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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 or
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to to
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Commission file number 0-25606
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WELLS REAL ESTATE FUND VII, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2022629
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(State or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
CLASS A UNITS
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(Title of Class)
CLASS B UNITS
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
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PART I
ITEM 1. BUSINESS
General
Wells Real Estate Fund VII, 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 December 1, 1992 for the purpose of acquiring,
developing, 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 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 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 April 6, 1994, the Partnership commenced an offering of up to $25,000,000 of
Class A or Class B limited partnership units ($10 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations upon receiving and accepting
subscriptions for 125,000 units on April 26, 1994. The Partnership terminated
its offering on January 5, 1995 upon receiving gross proceeds of $24,180,174
representing subscriptions for 1,678,810 Class A Units and 739,207 Class B Units
held by 1,591 and 319 Limited Partners, respectively.
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 of the
properties owned by the Partnership through its interests in joint ventures. In
the opinion of management, all such properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may 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 that 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.
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ITEM 2. PROPERTIES
The Partnership owns interests in properties through the following joint
ventures between the Partnership and other affiliated limited partnerships: (i)
Fund V, Fund VI, and Fund VII Associates, a joint venture between the
Partnership, Wells Real Estate Fund V, L.P. ("Wells Fund V"), and Wells Real
Estate Fund VI, L.P. ("Wells Fund VI") (the "Fund V-VI-VII Joint Venture"), (ii)
Fund VI and Fund VII Associates, a joint venture between the Partnership and
Wells Fund VI (the "Fund VI-VII Joint Venture"), (iii) Fund II, III, VI, and VII
Associates, a joint venture among the Partnership, Wells Fund II-III Associates
and Wells Fund VI, (the "Fund II-III-VI-VII Joint Venture"), (iv) Fund VII and
Fund VIII Associates, a joint venture between the Partnership and Wells Real
Estate Fund VIII, L.P. ("Wells Fund VIII") (the "Fund VII-VIII Joint Venture"),
(v) Fund VI, Fund VII, and Fund VIII Associates, a joint venture between the
Partnership, Wells Fund VI and Wells Fund VIII (the "Fund VI-VII-VIII Joint
Venture"), and (vi) Fund I, II, IIOW, VI, and VII Associates, a joint venture
between the Partnership, Wells Real Estate Fund I ("Wells Fund I"), the Fund II
and Fund IIOW Joint Venture, and Wells Fund VI (the "Fund I-II-IIOW-VI-VII Joint
Venture"). The Fund II and Fund IIOW Joint Venture is a joint venture between
Wells Real Estate Fund II ("Wells Fund II") and Wells Real Estate Fund II-OW
("Wells Fund IIOW"). Wells Fund II-III Associates is a joint venture between the
Fund II and IIOW Joint Venture and Wells Real Estate Fund III, L.P. ("Wells Fund
III"). The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investments in joint ventures are recorded using the equity method of
accounting.
As of December 31, 2001, the Partnership owned interests in the following
properties through its ownership in the foregoing joint ventures: (i) a
three-story office building located in Appleton, Wisconsin (the "Marathon
Building"), (ii) two retail buildings located in Stockbridge, Georgia
("Stockbridge Village III"), (iii) a retail shopping center expansion located in
Stockbridge, Georgia ("Stockbridge Village I Expansion"), (iv) an office/retail
center located in Roswell, Georgia ("Holcomb Bridge Property"), (v) a retail
center located in Stockbridge, Georgia ("Hannover Center"), (vi) a four-story
office building located in Jacksonville, Florida ("BellSouth Building"), (vii)
an office building located in Gainesville, Florida ("CH2M Hill at Gainesville
Property"), and (viii) a retail center in Clemmons, North Carolina ("Tanglewood
Commons").
On October 1, 2001, the Fund I-II-IIOW-VI-VII Joint Venture sold Cherokee
Commons for net sale proceeds of $8,434,089 and recognized a gain of $1,725,015
on the sale. The Partnership was allocated taxable gain of $21,867 and net sale
proceeds of $903,122 from this transaction.
The following table shows lease expirations during each of the next ten years
for all leases at properties in which the Partnership owned an interest through
the joint ventures described above as of December 31, 2001, assuming no exercise
of renewal options or termination rights:
-3-
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 21 42,434 $ 756,835 $ 374,366 12.2% 14.9%
2003 11 22,742 330,325 131,685 6.6 6.5
2004 3 11,795 178,927 75,609 3.4 3.5
2005(2) 6 70,097 714,467 280,525 20.2 14.0
2006(3) 10 193,047 2,978,101 1,137,750 55.7 58.5
2011 1 6,732 134,640 74,321 1.9 2.6
-- ------- ---------- ---------- ----- -----
52 346,847 $5,093,295 $2,074,256 100.0% 100.0%
== ======= ========== ========== ===== =====
(1) Average monthly gross rent over the life of the lease,
annualized.
(2) Primarily expiration of CH2M Hill lease (57,547 square feet).
(3) Primarily expirations of Marathon lease (76,000 square feet),
BellSouth lease (70,234 square feet), American Express lease at
BellSouth Building (22,607 square feet), Mattress King lease at
Hannover Center (6,020 square feet), and Bertucci's lease at the
Holcomb Bridge Property (5,935 square feet).
The following describes the properties in which the Partnership owns an interest
as of December 31, 2001:
Fund V-VI-VII Joint Venture
On September 8, 1994, the Partnership, Wells Fund V and Wells Fund VI, both
of which are Georgia public limited partnerships affiliated with the
Partnership through common general partners, formed the Fund V-VI-VII Joint
Venture. The investment objectives of Wells Fund V and Wells Fund VI are
substantially identical to those of the Partnership. The Partnership owns
an approximate 42% interest in the following property through its
investment in the Fund V-VI-VII Joint Venture:
The Marathon Building
On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a
three-story office building for a purchase price of $8,250,000, excluding
acquisition costs, containing approximately 76,000 rentable square feet,
located on approximately 6.2 acres of land in Appleton, Wisconsin, known as
the Marathon Building. The funds used by the Fund V-VI-VII Joint Venture to
acquire the Marathon Building were derived from capital contributions made
by the Partnership, Wells Fund V and Wells Fund VI totaling $3,470,958,
$1,337,505, and $3,470,958, respectively, for total contributions to the
Fund V-VI-VII Joint Venture of $8,279,421, including acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a
period of twelve years, three and one-half months, with options to renew
the lease for two additional five-year periods. The annual base rent is
$980,000. The current lease expires on December 31, 2006.
The average effective annual rental rate per square foot at the Marathon
Building was $12.78 in 2001, 2000, 1999 and 1998, and $12.74 for 1997. The
occupancy rate at year-end was 100% in 2001, 2000, 1999, 1998 and 1997.
-4-
Fund VI-VII Joint Venture
On December 9, 1994, the Partnership and Wells Fund VI entered into a Joint
Venture Agreement and formed the Fund VI-VII Joint Venture. As of December
31, 2001, the Partnership had contributed $3,358,633 and Wells Fund VI had
contributed $2,710,639, including its cost to acquire land, to the Fund
VI-VII Joint Venture for the acquisition and development of Stockbridge
Village III and Stockbridge Village I Expansion. As of December 31, 2001,
the Partnership's equity interest in the Fund VI-VII Joint Venture was
approximately 55%, and Wells Fund VI's equity interest in the Fund VI-VII
Joint Venture was approximately 45%.
Stockbridge Village III
In April 1994, Wells Fund VI purchased 3.27 acres of real property located
in Clayton County, Georgia for a cost of $1,015,673. This tract of land is
located directly across Route 138 from the Stockbridge Village Shopping
Center which was developed and is owned by an affiliate of the Partnership.
