 $ 14.35
partner unit
Net loss per Class B limited partner 0.00 0.00 0.00 (32.06) (30.89)
unit
Cash distributions to Investors:
Investments income Class A units 2.62 0.00 0.00 10.85 12.92
Return of Capital Class A units 11.53 6.53 0.00 0.00 0.00
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS RESULTS
OF OPERATION
The following discussion and analysis should be read in conjunction with the
selected financial data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statement
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
General
Gross revenues of the Partnership were $2,176,831 for the fiscal year ended
December 31, 2000, as compared to $1,710,741 for the fiscal year ended December
31, 1999, and $1,636,172 for the fiscal year ended December 31, 1998. The
increase for 2000 was due to increased equity in joint ventures, increased
interest income, increased rental income and a gain on sale of real estate.
Increased equity in joint ventures is due to increased rental renewal rates at
the Cherokee Property and increased occupancy and lower operating expenses at
the Tucker Property. Expenses of the Partnership were $1,946,297 for the fiscal
year ended December 31, 2000, as compared to $1,811,046 for 1999 and $1,973,731
for 1998. The increase in 2000 over 1999 is due to primarily a loss on real
estate assets due to fire, uncollectable accounts receivable, legal fees, and
partnership administration. Partnership administration expenses increased in
2000 as compared to 1999 due to increased printing and postage in 2000. The
decrease in 1999 over 1998 is due primarily to decreased legal fees at Black Oak
Plaza and decreased property
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operating expenses in the areas of property security and general repairs and
maintenance. As a result of increased revenue and decreased expenses, net income
increased to $208,078 in 2000, as compared to a net loss of $101,904 in 1999 and
net loss of $337,675 in 1998.
The Partnership's cash distribution to the Limited Partners holding Class A
Units was $14.15 per unit for the fiscal year ended December 31, 2000 and $6.53
per unit for the fiscal year ended December 31, 1999. No cash distributions
were made to the Limited Partners holding Class A Units for the year ending
December 31, 1998. No distributions have been paid to Limited Partners holding
Class B Units or to the General Partners.
The Partnership has recently made the decision to begin selling its properties.
At this time, three properties have been identified that will be offered for
sale within the next several months. The Partnership's goal is to have all
Partnership properties sold by the end of 2002. Wells-Baker Joint Venture sold
one of its commercial office buildings, 3875 Peachtree Place, on August 31,
2000, for $772,915. The net proceeds from this sale were $704,496, $633,694 of
which constitute the Partnership's share of proceeds. This resulted in an
aggregate gain of $268,103, $241,159 of which constitutes the Partnership's
share of gain. As of December 31, 2000, the proceeds from the sale of the
Peachtree Place building had not been distributed to the Limited Partners. The
Crowe's Crossing Property was sold on January 11, 2001 for $6,785,000. The net
proceeds from this sale were $6,387,000, resulting in a gain to the Partnership
from this sale of $1,100,000. As described in Item 4 above, the General
Partners are currently involved in a Consent Solicitation of the Class A Limited
Partners to approve proposed amendments to the Partnership Agreement relating to
the allocation and distribution of net sale proceeds. Until these outstanding
issues relating to the proper order of allocating and distributing net sale
proceeds are resolved, the General Partners have no basis for distributing net
sale proceeds among the Limited Partners and, accordingly, have not yet
distributed the proceeds from these two property sales.
Management estimates that the net realizable value of each of the properties
exceeds the carrying value of the corresponding real estate assets;
consequently, no impairment loss has been recorded. In the event that the net
sales proceeds are less than the carrying value of the property sold, the
Partnership would recognize a loss on the sale. Management is not contractually
or financially obligated to sell any of its properties, and it is management's
intent to fully realize the Partnership's investment in real estate. The
success of the Partnership's future operations and the ability to realize
investment in its assets will be dependent on the Partnership's ability to
maintain rental rates, occupancy and an appropriate level of operating expenses
in future years. Management believes that the steps that it is taking will
position the Partnership to realize its investment in its assets.
Property Operations
As of December 31, 2000, the Partnership's ownership interest in the Paces
Pavilion Property, Black Oak Plaza and Crowe's Crossing Shopping Center is 100%,
the Peachtree Place Property is 89.95%, Fund I--Fund II Tucker Joint Venture is
55.09% and Fund I, II, II-OW, VI, and VII Joint Venture is 24.02%.
-11-
As of December 31, 2000, the Partnership owned interests in the following
properties:
Paces Pavilion Property/Fund I
For the Years Ended December 31
---------------------------------------------
2000 1999 1998
----------- ------------- ------------
Revenues:
Rental income $ 124,122 $ 106,993 $ 79,054
----------- ------------- ------------
Expenses:
Depreciation 259,508 256,640 256,157
Management and leasing expenses 9,922 6,420 4,800
Other operating expenses 272,166 262,295 243,744
----------- ------------- ------------
541,596 525,355 504,701
----------- ------------- ------------
Net loss $(417,474) $(418,362) $(425,647)
=========== ============= ============
Occupied percentage 33.2% 19.15% 12.6%
=========== ============= ============
Partnership ownership percentage 100% 100% 100%
=========== ============= ============
Cash generated to the Partnership $ 0 $ 0 $ 0
=========== ============= ============
Net loss generated to the Partnership $(417,474) $(418,362) $(425,647)
=========== ============= ============
Rental income increased in 2000, as compared to 1999, due to an increase in
occupancy and increased in 1999, as compared to 1998, due to a tenant that moved
in during the second quarter of 1999.
Other operating expenses increased in 2000, as compared to 1999, due to a write-
off of an uncollectible account receivable and an increase in surveys, prints,
and plans in 2000, but was offset by a decrease in association dues in 2000.
Other operating expenses increased in 1999, as compared to 1998, due primarily
to an increase in association dues.
Currently, there are three tenants occupying 33.2% of the premises. Management
is actively seeking replacement tenants for the remaining space at Paces
Pavilion. Because of the low rental income, increased expenses and capital
improvements, no cash was generated to the Partnership for 2000, 1999 and 1998.
Rental income is currently being generated through four (4) leaseholders
occupying 10,239 square feet.
Real estate taxes are included in the Paces Pavilion Condominium Association
monthly fee for 2000, 1999 and 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 the
property, tenants, etc., see Item 2, Properties, page 3.
-12-
Crowe's Crossing Shopping Center/Fund I
For the Years Ended December 31
----------------------------------------------
2000 1999 1998
----------- ------------- ------------
Revenues:
Rental income $710,317 $716,427 $696,530
----------- ------------- ------------
Expenses:
Depreciation 417,764 417,020 417,588
Management and leasing expenses 60,220 63,434 76,243
Other operating expenses (53,646) 118,504 71,925
----------- ------------- ------------
424,338 598,958 565,756
----------- ------------- ------------
Net income $285,979 $117,469 $130,774
=========== ============= ============
Occupied percentage 100% 96% 94%
=========== ============= ============
Partnership ownership percentage 100% 100% 100%
=========== ============= ============
Cash generated to the Partnership $697,433 $529,994 $606,495
=========== ============= ============
Net income generated to the Partnership $285,979 $117,469 $130,774
=========== ============= ============
Rental income decreased for 2000, as compared to 1999, and increased as compared
to 1998 due to fluctuations in occupancy and rental rates. Other operating
expenses were negative in 2000, as compared to 1999, due to a $115,000
adjustment recorded in 2000 for prior year common area maintenance billings.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference
billed to the tenant Other operating expenses increased in 1999, as compared to
1998, due to significant HVAC and plumbing repairs.
Cash generated to the Partnership increased in 2000, as compared to 1999, due to
increased net income.
Real estate taxes were $85,830 in 2000, $83,902 in 1999, and $87,045 in 1998.
The Partnership's ownership percentage has remained constant at 100% for the
years 2000, 1999, and 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 the
property, tenants, etc., see Item 2, Properties, page 3.
