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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, 2001
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[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
[No Fee Required]
For the transition period from to
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Commission file number 0-22039
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WELLS REAL ESTATE FUND IX, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2126622
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification 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
non-affiliates: Not Applicable
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PART I
ITEM 1. BUSINESS
GENERAL
Wells Real Estate Fund IX, L.P. (the "Partnership") is a Georgia public limited
partnership with Leo F. Wells, III and Wells Partners, L.P. ("Wells Partners"),
a Georgia nonpublic limited partnership, serving as General Partners. The
Partnership was formed on August 15, 1994, for the purpose of acquiring,
developing, constructing, owning, operating, improving, leasing, and otherwise
managing income producing commercial properties for investment purposes. The
Partnership has two classes of limited partnership interests, Class A and Class
B Units. Limited partners shall have the right to change their prior elections
to have some or all of their units treated as Class A or Class B Units one time
during each quarterly accounting period. Limited partners may vote to, among
other things, (a) amend the partnership agreement, subject to certain
limitations, (b) change the business purpose or investment objectives of the
Partnership, and (c) add or 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.
On January 5, 1996, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations on February 12, 1996, when it received
and accepted subscriptions for 125,000 units. An aggregate requirement of
$2,500,000 of offering proceeds was reached on February 26,1996, thus allowing
for the admission of New York and Pennsylvania investors in the Partnership.
The offering was terminated on December 30, 1996, at which time the Partnership
had sold 2,935,931 Class A Units, and 564,069 Class B Units, held by a total of
1,841 and 257 Class A and Class B Limited Partners, respectively, for total
Limited Partner capital contributions of $35,000,000. After payment of
$1,400,000 in acquisition and advisory fees and expenses, payments of
$5,254,700 in selling commissions and organization and offering expenses, the
investment by the Partnership of $13,289,359 in the Fund VIII-Fund IX Joint
Venture and the investment by the Partnership of $14,982,434 in the Fund
IX-X-XI-REIT Joint Venture, the Partnership has net offering proceeds of
$73,507 as reserves or as available for investment in properties as of December
31, 2001.
EMPLOYEES
The Company has no direct employees. The employees of Wells Capital, Inc., and
Wells Management Company, Inc. perform a full range of real estate services
including leasing and property management, accounting, asset management and
investor relations for the Company.
INSURANCE
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the
properties owned by the Partnership through investments in joint ventures. In
the opinion of management of the registrant, all such properties are adequately
insured.
2
COMPETITION
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES
The Partnership owns interests in properties through the following joint
ventures with other Wells entities: (i) Fund VIII and Fund IX Associates, a
joint venture between the Partnership and Wells Real Estate Fund VIII, L.P. (the
"Fund VIII-IX Joint Venture"), (ii) Fund IX-X-XI-REIT Associates, a joint
venture among the Partnership, Wells Real Estate Fund X, L.P., Wells Real Estate
Fund XI, L.P. and Wells Operating Partnership, L.P. ("Wells OP"), a Delaware
limited partnership having Wells Real Estate Investment Trust, Inc. ("Wells
REIT"), as its general partner and (iii) the Fund VIII-IX-REIT Joint Venture, a
joint venture between Wells OP and the Fund VIII-IX Joint Venture. Wells REIT is
a Maryland corporation that qualifies as a real estate investment trust. The
Partnership does not have control over the operations of the joint ventures;
however, it does exercise significant influence. Accordingly, investments in
joint ventures are recorded using the equity method.
As of December 31, 2001, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
four-story office building in Madison, Wisconsin ("US Cellular Building"), (ii)
a one-story office building in Farmer's Branch, Texas ("AT&T-Texas Building"),
(iii) a two-story office building in Boulder County, Colorado ("Cirrus Logic
Building"), all of which are owned by the Fund VIII-Fund IX Joint Venture, (iv)
a three-story office building in Knoxville, Tennessee ("Alstom Power-Knoxville
Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture, (v) a
two-story office building in Irvine, California ("Quest Building"), which was
owned by the Fund VIII-Fund IX Joint Venture through June 30, 2000 and is
currently owned by the Fund VIII-IX-REIT Joint Venture, (vi) a two-story office
building in Boulder County, Colorado ("Ohmeda Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture, (vii) a three-story office building located in
Boulder County, Colorado ("360 Interlocken Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture, (viii) a one-story office building located in
Oklahoma City, Oklahoma ("Avaya Building"), which is owned by the Fund
IX-X-XI-REIT Joint Venture, and (ix) a single-story warehouse and office
building located in Ogden, Weber County, Utah ("Iomega Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture.
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The following table shows lease expirations during each of the next ten years
for all leases at properties in which the operating partnership has interest
through investments in joint ventures as of December 31, 2001, 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
- ------------- ------------ ------------- ----------------- ----------------- -------------- ---------------
2002 5 33,610 $ 558,407 $ 218,417 5.5% 7.6%
2003/(2)/ 1 17,146 280,467 109,703 2.8 3.9
2004/(3)/ 1 65,006 1,207,998 459,885 10.6 16.7
2005/(4)/ 1 106,750 1,027,315 401,827 17.4 14.2
2006 0 0 0 0 0.0 0.0
2007/(5)/ 2 186,130 2,460,111 1,041,256 30.3 34.0
2008/(6)/ 1 57,186 583,016 228,043 9.3 8.1
2009/(7)/ 1 108,250 673,000 263,239 17.6 9.2
2010 0 0 0 0 0.0 0.0
2011/(8)/ 1 40,000 455,177 205,740 6.5 6.3
------------ ------------- ----------------- ----------------- -------------- ---------------
13 614,078 $7,245,491 $2,928,110 100.0% 100.0%
============ ============= ================= ================= ============== ===============
/(1)/ Average monthly gross rent over the life of the lease, annualized.
/(2)/ Expiration of ODS Technologies lease at 360 Interlocken Building.
/(3)/ Expiration of Quest lease.
/(4)/ Expiration of Ohmeda lease.
/(5)/ Expiration of US Cellular lease and Alstom Power-Knoxville lease.
/(6)/ Expiration of Avaya lease.
/(7)/ Expiration of Iomega lease.
/(8)/ Expiration of AT&T-TX lease.
The following describes the properties in which the Partnership owns an interest
as of December 31, 2001:
FUND VIII-IX JOINT VENTURE
On June 10, 1996, the Partnership and Wells Real Estate Fund VIII, L.P. ("Wells
Fund VIII"), a Georgia public limited partnership, affiliated with the
Partnership through common general partners, formed a joint venture known as
Fund VIII and Fund IX Associates ("Fund VIII-IX Joint Venture"). The investment
objectives of Wells Fund VIII are substantially identical to those of the
Partnership. As of December 31, 2001, the Partnership has contributed
$13,289,358 for an approximately 45% equity interest in the Fund VIII-IX Joint
Venture and Fund VIII has contributed $15,987,323 for an approximately 55%
equity interest.
US CELLULAR BUILDING
On June 17, 1996, the Fund VIII-IX Joint Venture purchased a 7.09 acres tract of
real property in Madison, Dane County, Wisconsin for a total cost of $859,255
including closing costs. Construction was completed on a four-story office
building containing approximately 101,727 rentable square feet. The land
purchase and construction costs have been funded by capital contributions of
$3,912,444 from the Partnership and $6,573,342 from Wells Fund VIII for a total
cost of approximately $10,650,000.
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In June, 1997, US Cellular, a subsidiary of BellSouth Corporation, took
occupancy of 76,276 rentable square feet, comprising approximately 75% of the
building. The initial term of this lease is 9 years and 11 months beginning in
June 1997, with the option to extend the initial term of the lease for two
consecutive five-year periods. The annual base rent payable during the initial
term is $902,418 during the first five years and $1,016,822 during the last four
years and 11 months of the initial term. The annual base rent for each extended
term will be at the currently prevailing market rental rates. US Cellular is
required to pay additional rent equal to its share of operating expenses during
the lease term.
Commencing November 1, 2001, US Cellular exercised its right of first refusal to
lease an additional 25,451 square feet of space vacated by American Family in
October 2001. This addition increased their rentable floor area from 76,276
square feet to 101,727 square feet. Accordingly, US Cellular now occupies 100%
of the building, and will pay rent on the same terms and conditions of their
original lease.
The average effective annual rental per square foot at the US Cellular Building
was $12.47 for 2001, $12.60 for 2000, 1999 and 1998, and $8.87 for 1997, the
first year of occupancy. The occupancy rate at year-end was 100% for 2001, 2000,
1999 and 1998, and 75% for 1997.
AT&T-TX BUILDING
On October 10, 1996, the Fund VIII-IX Joint Venture purchased a one-story office
building containing approximately 40,000 rentable square feet, located on 4.864
acres of land in Farmer's Branch, Dallas County, Texas for a purchase price of
$4,450,000, excluding acquisition costs.
The funds used by the Fund VIII-IX Joint Venture to acquire the AT&T-TX Building
were derived from capital contributions made by the Partnership and Wells Fund
VIII totaling $2,236,530 and $2,238,170, respectively, for total contributions
to the Fund VIII-IX Joint Venture with respect to this building of $4,474,700,
including acquisition costs.
The AT&T-TX Building is leased to AT&T Wireless Texas for a period of fifteen
years, with options to extend the lease for three consecutive five-year periods.
The annual base rent is $430,001 during the first five years, $454,001 during
the next five years and $482,001 during the last five years. The AT&T lease
commenced on July 19, 1996 and was assigned by the seller to the Fund VIII-IX
Joint Venture on October 10, 1996. AT&T Wireless Texas is responsible for the
operating expenses including real estate taxes.
The average effective annual rental per square foot at the AT&T-TX Building is
$11.48 for 2001, $11.38 for 2000 and 1999, and $11.49 for 1998 and 1997. The
occupancy rate at the AT&T-TX Building at year-end was 100% for 2001, 2000,
1999, 1998 and 1997.
CIRRUS LOGIC BUILDING
On February 20, 1997, the Fund VIII-IX Joint Venture acquired a 4.26 acre tract
of real property in Broomfield, Colorado, located in Boulder County in the
Denver/Boulder metropolitan area on which a two-story office building containing
approximately 49,460 rentable square feet was constructed. As part of the
Interlocken Business Park, a 963-acre business development for advanced
technology and research/development oriented companies. The purchase price paid
for the Cirrus Logic Building was $7,029,000, excluding acquisition costs.
Construction of the Cirrus Logic building was substantially completed in March
1997 with Cirrus Logic, Inc. taking occupancy of the entire building. The funds
used by the Fund VIII-IX Joint Venture to acquire the Cirrus Logic Building were
derived entirely from capital contributions made by the Partnership and Wells
Fund VIII of approximately $3,532,275 and
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$3,555,495, respectively, for total capital contributions to the Fund VIII-IX
Joint Venture of approximately $7,087,770. As of December 31, 2001, the
Partnership held an equity interest in the Fund VIII-Fund IX Joint Venture of
45.2%.
The lease, as well as Cirrus Logic's obligation to pay rent, commenced on March
17, 1997 Cirrus Logic took occupancy of the building. The lease with Cirrus
Logic provides for a term of 15 years and annual initial base rent payable of
$667,755. Cirrus Logic has the option to renew the lease for two consecutive
five-year periods. The base rent payable during any such extended term would be
95% of the then currently prevailing market rental rate for comparable office
buildings in the Boulder County area. The base annual rent will be increased by
10% beginning the sixth year of the lease and will be increased another 10%
beginning the eleventh year of the lease.