On December 9, 1994, Wells Fund VI contributed this real property as a
capital contribution to the Fund VI-VII Joint Venture.
As of December 31, 2001, the Partnership has contributed $1,917,483 and
Wells Fund VI has contributed $1,033,285 to the Fund VI-VII Joint Venture
for the acquisition and development of the Stockbridge Village III
Property. The first building is a 3,200 square foot restaurant, which was
completed in March 1995 at a cost of approximately $400,000 excluding land
and is currently leased to RMS/Fazoli's for a period of 13 years, which
commenced on December 10, 1998.
The second out-parcel building containing approximately 15,000 square feet
was completed in October 1995, at a cost of approximately $1,500,000,
excluding land. In October 2001, Stockbridge Ribs, Inc. took occupancy of
6,732 square feet with a lease for ten years. The initial annual base rent
for the first five years is $125,215, and $144,065 thereafter. Four other
tenants occupy the remaining 6,543 square feet of this building.
The average effective annual rental rate per square foot at Stockbridge
Village III was $14.99 for 2001, $ 17.05 for 2000, $17.08 for 1999, $13.08
for 1998, and $15.67 for 1997. The occupancy rate at year-end was 91% in
2001, and 100% in 2000, 1999, 1998 and 1997.
Stockbridge Village I Expansion
On June 7, 1995, the Fund VI-VII Joint Venture purchased 3.38 acres of real
property located in Clayton County, Georgia for $718,000. The Stockbridge
Village I Expansion consists of a multi-tenant shopping center containing
approximately 29,200 square feet. Construction was substantially complete
in April 1996, with Cici's Pizza taking occupancy of 4,000 square foot
restaurant. The term of the Cici's Pizza lease is 9 years and 11 months
commencing upon occupancy. The initial annual base rent was $48,000. In the
third year, the annual base rent increased to $50,000, in the sixth year to
$52,000, and in the ninth year to $56,000. Fourteen additional tenants
occupy the remaining square feet.
As of December 31, 2001, the Partnership had contributed a total of
$1,441,150, and Wells Fund VI had contributed a total of $1,677,354, for a
total contribution of approximately $3,118,504 toward the development and
construction of the Stockbridge Village I Expansion.
-5-
The average effective annual rental rate per square foot at the Stockbridge
Village I Expansion was $13.87 for 2001, $11.97 for 2000, $10.74 for 1999,
$10.08 for 1998, and $6.82 for 1997. The occupancy rate at year-end was
100% in 2001 and 2000, 86% for 1999, 81% for 1998, and 74% for 1997.
Fund II-III-VI-VII Joint Venture
On January 10, 1995, the Partnership, Wells Fund II-III Associates, and
Wells Fund VI entered into a Joint Venture Agreement known as the Fund
II-III-VI-VII Joint Venture. The Fund II-III Joint Venture is a joint
venture between Wells Fund III, and the Fund II-Fund IIOW Joint Venture
formed by Wells Fund II and Wells Fund IIOW, Georgia public limited
partnerships having Leo F. Wells, III and Wells Capital, Inc. as general
partners. The investment objectives of Wells Fund II, Wells Fund IIOW,
Wells Fund III, and Wells Fund VI are substantially identical to those of
the Partnership.
Holcomb Bridge Property
In January 1995, the Wells Fund II-III Associates contributed approximately
4.3 acres of land at the intersection of Warsaw Road and Holcomb Bridge
Road in Roswell, Fulton County, Georgia (the "Holcomb Bridge Property") and
funding for land improvements and the development and construction of two
buildings containing a total of approximately 49,530 square feet to the
Fund II-III-VI-VII Joint Venture.
Thirteen tenants occupied the Holcomb Bridge Property at December 31, 2001
for occupancy rates at year-end of 89% in 2001, 92% in 2000, 100% in 1999,
and 94% in 1998 and 1997. The average effective annual rental rate per
square foot was $17.07 for 2001, $17.55 for 2000, $19.36 for 1999, $17.63
for 1998, and $13.71 for 1997.
Fund VII-VIII Joint Venture
On February 10, 1995, the Partnership and Wells Fund VIII, a Georgia public
limited partnership affiliated with the Partnership through common general
partners, formed the Fund VII-VIII 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 $2,474,724, and
Wells Fund VIII has contributed $4,267,621 for a total cost of $6,742,346
to the Fund VII-Fund VIII Joint Venture for the acquisition and development
of the property. The Partnership held an approximate 37% equity interest
and Wells Fund VIII held an approximate 63% equity interest in the Fund
VII-VIII Joint Venture, through which a retail/office building and an
office building as of December 31, 2001.
The Hannover Property
On April 1, 1996, the Partnership contributed 1.01 acres of land located in
Clayton County, Georgia, and improvements thereon valued at $512,000 to the
Fund VII-VIII Joint Venture for the development of a 12,080 square foot,
single story combination retail/office building. As of December 31, 2001,
the Partnership has funded $1,437,801 and Wells Fund VIII has contributed
$190,311 for the development of the Hannover Center, in addition to the
cost of the land.
A five-year lease has been signed with Mattress King, a mattress retailer,
in December 2000 to occupy 6,020 square feet. The annual base rent is
$88,795 for the first three years, and $91,805
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for the last two years of the lease term, which expires in 2006. Two
additional tenants occupy the remaining space at the property with leases
that expire in 2003.
The average effective annual rental rate per square foot at the Hannover
Property was $13.68 for 2001, $9.15 for 2000, $15.97 for 1999, $10.05 for
1998, and $8.92 for 1997. The occupancy rate at year-end was 100% in 2001,
2000, 1999 and 1998, and 50% in 1997.
CH2M Hill at Gainesville Property
The Partnership made an initial contribution to the Fund VII-VIII Joint
Venture of $677,534, which constituted the total purchase price and all
other acquisition and development costs related to the purchase of a 5 acre
parcel of land in Gainesville, Alachua County, Florida. Construction of an
office building containing 61,468 rentable square feet was completed in
December 1995 and is known as the CH2M Hill at Gainesville Property.
The lease, as well as CH2M Hill's obligation to pay rent, commenced on
December 1995 CH2M Hill took occupancy of 57,547 square feet of the
building. The lease with CH2M Hill provides for a term of 9 years and 11
months and annual initial base rent payable of $530,313. CH2M Hill has the
option to renew the lease for an additional five-year period. The annual
rent for the extended term will be at the currently prevailing market rate.
As of December 31, 2001, the Partnership had contributed $1,036,923, and
Wells Fund VIII had contributed $4,077,310 to the Fund VII-VIII Joint
Venture toward the completion of this project.
The average effective annual rental rate per square foot at the Gainesville
Property was $9.37 for 2001, 2000 and 1999, $9.19 for 1998, and $8.63 for
1997. The occupancy rate at year-end was 100% in 2001, 2000, 1999 and 1998,
and 94% in 1997.
Fund VI-VII-VIII Joint Venture
On April 17, 1995, the Partnership, Wells Fund VI and Wells Fund VIII
formed the Fund VI-VII-VIII Joint Venture. As of December 31, 2001, the
Partnership had contributed approximately $5,932,312 for an approximate
equity interest of 33% in the Fund VI-VII-VIII Joint Venture through which
an office building in Jacksonville, Florida and a multi-tenant retail
center in Clemmons, North Carolina are owned. As of December 31, 2001,
Wells Fund VIII has contributed $5,700,000 for an equity interest in the
Fund VI-VII-VIII Joint Venture of approximately 32%, and Wells Fund VI has
contributed approximately $6,067,688 for an equity interest in the Fund
VI-VII-VIII Joint Venture of approximately 35%. Thus, a total cost of
$17,700,000 has been contributed to the Fund VI-VII-VIII Joint Venture for
the acquisition and development of the properties described below.