-13-
Black Oak Plaza/Fund I
For the Years Ended December 31
--------------------------------------------
2000 1999 1998
---------- ----------- ------------
Revenues:
Rental income $411,197 $378,447 $ 441,890
---------- ----------- ------------
Expenses:
Depreciation 266,775 266,275 266,866
Management and leasing expenses 46,419 43,043 46,857
Other operating expenses 122,130 61,517 232,521
---------- ----------- ------------
435,324 370,835 546,244
---------- ----------- ------------
Net (loss) income $(24,127) $ 7,612 $(104,354)
========== =========== ============
Occupied percentage 70% 70% 73%
========== =========== ============
Partnership ownership percentage 100% 100% 100%
========== =========== ============
Cash generated to the Partnership $244,293 $327,845 $ 208,670
========== =========== ============
Net (loss) income generated to the Partnership $(24,127) $ 7,612 $(104,354)
========== =========== ============
Rental income increased in 2000, as compared to 1999, and decreased in 1999, as
compared to 1998, due to changes in tenants at the property. Other operating
expenses increased in 2000, as compared to 1999, due to increases in property
taxes and insurance expenses in 2000. Other operating expenses decreased in
1999, as compared to 1998, due to significantly lower expenses in the areas of
parking lot repairs, security, legal, and bad debt reserves.
Real estate taxes were $89,402 for 2000, $47,318 for 1999, and $39,479 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 the
property, tenants, etc., see Item 2, Properties, page 3.
-14-
Peachtree Place/Wells-Baker Associates
For the Years Ended December 31
----------------------------------------------
2000 1999 1998
------------- ------------- --------------
Revenues:
Rental income $198,182 $238,932 $267,476
Interest income 934 22 24
Gain on sale of building 268,103 0 0
------------- ------------- --------------
467,219 238,954 267,500
------------- ------------- --------------
Expenses:
Depreciation 80,832 79,596 85,148
Management and leasing expenses 26,524 17,143 22,450
Other operating expenses 136,420 126,302 158,749
------------- ------------- --------------
243,776 223,041 266,347
------------- ------------- --------------
Net income $223,443 $ 15,913 $ 1,153
============= ============= ==============
Occupied percentage 81.24% 100.00% 74.02%
============= ============= ==============
Partnership ownership percentage 89.95% 89.95% 89.95%
============= ============= ==============
Cash distribution to the Partnership $ 41,385 $ 69,147 $ 82,286
============= ============= ==============
Net income allocated to the Partnership $200,987 $ 14,314 $ 1,037
============= ============= ==============
Rental income decreased in 2000, as compared to 1999 and 1998, due to the sale
of one of the buildings. Occupancy percentage decreased from 100% in 1999 to
81.24% in 2000. Other operating expenses increased in 2000, as compared to
1999, due to an increase in legal fees and a write-off of an uncollectible
accounts receivable in 2000. Other operating expenses decreased in 1999, as
compared to 1998, due to decreases in HVAC and roof repair costs. Depreciation
expense declined for 1999, as compared to 1998, due to some of the capitalized
tenant improvements becoming fully depreciated.
Wells-Baker Joint Venture sold one of its commercial office buildings, 3875
Peachtree Place, on August 31, 2000, for $772,915. The net proceeds of the sale
were $704,496, resulting in a gain of $268,103.
Real estate taxes were $14,283 for 2000, $14,759 for 1999, and $15,650 for 1998.
The Partnership holds an 89.95% equity interest in the joint venture, and Wells
& Associates, Inc. holds a 10.05% equity interest.
This property is currently being marketed for sale and the Partnership's goal is
to have this property sold by the end of 2002.
For comments on the general conditions to which the property may be subject, see
Item 1, Business, Page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.
-15-
Tucker Property/Fund I--Fund II Tucker Joint Venture
For the Years Ended December 31
-------------------------------------------------
2000 1999 1998
------------- ------------- --------------
Revenues:
Rental income $1,390,599 $1,373,213 $1,242,332
Interest income 601 447 0
------------- ------------- --------------
1,391,200 1,373,660 1,242,332
------------- ------------- --------------
Expenses:
Depreciation 491,806 491,385 440,099
Management and leasing expenses 121,946 158,270 164,378
Other operating expenses 506,139 498,849 532,985
------------- ------------- --------------
1,119,891 1,148,504 1,137,462
------------- ------------- --------------
Net income $ 271,309 $ 225,156 $ 104,870
============= ============= ==============
Occupied percentage 89.28% 87.10% 93.94%
============= ============= ==============
Partnership ownership percentage 55.09% 55.09% 55.09%
============= ============= ==============
Cash distribution to the Partnership $ 394,255 $ 300,689 $ 269,139
============= ============= ==============
Net income allocated to the Partnership $ 149,464 $ 124,039 $ 57,773
============= ============= ==============
The rental income increase in 2000, as compared to 1999, was due to increased
tenant occupancy at the property. Rental income increased in 1999, compared to
1998, due to increased rental renewal rates, despite a gradual decrease in
occupancy throughout the year. The increase in depreciation expense for 1999
was due to capitalized building repairs. The management and leasing expenses
decreased in 2000, as compared to 1999, due to an adjustment of the estimated
CAM billings to tenants. Other operating expenses decreased for 1999, as
compared to 1998, due to significant variable expenses for those years.
Expenses were higher in 1998 due to sewer and main water line repairs.
The cash distribution increased in 2000, as compared to 1999, due to a decrease
in capital expenditures in 2000.
Real estate taxes were $111,946 in 2000, $91,970 in 1999, and $93,697 in 1998.
This property is currently being marketed for sale by The First Fidelity
Companies. The management team is considering separating the retail portion of
this property from the office portion creating a condominium for the office
buildings. The legal and site work have been completed so that the management
team can market this property to investors. The Partnership's goal is to have
this property sold by the end of 2002.
For comments on the general conditions to which the property may be subject, see
Item 1, Business, Page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.
-16-
Cherokee Commons Shopping Center/Fund I, II, II-OW, VI, and VII Joint Venture
For the Years Ended December 31
---------------------------------------------
2000 1999 1998
----------- ----------- -----------
Revenues:
Rental income $965,305 $945,222 $909,831
Interest income 78 68 84
----------- ----------- -----------
965,383 945,290 909,915
----------- ----------- -----------
Expenses:
Depreciation 442,250 447,969 444,660
Management and leasing expenses 74,422 94,149 82,517
Other operating expenses 54,089 68,090 84,676
----------- ----------- -----------
570,761 610,208 611,853
----------- ----------- -----------
Net income $394,622 $335,082 $298,062
=========== =========== ===========
Occupied percentage 98% 97% 91%
=========== =========== ===========
Partnership ownership percentage 24% 24% 24%
=========== =========== ===========
Cash distributed to the Partnership $214,813 $203,853 $193,285
=========== =========== ===========
Net income allocated to the Partnership $ 94,800 $ 80,496 $ 71,604
=========== =========== ===========
Rental income increased in 2000, as compared to 1999, due to increases in
occupancy and rental renewals. Management and leasing expenses decreased in
2000, as compared to 1999, due to decreased leasing commissions. Management and
leasing expenses increased in 1999, as compared to 1998, due to the increases in
occupancy and rental renewal rates. Depreciation expense decreased in 2000, as
compared to 1999, due to some tenant improvements becoming fully depreciated in
1999. Operating expenses decreased in 2000, as compared to 1999, due to a
reimburseable tenant improvement write-off in 1999 and decreased in 1999, as
compared to 1998, due to differences in adjustments of CAM billings to tenants
offset by increased expenses for tenant improvements, HVAC repairs, and a
partial demolition of a tenant's suite in 1999. Tenants are billed an estimate
amount for the current year common area maintenance, which is then reconciled
the next year and the difference is billed to the tenant.
Real estate taxes were $82,048 for 2000, $87,411 for 1999, and $77,311 for 1998.
The property is currently being marketed for sale by CB Richard Ellis.
Marketing information regarding this property is being broadly distributed to
potential investors throughout the country. The Partnership's goal is to have
this property sold by the end of 2002.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., refer to Item 2, Properties, page 3.