Under its lease, Cirrus Logic is responsible for all utilities, cleaning, taxes,
other operating expenses, and for maintaining property and liability insurance
on the Cirrus Logic Building. The Fund VIII-IX Joint Venture shall maintain, for
its own benefit, liability insurance for the Cirrus Logic Building as well as
insurance for fire, vandalism and malicious mischief.
The average effective annual rental per square foot at the Cirrus Logic Building
was $14.92 for 2001, 2000, 1999 and 1998, and $13.25 for 1997, the first year of
occupancy. The occupancy rate at year-end was 100% for 2001, 2000, 1999, 1998
and 1997.
FUND VIII-IX-REIT JOINT VENTURE
On January 10, 1997, the Fund VIII-IX Joint Venture acquired a two story office
building containing approximately 65,006 rentable square feet on a 4.4 acre
tract of land located at 15253 Bake Parkway, in the Irvine Spectrum planned
business community in metropolitan Orange County, California. The total
consideration paid for the building was $7,193,000 excluding acquisition
expenses. The funds used by the Fund VIII-IX Joint Venture to acquire the Quest
Building were derived entirely from capital contributions by the Partnership and
Wells Fund VIII of approximately $3,620,316 and $3,608,109, respectively, for
total capital contributions to the Fund VIII-IX Joint Venture of approximately
$7,228,425.
On February 18, 1999, Wells OP entered into a Rental Income Guaranty Agreement
with Fund VIII-IX Joint Venture, whereby Wells OP guaranteed the Fund VIII-IX
Joint Venture with rental income on the Quest Building, previously leased to
Matsushita Avionics, equal to at least the rental revenues and building expenses
reimbursements that the Fund VIII-IX Joint Venture would have received over the
remaining term of the original lease with Matsushita Avionics. Wells OP paid
approximately $543,000 in rental income guaranty payments to the Fund VIII-IX
Joint Venture through December 31, 2000, however, ceased making such payments
upon Quest Software, Inc. taking occupancy on August 1, 2000.
On June 15, 2000, the Fund VIII-IX-REIT Joint Venture was formed between Wells
OP and Fund VIII-IX Joint Venture. On July 1, 2000, the Fund VIII-IX Joint
Venture contributed its interest in the Quest Building to the Fund VIII-IX-REIT
Joint Venture. As of December 31, 2001, the Partnership held an equity interest
in the Fund VIII-IX-REIT Joint Venture of 38.1%.
A 42-month lease for the entire Quest Building has been signed by Quest
Software, Inc. Occupancy occurred on August 1, 2000. Quest is a publicly traded
corporation that provides software database management and disaster recovery
services for its clients.
6
Construction of tenant improvements required under the Quest lease cost
approximately $1,231,000 and was funded through capital contributions made by
Wells OP.
The average effective annual rental per square foot at the Quest building is
$18.58 for 2001, $13.72 for 2000, $10.11 for 1999, $10.32 for 1998, and $9.91
for 1997. The occupancy rate at year-end was 100% for 2001, 2000, 1999, 1998 and
1997.
FUND IX-X-XI-REIT JOINT VENTURE
On June 11, 1998, Fund IX-X Joint Venture, a joint venture between the
Partnership and Wells Real Estate Fund X, L.P. ("Wells Fund X"), a Georgia
public limited partnership, was amended and restated to admit the Wells Real
Estate Fund XI, L.P. ("Wells Fund XI"), a Georgia public limited partnership,
and Wells OP. Wells Fund X, Wells Fund XI, Wells OP and the Wells REIT are all
Affiliates of the Partnership and its General Partners.
The IX-X Joint Venture, which changed its name to the Fund IX-X-XI-REIT Joint
Venture, had previously acquired and owned the following three properties: (i)
the Alstom Power-Knoxville Building, (ii) the Ohmeda Building, and (iii) the 360
Interlocken Building. On June 24, 1998, the Fund IX-X-XI-REIT Joint Venture
purchased the Avaya Building. On July 1, 1998, Wells Fund X contributed a
single-story warehouse and office building with 108,250 rentable square feet
'Iomega Building' to the Fund IX-X-XI-REIT Joint Venture as a capital
contribution.
As of December 31, 2001, the Partnership held an approximately 39.1% equity
interest in the Fund IX-X-XI-REIT Joint Venture. As of December 31, 2001, Wells
Fund X held an approximate 48.3% equity interest, Wells Fund XI held an
approximate 8.9% equity interest, and Wells OP held an approximate 3.7% equity
interest in the Fund IX-X-XI-REIT Joint Venture.
ALSTOM POWER-KNOXVILLE BUILDING
On March 20, 1997, the Fund IX-X Joint Venture began construction of the Alstom
Power-Knoxville Building, a three-story office building containing approximately
84,404 rentable square feet located on a 5.62 acre tract of real property in
Knoxville, Knox County, Tennessee. The land purchase and construction costs
totaling $8,137,994 were funded by capital contributions of $4,221,973 from the
Partnership and $3,916,021 from Wells Fund X.
Alstom Power, Inc. ("Alstom Power"), successor in interest to ABB Environmental
Systems, a subsidiary of ABB, Inc., occupied its lease space of 56,012 rentable
square feet comprising approximately 66% of the building in December 1997. The
initial term of the lease is 9 years and 11 months commencing upon occupancy.
Alstom Power has the option under its lease to extend the initial term of the
lease for two consecutive five year periods. The annual base rent payable during
the initial term is $646,250 during the first five years and $728,750 during the
last four years and 11 months of the initial term. The annual base rent for each
extended term will be at then currently prevailing market rental rates. In
addition to the base rent, Alstom Power is required to pay additional rent equal
to its share of operating expenses during the lease term.
Commencing December 1, 1999, Alstom Power Environmental exercised its right of
first refusal to lease an additional 23,992 square feet of space vacated by The
Associates in September, 1999, which increased their rentable floor area from
57,831 square feet to 81,823 square feet. On May 19, 2000, Alstom Power, Inc.
executed the third amendment of the lease agreement in order to lease the
remaining 2,581 square
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feet of rentable floor area on the second floor of the building. Accordingly,
Alstom Power now occupies 100% of the building, and will pay rent at the same
terms and conditions of their original lease.
The average effective annual rental per square foot at the Alstom Power Building
was $13.83 for 2001, $14.05 for 2000, $11.77 for 1999, $9.97 for 1998 and $8.16
for 1997, the first year of occupancy. The occupancy rate at year-end was 100%
for 2001 and 2000, 98% for 1999, 95% for 1998, and 67% for 1997.
OHMEDA BUILDING
On February 13, 1998, the Fund IX-X Joint Venture acquired the Ohmeda Building,
a two-story office building with approximately 106,750 rentable square feet. The
Ohmeda building is on a 15-acre tract of land located in Louisville, Boulder
County, Colorado. The purchase price for the Ohmeda Building was $10,325,000.
The Fund IX-X Joint Venture also incurred additional acquisition expenses in
connection with the purchase of the Ohmeda Building, including attorney's fees,
recording fees and other closing costs. As of December 31, 2001, the Partnership
had contributed $3,460,192 and Wells Fund X had contributed $6,900,878 toward
the purchase of this building.
The entire 106,750 rentable square feet of the Ohmeda Building is currently
under a net lease dated February 26,1987, as amended by First Amendment to Lease
dated December 3, 1987 and as amended by the Second Amendment to Lease dated
October 20, 1997 (the "Ohmeda Lease") with Ohmeda, Inc., a Delaware corporation.
The Ohmeda lease was assigned to the Joint Venture at the closing. The lease
currently expires in January 2005, subject to (i) Ohmeda's right to effectuate
an early termination of the lease under the terms and conditions described
below, and (ii) Ohmeda's right to extend the lease for two additional five year
periods of time at the then current market rental rates.
The monthly base rental payable under the lease is $83,710 through January 31,
2003; $87,891 from February 1, 2003 through January 31, 2004; and $92,250 from
February 1, 2004 through January 31,2005. Under the Lease, Ohmeda is responsible
for all utilities, taxes, insurance, and other operating costs with respect to
the Ohmeda Building during the term of the lease. In addition, Ohmeda shall pay
a $21,000 per year management fee for maintenance and administrative services of
the Ohmeda Building. The Fund IX-X-XI-REIT Joint Venture, as landlord, is
responsible for maintenance of the roof, exterior and structural walls,
foundation, other structural members and floor slab, provided that the
landlord's obligation to make repairs specifically excludes items of cosmetic
and routine maintenance such as the painting of walls.
The average effective annual rental rate per square foot at the Ohmeda Building
was $9.62 for 2001, 2000, 1999 and 1998, the year of acquisition. The occupancy
rate at year-end was 100% for 2001, 2000, 1999 and 1998.
360 INTERLOCKEN BUILDING
On March 20, 1998, the Fund IX-X Joint Venture acquired, the 360 Interlocken
Building, a three-story multi-tenant office building containing approximately
51,974 rentable square feet located on a 5.1 acre tract of land in Broomfield,
Boulder County, Colorado. The purchase price was $8,275,000, excluding
acquisition costs. The project was funded by capital contributions of $6,642,466
from the Partnership and $1,674,271 from Wells Fund X.
The 360 Interlocken Building was completed in December 1996. The first floor is
leased to multiple tenants and contains 15,599 rentable square feet; the second
floor is leased to ODS Technologies, L.P.
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and contains 17,146 rentable square feet; and the third floor is leased to
Transecon, Inc. and contains 19,229 rentable square feet.
The third floor lease expires in March 2002, subject to Transecon's right to
extend for one additional term of five years upon 180 days notice. The monthly
rent payable under Transecon's lease is approximately $24,000 for the initial
term of the lease. Under the lease, Transecon is responsible for its share of
utilities, taxes, insurance, and other operating expenses with respect to the
Interlocken Building. In addition, Transecon has a right of first refusal under
the lease for any second floor space proposed to be leased by the landlord. The
second floor lease expires in September, 2003, subject to ODS's right to extend
for one additional term of three years. The monthly rent payable is $22,100
through January 1998; $22,150 through January, 1999; $22,600 through January
2000; $23,100 through January 2001; $23,550 through January 2002; $24,050
through January 2003 and $24,550 through September, 2003. The rental payments
under the ODS lease are secured by the assignment of a $275,000 letter of credit
which may be drawn upon by the landlord in the event of a tenant default under
the lease. Under the lease, ODS is responsible for its share of utilities,
taxes, insurance, and other operating costs with respect to the 360 Interlocken
Building.
The average effective annual rental rate per square foot at the 360 Interlocken
Building was $16.12 for 2001, $16.23 for 2000, $15.97 for 1999 and 1998, the
first year of occupancy. The occupancy rate at year-end was 100% for 2001, 2000,
1999 and 1998.
AVAYA BUILDING
On May 30, 1997, the Fund IX-X Joint Venture entered into a purchase and sale
agreement with Wells Development Corporation ("Wells Development"), an affiliate
of the General Partners, for the acquisition and development of the Avaya
Building, a one-story office building containing 57,186 net rentable square feet
on 5.3 acres of land. On June 24, 1998, the Fund IX-X-XI-REIT Joint Venture
purchased this property for $5,504,276. The purchase price was funded by capital
contributions of $657,804 from the Partnership, $950,392 from Fund X, $2,482,810
from Fund XI and $1,421,466 from Wells OP.