BellSouth Building
On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55
acres parcel of land in Jacksonville, Florida for a total of $1,245,059,
including closing costs. In May 1996, the 92,964 square foot office
building was completed with BellSouth Advertising and Publishing
Corporation, a subsidiary of BellSouth Company, taking occupancy of
approximately 66,333 square feet and American Express Travel Related
Services Company, Inc. taking occupancy of approximately 22,607 square
feet. BellSouth took occupancy of an additional 3,901 square feet in
December 1996. The land purchase price and construction costs totaling
approximately
-7-
$9 million were funded by capital contributions of $3,500,000 from the
Partnership, $3,500,000 from Wells Fund VI, and $2,000,000 from Wells Fund
VIII.
The BellSouth lease is for an initial term of nine years and eleven months,
commencing May 1996, with an option to extend for an additional five-year
period at the currently prevailing market rate. The annual base rent during
the initial term is $1,094,426 during the first five years and $1,202,034
for the remaining period. The American Express lease was for an initial
term of five years with an annual base rent of $369,851 and expired in June
2001. American Express has renewed their lease for a term of five years
commencing in July 2001 at an annual base rent of $405,117 for the first
year with 3 percent escalations each year thereafter. BellSouth and
American Express are required to pay additional rent equal to their share
of operating expenses during their respective lease terms.
The average effective annual rental rate per square foot at the BellSouth
Building was $16.65 in 2001, $16.36 in 2000, 1999, and 1998, and $16.40 in
1997. The occupancy rate at year-end was 100% in 2001, 2000, 1999, 1998 and
1997.
Tanglewood Commons Shopping Center
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683
acres tract of real property located in Clemmons, Forsyth County, North
Carolina. The Fund VI-VII-VIII Joint Venture constructed one large strip
shopping center building containing approximately 67,320 gross square feet
on a 12.48 acres tract. The remaining 2.2 acre portion of the property
consists of four out-parcels which have been graded and are held for future
development or resale. As of December 31, 2001, the Partnership has
contributed $2,432,312, Wells Fund VI has contributed $2,567,688 and Wells
Fund VIII has contributed $3,700,000 for total costs of $8,700,000 to
complete the development of this project. Construction of the project was
substantially completed in the first quarter of 1997.
In February 1997, Harris Teeter, Inc., a regional supermarket chain,
executed a lease for a minimum of 45,000 square feet with an initial term
of 20 years with extension options of four consecutive five-year periods
with the same terms as the initial lease. The annual base rent payable
during the initial term is $488,250. In addition, Harris Teeter has agreed
to pay percentage rents equal to one percent of the amount by which Harris
Teeter's gross sales at this location exceed $35,000,000 for each lease
year.
The average effective annual rental rate per square foot at Tanglewood
Commons was $13.02 for 2001, $12.53 for 2001, $11.48 for 1999, $10.96 for
1998, and $9.12 for 1997, the first year of occupancy. The occupancy rate
at year-end was 100% in 2001 and 2000, 91% in 1999 and 1998, and 86% in
1997.
Fund I-II-II-OW-VI-VII Joint Venture
On August 1, 1995, the Partnership, Wells Fund I, the Fund II-Fund II-OW
Joint Venture and Wells Fund VI formed the Fund I-II-IIOW-VI-VII Joint
Venture for the purpose of owning and operating the Cherokee Property
described below.
Cherokee Commons
Cherokee Commons consists of a retail shopping center located in
metropolitan Atlanta, Cherokee County, which has been expanded to consist
of approximately 103,755 net leasable
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square feet. Cherokee Commons was initially developed through a joint
venture between Wells Fund I and the Fund II-Fund IIOW Joint Venture, which
contributed Cherokee Commons to the Fund I-II-IIOW-VI-VII Joint Venture on
August 1, 1995 to complete the required funding for the expansion.
As of September 30, 2001, Wells Fund I contributed property with a book
value of $2,139,900, the Fund II-Fund IIOW Joint Venture contributed
property with a book value of $4,860,100, Wells Fund VI contributed cash in
the amount of $953,798 and the Partnership contributed cash in the amount
of $953,798 to the Fund I-II-IIOW-VI-VII Joint Venture. As of September 30,
2001, the equity interests in the Fund I-II-IIOW-VI-VII Joint Venture were
approximately as follows: Wells Fund I, 24%; Fund II-Fund II-OW Joint
Venture, 54%; Wells Fund VI, 11%; and the Partnership, 11%.
On October 1, 2001, the Fund I-II-IIOW-VI-VII Joint Venture sold Cherokee
Commons for net sale proceeds of $8,434,089 and recognized a gain of
$1,725,015 on the sale. The Partnership was allocated taxable gain of
$21,867 and net sale proceeds of $903,122 from this transaction.
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 $8.42 per Class A Unit and $13.55 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.
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.
-9-
PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
As of February 28, 2002, the Partnership had 2,067,020 outstanding Class A Units
held by a total of 1,677 Limited Partners and 350,997 of Class B held by a total
of 231 Limited Partners. There is no established public trading for the
Partnership's limited partnership units, and it is not anticipated that a public
trading market for the units will develop. Under the Partnership Agreement, the
General Partners have the right to prohibit transfers of units.
Class A 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, amortization and cost recovery 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 Partner or holders of Class B Units as of December 31, 2001.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners elect to have their cash distributed
monthly. Cash distributions made to Class A Limited Partners during 2001 and
2000 were as follows:
Per Class A Per Class A
Total Unit Unit
Distribution for Cash Investment Return of
Quarter Ended Distributed Income Capital
- -------------------- ----------- ----------- -----------
March 31, 2000 $471,887 $0.23 $0.00
June 30, 2000 485,206 0.24 0.00
September 30, 2000 471,945 0.11 0.12
December 31, 2000 453,613 0.10 0.12
March 31, 2001 460,973 0.10 0.13
June 30, 2001 450,019 0.10 0.12
September 30, 2001 464,020 0.12 0.10
December 31, 2001 465,080 0.22 0.00
The fourth quarter distributions were accrued for accounting purposes in 2001
and paid to Limited Partners holding Class A Units in February 2002. The General
Partners anticipate that cash distributions to Limited Partners holding Class A
Units will continue in 2002 at a level at least comparable with 2001 cash
distributions on an annual basis.