-17-
Liquidity and Capital Resources
During its offering, which terminated on September 5, 1986, the Partnership
raised a total of $35,321,000 through the sale of 141,284 units. No additional
Units will be sold by the Partnership. From the original funds raised, the
Partnership had invested a total of $28,253,054 in properties, paid $2,225,992
in acquisition and advisory fees, $4,836,633 in selling commissions and
organization and offering expenses, and is maintaining a working capital reserve
of $5,321.
Since the Partnership is an investment partnership formed for the purpose of
acquiring, owning, and operating income-producing real property and has invested
all of its funds available for investment, it is unlikely that the Partnership
will acquire interests in any additional properties, and the Partnership's
capital resources are anticipated to remain relatively stable over the holding
period of its investments.
The Partnership's net cash provided by operating activities increased to
$922,523 in 2000, as compared to $614,844 in 1999, due primarily to increased
occupancy at its properties generating additional rental income. Net cash
provided by investing activities increased from $414,506 in 1999 to $1,101,144
in 2000 due to proceeds from the sale of real estate. Net cash used in
financing activities increased in 2000 as compared to 1999. These changes are
due to distributions to limited partners for all quarters of 2000 as compared to
third and fourth quarters of 1999. As a result, primarily of distributions,
cash and cash equivalents has increased in 2000.
Wells-Baker Joint Venture sold one of its commercial office buildings, 3875
Peachtree Place, on August 31, 2000, for $772,915. The net proceeds generated
from this sale were $704,496. On January 11, 2001, the Partnership sold the
Crowe's Crossing Property. As a result of this sale, the Partnership received
net proceeds of $6,387,000, resulting in a gain to the Partnership from this
sale of $1,100,000.
The Partnership is unaware of any other demands, commitments, events, or capital
expenditures other than that which is required for the normal operations of its
properties or the properties in which it owns a joint venture interest that will
result in the Partnership's liquidity increasing or decreasing in any material
way.
Inflation
Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. These leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, or in some cases, annual reimbursement of operating expenses
above a certain per square foot allowance. These provisions should reduce the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation. In addition, a number of the Partnership's leases are for terms
of less than five years which may permit the Partnership to replace existing
leases with new leases at higher base rental rates if the existing leases are
below market rate. There is no assurance, however, that the Partnership would
be able to replace existing leases with new leases at higher base rentals.
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.
-18-
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.
PART III
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP
Wells Capital, Inc.
Wells Capital, Inc. ("Capital") is a Georgia corporation formed in April 1984.
The executive offices of Capital are located at 6200 The Corners Parkway,
Norcross, Georgia 30092. Leo F. Wells, III is the sole Director and the
President of Capital.
Leo F. Wells, III.
Mr. Wells is a resident of Atlanta, Georgia, is 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. Mr.
Wells is the President of Wells & Associates, Inc., a real estate brokerage and
investment company formed in 1976 and incorporated in 1978, for which he serves
as principal broker. Mr. Wells is also currently the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983. In addition, Mr. Wells is the President and Chairman of the
Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells
Management Company, Inc., which are all affiliates of the General Partners.
From 1980 to February 1985, Mr. Wells served as Vice-President of Hill-Johnson,
Inc., a Georgia corporation engaged in the construction business. From 1973 to
1976, he was associated with Sax Gaskin Real Estate Company and from 1970 to
1973, he was a real estate salesman and property manager for Roy D. Warren &
Company, an Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
No cash compensation or fees were paid to the General Partners or their
affiliates during the year ended December 31, 2000 from the Partnership or with
respect to the Partnership's interests in joint ventures owning and operating
properties. Due to the fact that Wells Management Company, Inc. has elected to
defer the receipt of property management and leasing fees from the Partnership
and with respect to the Partnership's interests in properties owned through
joint ventures, as of December 31, 2000, deferred cash compensation of
approximately $2,520,041 of which $1,749,943 was accrued at the Partnership
level and the remainder at the joint venture level in the aggregate was due to
Wells Management Company, Inc. An aggregate of $236,326 of deferred property
management and leasing fees were accrued for fiscal year 2000, out of which
$122,775 was accrued at the partnership level for fiscal year 2000.
-19-
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 2000:
(A) (B) (C)
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
- ------------------------------- ------------------------------- -------------------------------
Wells Management Company, Inc. Property Manager-Management $236,326(1)
and Leasing Fees
Wells Capital, Inc. General Partner-Partnership 0
Cash Flow Distributions
Leo F. Wells, III General Partner-Partnership 0
Cash Flow Distributions
(1) Some of these fees are paid directly by the Partnership and
some are paid by the joint venture entities which own
properties to which the property management and leasing
services relate and include management and leasing fees, some
of which were accrued for accounting purposes in 2000 but not
actually paid until January, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of December 31, 2000.
(2) (3)
(1) Name and Address of Amount and Nature of (4)
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- ------------------------ --------------------------- -------------------------- --------------------------
Class A units Leo F. Wells, III 146 Units (IRA, 401 (k) and Less than 1%
Profit Sharing)
Class B units Leo F. Wells, III 222 Units (401 (k) and Less than 1%
Profit Sharing)
No arrangements exist which would, upon implementation, result in a change in
control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are compensation and fees paid or to be paid by the Partnership to
the General Partners and their affiliates in connection with the operation of
the Partnership.
-20-
Interest in Partnership Cash Flow and Net Sale Proceeds
The General Partners are entitled to receive a subordinated participation in net
cash flow from operations equal to 10% of net cash flow after the Limited
Partners have received preferential distributions equal to 9% of their adjusted
capital accounts in each fiscal year. In addition, after the Limited Partners
receive their distributions equal to 9% of their capital contributions and the
General Partners receive their distributions equal to 10% of the total
distributions for such year, the General Partners will receive a participation
of 10% of the additional distributions from cash available for distribution, 9%
of which is to be paid to the General Partners as a Partnership Management Fee.
The General Partners will also receive a participation in net sale proceeds and
net financing proceeds equal to 15% of the residual proceeds available for
distribution after the Limited Partners have received a return of their adjusted
capital contributions plus a 15% cumulative return on their adjusted capital
contributions. The General Partners received no distributions of cash flow or
net sale proceeds from the Partnership during 2000.
Property Management and Leasing Fees
Wells Management Company, Inc., an affiliate of the General Partners, is
entitled to receive compensation for supervising the management of the
Partnership properties equal to 6% (3% management and 3% leasing) of rental
income. In no event will such fees exceed the sum of (i) 6% of the gross
receipts of each property, plus (ii) a separate one-time fee for initial rent-up
or leasing-up of development properties in an amount not to exceed the fee
customarily charged in arm's-length transactions by others rendering similar
services in the same geographic area for similar properties. With respect to
properties leased on a net lease basis for a period of ten years or longer,
property management fees will not exceed 1% of gross revenues from such leases,
plus a one-time initial leasing fee of 3% of the gross revenues which are
payable over the first five years of the term of such net leases. Since the
third quarter of 1998, the management and leasing of the Crowe's Crossing
Property and the Black Oak Plaza Property has been performed by an outside
agent, Noro Management, since the third quarter of 1998 for which they receive a
3% fee and Wells Management is accrued the balance. Management and leasing fees
as well as initial lease-up fees due from the Partnership and with respect to
the Partnership's interest in joint ventures owning properties are currently
being expensed but not paid to Wells Management Company, Inc. As set forth
above, as of December 31, 2000, deferred property management and leasing fees
totaling $2,520,041 were due to Wells Management Company, Inc., of which
$236,326 was accrued for fiscal year 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. During 2000, no real estate
commissions were paid to the General Partners or their affiliates.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
-21-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-20 of
this Annual Report on Form 10-K, and the list of the financial
statements contained herein is set forth on page F-1, which is hereby
incorporated by reference.
(a)2. Financial statement Schedule III
Information with respect to this item begins on page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission during the fourth
quarter of 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.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-22-
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 27th day of March
2001.