Avaya, a world-wide leader in telecommunications technology producing a variety
of communication products, occupies the entire Avaya Building. The initial item
of the lease is ten years commencing January 5, 1998. Avaya has the option to
extend the initial term of the lease for two additional five-year periods. The
annual base rent payable during the initial term is $508,383 during the first
five years and $594,152 during the second five years of the lease term. The
annual base rent for each extended term will be at currently prevailing market
rental rates. In addition to the base rent, Avaya will be required to pay
additional rent equal to its share of operating expenses during the lease term.
The average effective annual rental per square foot at the Avaya Building was
$10.19 for 2001, 2000, 1999, and 1998, the first year of occupancy. The
occupancy rate at year-end was 100% for 2001, 2000, 1999 and 1998.
IOMEGA BUILDING
On July 1, 1998, Wells Fund X contributed the Iomega Building, a single story
warehouse and office building with 108,250 rentable square feet, and was
credited with making a capital contribution to the IX-X-XI-REIT Joint Venture in
the amount of $5,050,425, which represents the purchase price of $5,025,000 plus
acquisition expenses of $25,425 originally paid by Wells Fund X on April 1,
1998.
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The building is 100% occupied by Iomega Corporation with a ten year lease term
that expires on July 31, 2006. The monthly base rent payable under the lease is
$40,000 through November 12, 1999. Beginning on the 40th and 80th months of the
lease term, the monthly base rent payable under the lease will be increased to
reflect an amount equal to 100% of the increase in the Consumer Price Index (as
defined in the lease) during the preceding 40 months, provided, however, that in
no event shall the base rent be increased with respect to any one year by more
than 6% or by less than 3% per annum, compounded annually, on a cumulative basis
from the beginning of the lease term. The lease is a triple net lease, whereby
the terms require the tenant to reimburse the IX-X-XI-REIT Joint Venture for
certain operating expenses, as defined in the lease, related to the building.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a four-acre
tract of vacant land adjacent to the Iomega Building located in Ogden, Utah. The
land was purchased at a cost of $212,000, excluding acquisition costs. The funds
used to acquire the land and make improvements were funded out of capital
contributions made by Wells Fund XI to the Fund IX-X-XI-REIT Joint Venture in
the amount of $874,625, which was the total project cost. The site was developed
as additional parking and a loading-dock area, including 400 new parking stalls
and new site work for truck maneuver space in accordance with the requirements
of the tenant and the city of Ogden. The project was completed on July 31, 1999.
Iomega Corporation has extended its lease through April 30, 2009 and will pay as
additional annual base rent $113,700 commencing May 1, 1999.
The average effective annual rental per square foot at the Iomega Building was
$6.22 for 2001 and 2000, $5.18 for 1999, and $4.60 for 1998, the first year of
occupancy. The occupancy rate at year-end was 100% for 2001, 2000, 1999 and
1998.
Because of the requirement for fiduciaries of retirement plans subject to ERISA
to determine the value of the assets of such retirement plans on an annual
basis, the General Partners are required under the Partnership Agreement to
report estimated Unit values to the Limited Partners each year in the
Partnership's annual Form 10-K. The methodology to be utilized for determining
such estimated Unit values under the Partnership Agreement is for the General
Partners to estimate the amount a Unit holder would receive if the Partnership's
properties were sold at their estimated fair market values as of the end of the
Partnership's fiscal year and the proceeds therefrom (without reduction for
selling expenses) were distributed to the Limited Partners in liquidation of the
Partnership. Utilizing this methodology, the General Partners have estimated
Unit valuations, based upon their estimates of property values as of December
31, 2001, to be approximately $8.98 per Class A Unit and $12.97 per Class B
Unit, based upon market conditions existing in early December 2001. In
connection with these estimated valuations, the General Partners obtained an
opinion from David L. Beal Company, an independent MAI appraiser, to the effect
that such estimates of value were reasonable; however, due to the inordinate
expense involved in obtaining appraisals for all of the Partnership's
properties, no actual appraisals were obtained. Accordingly, these estimates
should not be viewed as an accurate reflection of the fair market value of the
Partnership's properties, nor do they represent the amount of net proceeds which
would result from an immediate sale of the Partnership's properties. The
valuations performed by the General Partners are estimates only, and are based a
number of assumptions which may not be accurate or complete. In addition,
property values are subject to change and could decline in the future. Further,
as set forth above, no appraisals have or will be obtained. For these reasons,
the estimated Unit valuations set forth above should not be relied upon for any
purpose other than required ERISA disclosures.
10
ITEM 3. LEGAL PROCEEDINGS
There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 2001.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Limited Partners during 2001.
(THE REMAINDER OF THIS PAGE IS INTENTINALLY LEFT BLANK)
11
PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
The offering for sale of Units in the Partnership terminated on December 30,
1996, at which time the Partnership had 2,935,931 outstanding Class A Units held
by a total of 1,841 Limited Partners and 564,069 outstanding Class B Units held
by a total of 257 Limited Partners. As of February 28, 2002, the Partnership had
3,136,429 outstanding Class A Units held by a total of 1,908 Limited Partners
and 363,571 outstanding Class B Units held by a total of 211 Limited Partners.
The capital contribution per unit is $10.00. There is no established public
trading market for the Partnership's limited partnership units, and it is not
anticipated that a public trading market for the units will develop. Under the
Partnership Agreement, the General Partners have the right to prohibit transfers
of units.
Class A Limited Partners are entitled to a distribution from Net Cash From
Operations, as defined in the Partnership Agreement to mean cash flow, less
adequate cash reserves for other obligations of the Partnership for which there
is no provision, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of Net Cash From Operations equal to 10% of the total amount
of Net Cash From Operations distributed. Thereafter, the Limited Partners
holding Class A Units will receive 90% of Net Cash From Operations and the
General Partners will receive 10%. No Net Cash From Operations will be
distributed to Limited Partners holding Class B Units. Holders of Class A Units
will, except in limited circumstances, be allocated none of the Partnership's
net loss, depreciation, and amortization deductions. These deductions will be
allocated to the Class B Units, until their capital account balances have been
reduced to zero. No distributions have been made to the General Partners as of
December 31, 2001.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A Limited Partners during 2000 and
2001 were as follows:
(THE REMAINDER OF THIS PAGE IS INTENTINALLY LEFT BLANK)
12
Per Class A Per Class A
Unit Unit
Distribution for Total Cash Investment Return of
Quarter Ended Distributed Income Capital
- --------------------- ------------- ------------ ----------
March 31, 2000 $672,619 $0.22 $0.00
June 30, 2000 692,840 0.23 0.00
September 30, 2000 714,179 0.23 0.00
December 31, 2000 719,081 0.23 0.00
March 31, 2001 700,078 0.22 0.00
June 30, 2001 739,232 0.15 0.09
September 30, 2001 738,896 0.15 0.09
December 31, 2001 744,902 0.15 0.09
The partnership's distributions to holders of Class A Units for the fourth
quarter ended December 31, 2001 were paid in February 2002 from investment
income and a return of capital. No cash distributions were paid to holders of
Class B Units in 2001.
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 2001, 2000, 1999, 1998 and 1997:
2001 2000 1999 1998 1997
------------- ------------- ------------- ------------- ------------
Total assets $25,871,459 $27,001,398 $27,944,553 $29,211,164 $29,945,898
Total revenues 1,874,290 1,836,768 1,593,734 1,561,456 1,199,300
Net income 1,768,474 1,758,676 1,490,331 1,449,955 1,091,766
Net loss allocated to General
Partners 0 0 0 0 (206)
Net income allocated to Class A
Limited Partners 1,768,474 2,858,806 2,713,636 2,597,938 1,564,778
Net loss allocated to Class B
Limited Partners $ 0 $(1,100,130) $(1,223,305) $(1,147,983) $ (472,806)
Net income per weighted average
Class A Limited Partner Unit /(1)/ $ 0.57 $ 0.93 $ 0.88 $ 0.89 $ 0.53
Net loss per weighted average
Class B Limited Partner Unit /(1)/ 0.00 (2.67) (2.18) (2.72) (0.77)
Cash distributions per weighted
average Class A Limited Partner
unit: /(1)/
Investment income 0.67 0.91 0.82 0.89 0.46
Return of capital $ 0.27 $ 0.00 $ 0.00 $ 0.00 $ 0.00
/(1)/ The weighted average unit is calculated by averaging units over
the period they are outstanding during the time units are still
being purchased or converted by Limited Partners in the
Partnership.
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATION.
FORWARD-LOOKING STATEMENTS
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 the Report, which include construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants upon the
expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
RESULTS OF OPERATIONS
The Partnership commenced active operations on February 24, 1996, when it
received and accepted subscriptions for 125,000 units. The offering was
terminated on December 30, 1996, at which time the Partnership had sold
2,935,931 Class A Units and 564,069 Class B Units, held by a total of 1,841 and
257 Limited Partners, respectively, for total Limited Partner contributions of
$35,000,000. After payment of $1,400,000 in acquisition and advisory fees,
payment of $5,254,603 in selling commissions and organization and offering
expenses, investment of $13,289,359 in the Fund VIII-Fund IX Joint Venture, and
investment of $14,982,434 in the Fund IX-X-XI-REIT Joint Venture, as of December
31, 2001, the Partnership was holding net offering proceeds of $73,507 as
reserves or as available for investments in properties.
Gross revenues of the Partnership were $1,874,290, $1,836,768, and $1,593,734
for the years ended December 31, 2001, 2000, and 1999, respectively. The
increase in revenues from 1999 to 2000 is attributable primarily to increased
earnings from the Fund IX-X-XI-REIT Joint Venture, primarily due to increased
revenues at Alstom Power-Knoxville Building as it became fully occupied in 2000,
and increased revenues at Iomega Building as it finished its rentable parking
area in July 1999, partially offset by decreased equity in income of joint
ventures from VIII-IX joint venture as the Partnership decreased its ownership
percentage in Quest Building. The increase in revenues from 2000 to 2001 is
attributable primarily to decreased property taxes at the Ohmeda Building and
increased common area maintenance reimbursement adjustments at the Cirrus Logic
Building. Expenses of the Partnership were $105,816, $78,092, and $103,403 for
the years December 31, 2001, 2000, and 1999, respectively. Expenses decreased in
2000, as compared to 2001 and 1999, due to the write-off of organizational
costs, which were previously capitalized, in accordance with accounting
pronouncements ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities"
which became effective during the year ended December 31, 1999. As a result, net
income of the Partnership was $1,768,474 for the year ended December 31, 2001,
$1,758,676 for the year ended December 31, 2000, and $1,490,331 for the year
ended December 31, 1999.
The Partnership made cash distributions of investment income and a return of
capital to Limited Partners of $0.94, $0.91 and $0.89 per Class A Status Unit
for the years ended December 31, 2001, 2000 and 1999, respectively. The General
Partners anticipate distributions per unit to Limited Partners holding Class A
Units will continue in 2002 at a level at least comparable with 2001 cash
distributions on an
14
annual basis. Distributions accrued for the fourth quarter
of 2001 to the Limited Partners holding Class A Units were paid in February
2002. No cash distributions were made to Limited Partners holding Class B Units.
Refer to footnotes of audited Financial Statements where a complete summary of
operations is disclosed.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's net cash used in operating activities was $101,573 in 2001,
$66,145 in 2000, and $94,403 in 1999. The use of net cash in operating
activities remains relatively stable for 2001 as compared to 1999. The decrease
in use of cash in operating activities in 2000 was primarily due to a decrease
in partnership administration expenses. Net cash provided by investing
activities was $2,978,785 in 2001, $2,786,972 in 2000, and $2,624,017 in 1999.