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ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 2001, 2000, 1999, 1998, and 1997:
2001 2000 1999 1998 1997
----------- ------------ ------------ ------------ ------------
Total assets $16,278,839 $ 16,992,526 $ 17,993,904 $ 18,789,678 $ 19,666,294
Total revenues 1,203,501 961,858 982,630 846,306 816,237
Net income 1,113,684 882,982 895,795 754,334 733,149
Net income allocated to Class A
Limited Partners 1,113,684 1,286,161 1,879,410 1,704,213 1,615,965
Net loss allocated to Class B
Limited Partners 0 (403,179) (983,615) (949,879) (882,816)
Net income per weighted average
Class A Limited Partner Unit (1) $ 0.54 $ 0.63 $ 0.93 $ 0.85 $ 0.86
Net loss per weighted average
Class B Limited Partner Unit (1) 0.00 (1.07) (2.48) (2.24) (1.68)
Cash distributions per weighted
average Class A Limited Partner
Unit: (1)
Investment income 0.54 0.68 0.87 0.82 0.79
Return of capital 0.35 0.24 0.00 0.00 0.00
(1) Weighted average units are calculated by averaging units
over the period they are outstanding during the time units
are still being purchased or converted by limited partners
in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS 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 this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
Gross revenues of the Partnership were $1,203,501, $961,858, and $982,630 for
the years ended December 31, 2001, 2000, and 1999, respectively. The increase in
revenues from 2000 to 2001 was attributable primarily to (i) increased rental
rates at the BellSouth Building, Tanglewood Commons, Hannover Center, Cherokee
Commons, and Stockbridge Village I Expansion Properties, (ii) a bad debt expense
recognized for the Holcomb Bridge Property, and Hannover Center in 2000, (iii)
gain on the 2001 sale of Cherokee Commons and related decrease in 2001
depreciation, and (iv) decreased depreciation for the Holcomb Bridge Property as
some tenant improvements became fully depreciated in
-11-
2000. In accordance with the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of",
the Fund I-II-IIOW-VI-VII Joint Venture reclassified the real estate assets of
Cherokee Common as "Held For Sale" upon finalizing negotiations with the
Purchaser in August 2001 and, accordingly, stopped depreciating its real estate
assets at that time. The increase in revenues was partially offset by (i) bad
debt expense recorded at Tanglewood Commons and Stockbridge Village III in 2001,
and (ii) decreased occupancy at the Holcomb Bridge Property in 2001. The
decrease in revenues from 1999 to 2000 was attributable primarily to (i) bad
debt expense recognized for the Holcomb Bridge Property, and Hannover Center,
(ii) decreased occupancy at the Holcomb Bridge Property in 2000, partially
offset by (i) increased rental rates at Stockbridge Village I Expansion and
Cherokee Commons, (ii) increased occupancy at Tanglewood Commons, and (iii)
increased common area maintenance reimbursement adjustments at Tanglewood
Commons and the CH2M Hill at Gainesville Property.
Expenses of the Partnership were $89,817, $78,876, and $86,835 for the years
ended December 31, 2001, 2000, and 1999, respectively. Expenses of the
Partnership decreased in 2000, as compared to 1999 and 2001, due to decreased
administrative salaries. As a result, net income of the Partnership was
$1,113,684 for the year ended December 31, 2001, $882,982 for the year ended
December 31, 2000, and $895,795 for the year ended December 31, 1999.
Net income per weighted average unit for Class A Limited Partners was $0.54 for
the year ended December 31, 2001 as compared to $0.63 for the year ended
December 31, 2000 and $0.93 for the year ended December 31, 1999. Net loss per
weighted average unit for Class B was $0 for the year ended December 31, 2001 as
compared to $1.07 for the year ended December 31, 2000 and $2.48 for the year
ended December 31, 1999. The related decrease for Class A and increase for Class
B resulted from a change in the method used to allocate income as the Class B
Limited Partners' capital balances reached zero at the end of 2000.
Liquidity and Capital Resources
Pursuant to the terms of the Partnership Agreement, the Partnership is required
to maintain working capital reserves in an amount equal to the cash operating
expenses required to operate the Partnership for a six-month period not to be
reduced below 1% of Limited Partners' capital contributions. As set forth above,
in order to fund a portion of the tenant improvements at the Holcomb Bridge
Property and Stockbridge Village III, the General Partners have used a portion
of the Partnership's working capital reserves to reduce the balance below this
minimum amount, rather than funding the tenant improvements out of operating
cash flow, which would have the effect of reducing cash flow distributions to
Limited Partners. The General Partners anticipate that the remaining $14,630 in
working capital reserves will be sufficient to meet future needs.
The Partnership's net cash used in operating activities was $83,497 in 2001,
$60,735 in 2000, and $82,763 in 1999. The use of 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 $1,904,057 in 2001, $1,921,437 in 2000 and $1,777,010 in 1999. Even though
there is a significant increase in equity in income from the Fund
I-II-IIOW-VI-VII joint venture in 2001 due to the gain from the sale of Cherokee
Commons, the proceeds from the sale have not been distributed. As a result, cash
provided by investing activities in 2001, as compared to 2000, remains
relatively stable. Net cash provided by investing activities increased in 2000
as compared to 1999 due to an increased in the distributions from joint
ventures. Net cash used in financing activities was $1,829,826 in 2001,
$1,887,183 in 2000, and $1,688,290 in 1999. The decrease in net cash used in
financing activities in 2001, as compared to 2000,
-12-
was attributable to decreases in cash flows generated by properties owned
through joint ventures, which resulted in a decreased 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. 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.
As all properties have been acquired on an all-cash basis, the Partnership has
no permanent long-term liquidity requirements.
Inflation
The real estate market has not been significantly affected by inflation during
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. These 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. In addition,
a number of the Partnership's leases are for terms of less than five years which
may permit the Partnership to replace existing leases with new leases at higher
base rental rates if the existing leases are below market rate. There is no
assurance, however, that the Partnership would be able to replace existing
leases with new leases at higher base rentals.
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 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.
-13-
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.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-14-
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 at 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. He is also the President, sole Director and sole shareholder of
Wells Real Estate Investment Funds, Inc., the parent corporation of Wells
Capital, Inc. Mr. Wells is also the President of Wells & Associates, Inc., a
real estate brokerage and investment company formed in 1976 and incorporated in
1978, for which he serves as the principal broker. Mr. Wells is also the sole
Director and President of Wells Management Company, Inc., a property management
company he founded in 1983. In addition, Mr. Wells is the President and Chairman
of the Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and
Wells Management Company, Inc., all of which are all affiliates of the General
Partners. From 1980 to February 1985, Mr. Wells served as Vice-President of
Hill-Johnson, Inc., a Georgia corporation engaged in the construction business.
From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company, and
from 1970 to 1973, he was a real estate salesman and property manager for Roy D.
Warren & Company, an Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
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
- ------------------------------ ---------------------------- ------------
Leo F. Wells, III General Partner $ 0
Wells Management Company, Inc. Property Manager--Management $195,633(1)
And Leasing 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.
-15-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of December 31, 2001.
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 69.32 Units (IRA, 401(k), Less than 1%
and 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 described below:
Interest in Partnership Cash Flow and Net Sale Proceeds
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow from operations after the Limited
Partners holding Class A Units have received preferential distributions equal to
10% of their adjusted capital contribution. The General Partners will also
receive a subordinated participation in net sale proceeds and net financing
proceeds equal to 20% of residual proceeds available for distribution after the
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 the Limited Partners holding Class B Units have received a
return of their adjusted capital contribution plus a 15% cumulative return on
their adjusted capital contribution; however, that in no event shall the General
Partners receive in the aggregate in excess of 15% of net sale proceeds and net
financing proceeds remaining after payments to Limited Partners from such
proceeds of amounts equal to the sum of their adjusted capital contributions
plus a 6% cumulative return on their adjusted capital contributions. The General
Partners did not receive any distributions from net cash flow from operations or
net sale 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 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; and (ii) n the cash of industrial and
commercial properties which are leased on a long-term basis (ten or more years),
1% of the gross revenues except for initial leasing fees equal to 3% of the
gross revenues over the first five years of the lease term; or (B) the amounts
charged by unaffiliated persons rendering comparable services in the same
geographic area. Wells
-16-
Management Company, Inc. received $195,633 in property management and leasing
fees for services rendered during the year ended December 31, 2001.
Real Estate Commissions
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. During 2001, no real estate
commissions were paid to the General Partners or their affiliates.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
-17-
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-33 of this
Annual Report on Form 10-K, and the list of the financial statements
contained herein is set forth on page F-1, which is hereby incorporated by
reference.
(a)2. The Exhibits filed in response to Item 601 of Regulation S-K are listed on
the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission 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.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-18-
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 VII
(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
President and Sole Director of
Wells Capital, Inc., the General
Leo F. Wells, III 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.