Wells Real Estate Fund I
(Registrant)
By: /s/ Leo F. Wells, III
--------------------------------------
Leo F. Wells, III
Individual General Partner and as President and
Chief Financial Officer of Wells Capital, Inc.,
Corporate General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
Signature Title Date
- ----------------------------- ----------------------------- ---------------------------
/s/ Leo F. Wells, III
- -----------------------------
Leo F. Wells, III Individual General Partner, March 27, 2001
President and Sole Director of
Wells Capital, Inc., the
Corporate General Partner
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
-23-
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- -------------------------------------------------------------------------- ---------
Independent Auditors' Report F2
Consolidated Balance Sheets as of December 31, 2000 and 1999 F3
Consolidated Statements of Loss for the Years ended December 31, 2000, 1999, and 1998 F4
Consolidated Statements of Partners' Capital for the Years Ended December 31, 2000, 1999, F5
and 1998
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999, and 1998 F6
Notes to Consolidated Financial Statements for December 31, 2000, 1999, and 1998 F7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund I and Subsidiary:
We have audited the accompanying consolidated balance sheets of WELLS REAL
ESTATE FUND I (a Georgia public limited partnership) AND SUBSIDIARY as of
December 31, 2000 and 1999 and the related consolidated statements of income
(loss), partners' capital, and cash flows for each of the three years in the
period ended December 31, 2000. These financial statements and the schedule
referred to below are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wells Real Estate
Fund I and subsidiary as of December 31, 2000 and 1999 and the results of their
operations and their 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.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments and
Accumulated Depreciation as of December 31, 2000 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 30, 2001
F-2
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
----------- ------------
REAL ESTATE ASSETS, at cost:
Land $ 2,776,544 $ 2,894,193
Building and improvements, less accumulated
depreciation of $9,170,624 and
$8,399,494 at December 31, 2000 and 1999,
respectively 10,093,769 11,313,057
----------- ------------
Total real estate assets 12,870,313 14,207,250
INVESTMENT IN JOINT VENTURES 5,835,269 6,200,073
CASH AND CASH EQUIVALENTS 2,268,774 1,670,343
DUE FROM AFFILIATES 207,948 145,762
ACCOUNTS RECEIVABLE 306,881 275,220
DEFERRED LEASE ACQUISITION COSTS 159,239 131,071
PREPAID EXPENSES AND OTHER ASSETS 84,226 91,457
----------- ------------
Total assets $21,732,650 $22,721,176
=========== ============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 129,204 $ 23,004
Refundable security deposits 106,609 93,112
Due to affiliate 1,773,130 1,686,651
Partnership distributions payable 374,875 328,511
Minority interest 50,222 102,727
----------- ------------
Total liabilities 2,434,040 2,234,005
----------- ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--98,716 units 19,184,478 20,487,171
Class B--42,568 units 114,132 0
----------- ------------
Total partners' capital 19,298,610 20,487,171
----------- ------------
Total liabilities and partners' capital $21,732,650 $22,721,176
=========== ============
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
---------- ---------- ----------
REVENUES:
Rental income $1,559,270 $1,436,029 $1,484,950
Equity in income of joint ventures 244,264 204,535 129,377
Interest income 105,194 70,177 21,845
Gain on sale of real estate 268,103 0 0
---------- ---------- ----------
2,176,831 1,710,741 1,636,172
---------- ---------- ----------
EXPENSES:
Depreciation 1,024,879 1,019,531 1,025,759
Operating costs, net of reimbursements 450,323 490,462 531,998
Partnership administration 99,869 63,465 60,938
Management and leasing fees 169,383 130,040 146,350
Legal and accounting 102,562 89,882 173,873
Bad debt expense 62,709 7,280 27,254
Computer costs 10,673 10,386 7,559
Loss on real estate assets 25,899 0 0
---------- ---------- ----------
1,946,297 1,811,046 1,973,731
---------- ---------- ----------
INCOME (LOSS) BEFORE MINORITY INTEREST 230,534 (100,305) (337,559)
MINORITY INTEREST (22,456) (1,599) (116)
---------- ---------- ----------
NET INCOME (LOSS) $ 208,078 $ (101,904) $ (337,675)
========== ========== ==========
NET INCOME (LOSS) ALLOCATED TO CLASS A LIMITED PARTNERS $ 93,946 $ (101,904) $ (337,675)
========== ========== ==========
NET INCOME ALLOCATED TO CLASS B LIMITED PARTNERS $ 114,132 $ 0 $ 0
========== ========== ==========
NET INCOME (LOSS) PER CLASS A LIMITED PARTNER UNIT $ .95 $ (1.03) $ (3.42)
========== ========== ==========
NET INCOME PER CLASS B LIMITED PARTNER UNIT $ 2.68 $ 0.00 $ $0.00
========== ========== ==========
CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT $ 14.15 $ 6.53 $ 0.00
========== ========== ==========
The accompanying notes are an integral part of these consolidated statements.
F-4
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Limited Partners Total
-----------------------------------------------
Class A Class B Partners'
--------------------- ---------------------
Units Amount Units Amount Capital
------- --------- -------- -------- -----------
BALANCE, December 31, 1997 98,716 $21,571,254 42,568 $ 0 $21,571,254
Net loss 0 (337,675) 0 0 (337,675)
------- ----------- -------- -------- -----------
BALANCE, December 31, 1998 98,716 21,233,579 42,568 0 21,233,579
Net loss 0 (101,904) 0 0 (101,904)
Partnership distributions 0 (644,504) 0 0 (644,504)
------- ----------- -------- -------- -----------
BALANCE, December 31, 1999 98,716 20,487,171 42,568 0 20,487,171
Net income 0 93,946 0 114,132 208,078
Partnership distributions 0 (1,396,639) 0 0 (1,396,639)
------- ----------- -------- -------- -----------
BALANCE, December 31, 2000 98,716 $19,184,478 42,568 $114,132 $19,298,610
======= =========== ======== ======== ===========
The accompanying notes are an integral part of these consolidated statements.
F-5
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
----------- ----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 208,078 $ (101,904) $ (337,675)
----------- ---------- ----------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Equity in income of joint ventures (244,264) (204,535) (129,377)
Depreciation 1,024,879 1,019,531 1,025,759
Gain on real estate assets (268,103) 0 0
Loss on real estate assets 25,899 0 0
Changes in assets and liabilities:
Accounts receivable (31,661) (44,710) 63,134
Deferred lease acquisition costs (28,168) (73,481) (11,212)
Prepaid expenses and other assets 7,231 (32,916) (4,247)
Accounts payable, accrued expenses, and refundable 119,697 (10,642) (67,138)
security deposits
Due to affiliate 86,479 61,902 93,534
Minority interest 22,456 1,599 116
----------- ---------- ----------
Total adjustments 714,445 716,748 970,569
----------- ---------- ----------
Net cash provided by operating activities 922,523 614,844 632,894
----------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of real estate 702,604 0 0
Investment in real estate (148,342) (27,499) (52,061)
Distributions received from joint ventures 546,882 442,005 443,670
----------- ---------- ----------
Net cash provided by investing activities 1,101,144 414,506 391,609
----------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (104,646) 0 0
Distributions to partners in excess of accumulated earnings (1,245,629) (320,363) (174,427)
Distributions to minority interest (74,961) (7,725) (9,194)
----------- ---------- ----------
Net cash used in financing activities (1,425,236) (328,088) (183,621)
----------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 598,430 701,262 840,882
CASH AND CASH EQUIVALENTS, beginning of year 1,670,343 969,081 128,199
----------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of year $ 2,268,774 $1,670,343 $ 969,081
=========== ========== ==========
The accompanying notes are an integral part of these consolidated statements.