The increase of net cash provided by investing activities in 2000 and 2001 was
primarily due to increased distributions received from joint ventures and offset
by investments of $190,853 and $44,357 in joint ventures made in 1999 and 2000,
respectively. Net cash used in financing activities was $2,897,286 in 2001,
$2,707,684 in 2000, and $2,753,442 in 1999. The increase in 2001 was primarily
due to increases in cash flows generated by properties owned through joint
ventures, resulting in an increased distribution rate for the Partnership.
The Partnership expects to continue to meet its short-term liquidity
requirements and budget demands generally through net cash provided by
operations which the Partnership believes will continue to be adequate to meet
both operating requirements and distributions to limited partners. Although
there is no assurance, the Partnership anticipates that distributions will
continue to be paid on a quarterly basis from such sources on a level at least
consistent with 2001. At this time, given the nature of the joint ventures and
properties in which the Partnership has invested, there are no known
improvements or renovations to the properties expected to be funded from cash
flow from operations.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
INFLATION
The real estate market has not been affected significantly by inflation in the
past three years due to the relatively low inflation rate. There are provisions
in the majority of tenant leases to protect the Partnership from the impact of
inflation. Most leases contain common area maintenance charges, real estate tax
and insurance reimbursements on a per square foot basis, or in some cases,
annual reimbursement of operating expenses above a certain per square foot
allowance. These provisions should reduce the Partnership's exposure to
increases in costs and operating expenses resulting from inflation.
CRITICAL ACCOUNTING POLICIES
The Partnership's accounting policies have been established and conformed to in
accordance with accounting principles generally accepted in the United States
("GAAP"). The preparation of financial statements in conformity with GAAP
requires management to use judgment in the application of accounting policies,
including making estimates and assumptions. These judgments affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
revenue and expenses during the reporting periods. If our judgment or
interpretation of the facts and circumstances relating to various transactions
had been different, it is possible that different accounting policies would have
been applied; thus, resulting in a different presentation of our financial
statements. Below is a discussion of the accounting policies that
15
we consider to be critical in that they may require complex judgment in their
application or require estimates about matters, which are inherently uncertain.
Additional discussion of accounting policies that we consider to be
significant, including further discussion of the critical accounting policies
described below, is presented in the notes to the Partnership's financial
statements in Item 14(a).
STRAIGHT-LINED RENTAL REVENUES
The Partnership recognizes rental income generated from all leases on real
estate assets in which the Partnership has an ownership interest, either
directly or through investments in joint ventures, on a straight-line basis
over the terms of the respective leases. If a tenant was to encounter financial
difficulties in future periods, the amount recorded as receivable may not be
realized.
OPERATING COST REIMBURSEMENTS
The Partnership generally bills tenants for operating cost reimbursements,
either directly or through investments in joint ventures, on a monthly basis at
amounts estimated largely based on actual prior period activity and the
respective lease terms. Such billings are generally adjusted on an annual basis
to reflect reimbursements owed to the landlord based on the actual costs
incurred during the period and the respective lease terms. Financial
difficulties encountered by tenants may result in receivables not being
realized.
REAL ESTATE
Management continually monitors events and changes in circumstances indicating
that the carrying amounts of the real estate assets in which the Partnership
has an ownership interest, either directly or through investments in joint
ventures, may not be recoverable. When such events or changes in circumstances
are present, management assesses the potential impairment by comparing the fair
market value of the asset, estimated at an amount equal to the future
undiscounted operating cash flows expected to be generated from tenants over
the life of asset and from its eventual disposition, to the carrying value of
the asset. In the event that the carrying amount exceeds the estimated fair
market value, the Partnership would recognize an impairment loss in the amount
required to adjust the carrying amount of the asset to its estimated fair
market value. Neither the Partnership nor its joint ventures have recognized
impairment losses on real estate assets in 2001, 2000 or 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements of the Registrant and supplementary data are detailed
under Item 14 (a) and filed as part of the report on the pages indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There were no disagreements with the Partnership's accountants or other
reportable events during 2001.
16
PART III
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP
Wells Partners, L.P. The sole General Partner of Wells Partners, L.P. is Wells
Capital, Inc. The executive offices of Wells Capital, Inc. are located 6200
The Corners Parkway, Norcross, Georgia 30092.
Leo F. Wells, III. Mr. Wells is a resident of Atlanta, Georgia, is 58 years of
age and holds a Bachelor of Business Administration Degree in Economics from
the University of Georgia. Mr. Wells is the President and sole Director of
Wells Capital, Inc. Mr. Wells is the President of Wells & Associates, Inc., a
real estate brokerage and investment company formed in 1976 and incorporated in
1978, for which he serves as the 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., all of which are
affiliates of the General Partners. From 1980 to February 1985, Mr. Wells
served as Vice-President of Hill-Johnson, Inc., a Georgia corporation engaged
in the construction business. From 1973 to 1976, he was associated with Sax
Gaskin Real Estate Company, and from 1970 to 1973, he was a real estate
salesman and property manager for Roy D. Warren & Company, an Atlanta real
estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES.
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 2001:
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
===== ============================= ======================================= =================
Wells Management Company, Inc. Property Manager-Management and Leasing $209,345/(1)/
Fees
/(1)/ These fees are not paid directly by the Partnership, but are paid
by the joint venture entities which own properties for which the
property management and leasing services relate and include
management and leasing fees. The Partnership does not own any
properties directly. Accordingly, these fees are payable to
Wells Management, Inc. by the joint ventures described in Item 1
and represent the Partnership's ownership interest in amounts
attributable to the properties owned directly by these joint
ventures for services rendered during 2001. Some of these fees
were accrued for accounting purposes in 2001, however, were not
paid until January 2002.
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.
17
Set forth below is the security ownership of management as of February 28,
2002.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
====== ================ =========================== ============================= ====================
Class A Units Leo F. Wells, III 2,128.705 Units (IRA, 401(k) Less than 1%
and Profit Sharing )
Class B Units Leo F. Wells, III 26.797 Units (IRA, 401(k) and Less than 1%
Profit Sharing )
No arrangements exist which would, upon execution thereof, result in a change
in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The compensation and fees paid or to be paid by the Partnership to the General
Partners and their affiliates in connection with the operation of the
Partnership are as follows:
INTEREST IN PARTNERSHIP CASH FLOW AND NET SALES PROCEEDS
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners
holding Class A Units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A Units have received a return of their
adjusted capital contributions plus a 10% cumulative return on their adjusted
capital contributions and Limited Partners holding Class B Units have received
a return of their adjusted capital contributions plus a 15% cumulative return
on their adjusted capital contributions; provided, however, that in no event
shall the General Partners receive in the aggregate in excess of 15% of net
sales proceeds and net financing proceeds remaining after payments to Limited
Partners from such proceeds of amounts equal to the sum of their adjusted
capital contributions plus a 6% cumulative return on their adjusted capital
contributions. The General Partners did not receive any distributions from net
cash flow from operations or net sales proceeds for the year ended December 31,
2001.
PROPERTY MANAGEMENT AND LEASING FEES.
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to the lesser of (A) (i) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate one-time fee for initial rent-up or leasing-up of newly
constructed properties in an amount not to exceed the fee customarily charged
in arm's-length transactions by others rendering similar services in the same
geographic area for similar properties; and (ii) in the case of industrial and
commercial properties which are leased on a long-term (ten or more years) net
basis, 1% of the gross revenues except for initial leasing fees equal to 3% of
the gross revenues over the first five years of the lease term; or (B) the
amounts charged by unaffiliated persons rendering comparable services in the
same geographic area.
Wells Management Company, Inc. has received $209,345 in total cash compensation
for services rendered during the year ended December 31, 2001.
18
REAL ESTATE COMMISSIONS
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. No real estate commissions were
paid to the General Partners or affiliates for the year ended December 31, 2001.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a)1. The Financial Statements are contained on Pages F-2 through F-24 of
this Annual Report on Form 10-K, and the list of the Financial
Statements contained herein is set forth on page F-1, which is hereby
incorporated by reference.
(a)2. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission during the
fourth quarter of 2001.
(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.
20
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 21st day of March,
2002.
Wells Real Estate Fund IX, L.P.
(Registrant)
By: /s/Leo F. Wells, III
----------------------------------------------
Leo F. Wells, III
Individual General Partner and as
President and Chief Financial Officer
of Wells Capital, Inc., the General
Partner of Wells Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant and in the capacity as and on the date indicated.
Signature Title Date
========================= ============================ ======================
/s/Leo F. Wells, III Individual General Partner, March 21, 2002
- ------ ------------------
Leo F. Wells, III President and Sole Director of
Wells Capital, Inc., the General
Partner of Wells Partners, L.P.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS, WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
21
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- ----------------------------------------------------------------------------- ------
Independent Auditors' Report F-2
Balance Sheets as of December 31, 2001 and 2000 F-3
Statements of Income for the Years Ended December 31, 2001, 2000 and 1999 F-4
Statements of Partners' Capital for the Years Ended December 31, 2001, 2000,
1999 F-5
Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999 F-6
Notes to Financial Statements for December 31, 2001, 2000, 1999 F-7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund IX, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND IX,
L.P. (a Georgia public limited partnership) as of December 31, 2001 and 2000
and the related statements of income, partners' capital, and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund IX, L.P.