-19-
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- ------------------------------------------------------------------------------------ ----
Independent Auditor's Report F-2
Balance Sheets 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 Partner's Capital for the Years Ended December 31, 2001, 2000 and 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, and 1999 F-7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VII, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VII,
L.P. (a Georgia public limited partnership) as of December 31, 2001 and 200 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 VII,
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 VII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
2001 2000
----------- -----------
ASSETS
INVESTMENT IN JOINT VENTURES $15,772,696 $16,519,029
CASH AND CASH EQUIVALENTS 45,950 55,216
DUE FROM AFFILIATES 460,193 415,906
PREPAID EXPENSES AND OTHER ASSETS 0 2,375
----------- -----------
Total assets $16,278,839 $16,992,526
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 7,207 $ 4,752
Partnership distributions payable 463,881 453,615
----------- -----------
Total liabilities 471,088 458,367
----------- -----------
COMMITMENTS AND CONTINGENCIES
partners' capital:
Limited partners:
Class A--2,067,020 units and 2,045,427 units as of December 31, 2001
and 2000, respectively 15,807,751 16,534,159
Class B--350,997 units and 372,590 units as of December 31, 2001 and
2000, respectively 0 0
----------- -----------
Total partners' capital 15,807,751 16,534,159
----------- -----------
Total liabilities and partners' capital $16,278,839 $16,992,526
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND VII, 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 $ 1,202,011 $ 944,165 $ 981,104
Interest income 1,490 17,693 1,526
----------- ----------- -----------
1,203,501 961,858 982,630
----------- ----------- -----------
EXPENSES:
Partnership administration 57,309 48,855 56,603
Legal and accounting 18,392 17,748 20,224
Amortization of organization costs 0 0 1,562
Computer costs 14,116 12,273 8,446
----------- ----------- -----------
89,817 78,876 86,835
----------- ----------- -----------
NET INCOME $ 1,113,684 $ 882,982 $ 895,795
=========== =========== ===========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 1,113,684 $ 1,286,161 $ 1,879,410
=========== =========== ===========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ 0 $ (403,179) $ (983,615)
=========== =========== ===========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.54 $ 0.63 $ 0.93
=========== =========== ===========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ 0.00 $ (1.07) $ (2.48)
=========== =========== ===========
DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.89 $ 0.92 $ 0.87
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
Limited Partners
------------------------------------------------
Class A Class B Total
------------------------ --------------------- Partners'
Units Amount Units Amount Capital
--------- ------------ ------- ----------- ------------
BALANCE, December 31, 1998 2,009,517 $ 16,935,935 408,500 $ 1,452,035 $ 18,387,970
Net income (loss) 0 1,879,410 0 (983,615) 895,795
Partnership distributions 0 (1,749,938) 0 0 (1,749,938)
Class B conversion elections 26,750 59,787 (26,750) (59,787) 0
--------- ------------ ------- ----------- ------------
BALANCE, December 31, 1999 2,036,267 17,125,194 381,750 408,633 17,533,827
Net income (loss) 0 1,286,161 0 (403,179) 882,982
Partnership distributions 0 (1,882,650) 0 0 (1,882,650)
Class B conversion elections 9,160 5,454 (9,160) (5,454) 0
--------- ------------ ------- ----------- ------------
BALANCE, December 31, 2000 2,045,427 16,534,159 372,590 0 16,534,159
Net income 0 1,113,684 0 0 1,113,684
Partnership distributions 0 (1,840,092) 0 0 (1,840,092)
Class B conversion elections 21,593 0 (21,593) 0 0
--------- ------------ ------- ----------- ------------
BALANCE, December 31, 2001 2,067,020 $ 15,807,751 350,997 $ 0 $ 15,807,751
========= ============ ======= =========== ============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND VII, 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 $ 1,113,684 $ 882,982 $ 895,795
----------- ----------- -----------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (1,202,011) (944,165) (981,104)
Amortization of organization costs 0 0 1,562
Changes in assets and liabilities:
Prepaid expenses and other assets 2,375 (2,375) 4,263
Accounts payable and accrued expenses 2,455 2,823 (3,279)
----------- ----------- -----------
Total adjustments (1,197,181) (943,717) (978,558)
----------- ----------- -----------
Net cash used in operating activities (83,497) (60,735) (82,763)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 1,904,057 1,921,437 1,777,010
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (860,111) (1,887,183) (1,688,290)
Distributions to partners in excess of accumulated
earnings (969,715) 0 0
----------- ----------- -----------
Net cash used in financing activities (1,829,826) (1,887,183) (1,688,290)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (9,266) (26,481) 5,957
CASH AND CASH EQUIVALENTS, beginning of year 55,216 81,697 75,740
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 45,950 $ 55,216 $ 81,697
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND VII, 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 VII, L.P. (the "Partnership") is a public limited
partnership organized on December 1, 1992 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners,
L.P. ("Wells Partners"), a Georgia nonpublic limited partnership. The
Partnership has two classes of limited partnership interests, Class A and
Class B units. Limited partners 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) remove a general partner.
A majority vote on any of the above-described matters will bind the
Partnership without the concurrence of the general partners. Each limited
partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed, are
currently under development or construction, are newly constructed, or have
operating histories. During the periods audited, the Partnership owned an
interest in the following properties through joint ventures between the
Partnership and other Wells Real Estate Funds: (i) a shopping center
located in Cherokee County, Georgia, the Cherokee Commons Shopping Center
("Cherokee"); (ii) an office/retail center in Roswell, Georgia (known as
"880 Holcomb Bridge"); (iii) the Marathon Building, a three-story office
building located in Appleton, Wisconsin; (iv) the Stockbridge Village III
Retail Center, two retail buildings located in Stockbridge, Georgia; (v) a
retail center expansion in Stockbridge, Georgia ("Stockbridge Expansion");
(vi) a four-story office building located in Jacksonville, Florida (the
"BellSouth property"); (vii) a retail shopping center in Clemmons, Forsyth
County, North Carolina ("Tanglewood Commons"); (viii) an office building
located in Gainesville, Florida (the "CH2M Hill Building"); and (ix) a
retail/office building in Stockbridge, Georgia ("The Hannover Center").
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 Partnership recently began considering selling its properties.
Management estimates that the net realizable value of each of the
properties exceeds the carrying value of the corresponding real estate
assets; consequently, no impairment loss has been recorded. In the event
that the net sales proceeds are less than the carrying value of the
property sold, the Partnership would recognize a loss on the sale.
Management is not contractually or financially obligated to sell any of its
properties, and it is management's current intent to fully realize the
Partnership's investment in real estate. The success of the Partnership's
future operations and the ability to realize the investment in its assets
will be dependent on the Partnership's ability to maintain rental rates,
occupancy, and an appropriate level of operating
F-7
expenses in future years. Management believes that the steps that it is
taking will enable the Partnership to realize its investment in its assets.
Income Taxes
The Partnership is not subject to federal or state income taxes; therefore,
none have been provided for in the accompanying financial statements. The
partners are required to include their respective shares of profits and
losses in their individual income tax returns.