F-6
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999, AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund I (the "Partnership") is a public limited partnership
organized on April 26, 1984 under the laws of the state of Georgia. The
general partners are Leo F. Wells, III and Wells Capital, Inc. (the
"Company"). The Partnership has two classes of limited partnership
interests, Class A and Class B units. Limited partners may vote to, among
other things, (a) amend the partnership agreement, subject to certain
limitations, (b) change the business purpose or investment objectives of the
Partnership, and (c) remove a general partner. A majority vote on any of the
above described matters will bind the Partnership, without the concurrence
of the general partners. Each limited partnership unit has equal voting
rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed, currently
under development or construction, newly constructed, or have operating
histories. As of December 31, 2000, the Partnership owned the following
properties directly: (i) the Paces Pavilion Property ("Paces Pavilion"), a
medical office building located in Atlanta, Georgia; (ii) the Crowe's
Crossing Property, a shopping center located in DeKalb County, Georgia;
(iii) the Black Oak Property, a shopping center located in Knoxville,
Tennessee; and (iv) the Peachtree Place Property ("Wells-Baker"), one
commercial office building located in Atlanta, Georgia. In addition, through
its investment in joint ventures, the Partnership owns interests in the
following properties: Heritage Place at Tucker ("Tucker"), a retail shopping
and commercial office complex located in Tucker, Georgia, and the Cherokee
Commons Shopping Center ("Cherokee Commons"), a shopping center located in
Cherokee County, Georgia.
Basis of Presentation
The financial statements include the accounts of the Partnership and Wells-
Baker. The Partnership's interest in Wells-Baker was approximately 90% at
December 31, 2000 and 1999. All significant intercompany balances have been
eliminated in consolidation.
Minority Interest
Minority interest represents the interest of Wells and Associates, Inc., an
affiliate of the general partners, in Wells-Baker. The Partnership sold one
of the two commercial office buildings comprising approximately 13% of
Wells-Baker on August 31, 2000 for total proceeds of $702,604. As a result
of this sale, the Partnership recognized a $268,103 gain, of which
approximately $26,810 was allocated to minority interest. At December 31,
2000 and 1999, Wells and Associates, Inc.'s interest in Wells-Baker was
approximately 10%.
F-7
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership recently began selling its properties. Management estimates
that the net realizable value of each of the properties exceeds the
carrying value of the corresponding real estate assets; consequently, no
impairment loss has been recorded. In the event that the net sales proceeds
are less than the carrying value of the property sold, the Partnership
would recognize a loss on the sale. Other than the sale discussed in Note
8, management is not contractually or financially obligated to sell any of
its properties, and it is management's current intent to fully realize the
Partnership's investment in real estate. The success of the Partnership's
future operations and the ability to realize the investment in its assets
will be dependent on the Partnership's ability to maintain rental rates,
occupancy, and an appropriate level of operating expenses in future years.
Management believes that the steps that it is taking will position the
Partnership to realize its investment in its assets.
One significant tenant at Paces Pavilion represented 100% of rental income
of the property for the year ended December 31, 1996, of which
approximately 25% was received from sublessees. This tenant vacated the
property effective December 31, 1996 and the property is currently only 33%
occupied. The Partnership is actively seeking replacement tenants for
occupancy of the remainder of the space at Paces Pavilion; however, in the
event that replacement tenants require significant tenant improvements and
renovations to the space to be leased, it is anticipated that such amounts
may be funded from cash of the Partnership which would otherwise have been
distributed to the Limited Partners. In such event, cash distributions to
Limited Partners holding Class A Units may be reduced or suspended pending
funding of amounts required for any such tenant improvements or
renovations. As of January 30, 2001, the Partnership has not been
successful in re-leasing a substantial portion of Paces Pavilion.
Income Taxes
The Partnership is not subject to federal or state income taxes, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
Distribution of Net Cash From Operations
Cash available for distribution is distributed on a cumulative
noncompounded basis to limited partners quarterly. In accordance with the
partnership agreement, distributions are paid first to limited partners
holding Class A units until they have received a 9% per annum return on
their adjusted capital contributions, as defined. Cash available for
distribution is then distributed to limited partners holding Class B units
until they have received a 9% per annum return on their adjusted capital
contributions, as defined. Any remaining cash available for distribution is
split between the limited partners and the general partners on a basis of
90% and 10%, respectively.
Distribution of Sales Proceeds
Under the partnership agreement, the net proceeds from a sale or exchange
of the Partnership's properties are currently required to be distributed
among the partners in accordance with the positive balances in their tax
capital accounts, after the allocation of taxable gain on the sale or
exchange of such properties, as described below.
F-8
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners and 1% to
the general partners.
Net loss, depreciation and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the Class B limited partners and
1% to the general partners until their capital accounts are reduced to
zero, (b) then to any partner having a positive balance in his capital
account in an amount not to exceed such positive balance, and (c)
thereafter to the general partners.
Under the partnership agreement, gain on the sale or exchange of the
Partnership's properties is currently allocated as follows: (a) first, to
partners having negative capital accounts until all negative capital
accounts have been restored to zero, (b) then, to the limited partners in
proportion to and to the extent of the excess of (i) each limited partner's
adjusted capital contribution, plus a cumulative 15% per annum return on
his adjusted capital contribution (16% for investments made before December
31, 1984), less the sum of all prior distributions of cash flow from
operations previously made to such limited partner, over (ii) such limited
partner's capital account balance as of the sale date, (c) then, to the
general partners in proportion to and to the extent of the excess of (i)
each general partner's adjusted capital contribution, over (ii) such
general partner's capital account balance as of the sale date, and (d)
thereafter, 85% to the limited partners and 15% to the general partners.
Real Estate Assets
Real estate assets held by the Partnership directly or through investments
in affiliated joint ventures are stated at cost less accumulated
depreciation. Major improvements and betterments are capitalized when they
extend the useful life of the related asset. All repairs and maintenance
are expensed as incurred.
Management continually monitors events and changes in circumstances that
could indicate carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present that
indicate the carrying amounts of real estate assets may not be recoverable,
management assesses the recoverability of real estate assets by determining
whether the carrying value of such real estate assets will be recovered
through the future cash flows expected from the use of the asset and its
eventual disposition. Management has determined that there has been no
impairment in the carrying value of real estate assets held by the
Partnership or its affiliated joint ventures as of December 31, 2000.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years.
Revenue Recognition
All leases on real estate assets held by the Partnership are classified as
operating leases and the related rental income is recognized on a straight-
line basis over the terms of the respective leases.
Deferred Lease Acquisition Costs
Costs incurred to procure operating leases are capitalized and amortized on
a straight-line basis over the terms of the related leases.
Investment in Joint Ventures
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investment in joint ventures is recorded using the equity method of
accounting. The joint ventures follow the same significant accounting
policies as the Partnership.
F-9
Cash available for distribution and allocations of profit and loss to the
Partnership by the joint ventures are made in accordance with the terms of
the individual joint venture agreements. Generally, these items are
allocated in proportion to the partners' respective ownership interests.
Cash is paid by the joint ventures to the Partnership on a quarterly basis.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market
accounts.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
current year financial statement presentation.
2. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 2000 and 1999 represents the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarters of 2000 and 1999, as follows:
2000 1999
----------- ----------
Fund I and II Tucker $ 157,647 $ 96,725
Fund I, II, II-OW, VI, and VII Associates--Cherokee 50,301 49,037
---------- ---------
$ 207,948 $ 145,762
========== =========
The Partnership entered into property management agreements with Merchant's
Management, Inc. (an unrelated third party) and Wells Management Company,
Inc. ("Wells Management"), an affiliate of the general partners. In
consideration for supervising the management of its properties, the
Partnership pays Merchant's Management, Inc. management and leasing fees
equal to 1.5% of the gross revenues for management and 1.5% of the gross
revenues for leasing. With respect to Wells Management, the Partnership
incurs management and leasing fees equal to (a) 1.5% of the gross revenues
for management and 1.5% of the gross revenues for leasing, plus a separate
fee for the one-time initial lease-up of newly constructed properties in an
amount not to exceed the fee customarily charged in arm's-length
transactions by others rendering similar services in the same geographic
area for similar properties or (b) in the case of commercial properties,
which are leased on a long-term net basis (ten or more years), 1% of the
gross revenues except for initial leasing fees equal to 3% of the gross
revenues over the first five years of the lease term. The Partnership's
aggregate management and leasing fees are not to exceed a maximum of 6% of
annual gross revenues.
The Partnership incurred management and leasing fees and lease acquisition
costs, both directly and at the joint venture level, for the years ended
December 31, 2000, 1999, and 1998 of $236,326, $200,249, and $227,230,
respectively. Wells Management has elected to defer the receipt of its
portion of the management and leasing fees from the Partnership and with
respect to the Partnership's interest in properties owned through joint
ventures. As of December 31, 2000 and 1999, this deferral totaled
$1,749,943 and $1,686,651, respectively, and is included in due to
affiliate in the accompanying balance sheets.