as of December 31, 2001 and 2000 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 25, 2002
F-2
WELLS REAL ESTATE FUND IX, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
-------------- -------------
INVESTMENT IN JOINT VENTURES $24,980,158 $26,166,688
ACCOUNTS RECEIVABLE 0 1,458
CASH AND CASH EQUIVALENTS 95,263 115,337
DUE FROM AFFILIATES 792,318 714,195
DEFERRED PROJECT COSTS 3,720 3,720
-------------- -------------
Total assets $25,871,459 $27,001,398
============== =============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 4,726 $ 5,853
Partnership distributions payable 744,902 719,081
-------------- -------------
Total liabilities 749,628 724,934
-------------- -------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--3,316,429 units and 3,110,159 units as of
December 31, 2001 and 2000, respectively 25,121,831 26,276,464
Class B--363,571 units and 389,841 units as of December 31,
2001 and 2000, respectively 0 0
-------------- -------------
Total partners' capital 25,121,831 26,276,464
-------------- -------------
Total liabilities and partners' capital $25,871,459 $27,001,398
============== =============
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND IX, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
------------ ------------- --------------
REVENUES:
Equity in income of joint ventures $1,870,378 $ 1,829,216 $ 1,593,734
Interest income 3,912 7,552 0
------------ ------------- --------------
1,874,290 1,836,768 1,593,734
------------ ------------- --------------
EXPENSES:
Partnership administration 76,598 47,396 60,020
Legal and accounting 14,573 18,823 20,897
Amortization of organization costs 0 0 12,500
Computer costs 14,645 11,873 9,986
------------ ------------- --------------
105,816 78,092 103,403
------------ ------------- --------------
NET INCOME $1,768,474 $ 1,758,676 $ 1,490,331
============ ============= ==============
NET INCOME ALLOCATED TO CLASS A LIMITED
PARTNERS $1,768,474 $ 2,858,806 $ 2,713,636
============ ============= ==============
NET LOSS ALLOCATED TO CLASS B LIMITED
PARTNERS $ 0 $(1,100,130) $(1,223,305)
============ ============= ==============
NET INCOME PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.57 $ 0.93 $ 0.89
============ ============= ==============
NET LOSS PER WEIGHTED AVERAGE CLASS B
LIMITED PARTNER UNIT $ 0.00 $ (2.67) $ (2.72)
============ ============= ==============
DISTRIBUTION PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.94 $ 0.91 $ 0.89
============ ============= ==============
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND IX, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
Limited Partners Total
--------------------------------------------------------
Class A Class B Partners'
---------------------------- -------------------------
Units Amount Units Amount Capital
----------- -------------- ---------- ------------ ------------
BALANCE, December 31, 1998 2,989,875 $25,646,950 510,125 $2,879,510 $28,526,460
Net income (loss) 0 2,713,636 0 (1,223,305) 1,490,331
Partnership distributions 0 (2,700,284) 0 0 (2,700,284)
Class B conversion elections 82,447 454,355 (82,447) (454,355) 0
----------- -------------- ---------- ------------ ------------
BALANCE, December 31, 1999 3,072,322 26,114,657 427,678 1,201,850 27,316,507
Net income (loss) 0 2,858,806 0 (1,100,130) 1,758,676
Partnership distributions 0 (2,798,719) 0 0 (2,798,719)
Class B conversion elections 37,837 101,720 (37,837) (101,720) 0
----------- -------------- ---------- ------------ ------------
BALANCE, December 31, 2000 3,110,159 26,276,464 389,841 0 26,276,464
Net income 0 1,768,474 0 0 1,768,474
Partnership distributions 0 (2,923,107) 0 0 (2,923,107)
Class B conversion elections 26,270 0 (26,270) 0 0
----------- -------------- ---------- ------------ ------------
BALANCE, December 31, 2001 3,136,429 $25,121,831 363,571 $ 0 $25,121,831
=========== ============== ========== ============ ============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,768,474 $ 1,758,676 $ 1,490,331
-------------- -------------- --------------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (1,870,378) (1,829,216) (1,593,734)
Amortization of organizational costs 0 0 12,500
Changes in assets and liabilities:
Accounts receivable 1,458 (1,458) 0
Accounts payable and accrued expenses (1,127) 5,853 (3,500)
-------------- -------------- --------------
Total adjustments (1,870,047) (1,824,821) (1,584,734)
-------------- -------------- --------------
Net cash used in operating activities (101,573) (66,145) (94,403)
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture 0 (44,357) (190,853)
Distributions received from joint ventures 2,978,785 2,831,329 2,814,870
-------------- -------------- --------------
Net cash provided by investing activities 2,978,785 2,786,972 2,624,017
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (1,989,546) (2,707,684) (2,753,442)
Distributions to partners in excess of accumulated earnings (907,740) 0 0
-------------- -------------- --------------
Net cash used in financing activities (2,897,286) (2,707,684) (2,753,442)
-------------- -------------- --------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (20,074) 13,143 (223,828)
CASH AND CASH EQUIVALENTS, beginning of year 115,337 102,194 326,022
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS, end of year $ 95,263 $ 115,337 $ 102,194
============== ============== ==============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 0 $ 1,765 $ 8,136
============== ============== ==============
The accompanying notes are an integral part of these
statements.
F-6
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000, AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Wells Real Estate Fund IX, L.P. (the "Partnership") is a public limited
partnership organized on August 15, 1994 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners,
L.P. ("Wells Partners"), a Georgia nonpublic limited partnership. The
Partnership began offering units for sale in the beginning of 1996. The
Partnership has two classes of limited partnership units. Upon
subscription for units, each limited partner must elect whether to have
his or her units treated as Class A units or Class B units. Thereafter,
limited partners have the right to change their prior elections to have
some or all of their units treated as Class A units or Class B units one
time during each quarterly accounting period. Limited partners may vote
to, among other things, (a) amend the partnership agreement, subject to
certain limitations, (b) change the business purpose or investment
objectives of the Partnership, and (c) add or remove a general partner. A
majority vote on any of the described matters will bind the Partnership
without the concurrence of the general partners. Each limited partnership
unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed, are
currently under development or construction, are newly constructed, or have
operating histories. The Partnership owns an interest in the following
properties through joint ventures between the Partnership and other Wells
Real Estate Funds: (i) an office building in Madison, Wisconsin (the "U.S.
Cellular Building"); (ii) an office building in Farmers Branch, Texas (the
"AT&T Texas Building"); (iii) a two-story office building in Boulder
County, Colorado (the "Cirrus Logic Building"); (iv) a two-story office
building in Orange County, California (the "Quest Building," formerly the
"Bake Parkway Building"); (v) a three-story office building in Knoxville,
Tennessee (the "Alstom Power Building," formerly the "ABB Building"); (vi)
a two-story office building in Louisville, Colorado (the "Ohmeda
Building"); (vii) a three-story office building in Broomfield, Colorado
(the "360 Interlocken Building"); (viii) a one-story office and warehouse
building in Ogden, Utah (the "Iomega Building"); and (ix) a one-story
office building in Oklahoma City, Oklahoma (the "Avaya Building," formerly
the "Lucent Technologies Building").
USE OF ESTIMATES AND FACTORS AFFECTING THE PARTNERSHIP
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
The carrying values of real estate are based on management's current
intent to hold the real estate assets as long-term investments. The
success of the Partnership's future operations and the ability to realize
the investment in its assets will be dependent on the Partnership's
ability to maintain rental rates, occupancy, and an appropriate level of
operating expenses in future years. Management believes that the steps it
is taking will enable the Partnership to realize its investment in its
assets.
F-7
INCOME TAXES
The Partnership is not subject to federal or state income taxes;
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares
of profits and losses in their individual income tax returns.
DISTRIBUTIONS OF NET CASH FROM OPERATIONS
Cash available for distribution, as defined by the partnership agreement,
is distributed to the limited partners quarterly. In accordance with the
partnership agreement, such distributions are paid first to limited
partners holding Class A units until they have received a 10% per annum
return on their net capital contributions, as defined. Then, such
distributions are paid to the general partners until they have received
10% of the total amount distributed thus far. Any remaining cash
available for distribution is split between the limited partners holding
Class A units and the general partners on a basis of 90% and 10%,
respectively. No distributions will be made to the limited partners
holding Class B units.
DISTRIBUTION OF SALES PROCEEDS
Upon sales of properties, the net sales proceeds will be distributed in
the following order:
. To limited partners holding units, which at any time have been
treated as Class B units, until they receive an amount necessary
to equal the net cash available for distribution received by the
limited partners holding Class A units
. To limited partners on a per unit basis until each limited partner
has received 100% of his/her net capital contribution, as defined
. To all limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital contribution,
as defined
. To limited partners on a per unit basis until they receive an
amount equal to their preferential limited partner return (defined
as the sum of a 10% per annum cumulative return on net capital
contributions for all periods during which the units were treated
as Class A units and a 15% per annum cumulative return on net
capital contributions for all periods during which the units were
treated as Class B units)
. To all general partners until they have received 100% of their
capital contributions; in the event that limited partners have
received aggregate cash distributions from the Partnership over
the life of their investment in excess of a return of their net
capital contributions plus their preferential limited partner
return, then the general partners shall receive an additional sum
equal to 25% of such excess
. Thereafter, 80% to the limited partners on a per unit basis and
20% to the general partners
ALLOCATION OF NET INCOME, NET LOSS, AND GAIN ON SALE
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners holding
Class A units and 1% to the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the limited partners holding
Class B units and 1% to the general partners until their capital accounts
are reduced to zero, (b) then to any partner having a positive balance in
his/her capital account in an amount not to exceed such positive balance,
and (c) thereafter to the general partners.
F-8
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such
sale are distributed to partners after the following allocations are
made, if applicable: (i) allocations made pursuant to the qualified
income offset provisions of the partnership agreement, (ii) allocations
to partners having negative capital accounts until all negative capital
accounts have been restored to zero, and (iii) allocations to limited
partners holding Class B units in amounts equal to the deductions for
depreciation and amortization previously allocated to them with respect
to the specific Partnership property sold, but not in excess of the
amount of gain on sale recognized by the Partnership with respect to the
sale of such property.
INVESTMENT IN JOINT VENTURES
BASIS OF PRESENTATION
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
the Partnership's investments in joint ventures are recorded using the
equity method of accounting.
REAL ESTATE ASSETS
Real estate assets held by the joint ventures are stated at cost less
accumulated depreciation. Major improvements and betterments are
capitalized when they extend the useful life of the related asset. All
ordinary repairs and maintenance expenditures are expensed as incurred.
Management continually monitors events and changes in circumstances
which could indicate that carrying amounts of real estate assets may
not be recoverable. When events or changes in circumstances are present
that indicate the carrying amounts of real estate assets may not be
recoverable, management assesses the recoverability of real estate
assets by determining whether the carrying value of such real estate
assets will be recovered through the future cash flows expected from
the use of the asset and its eventual disposition. Management has
determined that there has been no impairment in the carrying value of
real estate assets held by the joint ventures as of December 31, 2001
or 2000.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized
over the life of the related lease or the life of the asset, whichever
is shorter.
REVENUE RECOGNITION
All leases on real estate assets held by the joint ventures are
classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective
leases.
PARTNERS' DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS
Cash available for distribution and allocations of profit and loss to
the Partnership by the joint ventures are made in accordance with the
terms of the joint venture agreements. Generally, these items are
allocated in proportion to the partners' respective ownership
interests. Cash is paid from the joint ventures to the Partnership
quarterly.
DEFERRED LEASE ACQUISITION COSTS
Costs incurred to procure operating leases are capitalized and
amortized on a straight-line basis over the terms of the related
leases. Deferred lease acquisition costs are included in prepaid
expenses and other assets, net, in the balance sheets presented in Note
4.
F-9
CASH AND CASH EQUIVALENTS
For the purposes of the statements of cash flows, the Partnership
considers all highly liquid instruments purchased with an original
maturity of three months or less to be cash equivalents. Cash equivalents
include cash and short-term investments. Short-term investments are
stated at cost, which approximates fair value, and consist of investments
in money market accounts.
PER UNIT DATA
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 2001, 2000, and 1999 is computed based on the weighted
average number of units outstanding during the period.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
current year financial statement presentation.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to
Wells Capital, Inc. (the "Company"), the general partner of Wells
Partners, for acquisition and advisory services. These payments, as
stipulated by the partnership agreement, can be up to 5% of the limited
partner contributions, subject to certain overall limitations contained
in the partnership agreement. Aggregate fees paid through December 31,
2001 were $1,390,055 and amounted to 4% of the limited partners'
contributions received. These fees are allocated to specific properties
as they are purchased or developed and are included in capitalized assets
of the joint venture. Deferred project costs at December 31, 2001 and
2000 represent fees not yet applied to properties.
3. RELATED-PARTY TRANSACTIONS
Due from affiliate at December 31, 2001 and 2000 represents the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarters of 2001 and 2000 as follows:
2001 2000
----------- -----------
Fund VIII and IX Associates $412,162 $318,775
Fund IX, X, XI, and REIT Joint Venture 380,156 395,420
----------- -----------
$792,318 $714,195
=========== ===========
The Partnership entered into a property management and leasing agreement
with Wells Management Company, Inc. ("Wells Management"), an affiliate of
the general partners. In consideration for supervising the management of
the Partnership's properties, the Partnership will generally pay Wells
Management management and leasing fees equal to: (a) 3% of the gross
revenues for management and 3% of the gross revenues for leasing
(aggregate maximum of 6%) plus a separate fee for the one-time initial
lease-up of newly constructed properties in an amount not to exceed the
fee customarily charged in arm's-length transactions by others rendering
similar services in the same geographic area for similar properties or
(b) in the case of commercial properties which are leased on a long-term
net basis (ten or more years), 1% of the gross revenues except for
initial leasing fees equal to 3% of the gross revenues over the first
five years of the lease term.