Distribution of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement,
is distributed to the limited partners quarterly. In accordance with the
partnership agreement, distributions are paid first to limited partners
holding Class A units until they have received a 10% per annum return on
their adjusted capital contributions, as defined. Cash available for
distribution is then paid to the general partners until they have received
an amount equal to 10% of distributions. Any remaining cash available for
distribution is split between the limited partners holding Class A units
and the general partners on a basis of 90% and 10%, respectively. No
distributions will be made to the limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners holding Class B units until they receive an
amount equal to 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 adjusted capital
contributions, as defined
. To all limited partners until they receive a cumulative 10% per
annum return on their adjusted capital contributions, as defined
. To limited partners holding Class B units on a per unit basis
until they receive a cumulative 15% per annum return on their
adjusted capital contributions, as defined
. To the general partners until they have received 100% of their
capital contributions, as defined
. Thereafter, 80% to the limited partners and 20% to the general
partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners holding
Class A units and 1% to the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the limited partners holding Class
B units and 1% to the general partners until their capital accounts are
reduced to zero, (b) then to any partner having a positive balance in
his/her capital account in an amount not to exceed such positive balance,
and (c) thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to a qualified income offset
provision in the
F-8
partnership agreement, (b) allocations to partners having negative capital
accounts until all negative capital accounts have been restored to zero,
(c) allocations to Class B limited partners in amounts equal to deductions
for depreciation and amortization previously allocated to them with respect
to the specific partnership property sold, but not in excess of the amount
of gain on sale recognized by the Partnership with respect to the sale of
such property, and (d) allocations to Class A limited partners and general
partners in amounts equal to 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, 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
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 which indicate that the carrying amounts of real estate assets
may not be recoverable, management assesses the recoverability of real
estate assets by determining whether the carrying value of such real
estate assets will be recovered through the future cash flows expected
from the use of the asset and its eventual disposition. Management has
determined that there has been no impairment in the carrying value of
real estate assets held by the Partnership or its affiliated 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 useful life of the related lease or real estate asset,
whichever is shorter.
Revenue Recognition
All leases on real estate assets held by the joint ventures are
classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective
leases.
Partners' Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to
the Partnership by the joint ventures are made in accordance with the
terms of the individual joint venture 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 3.
F-9
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market
accounts.
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. RELATED-PARTY TRANSACTIONS
Due from affiliates 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, respectively, as
follows:
2001 2000
---------- --------
Fund I, II, II-OW, VI, and VII Associates--Cherokee $ 8,261 $ 20,703
Fund II, III, VI, VII Associates 86,643 58,544
Fund V, VI, and VII Associates 98,308 98,745
Fund VI and VII Associates 76,544 79,380
Fund VI, VII, and VIII Associates 109,084 126,377
Fund VII and VIII Associates 81,353 32,157
---------- --------
$ 460,193 $415,906
========== ========
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 $187,927, $195,633, and $199,571 for
the years ended December 31, 2001, 2000, and 1999, respectively.
Wells Capital, Inc. (the "Company"), the general partner of Wells Partners,
performs certain administrative services for the Partnership, such as
accounting and other partnership administration, and incurs the related
expenses. Such expenses are allocated among the various Wells Real Estate
Funds based on time spent on each fund by individual administrative
personnel. In the opinion of management, such allocation is a reasonable
estimation of such expenses.
F-10
The general partners of the Partnership 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.
3. 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 I, II, II-OW, VI, and VII Associates--Cherokee $ 905,248 11% $ 747,076 11%
Fund II, III, VI, and VII Associates 2,594,924 50 2,789,003 50
Fund V, VI, and VII Associates 2,662,052 42 2,805,246 42
Fund VI and VII Associates 2,789,840 55 2,947,337 55
Fund VI, VII, and VIII Associates 4,906,826 33 5,168,016 33
Fund VII and VIII Associates 1,913,806 37 2,062,351 37
----------- -----------
$15,772,696 $16,519,029
=========== ===========
The following is a roll forward of the Partnership's investment in joint
ventures for the years ended December 31, 2001 and 2000:
2001 2000
----------- -----------
Investment in joint ventures, beginning of year $16,519,029 $17,446,299
Equity in income of joint ventures 1,202,011 944,165
Distributions from joint ventures (1,948,344) (1,871,435)
----------- -----------
Investment in joint ventures, end of year $15,772,696 $16,519,029
=========== ===========
Fund I, II, II-OW, VI, and VII Associates--Cherokee
Fund I, II, II-OW, VI, and VII Associates--Cherokee (or the "Cherokee Joint
Venture") was formed in August 1995 for the purpose of owning and operating
Cherokee Commons, a retail shopping center containing approximately 103,755
square feet, located in Cherokee County, Georgia. Until the formation of
this joint venture, Cherokee Commons was part of the Fund I and II
Tucker--Cherokee Joint Venture. Concurrent with the formation of Fund I,
II, II-OW, VI, and VII Associates--Cherokee, Cherokee Commons was
transferred from the Fund I and II Tucker--Cherokee Joint Venture to the
Cherokee Joint Venture. Percentage ownership interests in the Cherokee
Joint Venture were determined at the time of formation based on relative
capital contributions. Under the terms of the joint venture agreement, Fund
VI and Fund VII each contributed approximately $1 million in return for an
11% ownership interest. Fund I's ownership interest in the Cherokee Joint
Venture changed from 31% to 24%, and Fund II and II-OW joint venture's
ownership interest changed from 69% to 55%. The $2 million in cash
contributed to the Cherokee Joint Venture was used to fund an expansion of
the property for an existing tenant. On October 1, 2001, the Cherokee Joint
Venture sold Cherokee Commons for net proceeds of $8,434,089 and recognized
a gain of $1,725,015 on the sale.
F-11
Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---------- ----------
Assets
Real estate assets, at cost:
Land $ 0 $1,219,704
Building and improvements, less accumulated depreciation of $0 in 2001 and
$3,606,079 in 2000 0 5,624,924
---------- ----------
Total real estate assets 0 6,844,628
Cash and cash equivalents 8,455,308 214,940
Accounts receivable 54,871 31,356
Prepaid expenses and other assets 21,528 100,866
---------- ----------
Total assets $8,531,707 $7,191,790
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 30,777 $ 23,716
Refundable security deposits 0 23,839
Partnership distributions payable 77,142 197,191
Due to affiliates 149,898 137,334
---------- ----------
Total liabilities 257,817 382,080
---------- ----------
Partners' capital:
Wells Real Estate Fund I 1,840,011 1,498,120
Fund II and II-OW 4,620,682 3,814,737
Wells Real Estate Fund VI 907,949 749,777
Wells Real Estate Fund VII 905,248 747,076
---------- ----------
Total partners' capital 8,273,890 6,809,710
---------- ----------
Total liabilities and partners' capital $8,531,707 $7,191,790
========== ==========
F-12
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
----------- -------- --------
Revenues:
Rental income $ 758,302 $965,305 $945,222
Interest income 69,626 78 68
Other income 1,008 0 0
Gain on sale of real estate 1,725,015 0 0