The Company performs certain administrative services for the Partnership,
such as accounting and other Partnership administration, and incurs the
related expenses. Such expenses are allocated among the various Wells Real
Estate Funds based on time spent on each fund by individual administrative
personnel. In the opinion of management, such allocation is a reasonable
estimation of such expenses.
F-10
The general partners are also general partners of other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
3. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 2000 and 1999 are summarized as follows:
2000 1999
-------------------- ---------------------
Amount Percent Amount Percent
------ ------- ------ -------
Fund I and II Tucker $ 4,337,149 55% $ 4,581,940 55%
Fund I, II, II-OW, VI, and VII
Associates--Cherokee 1,498,120 24 1,618,133 24
----------- -----------
$ 5,835,269 $ 6,200,073
=========== ===========
The following is a rollforward of the Partnership's investment in joint ventures
for the years ended December 31, 2000 and 1999:
2000 1999
---------- ----------
Investment in joint ventures, beginning of year $6,200,073 $6,500,083
Equity in income of joint ventures 244,264 204,535
Distributions from joint ventures (609,068) (504,545)
---------- ----------
Investment in joint ventures, end of year $5,835,269 $6,200,073
========== ==========
Fund I and II Tucker
Tucker and Cherokee Commons were previously held in a joint venture between the
Partnership and Fund II and II-OW, a Georgia joint venture having Wells Real
Estate Fund II and Wells Real Estate Fund II-OW as joint partners. The joint
ventures were formed for the purpose of owning, developing, and operating
Cherokee Commons and Tucker. In 1991, the Tucker and Cherokee Commons joint
ventures were merged into a new joint venture, the Fund I and II Tucker-Cherokee
Joint Venture. Under the terms of the joint venture agreement, the ownership
interests of the Partnership and Fund II and II-OW in each individual property
remained unchanged.
On August 1, 1995, the joint venture assigned its ownership in Cherokee Commons
to the Fund I, II, II-OW, VI, and VII Associates joint venture. Upon the
assignment of Cherokee Commons, the joint venture was renamed Fund I and II
Tucker. Tucker is a retail shopping center containing approximately 29,858
square feet and a commercial office building complex containing approximately
67,465 square feet in Tucker, DeKalb County, Georgia.
In 1996, one of the tenants in Tucker experienced a fire. In 1996, Fund I and II
Tucker received an initial insurance settlement of $143,944 for damages to the
building. In 1997, an additional $104,895 was received as a final insurance
settlement for the fire damages discussed above and storm damages that occurred
in 1997. In addition, a loss from the retirement of real estate assets of
$58,952 was incurred. Additional insurance proceeds of $27,319 related to these
damages were received in 1998 and are reflected as a gain on real estate assets
in the following statement of income.
F-11
Following are the financial statements for Fund I and II Tucker:
Fund I and II Tucker
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
---------- ----------
Real estate assets, at cost:
Land $3,260,887 $3,260,887
Building and improvements, less accumulated depreciation of
$3,896,844 in 2000 and $3,405,038 in 1999 5,459,417 5,835,882
Construction in progress 0 0
---------- ----------
Total real estate assets 8,720,304 9,096,769
Cash and cash equivalents 117,239 123,617
Accounts receivable 222,778 125,772
Prepaid expenses and other assets 110,525 115,865
---------- ----------
Total assets $9,170,846 $9,462,023
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 69,099 $ 67,797
Partnership distributions payable 236,990 165,750
Due to affiliates 632,762 588,344
---------- ----------
Total liabilities 938,851 821,891
---------- ----------
Partners' capital:
Wells Real Estate Fund I 4,337,149 4,581,940
Fund II and II-OW 3,894,846 4,058,192
---------- ----------
Total partners' capital 8,231,995 8,640,132
---------- ----------
Total liabilities and partners' capital $9,170,846 $9,462,023
========== ==========
F-12
Fund I and II Tucker
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---------- ---------- ----------
Revenues:
Rental income $1,390,599 $1,373,213 $1,242,332
Interest income 601 447 0
---------- ---------- ----------
1,391,200 1,373,660 1,242,332
---------- ---------- ----------
Expenses:
Operating costs, net of reimbursements 434,738 464,001 515,791
Depreciation 491,806 491,386 440,099
Management and leasing fees 121,946 158,269 164,378
Partnership administration 37,480 29,109 32,420
Legal and accounting 6,824 5,739 12,093
Gain on real estate assets 0 0 (27,319)
Bad debt expense 27,097 0 0
---------- ---------- ----------
1,119,891 1,148,504 1,137,462
---------- ---------- ----------
Net income $ 271,309 $ 225,156 $ 104,870
========== ========== ==========
Net income allocated to Wells Real Estate Fund I $ 149,464 $ 124,039 $ 57,773
========== ========== ==========
Net income allocated to Fund II and II-OW $ 121,845 $ 101,117 $ 47,097
========== ========== ==========
Fund I and II Tucker
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Fund II Total
Estate and Partners'
Fund I II-OW Capital
---------- ---------- ----------
Balance, December 31, 1997 $4,969,956 $4,280,651 $9,250,607
Net income 57,773 47,097 104,870
Partnership distributions (269,138) (170,937) (440,075)
---------- ---------- ----------
Balance, December 31, 1998 4,758,591 4,156,811 8,915,402
Net income 124,039 101,117 225,156
Partnership distributions (300,690) (199,736) (500,426)
---------- ---------- ----------
Balance, December 31, 1999 4,581,940 4,058,192 8,640,132
Net income 149,464 121,845 271,309
Partnership distributions (394,255) (285,191) (679,446)
---------- ---------- ----------
Balance, December 31, 2000 $4,337,149 $3,894,846 $8,231,995
========== ========== ==========
F-13
Funds I and II Tucker
(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 $ 271,309 $ 225,156 $ 104,870
--------- --------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 491,806 491,386 440,099
Gain on real estate assets 0 0 (27,319)
Changes in assets and liabilities:
Accounts receivable (97,006) (29,410) (16,647)
Prepaid expenses and other assets 5,340 6,316 (17,585)
Accounts payable and accrued expenses 1,302 2,833 (9,054)
Due to affiliates 44,418 39,712 67,404
--------- --------- ---------
Total adjustments 445,860 510,837 436,898
--------- --------- ---------
Net cash provided by operating activities 717,169 735,993 541,768
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (115,341) (260,522) (142,814)
Insurance proceeds 0 0 27,319
--------- --------- ---------
Net cash used in investing activities (115,341) (260,522) (115,495)
--------- --------- ---------
Cash flows from financing activities:
Distributions to joint venture partners (608,206) (401,234) (389,577)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (6,378) 74,237 36,696
Cash and cash equivalents, beginning of year 123,617 49,380 12,684
--------- --------- ---------
Cash and cash equivalents, end of year $ 117,239 $ 123,617 $ 49,380
========= ========= =========
Fund I, II, II-OW, VI, and VII Associates--Cherokee
On August 1, 1995, Cherokee Commons was transferred to a new joint venture
between the Partnership, Fund II and II-OW, Wells Real Estate Fund VI, L.P.
("Fund VI"), and Wells Real Estate Fund VII, L.P. ("Fund VII"). The joint
venture, I, II, II-OW, VI, and VII Associates--Cherokee was formed for the
purpose of owning and operating Cherokee Commons, a retail shopping center
containing approximately 103,755 square feet, located in Cherokee County,
Georgia. Percentage ownership interests in the joint venture were determined at
the time of formation based on contributions. Under the terms of the joint
venture agreement, Fund VI and Fund VII each contributed approximately $1
million to the new joint venture in return for a 10.7% ownership interest. The
Partnership's ownership interest in Cherokee Commons changed from 30.6% to 24%,
and Fund II and II-OW joint venture's ownership interest changed from 69.4% to
55.6%. The $2 million in cash contributed to Cherokee Commons was used to fund
an expansion of the property for an existing tenant.