The Partnership incurred management and leasing fees and lease
acquisition costs, at the joint venture level, of $209,345, $212,225, and
$184,427 for the years ended December 31, 2001, 2000, and 1999,
respectively.
F-10
The Company performs certain administrative services for the Partnership,
such as accounting and other partnership administration, and incurs the
related expenses. Such expenses are allocated among the various Wells
Real Estate Funds based on time spent on each fund by individual
administrative personnel. In the opinion of management, such allocation
is a reasonable estimation of such expenses.
The general partners are also general partners in other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
4. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures
at December 31, 2001 and 2000 are summarized as follows:
2001 2000
------------------------- -----------------------
Amount Percent Amount Percent
------------- --------- ------------- --------
Fund VIII and IX
Associates $ 11,381,653 45% $ 12,048,885 45%
Fund IX, X, XI, and REIT
Joint Venture 13,598,505 39 14,117,803 39
-------------- --------------
$ 24,980,158 $ 26,166,688
============== ==============
The following is a roll forward of the Partnership's investment in the
joint ventures for the years ended December 31, 2001 and 2000:
2001 2000
--------------- -------------
Investment in joint ventures, beginning of year $ 26,166,688 $ 27,196,918
Equity in income of joint ventures 1,870,378 1,829,216
Contributions to joint ventures 0 46,122
Distributions from joint ventures (3,056,908) (2,905,568)
--------------- -------------
Investment in joint ventures, end of year $ 24,980,158 $ 26,166,688
=============== =============
FUND VIII AND IX ASSOCIATES
On June 10, 1996, the Partnership entered into a joint venture with Wells
Real Estate Fund VIII, L.P. ("Wells Fund VIII"). The joint venture, Fund
VIII and IX Associates, was formed to acquire, develop, operate, and sell
real properties. On June 19, 1996, the joint venture purchased a
7.09-acre parcel of land in Madison, Wisconsin. The parcel was developed
and commenced operations as the U.S. Cellular Building in 1997. On
October 10, 1996, the joint venture purchased a 40,000-square foot,
one-story office building, known as the TCI Building, in Farmers Branch,
Texas. On January 10, 1997, the joint venture purchased a 63,417-square
foot, two-story office building, known as the Matsushita Building, in
Orange County, California. On February 20, 1997, the joint venture
purchased a two-story partially completed office building, known as the
Cirrus Logic Building, in Boulder County, Colorado. Construction of the
49,460-square foot building was completed and commenced operations in
1997.
On June 15, 2000, Fund VIII and IX Associates entered into a joint
venture with Wells Operating Partnership, L.P. (the "Operating
Partnership"), a Delaware limited partnership having Wells Real Estate
Investment Trust, Inc. ("Wells REIT"), a Maryland corporation, as its
general partner. The joint venture, Fund VIII, IX, and REIT Joint
Venture, was formed to acquire, develop, operate, and sell real
properties. On July 1, 2000, Fund VIII and IX contributed, at cost, the
Quest building (formerly the Matsushita Building) to the joint venture.
The Quest Building is a two-story office building containing
approximately 65,006 rentable square feet on a 4.4-acre tract of land in
Irvine, California.
F-11
Following are the financial statements for Fund VIII and IX Associates:
Fund VIII and IX Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
---------------- ---------------
Real estate assets, at cost:
Land $ 2,503,586 $ 2,503,586
Building and improvements, less accumulated depreciation of
$4,966,747 in 2001 and $3,907,439 in 2000 15,552,683 16,611,991
--------------- ---------------
Total real estate assets 18,056,269 19,115,577
Cash and cash equivalents 845,779 826,248
Accounts receivable 827,141 613,445
Due from affiliates 249,982 149,060
Investment in limited partnerships 6,341,285 6,835,000
Prepaid expenses and other assets, net 98,053 138,558
--------------- ---------------
Total assets $ 26,418,509 $ 27,677,888
=============== ===============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 292,194 $ 288,369
Due to affiliates 35,691 29,418
Partnership distributions payable 911,797 705,204
---------------- -------------
Total liabilities 1,239,682 1,022,991
--------------- --------------
Partners' capital:
Wells Real Estate Fund VIII 13,797,174 14,606,012
Wells Real Estate Fund IX 11,381,653 12,048,885
--------------- --------------
Total partners' capital 25,178,827 26,654,897
--------------- --------------
Total liabilities and partners' capital $ 26,418,509 $ 27,677,888
=============== ==============
F-12
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------------- ------------- -------------
Revenues:
Rental income $ 2,466,165 $ 2,804,167 $ 3,132,925
Equity in income of joint venture 477,061 285,006 0
Interest income 21,027 34,741 25,995
Other income 15,847 13,074 0
-------------- ------------- -------------
2,980,100 3,136,988 3,158,920
-------------- ------------- -------------
Expenses:
Depreciation 1,059,308 1,167,145 1,274,978
Management and leasing fees 207,656 203,445 216,075
Property administration expenses 47,608 47,482 41,708
Legal and accounting 15,133 14,500 15,336
Operating costs, net of reimbursements (164,125) (30,221) (34,328)
-------------- ------------- -------------
1,165,580 1,402,351 1,513,769
-------------- ------------- -------------
Net income $ 1,814,520 $ 1,734,637 $ 1,645,151
============== ============= =============
Net income allocated to Wells Real Estate Fund VIII $ 994,298 $ 950,525 $ 901,489
============== ============= =============
Net income allocated to Wells Real Estate Fund IX $ 820,222 $ 784,112 $ 743,662
============== ============= =============
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Total
Estate Estate Partners'
Fund VIII Fund IX Capital
-------------- -------------- --------------
Balance, December 31, 1998 $ 15,952,307 $ 13,159,479 $ 29,111,786
Net income 901,489 743,662 1,645,151
Partnership distributions (1,572,080) (1,296,849) (2,868,929)
-------------- -------------- --------------
Balance, December 31, 1999 15,281,716 12,606,292 27,888,008
Net income 950,525 784,112 1,734,637
Partnership distributions (1,626,229) (1,341,519) (2,967,748)
-------------- -------------- --------------
Balance, December 31, 2000 14,606,012 12,048,885 26,654,897
Net income 994,298 820,222 1,814,520
Partnership distributions (1,803,136) (1,487,454) (3,290,590)
-------------- -------------- --------------
Balance, December 31, 2001 $ 13,797,174 $ 11,381,653 $ 25,178,827
============== ============== ==============
F-13
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------------- ------------- -------------
Cash flows from operating activities:
Net income $ 1,814,520 $ 1,734,637 $ 1,645,151
-------------- ------------- -------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of joint venture (477,061) (285,006) 0
Depreciation 1,059,308 1,167,145 1,274,978
Changes in assets and liabilities:
Accounts receivable (213,696) 78,307 (187,144)
Prepaid expenses and other assets, net 40,505 38,165 32,606
Accounts payable 3,825 4,821 94,407
Due to affiliates 6,273 (1,129) 3,920
-------------- ------------- -------------
Total adjustments 419,154 1,002,303 1,218,767
-------------- ------------- -------------
Net cash provided by operating activities 2,233,674 2,736,940 2,863,918
-------------- ------------- -------------
Cash flows from investing activities:
Investment in real estate 0 0 (3,500)
Distributions received from joint venture 869,854 158,835 0
-------------- ------------- -------------
Net cash provided by (used in) investing
activities 869,854 158,835 (3,500)
-------------- ------------- -------------
Cash flows from financing activities:
Distributions to joint venture partners (3,083,997) (2,936,037) (2,901,686)
-------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents 19,531 (40,262) (41,268)
Cash and cash equivalents, beginning of year 826,248 866,510 907,778
-------------- ------------- -------------
Cash and cash equivalents, end of year $ 845,779 $ 826,248 $ 866,510
============== ============= =============
Supplemental disclosure of noncash activities:
Real estate contributed to joint venture $ 0 $ 6,857,889 $ 0
============== ============= =============
FUND VIII, IX, AND REIT JOINT VENTURE
On June 15, 2000, Fund VIII and IX Associates entered into a joint
venture with the Operating Partnership to form the Fund VIII, IX, and
REIT Joint Venture for the purpose of acquiring, developing, operating,
and selling real properties.
On July 1, 2000, Fund VIII and IX contributed the Quest Building
(formerly the Bake Parkway Building) to the joint venture. Fund VIII, IX,
and REIT Joint Venture recorded the net assets of the Quest Building at
an amount equal to the respective historical net book values. The Quest
Building is a two-story office building containing approximately 65,006
rentable square feet on a 4.4-acre trace of land in Irvine, California.
During 2000, the Operating Partnership contributed $1,282,111 to the Fund
VIII, IX, and REIT Joint Venture. Ownership interests were recomputed
accordingly.
F-14
Following are the financial statements for Fund VIII, IX, and REIT Joint
Venture:
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
-------------- --------------
Real estate assets, at cost:
Land $ 2,220,993 $ 2,220,993
Building and improvements, less accumulated depreciation of
$649,436 in 2001 and $187,891 in 2000 4,952,724 5,408,892
-------------- --------------
Total real estate assets 7,173,717 7,629,885
Cash and cash equivalents 297,533 170,664
Accounts receivable 164,835 197,802
Prepaid expenses and other assets, net 191,799 283,864
-------------- --------------
Total assets $ 7,827,884 $ 8,282,215
============== ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 676 $ 0
Partnership distributions payable 296,856 170,664
-------------- --------------
Total liabilities 297,532 170,664
-------------- --------------
Partners' capital:
Fund VIII and IX Associates 6,341,285 6,835,000
Wells Operating Partnership, L.P. 1,189,067 1,276,551
-------------- --------------
Total partners' capital 7,530,352 8,111,551
-------------- --------------
Total liabilities and partners' capital $ 7,827,884 $ 8,282,215
============== ==============
F-15
FUND VIII, IX, AND REIT JOINT VENTURE
(A GEORGIA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2001 AND
THE PERIOD FROM JUNE 15, 2000 (INCEPTION) THROUGH
DECEMBER 31, 2000
2001 2000
------------ ----------
Revenues:
Rental income $1,207,995 $563,049
Interest income 729 0
------------ ----------
1,208,724 563,049
------------ ----------
Expenses:
Depreciation 461,545 187,891
Management and leasing fees 142,735 54,395
Property administration expenses 22,278 5,692
Operating costs, net of reimbursements 15,326 5,178
------------ ----------
641,884 253,156
------------ ----------
Net income $ 566,840 $309,893
============ ==========
Net income allocated to Fund VIII and IX Associates $ 477,061 $285,006
============ ==========
Net income allocated to Wells Operating Partnership, L.P. $ 89,779 $ 24,887
============ ==========
FUND VIII, IX, AND REIT JOINT VENTURE
(A GEORGIA JOINT VENTURE)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2001 AND
THE PERIOD FROM JUNE 15, 2000 (INCEPTION) THROUGH
DECEMBER 31, 2000
Fund VIII Wells Total
and IX Operating Partners'
Associates Partnership, L.P. Capital
------------- ------------------ -------------
Balance, June 15, 2000 (inception) $ 0 $ 0 $ 0
Net income 285,006 24,887 309,893
Partnership contributions 6,857,889 1,282,111 8,140,000
Partnership distributions (307,895) (30,447) (338,342)
------------- ------------------ -------------
Balance, December 31, 2000 6,835,000 1,276,551 8,111,551
Net income 477,061 89,779 566,840
Partnership contributions 0 5,377 5,377
Partnership distributions (970,776) (182,640) (1,153,416)
------------- ------------------ -------------
Balance, December 31, 2001 $6,341,285 $1,189,067 $7,530,352
============= ================== =============
F-16
FUND VIII, IX, AND REIT JOINT VENTURE
(A GEORGIA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001 AND
THE PERIOD FROM JUNE 15, 2000 (INCEPTION) THROUGH
DECEMBER 31, 2000
2001 2000
------------- -------------
Cash flows from operating activities:
Net income $ 566,840 $ 309,893
------------- -------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 461,545 187,891
Changes in assets and liabilities:
Accounts receivable 32,967 (197,802)
Prepaid expenses and other assets, net 92,065 (283,864)
Accounts payable 676 0
------------- -------------
Total adjustments 587,253 (293,775)
------------- -------------
Net cash provided by operating activities 1,154,093 16,118
------------- -------------
Cash flows from investing activities:
Investment in real estate (5,377) (959,887)
------------- -------------
Cash flows from financing activities:
Contributions from joint venture partners 5,377 1,282,111
Distributions to joint venture partners (1,027,224) (167,678)
------------- -------------
Net cash (used in) provided by financing activities (1,021,847) 1,114,433
------------- -------------
Net increase in cash and cash equivalents 126,869 170,664
Cash and cash equivalents, beginning of period 170,664 0
------------- -------------
Cash and cash equivalents, end of year $ 297,533 $ 170,664
============= =============
Supplemental disclosure of noncash activities:
Real estate contribution received from joint venture partner $ 0 $6,857,889
============= =============
FUND IX, X, XI, AND REIT JOINT VENTURE
On March 20, 1997, the Partnership entered into a joint venture agreement with
Wells Real Estate Fund X, L.P. ("Wells Fund X"). The joint venture, Fund IX and
X Associates, was formed to acquire, develop, operate, and sell real properties.