----------- -------- --------
2,553,951 965,383 945,290
----------- -------- --------
Expenses:
Depreciation 254,448 442,250 447,969
Operating costs, net of reimbursements (65,676) 24,557 37,583
Partnership administration 15,627 23,352 24,882
Management and leasing fees 67,560 74,422 94,149
Legal and accounting 18,357 6,180 5,624
Bad debt expense 8,682 0 0
----------- -------- --------
298,998 570,761 610,207
----------- -------- --------
Net income $ 2,254,953 $394,622 $335,083
=========== ======== ========
Net income allocated to Wells Real Estate Fund I $ 541,707 $ 94,800 $ 80,496
=========== ======== ========
Net income allocated to Fund II and II-OW $ 1,230,326 $215,310 $182,825
=========== ======== ========
Net income allocated to Wells Real Estate Fund VI $ 241,460 $ 42,256 $ 35,881
=========== ======== ========
Net income allocated to Wells Real Estate Fund VII $ 241,460 $ 42,256 $ 35,881
=========== ======== ========
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Fund II Wells Real Wells Real Total
Estate and Estate Estate Partners'
Fund I II-OW Fund VI Fund VII Capital
----------- ----------- ---------- ---------- ------------
Balance, December 31, 1998 $ 1,741,492 $ 4,295,663 $ 844,160 $ 841,460 $ 7,722,775
Net income 80,496 182,825 35,881 35,881 335,083
Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204)
----------- ----------- ---------- ---------- ------------
Balance, December 31, 1999 1,618,133 4,053,105 796,558 793,858 7,261,654
Net income 94,800 215,310 42,256 42,256 394,622
Partnership distributions (214,813) (453,678) (89,037) (89,038) (846,566)
----------- ----------- ---------- ---------- ------------
Balance, December 31, 2000 1,498,120 3,814,737 749,777 747,076 6,809,710
Net income 541,707 1,230,326 241,460 241,460 2,254,953
Partnership distributions (199,816) (424,381) (83,288) (83,288) (790,773)
----------- ----------- ---------- ---------- ------------
Balance, December 31, 2001 $ 1,840,011 $ 4,620,682 $ 907,949 $ 905,248 $ 8,273,890
=========== =========== ========== ========== ============
F-13
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
---------- -------- --------
Cash flows from operating activities:
Net income $2,254,953 $394,622 $335,083
---------- -------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 254,448 442,250 447,969
Gain on sale of real estate (1,725,015) 0 0
Changes in assets and liabilities:
Accounts receivable (56,972) (3,653) 7,814
Prepaid expenses and other assets, net 12,961 (11,020) 1,133
Accounts payable and accrued expenses, and
refundable security deposits (29,563) 12,694 (72,272)
Due to affiliates 12,564 15,062 13,005
---------- -------- --------
Total adjustments (1,531,577) 455,333 397,649
---------- -------- --------
Net cash provided by operating activities 723,376 849,955 732,732
---------- -------- --------
Cash flows from investing activities:
Net proceeds from the sale of real estate 8,434,089 0 0
Investment in real estate (6,275) 0 (14,148)
---------- -------- --------
Net cash provided by (used in) investing
activities 8,427,814 0 (14,148)
---------- -------- --------
Cash flows from financing activities:
Distributions to joint venture partners (910,822) (841,555) (734,858)
---------- -------- --------
Net increase (decrease) in cash and cash equivalents 8,240,368 8,400 (16,274)
Cash and cash equivalents, beginning of year 214,940 206,540 222,814
---------- -------- --------
Cash and cash equivalents, end of year $8,455,308 $214,940 $206,540
========== ======== ========
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with
Fund II and III Associates--Brookwood Grill and Fund VI. The joint venture, Fund
II, III, VI, and VII Associates, was formed for the purpose of acquiring,
developing, operating, and selling real properties. During 1995, Fund II and III
Associates--Brookwood Grill contributed a 4.3-acre tract of land from its 880
Holcomb Bridge property to the Fund II, III, VI, and VII Associates joint
venture. Development on this property of two buildings containing a total of
approximately 49,500 square feet was substantially completed in 1996.
F-14
The following are the financial statements for Fund II, III, VI, and VII
Associates:
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---------- ----------
Assets
Real estate assets, at cost:
Land $1,325,242 $1,325,242
Building and improvements, less accumulated depreciation of $1,969,078 in
2001 and $1,654,520 in 2000 3,749,081 4,063,639
---------- ----------
Total real estate assets 5,074,323 5,388,881
Cash and cash equivalents 151,109 88,044
Accounts receivable 27,391 151,886
Prepaid expenses and other assets, net 86,575 158,872
---------- ----------
Total assets $5,339,398 $5,787,683
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 47,605 $ 82,072
Partnership distributions payable 136,570 154,874
---------- ----------
184,175 236,946
---------- ----------
Partners' capital:
Fund II and III Associates--Brookwood Grill 1,210,117 1,305,317
Wells Real Estate Fund VI 1,350,182 1,456,417
Wells Real Estate Fund VII 2,594,924 2,789,003
---------- ----------
Total partners' capital 5,155,223 5,550,737
---------- ----------
Total liabilities and partners' capital $5,339,398 $5,787,683
========== ==========
F-15
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------- -------- --------
Revenues:
Rental income $845,597 $869,390 $953,952
Other income 0 0 23,843
Interest income 2,566 0 0
-------- -------- --------
848,163 869,390 977,795
-------- -------- --------
Expenses:
Depreciation 314,558 355,293 415,165
Operating costs, net of reimbursements 77,354 70,693 68,691
Management and leasing fees 103,277 111,567 129,798
Legal and accounting 12,389 4,513 4,952
Partnership administration 21,691 22,646 19,891
Bad debt expense 55,802 74,145 0
-------- -------- --------
585,071 638,857 638,497
-------- -------- --------
Net income $263,092 $230,533 $339,298
======== ======== ========
Net income allocated to Fund II and III Associates-- $ 63,326 $ 55,489 $ 81,669
Brookwood Grill ======== ======== ========
Net income allocated to Wells Real Estate Fund VI $ 70,667 $ 61,921 $ 91,135
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $129,099 $113,123 $166,494
======== ======== ========
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Fund II
and III
Associates-- Wells Wells Real Total
Brookwood Real Estate Estate Partners'
Grill Fund VI Fund V II Capital
------------ ------------ ----------- -----------
Balance, December 31, 1998 $ 1,507,807 $ 1,682,380 $ 3,201,805 $ 6,391,992
Net income 81,669 91,135 166,494 339,298
Partnership distributions (182,885) (204,085) (372,836) (759,806)
------------ ------------ ----------- -----------
Balance, December 31, 1999 1,406,591 1,569,430 2,995,463 5,971,484
Net income 55,489 61,921 113,123 230,533
Partnership distributions (156,763) (174,934) (319,583) (651,280)
------------ ------------ ----------- -----------
Balance, December 31, 2000 1,305,317 1,456,417 2,789,003 5,550,737
Net income 63,326 70,667 129,099 263,092
Partnership distributions (158,526) (176,902) (323,178) (658,606)
------------ ------------ ----------- -----------
Balance, December 31, 2001 $ 1,210,117 $ 1,350,182 $ 2,594,924 $ 5,155,223
============ ============ =========== ===========
F-16
Fund II, III, VI, and VII 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 $ 263,092 $ 230,533 $ 339,298
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 314,558 355,293 415,165
Changes in assets and liabilities:
Accounts receivable 124,495 10,578 (51,004)
Prepaid expenses and other assets, net 72,297 54,571 20,522
Accounts payable and accrued expenses (34,467) (5,854) (104,146)
--------- --------- ---------
Total adjustments 476,883 414,588 280,537
--------- --------- ---------
Net cash provided by operating activities 739,975 645,121 619,835
Cash flows from investing activities:
Investment in real estate 0 0 (19,772)
Cash flows from financing activities:
Distributions to joint venture partners (676,910) (746,481) (719,447)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 63,065 (101,360) (119,384)
Cash and cash equivalents, beginning of year 88,044 189,404 308,788
--------- --------- ---------
Cash and cash equivalents, end of year $ 151,109 $ 88,044 $ 189,404
========= ========= =========
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund V, L.P. ("Fund V") and Fund VI. The joint venture,
Fund V, VI, and VII Associates, was formed for the purpose of investing in
commercial real properties. In September 1994, Fund V, VI, and VII Associates
purchased a 75,000-square foot, three-story office building known as the
Marathon Building in Appleton, Wisconsin.