F-14
Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 20008 and 1999
Assets
2000 1999
---------- ----------
Real estate assets, at cost:
Land $1,219,704 $1,219,704
Building and improvements, less accumulated depreciation of
$3,606,079 in 2000 and $3,163,829 in 1999 5,624,924 6,067,174
---------- ----------
Total real estate assets 6,844,628 7,286,878
Cash and cash equivalents 214,940 206,540
Accounts receivable 31,356 27,703
Prepaid expenses and other assets 100,866 89,846
---------- ----------
Total assets $7,191,790 $7,610,967
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 23,716 $ 16,295
Refundable security deposits 23,839 18,562
Partnership distributions payable 197,191 192,184
Due to affiliates 137,334 122,272
---------- ----------
Total liabilities 382,080 349,313
---------- ----------
Partners' capital:
Wells Real Estate Fund I 1,498,120 1,618,133
Fund II and II-OW 3,814,737 4,053,105
Wells Real Estate Fund VI 749,777 796,558
Wells Real Estate Fund VII 747,076 793,858
---------- ----------
Total partners' capital 6,809,710 7,261,654
---------- ----------
Total liabilities and partners' capital $7,191,790 $7,610,967
========== ==========
F-15
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
-------- -------- --------
Revenues:
Rental income $965,305 $945,222 $909,831
Interest income 78 68 84
-------- -------- --------
965,383 945,290 909,915
-------- -------- --------
Expenses:
Depreciation 442,250 447,969 444,660
Operating costs, net of reimbursements 24,557 37,583 35,715
Partnership administration 23,352 24,882 22,934
Management and leasing fees 74,422 94,149 82,517
Legal and accounting 6,180 5,624 7,363
Bad debt expense 0 0 18,664
-------- -------- --------
570,761 610,207 611,853
-------- -------- --------
Net income $394,622 $335,083 $298,062
======== ======== ========
Net income allocated to Wells Real Estate Fund I $ 94,800 $ 80,496 $ 71,604
======== ======== ========
Net income allocated to Fund II and II-OW $215,310 $182,825 $162,626
======== ======== ========
Net income allocated to Wells Real Estate Fund VI $ 42,256 $ 35,881 $ 31,916
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $ 42,256 $ 35,881 $ 31,916
======== ======== ========
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells Real Fund II Wells Real Wells Real Total
Estate and Estate Estate Partners'
Fund I II-OW Fund VI Fund VII Capital
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1997 $1,863,173 $4,536,781 $891,482 $888,782 $8,180,218
Net income 71,604 162,626 31,916 31,916 298,062
Partnership distributions (193,285) (403,744) (79,238) (79,238) (755,505)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1998 1,741,492 4,295,663 844,160 841,460 7,722,775
Net income 80,496 182,825 35,881 35,881 335,083
Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1999 1,618,133 4,053,105 796,558 793,858 7,261,654
Net income 94,800 215,310 42,256 42,256 394,622
Partnership distributions (214,813) (453,678) (89,037) (89,038) (846,566)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 2000 $1,498,120 $3,814,737 $749,777 $747,076 $6,809,710
========== ========== ========== ========== ==========
F-16
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
-------- --------- ---------
Cash flows from operating activities:
Net income $ 394,622 $ 335,083 $ 298,062
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 442,250 447,969 444,660
Changes in assets and liabilities:
Accounts receivable (3,653) 7,814 56,999
Prepaid expenses and other assets (11,020) 1,133 8,890
Accounts payable, accrued expenses, and refundable
security deposits 12,694 (72,272) 70,278
Due to affiliates 15,062 13,005 15,327
--------- --------- ---------
Total adjustments 455,333 397,649 596,154
--------- --------- ---------
Net cash provided by operating activities 849,955 732,732 894,216
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate 0 (14,148) (5,771)
--------- --------- ---------
Cash flows from financing activities:
Distributions to joint venture partners (841,555) (734,858) (818,790)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 8,400 (16,274) 69,655
Cash and cash equivalents, beginning of year 206,540 222,814 153,159
--------- --------- ---------
Cash and cash equivalents, end of year $ 214,940 $ 206,540 $ 222,814
========= ========= =========
F-17
4. 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 loss $208,078 $(101,904) $(337,675)
Decrease in net loss resulting from:
Depreciation expense for financial reporting purposes in excess of 693,726 720,603 705,472
amounts for income tax purposes
Expenses deductible when paid for income tax purposes, accrued for 91,782 87,478 146,242
financial reporting purposes
Rental income recognized for income tax purposes in excess of 258 59,574 33,416
amounts for financial reporting purposes
Meals and entertainment 990 590 1,577
Other (56,999) 0 21,031
--------- --------- ---------
Income tax basis net income $937,835 $ 766,341 $ 570,063
========= ========= =========
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 $19,298,610 $20,487,171 $21,233,579
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes
in excess of amounts for income tax purposes 3,573,180 2,879,454 2,158,851
Joint venture change in ownership 14,293 14,293 14,293
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for income tax
purposes (93,991) (94,249) (153,823)
Accumulated expenses deductible when paid for income
tax purposes, accrued for financial reporting purposes 2,425,283 2,333,501 2,246,023
Accumulated expenses capitalized for income tax
purposes and expensed for financial reporting
purposes, net of accumulated amortization (2,086) (2,086) (2,086)
Partnership distributions payable 350,578 299,399 15,402
Other, net (46,502) 9,507 8,917
----------- ----------- -----------
Income tax basis partners' capital $25,519,365 $25,926,990 $25,521,156
=========== =========== ===========
5. RENTAL INCOME
The future minimum rental income due from the Partnership's direct
investments in real estate assets or its respective ownership interest in
the joint ventures under noncancelable operating leases at December 31, 2000
is as follows:
F-18
Year ending December 31:
2001 $1,342,847
2002 1,071,493
2003 733,835
2004 434,583
2005 322,389
Thereafter 1,128,727
-----------
$5,033,874
===========
One tenant contributed approximately 17% of rental income for the year ended
December 31, 2000. In addition, two tenants will contribute approximately
29% and 12% of future minimum rental income.
The future minimum rental income due Fund I and II Tucker under
noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31:
2001 $1,105,038
2002 842,503
2003 463,520
2004 206,361
2005 122,848
Thereafter 344,503
-----------
$3,084,773
===========
One tenant contributed 10% of rental income for the year ended December 31,
2000 and will contribute approximately 19% of future minimum rental income.
The future minimum rental income due Fund I, II, II-OW, VI, and VII
Associates--Cherokee under noncancelable operating leases at December 31,
2000 is as follows:
Year ending December 31:
2001 $ 951,376
2002 908,795
2003 819,757
2004 689,164
2005 653,219
Thereafter 3,159,986
-----------
$7,182,297
===========
One tenant contributed approximately 61% of rental income for the year ended
December 31, 2000 and will contribute approximately 84% of future minimum
rental income.
F-19
6. 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 $482,424 $479,425 $721,446 $493,536
Net income (loss) 3,134 (50,432) 238,189 17,187
Net income allocated to Class A limited
partners 3,134 (50,432) 238,189 17,187
Net income (loss) per Class A limited partner
unit outstanding (a) $ 0.03 $ (0.51) $ 2.41 $ 0.17
Cash distribution per Class A limited partner
unit outstanding 3.12 3.52 3.75 3.76
(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 rounding differences between quarters.
2000 Quarters Ended
------------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- ---------- ------------- -------------
Revenues $445,258 $442,104 $403,109 $ 420,270
Net income (loss) (68,435) 115,140 (46,499) (102,110)
Net income allocated to Class A limited
partners (68,435) 115,140 (46,499) (102,110)
Net income per Class A limited partner unit
outstanding $ (0.69) $ 1.17 $ (0.47) $ (1.04)
Cash distribution per Class A limited partner
unit outstanding 0.00 0.00 3.25 3.28
7. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
8. SUBSEQUENT EVENT
On January 11, 2001, the Partnership sold the Crowe's Crossing Property. As
a result of this sale, the Partnership received net proceeds of
approximately $6,400,000, and will recognize a gain of approximately
$1,100,000 during the first quarter of 2001.