On March 20, 1997, the Partnership contributed a 5.62-acre tract of real
property in Knoxville, Tennessee, and improvements thereon, known as the Alstom
Power Building, to the Fund IX and X Associates joint venture. An 84,404-square
foot, three-story office building was constructed and commenced operations at
the end of 1997.
On February 13, 1998, the joint venture purchased a two-story office building,
known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, the
joint venture purchased a three-story office building, known as the 360
Interlocken Building, in Broomfield, Colorado. On June 11, 1998, Fund IX and X
Associates was amended and restated to admit Wells Real Estate Fund XI, L.P. and
the Operating Partnership. The joint venture was renamed Fund IX, X, XI, and
REIT Joint Venture. On June 24, 1998, the new joint venture purchased a
one-story office building, known as the Avaya Building, in Oklahoma City,
Oklahoma. On April 1, 1998, Wells Fund X purchased a one-story office and
warehouse building, known as the Iomega Building, in Ogden, Utah. On July 1,
1998, Wells Fund X contributed the Iomega Building to Fund IX, X, XI, and REIT
Joint Venture.
During 1999, the Partnership and Wells Real Estate Fund XI, L.P. made
additional capital contributions to the Fund IX, X, XI, and REIT Joint Venture;
during 2000, the Partnership and Wells Fund X made additional capital
contributions to the Fund IX, X, XI, and REIT Joint Venture. Ownership interests
were recomputed accordingly.
F-17
Following are the financial statements for the Fund IX, X, XI, and REIT Joint
Venture:
THE FUND IX, X, XI, AND REIT JOINT VENTURE
(A GEORGIA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 2001 and 2000
Assets
2001 2000
--------------- --------------
Real estate assets, at cost:
Land $ 6,698,020 $ 6,698,020
Building and improvements, less accumulated depreciation of
$5,619,744 in 2001 and $4,203,502 in 2000 27,178,526 28,594,768
-------------- -------------
Total real estate assets, net 33,876,546 35,292,788
Cash and cash equivalents 1,555,917 1,500,044
Accounts receivable 596,050 422,243
Prepaid expenses and other assets, net 439,002 487,276
-------------- -------------
Total assets $ 36,467,515 $ 37,702,351
============== =============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 620,907 $ 568,517
Refundable security deposits 100,336 99,279
Due to affiliates 13,238 9,595
Partnership distributions payable 966,912 931,151
-------------- -------------
Total liabilities 1,701,393 1,608,542
-------------- -------------
Partners' capital:
Wells Real Estate Fund IX 13,598,505 14,117,803
Wells Real Estate Fund X 16,803,586 17,445,277
Wells Real Estate Fund XI 3,073,671 3,191,093
Wells Operating Partnership, L.P. 1,290,360 1,339,636
-------------- -------------
Total partners' capital 34,766,122 36,093,809
-------------- -------------
Total liabilities and partners' capital $ 36,467,515 $ 37,702,351
============== =============
F-18
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------------- ------------ -------------
Revenues:
Rental income $4,174,379 $4,198,388 $3,932,962
Other income 119,828 116,129 61,312
Interest income 50,002 73,676 58,768
-------------- ------------ -------------
4,344,209 4,388,193 4,053,042
-------------- ------------ -------------
Expenses:
Depreciation 1,416,242 1,411,434 1,538,912
Management and leasing fees 357,761 362,774 286,139
Operating costs, net of reimbursements (232,601) (133,505) (34,684)
Property administration expense 91,747 57,924 59,886
Legal and accounting 26,223 20,423 30,545
-------------- ------------ -------------
1,659,372 1,719,050 1,880,798
-------------- ------------ -------------
Net income $2,684,837 $2,669,143 $2,172,244
============== ============ =============
Net income allocated to Wells Real Estate Fund IX $1,050,156 $1,045,094 $ 850,072
============== ============ =============
Net income allocated to Wells Real Estate Fund X $1,297,665 $1,288,629 $1,056,316
============== ============ =============
Net income allocated to Wells Real Estate Fund XI $ 237,367 $ 236,243 $ 184,355
============== ============ =============
Net income allocated to Wells Operating Partnership, L.P. $ 99,649 $ 99,177 $ 81,501
============== ============ =============
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Wells
Wells Real Wells Real Wells Real Operating Total
Estate Estate Estate Partnership, Partners'
Fund IX Fund X Fund XI L.P. Capital
------------- ------------- ------------ ------------- -------------
Balance, December 31, 1998 $14,960,100 $18,707,139 $2,521,003 $1,443,378 $37,631,620
Net income 850,072 1,056,316 184,355 81,501 2,172,244
Partnership contributions 198,989 0 911,027 0 1,110,016
Partnership distributions (1,418,535) (1,762,586) (307,982) (135,995) (3,625,098)
------------- ------------- ------------ ------------- -------------
Balance, December 31, 1999 14,590,626 18,000,869 3,308,403 1,388,884 37,288,782
Net income 1,045,094 1,288,629 236,243 99,177 2,669,143
Partnership contributions 46,122 84,317 0 0 130,439
Partnership distributions (1,564,039) (1,928,538) (353,553) (148,425) (3,994,555)
------------- ------------- ------------ ------------- -------------
Balance, December 31, 2000 14,117,803 17,445,277 3,191,093 1,339,636 36,093,809
Net income 1,050,156 1,297,665 237,367 99,649 2,684,837
Partnership distributions (1,569,454) (1,939,356) (354,789) (148,925) (4,012,524)
------------- ------------- ------------ ------------- -------------
Balance, December 31, 2001 $13,598,505 $16,803,586 $3,073,671 $1,290,360 $34,766,122
============= ============= ============ ============= =============
F-19
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
------------- ------------ -------------
Cash flows from operating activities:
Net income $2,684,837 $2,669,143 $2,172,244
------------- ------------ -------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,416,242 1,411,434 1,538,912
Changes in assets and liabilities:
Accounts receivable (173,807) 132,722 (421,708)
Prepaid expenses and other assets, net 48,274 39,133 (85,281)
Accounts payable and accrued liabilities,
and refundable security deposits 53,447 (37,118) 295,177
Due to affiliates 3,643 3,216 1,973
------------- ------------ -------------
Total adjustments 1,347,799 1,549,387 1,329,073
------------- ------------ -------------
Net cash provided by operating activities 4,032,636 4,218,530 3,501,317
------------- ------------ -------------
Cash flows from investing activities:
Investment in real estate 0 (127,661) (930,401)
------------- ------------ -------------
Cash flows from financing activities:
Distributions to joint venture partners (3,976,763) (3,868,138) (3,820,491)
Contributions received from partners 0 130,439 1,066,992
------------- ------------ -------------
Net cash used in financing activities (3,976,763) (3,737,699) (2,753,499)
------------- ------------ -------------
Net increase (decrease) in cash and cash equivalents 55,873 353,170 (182,583)
Cash and cash equivalents, beginning of year 1,500,044 1,146,874 1,329,457
------------- ------------ -------------
Cash and cash equivalents, end of year $1,555,917 $1,500,044 $1,146,874
============= ============ =============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 43,024
============= ============ =============
F-20
5. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended
December 31, 2001, 2000, and 1999 is calculated as follows:
2001 2000 1999
------------ ------------- -------------
Financial statement net income $1,768,474 $1,758,676 $1,490,331
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 578,079 524,227 521,336
Rental income accrued for financial reporting
purposes in excess of amounts for income tax
purposes (99,340) (136,558) (89,669)
Expenses deductible when paid for income tax
purposes, accrued for financial reporting
purposes 4,261 749 2,544
Expenses capitalized for income tax purposes,
deducted for financial reporting purposes 0 0 0
------------ ------------- -------------
Income tax basis net income $2,251,474 $2,147,094 $1,924,542
============ ============= =============
The Partnership's income tax basis partners' capital at December 31,
2001, 2000, and 1999 is computed as follows:
2001 2000 1999
-------------- -------------- ---------------
Financial statement partners' capital $25,121,831 $26,276,464 $27,316,507
Increase (decrease) in partners' capital resulting
from:
Depreciation expense for financial reporting
purposes in excess of amounts for income
tax purposes 2,344,436 1,766,357 1,242,130
Capitalization of syndication costs for income
tax purposes, which are accounted for as
cost of capital for financial reporting
purposes 5,223,360 5,223,360 5,223,360
Accumulated rental income accrued for
financial reporting purposes in excess of
amounts for income tax purposes (616,803) (517,463) (380,905)
Accumulated expenses deductible when paid
for income tax purposes, accrued for
financial reporting purposes 21,761 17,500 16,751
Accumulated expenses capitalized for income
tax purposes, deducted for financial
reporting purposes 10,145 10,145 10,145
Partnership's distributions payable 744,902 719,081 628,046
-------------- -------------- ---------------
Income tax basis partners' capital $32,849,632 $33,495,444 $34,056,034
============== ============== ===============
F-21
6. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interest in the joint ventures under noncancelable operating
leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 3,184,542
2003 3,054,975
2004 2,558,935
2005 2,120,947
2006 2,087,267
Thereafter 4,384,502
--------------
$ 17,391,168
==============
Four tenants contributed approximately 14%, 13%, 12%, and 12% of rental
income. In addition, five tenants will contribute approximately 22%, 17%,
15%, 13%, and 10% of future minimum rental income.
The future minimum rental income due Fund VIII and IX Associates under
noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 2,804,162
2003 2,544,616
2004 2,544,616
2005 2,544,616
2006 2,556,283
Thereafter 7,058,967
--------------
$ 20,053,260
==============
Four tenants contributed 37%, 27%, 18%, and 13% of rental income. In
addition, three tenants will contribute approximately 40%, 27%, and 22%
of future minimum rental income.
Future minimum rental income due from Fund VIII, IX, and REIT Joint
Venture under noncancelable operating leases at December 31, 2001 is as
follows:
Year ending December 31:
2002 $ 1,287,119
2003 1,287,119
2004 107,260
2005 0
2006 0
Thereafter 0
--------------
$ 2,681,498
==============
One tenant contributed 100% of rental income for the year ended December
31, 2001. In addition, one tenant will contribute 100% of future minimum
rental income.
F-22
The future minimum rental income due Fund IX, X, XI, and REIT Joint
Venture under noncancelable operating leases at December 31, 2001 is as
follows:
Year ending December 31:
2002 $ 3,648,769
2003 3,617,432
2004 3,498,472
2005 2,482,815
2006 2,383,190
Thereafter 3,053,321
--------------
$ 18,683,999
==============
Four tenants contributed 26%, 23%, 13%, and 13% of rental income. In
addition, four tenants will contribute 38%, 21%, 20%, and 17% of future
minimum rental income.
7. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 2001 and 2000:
2001 Quarters Ended
--------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- --------- -------------- -------------
Revenues $418,470 $483,160 $481,642 $491,018
Net income 397,990 452,885 450,932 466,667
Net income allocated to Class A limited
partners 397,990 452,885 450,932 466,667
Net income per weighted average Class A
limited partner unit (a) $ 0.13 $ 0.15 $ 0.15 $ 0.15
Distribution per weighted average Class A
limited partner unit 0.23 0.24 0.24 0.23
(a) The totals of the four quarterly amounts for the year ended December
31, 2001 do not equal the totals for the year. This difference
results from the use of a weighted average to compute the number of
units outstanding for each quarter and the year.
2000 Quarters Ended
--------------------------------------------------------------
March 31 June 30 September 30 December 31
---------- --------- -------------- -------------
Revenues $461,867 $462,850 $ 455,304 $ 456,747
Net income 437,592 436,218 444,468 440,398
Net income allocated to Class A limited
partners 729,214 731,164 711,473 686,955
Net loss allocated to Class B limited
partners (291,622) (294,496) (267,005) (247,007)
Net income per weighted average Class A
limited partner unit $ 0.24 $ 0.24 $ 0.23 $ 0.22
Net loss per weighted average Class B
limited partner unit (a) (0.71) (0.72) (0.65) (0.60)
Distribution per weighted average Class A
limited partner unit 0.22 0.23 0.23 0.23
(a) The totals of the four quarterly amounts for the year ended December
31, 2000 do not equal the totals for the year. This difference
results from the use of a weighted average to compute the number of
units outstanding for each quarter and the year.
F-23
8. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or Wells
Partners. In the normal course of business, the Partnership or Wells
Partners may become subject to such litigation or claims.
F-24
EXHIBIT INDEX
-------------
(Wells Real Estate Fund IX, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Exhibit
Number Description of Document
- ------ -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real Estate Fund IX, L.P.
(Exhibit 3(a) to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund IX, L.P. (Exhibit 3(c) to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
as amended to date, Commission File No. 33-83852)
*10(a) Leasing and Tenant Coordinating Agreement between Wells Real Estate Fund IX, L.P. and Wells
Management Company, Inc. (Exhibit 10(d) to Form S-11 Registration Statement of Wells Real Estate
Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date, Commission File No.
33-83852)
*10(b) Management Agreement between Wells Real Estate Fund IX, L.P. and Wells Management Company, Inc.
(Exhibit 10(e) to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(c) Amended and Restated Custodial Agency Agreement between Wells Real Estate Fund IX, L.P. and
NationsBank of Georgia, N.A. (Exhibit 10(f) to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date, Commission File
No. 33-83852)
*10(d) Joint Venture Agreement of Fund VIII and Fund IX Associates dated June 10, 1996 (Exhibit 10(aa)
to Post-Effective Amendment No. 11 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(e) Agreement for the Purchase and Sale of Real Property dated April 23, 1996, between American
Family Mutual Insurance Company and Wells Capital, Inc. (Exhibit 10(bb) to Post-Effective
Amendment No. 11 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(f) Agreement to Lease dated June 18, 1996, between Fund VIII and IX Associates and
Westel-Milwaukee, Inc., d/b/a Cellular One (Exhibit 10(cc) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund
IX, L.P., as amended to date, Commission File No. 33-83852)
*10(g) Development Agreement dated June 18, 1996, between Fund VIII and Fund IX Associates and ADEVCO
Corporation (Exhibit 10(dd) to Post-Effective Amendment No. 11 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended
to date, Commission File No. 33-83852)
*10(h) Owner-Contractor Agreement dated June 18, 1996, with Kraemer Brothers, Inc. (Exhibit 10(ee) to
Post-Effective Amendment No. 11 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(i) First Amendment to Joint Venture Agreement of Fund VIII and Fund IX Associates dated October 10,
1996 (Exhibit 10(ii) to Post-Effective Amendment No. 12 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(j) Agreement for the Purchase and Sale of Property dated October 10, 1996, between TCI Valwood
Limited Partnership I and Fund VIII and Fund IX Associates (Exhibit 10(ff) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(k) Build to Suite Industrial Lease Agreement dated November 1, 1995, between Industrial
Developments International, Inc. and TCI Central, Inc., as amended July 16, 1996 and August 29,
1996 (Exhibit 10(gg) to Post-Effective Amendment No. 12 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
Commission File No. 33-83852)
*10(l) Assignment and Assumption of Lease dated October 10, 1996, between TCI Valwood Limited
Partnership I and The Bank of New York, as Agent for Fund VIII and Fund IX Associates (Exhibit
10(hh) to Post-Effective Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as amended to date, Commission File
No. 33-83852)
*10(m) Real Estate Option Agreement dated December 9, 1996, between The Development Corporation of Knox
County and Wells Real Estate Fund IX, L.P. (Exhibit 10(jj) to Post-Effective Amendment No. 13 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund
IX, L.P., as amended to date, Commission File No. 33-83852)
*10(n) Lease Agreement for the ABB Building dated December 10, 1996, between Wells Real Estate Fund IX,
L.P. and ABB Flakt, Inc. (Exhibit 10(kk) to Post-Effective Amendment No. 13 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
as amended to date, Commission File No. 33-83852)
*10(o) Development Agreement relating to the ABB Building dated December 10, 1996, between Wells Real
Estate Fund IX, L.P. and ADEVCO Corporation (Exhibit 10(ll) to Post-Effective Amendment No. 13
to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(p) Owner-Contractor Agreement relating to the ABB Building dated November 1, 1996, between Wells
Real Estate Fund IX, L.P. and Integra Construction, Inc. (Exhibit 10(mm) to Post-Effective
Amendment No. 13 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., as amended to date, Commission File No. 33-83852)
*10(q) Second Amendment to Joint Venture Agreement of Fund VIII and Fund IX Associates dated January 7,
1997 (Exhibit 10(ii) to Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1997, Commission File No. 0-27888)
*10(r) Agreement for the Purchase and Sale of Property with Magellan Bake Parkway Limited Partnership dated
December, 1996 (Exhibit 10(jj) to Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, Commission File No. 0-27888)
*10(s) Office Lease with Matsushita Avionics Systems Corporation dated April 29, 1996 (Exhibit 10(kk) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended December 31, 1997,
Commission File No. 0-27888)
*10(t) Third Amendment to Joint Venture Agreement of Fund VIII and Fund IX Associates dated February 18,
1997 (Exhibit 10(ll) to Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1997, Commission File No. 0-27888)
*10(u) Agreement for the Purchase and Sale of Property with Orix Prime West Broomfield II Venture dated
February 5, 1997 (Exhibit 10(mm) to Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal
year ended December 31, 1997, Commission File No. 0-27888)
*10(v) Lease with Cirrus Logic, Inc. dated July 5, 1995 (Exhibit 10(nn) to Form 10-K of Wells Real
Estate Fund VIII, L.P. for the fiscal year ended December 31, 1997, Commission File No. 0-27888)
*10(w) Joint Venture Agreement of Fund IX and Fund X Associates dated March 20, 1997 (Exhibit 10(g) to
Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
amended to date, Commission File No. 333-7979)
*10(x) Agreement for the Purchase and Sale of Real Property relating to the Lucent Technologies
Building dated May 30, 1997, between Fund IX and Fund X Associates and Wells Development
Corporation (Exhibit 10(k) to Post-Effective Amendment No. 2 to Form S-11 Registration Statement
of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
Commission File No. 333-7979)
*10(y) Net Lease Agreement for the Lucent Technologies Building dated May 30, 1997, between Wells
Development Corporation and Lucent Technologies, Inc. (Exhibit 10(l) to Post-Effective Amendment
No. 2 to Form S-11 Registration Statement of Wells Real Estate Fund X, L.P. and Wells Real
Estate Fund XI, L.P., as amended to date, Commission File No. 333-7979)
*10(z) Development Agreement relating to the Lucent Technologies Building dated May 30, 1997, between
Wells Development Corporation and ADEVCO Corporation (Exhibit 10(m) to Post-Effective Amendment
No. 2 to Form S-11 Registration Statement of Wells Real Estate Fund X, L.P. and Wells Real
Estate Fund XI, L.P., as amended to date, Commission File No. 333-7979)
*10(aa) First Amendment to Net Lease Agreement for the Lucent Technologies Building dated March 30, 1998
(Exhibit 10.10(a) to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc.,
as amended to date, Commission File No. 333-32099)
*10(bb) Amended and Restated Joint Venture Agreement of The Fund IX, Fund X, Fund XI and REIT Joint Venture
(the "IX-X-XI-REIT Joint Venture") dated July 11, 1998 (Exhibit 10.4 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(cc) Agreement for the Purchase and Sale of Real Property relating to the Ohmeda Building dated
November 14, 1997 between Lincor Centennial, Ltd. and Wells Real Estate Fund X, L.P. (Exhibit
10.6 to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10(dd) Agreement for the Purchase and Sale of Property relating to the 360 Interlocken Building dated February
11, 1998 between Orix Prime West Broomfield Venture and Wells Development Corporation (Exhibit 10.7
to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10(ee) Purchase and Sale Agreement relating to the Iomega Building dated February 4, 1998 with SCI Development
Services Incorporated (Exhibit 10.11 to Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(ff) Lease Agreement for the Iomega Building dated April 9, 1996 (Exhibit 10.12 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10(gg) Temporary Lease Agreement for remainder of the ABB Building dated September 10, 1998 between the
IX-X-XI-REIT Joint Venture and Associates Housing Finance, LLC (Exhibit 10.35 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended to date, Commission File No. 333-32099)
*10(hh) Rental Income Guaranty Agreement relating to the Bake Parkway Building dated February 18, 1999,
between Wells Operating Partnership, L.P. and Fund VIII and Fund IX Associates (Exhibit 10.53
to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to
date, Commission File No. 333-32099)
*10(ii) Joint Venture Partnership Agreement of Fund VIII-IX-REIT Joint Venture (Exhibit 10.47 to Form
S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-44900)
*10(jj) Lease Agreement for the Quest Building (formerly the Bake Parkway Building) (Exhibit 10.51 to
Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to
date, Commission File No. 333-44900)