F-20
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Initial Cost Costs of
--------------------------------
Buildings and Capitalized
Description Ownership Encumbrances Land Improvements Improvements
- ----------------------------- ------------- ---------------- ---------------- -------------- -----------------
PACES PAVILION (a) 100% None $ 515,078 $ 3,158,662 $ 1,935,615
BLACK OAK PLAZA (b) 100 None 727,500 4,151,849 1,037,573
CROWE'S CROSSING (c) 100 None 1,317,220 7,617,905 294,571
PEACHTREE PLACE (d) 90 None 187,087 0 1,097,878
CHEROKEE COMMONS (e) 24 None 1,142,663 6,462,837 2,845,207
HERITAGE PLACE AT TUCKER (f) 55 None 2,756,378 0 9,860,769
---------------- -------------- -----------------
Total $6,645,926 $21,391,253 $17,071,613
================ ============== =================
Gross Amounts at Which Carried at December 31, 2000
----------------------------------------------------------------
Buildings and Construction
Description Land Improvements in Progress Total
- -------------------------- ------------ ---------------- ---------------- --------------
PACES PAVILION (a) $ 501,049 $ 5,108,306 $ 0 $ 5,609,355
BLACK OAK PLAZA (b) 737,770 5,173,152 6,000 5,916,922
CROWE'S CROSSING (c) 1,335,936 7,873,950 19,810 9,229,696
PEACHTREE PLACE (d) 201,789 1,083,176 0 1,284,965
CHEROKEE COMMONS (e) 1,219,704 9,231,003 0 10,450,707
HERITAGE PLACE AT TUCKER (f) 3,260,887 9,352,510 3,750 12,617,147
------------ ---------------- ---------------- --------------
Total $7,257,135 $37,822,097 $29,560 $45,108,792
============ ================ ================= ==============
Life on Which
Accumulated Date of Date Depreciation
Description Depreciation Construction Acquired Is Computed (g)
- ------------------------ --------------- -------------- ------------ -------------------
PACES PAVILION (a) $ 2,455,327 1986 12/27/85 20 to 25 years
BLACK OAK PLAZA (b) 2,286,316 1986 12/31/86 20 to 25 years
CROWE'S CROSSING (c) 3,857,123 1986 12/31/86 20 to 25 years
PEACHTREE PLACE (d) 571,859 1986 04/09/85 20 to 25 years
CHEROKEE COMMONS (e) 3,606,079 1986 06/09/87 20 to 25 years
HERITAGE PLACE AT TUCKER (f) 3,896,843 1987 09/04/86 20 to 25 years
--------------
Total $16,673,547
==============
(a) Paces Pavilion Property is a medical office building located in
Atlanta, Georgia, owned entirely by the Partnership.
(b) Black Oak Plaza is a retail shopping center located in Knoxville,
Tennessee, owned entirely by the Partnership.
(c) Crowe's Crossing is a retail shopping center located in DeKalb County,
Georgia, owned entirely by the Partnership.
(d) Peachtree Property is a commercial office park located in Atlanta,
Georgia. It is owned by Wells-Baker.
(e) Cherokee Commons is a retail shopping center located in Cherokee
County, Georgia. It is owned by Fund I, II, II-OW, VI, and VII
Associates--Cherokee.
(f) Heritage Place at Tucker is a center offering retail, shopping, and
commercial office space located in Tucker, Georgia. It is owned by
Fund I and II--Tucker.
(g) Depreciation lives used for buildings were 40 years through September
1995, changed to 25 years thereafter. Depreciation lives used for land
improvements are 20 years.
WELLS REAL ESTATE FUND I AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Accumulated
Cost Depreciation
------------- ---------------
BALANCE AT DECEMBER 31, 1996 $44,661,340 $ 9,283,955
1997 additions 599,975 1,867,429
1997 deductions (202,450) (50,478)
------------- ---------------
BALANCE AT DECEMBER 31, 1997 45,058,865 11,100,906
1998 additions 200,645 1,910,512
------------- ---------------
BALANCE AT DECEMBER 31, 1998 45,259,510 13,011,418
1999 additions 299,203 1,958,893
------------- ---------------
BALANCE AT DECEMBER 31, 1999 45,558,713 14,970,311
2000 additions 275,964 1,968,721
2000 deductions (725,885) (265,485)
------------- ---------------
BALANCE AT DECEMBER 31, 2000 $45,108,792 $16,673,547
============= ===============
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund I)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Sequential
Exhibit No. Description of Document
- ----------- -----------------------
*4 Restated and Amended Certificate and Agreement of Limited
Partnership of Wells Real Estate Fund I (Registration Statement
of Wells Real Estate Fund I, Exhibit B to the Prospectus, File
No. 2-91165)
*10(a) Management Agreement between Registrant and Wells Management
Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund I
for the fiscal year ended December 31, 1990, File No. 0-14463)
*10(b) Leasing and Tenant Coordination Agreement Between Registrant and
Wells Management Company, Inc. (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal year ended December 31, 1990,
File No. 0-14463)
*10(c) Purchase Agreement for the acquisition of the Howell Mill Road
Property dated December 27, 1985 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal year ended December 31, 1990,
File No. 0-14463)
*10(d) Leases between Registrant and Hospital Corporation of America
(Exhibit to Form 10-K of Wells Real Estate Fund I for the fiscal
year ended December 31, 1990, File No. 0-14463)
*10(e) Joint Venture Agreement of Wells-Baker Associates dated April 1,
1985 (Exhibit to Form 10-K of Wells Real Estate Fund I for the
fiscal year ended December 31, 1990, File No. 0-14463)
*10(f) Purchase Agreement for the acquisition of Heritage Place at
Tucker dated April 25, 1986 (Exhibit to Form 10-K of Wells Real
Estate Fund I for the fiscal year ended December 31, 1990, File
No. 0-14463)
*10(g) Joint Venture Agreement of Fund I and Fund II Tucker dated
January 9, 1987 (Exhibit to Form 10-K of Wells Real Estate Fund I
for the fiscal year ended December 31, 1990, File No. 0-14463)
*10(h) Purchase Agreement for the acquisition of the Cherokee Commons
Shopping Center dated December 31, 1986 (Exhibit to Form 10-K of
Wells Real Estate Fund I for the fiscal year ended December 31,
1990, File No. 0-14463)
*10(i) Joint Venture Agreement of Fund I and Fund II Cherokee dated June
27, 1987 (Exhibit to Form 10-K of Wells Real Estate Fund I for
the fiscal year ended December 31, 1990, File No. 0-14463)
*10(j) Amended and Restated Joint Venture Agreement of Fund I and Fund
II Tucker-Cherokee dated January 1, 1991 (Exhibit to Form 10-K of
Wells Real Estate Fund I for the fiscal year ended December 31,
1991, File No. 0-14463)
*10(k) Lease Modification Agreement No. 3 with The Kroger Co. dated
December 21, 1993 (Exhibit to Form 10-K of Wells Real Estate Fund
I for the fiscal year ended December 31, 1993, File No. 0-14463)
*10(l) Joint Venture Agreement of Fund I, II, II-OW, VI and VII
Associates dated August 1, 1995 (Exhibit to Form 10-K of Wells
Real Estate Fund VI, L.P. for the fiscal year ended December 31,
1995, File No. 0-23656)
*10(m) First Amendment to Amended and Restated Joint Venture Agreement
of Fund I and Fund II Tucker (formerly Fund I and Fund II Tucker-
Cherokee) dated August 1, 1995 (Exhibit to Form 10-K of Wells
Real Estate Fund I for the fiscal year ended December 31, 1995,
File No. 0-14463)
*10(n) Custodial Agency Agreement between Wells Real Estate Fund I and
NationsBank of Georgia, N.A. dated August 1, 1995 (Exhibit to
Form 10-K of Wells Real Estate Fund I for the fiscal year ended
December 31, 1995, File No. 0-14463)
10(o) Purchase and Sale Agreement for the sale of the Crowe's Crossing
Shopping Center dated November 28, 2000 (filed herewith)
2