F-17
Following are the financial statements for Fund V, VI, and VII Associates:
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---------- ----------
Assets
Real estate assets, at cost:
Land $ 314,591 $ 314,591
Building and improvements, less accumulated depreciation of $2,392,085 in
2001 and $2,057,369 in 2000 5,975,819 6,310,535
---------- ----------
Total real estate assets 6,290,410 6,625,126
Cash and cash equivalents 238,016 238,242
Accounts receivable 94,746 103,696
---------- ----------
Total assets $6,623,172 $6,967,064
========== ==========
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 235,695 $ 236,743
Due to affiliates 6,112 5,648
---------- ----------
Total liabilities 241,807 242,391
---------- ----------
Partners' capital:
Wells Real Estate Fund V 1,050,146 1,106,655
Wells Real Estate Fund VI 2,669,167 2,812,772
Wells Real Estate Fund VII 2,662,052 2,805,246
---------- ----------
Total partners' capital 6,381,365 6,724,673
---------- ----------
Total liabilities and partners' capital $6,623,172 $6,967,064
========== ==========
F-18
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------- -------- --------
Revenues:
Rental income $971,051 $971,050 $971,051
Interest income 8,135 0 0
-------- -------- --------
979,186 971,050 971,051
-------- -------- --------
Expenses:
Depreciation 334,716 350,585 350,585
Management and leasing fees 9,442 9,442 39,659
Legal and accounting 4,500 5,750 5,750
Partnership administration 18,044 13,536 12,302
Operating costs 1,648 1,505 1,389
-------- -------- --------
368,350 380,818 409,685
-------- -------- --------
Net income $610,836 $590,232 $561,366
======== ======== ========
Net income allocated to Wells Real Estate Fund V $100,544 $ 97,152 $ 92,401
======== ======== ========
Net income allocated to Wells Real Estate fund VI $255,513 $246,894 $234,819
======== ======== ========
Net income allocated to Wells Real Estate fund VII $254,779 $246,186 $234,146
======== ======== ========
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund V Fund VI Fund VII Capital
----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 1,224,896 $ 3,113,259 $ 3,104,872 $ 7,443,027
Net income 92,401 234,819 234,146 561,366
Partnership distributions (151,521) (385,063) (383,959) (920,543)
----------- ----------- ----------- -----------
Balance, December 31, 1999 1,165,776 2,963,015 2,955,059 7,083,850
Net income 97,152 246,894 246,186 590,232
Partnership distributions (156,273) (397,137) (395,999) (949,409)
----------- ----------- ----------- -----------
Balance, December 31, 2000 1,106,655 2,812,772 2,805,246 6,724,673
Net income 100,544 255,513 254,779 610,836
Partnership distributions (157,053) (399,118) (397,973) (954,144)
----------- ----------- ----------- -----------
Balance, December 31, 2001 $ 1,050,146 $ 2,669,167 $ 2,662,052 $ 6,381,365
=========== =========== =========== ===========
F-19
Fund V, VI, and VII 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 $ 610,836 $ 590,232 $ 561,366
--------- --------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 334,716 350,585 350,585
Changes in assets and liabilities:
Accounts receivable 8,950 8,949 8,949
Due from affiliates 0 2,450 (2,450)
Due to affiliates 464 1,142 (358)
--------- --------- ---------
Total adjustments 344,130 363,126 356,726
--------- --------- ---------
Net cash provided by operating activities 954,966 953,358 918,092
Cash flows from financing activities:
Distributions to joint venture partners (955,192) (950,366) (918,833)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (226) 2,992 (741)
Cash and cash equivalents, beginning of year 238,242 235,250 235,991
--------- --------- ---------
Cash and cash equivalents, end of year $ 238,016 $ 238,242 $ 235,250
========= ========= =========
Fund VI and VII Associates
On December 9, 1994, the Partnership entered into a joint venture agreement with
Fund VI. The joint venture, Fund VI and VII Associates, was formed for the
purpose of investing in commercial properties. In December 1994, the Partnership
contributed its interest in a parcel of land, the Stockbridge Village III Retail
Center property located in Stockbridge, Georgia, to the joint venture. The
Stockbridge Village III Retail Center property is comprised of two separate out
parcel buildings totaling approximately 18,500 square feet. One of the out
parcel buildings began operations during 1995. The other out parcel building
began operations during 1996. On June 7, 1995, Fund VI and VII Associates
purchased an additional 3.38 acres of real property located in Stockbridge,
Georgia. The retail center expansion, the Stockbridge Expansion, consists of a
multitenant shopping center containing approximately 29,000 square feet.
During 2000, Fund VI made additional capital contributions to Fund VI and VII
Associates; during 1999, the Partnership and Fund VI made additional capital
contributions to the joint venture. Ownership percentage interests were
recomputed accordingly.
F-20
Following are the financial statements for Fund VI and VII Associates:
Fund VI and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---------- ----------
Assets
Real estate assets, at cost:
Land $1,812,447 $1,812,447
Building and improvements, less accumulated depreciation of $1,289,653 in
2001 and $1,065,513 in 2000 3,130,758 3,354,898
---------- ----------
Total real estate assets 4,943,205 5,167,345
Cash and cash equivalents 140,092 118,152
Accounts receivable 52,292 130,094
Prepaid expenses and other assets, net 109,796 106,422
---------- ----------
Total assets $5,245,385 $5,522,013
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 52,686 $ 38,969
Partnership distributions payable 138,667 143,693
---------- ----------
Total liabilities 191,353 182,662
---------- ----------
Partners' capital:
Wells Real Estate Fund VI 2,264,192 2,392,014
Wells Real Estate Fund VII 2,789,840 2,947,337
---------- ----------
Total partners' capital 5,054,032 5,339,351
---------- ----------
Total liabilities and partners' capital $5,245,385 $5,522,013
========== ==========
F-21
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
-------- -------- ---------
Revenues:
Rental income $677,831 $659,932 $ 624,453
Interest income 4,694 0 0
-------- -------- ---------
682,525 659,932 624,453
-------- -------- ---------
Expenses:
Depreciation 224,140 233,212 235,591
Operating costs, net of reimbursements 16,475 4,652 (9,718)
Management and leasing fees 80,783 84,684 80,064
Partnership administration 25,911 23,259 33,090
Legal and accounting 31,695 25,075 15,247
Bad debt expense 88,493 0 0
-------- -------- ---------
467,497 370,882 354,274
-------- -------- ---------
Net income $215,028 $289,050 $ 270,179
======== ======== =========
Net income allocated to Wells Real Estate Fund VI $ 96,332 $127,466 $ 118,073
======== ======== =========
Net income allocated to Wells Real Estate Fund VII $118,696 $161,584 $ 152,106
======== ======== =========
Fund VI and VII 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 VI Fund VII Capital
----------- ----------- -----------
Balance, December 31, 1998 $ 2,511,074 $ 3,234,873 $ 5,745,947
Net income 118,073 152,106 270,179
Partnership distributions (230,711) (297,212) (527,923)
----------- ----------- -----------
Balance, December 31, 1999 2,398,436 3,089,767 5,488,203
Net income 127,466 161,584 289,050
Partnership contributions 105,723 0 105,723
Partnership distributions (239,611) (304,014) (543,625)
----------- ----------- -----------
Balance, December 31, 2000 2,392,014 2,947,337 5,339,351
Net income 96,332 118,696 215,028
Partnership distributions (224,154) (276,193) (500,347)
----------- ----------- -----------
Balance, December 31, 2001 $ 2,264,192 $ 2,789,840 $ 5,054,032
=========== =========== ===========
F-22
Funds VI and VII 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 $ 215,028 $ 289,050 $ 270,179
--------- --------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 224,140 233,212 235,591
Changes in assets and liabilities:
Accounts receivable 77,802 (3,112) 6,152
Prepaid expenses and other assets, net (3,374) 9,321 14,940
Accounts payable 13,717 3,734 (2,165)
Due to affiliates 0 0 (5,338)
--------- --------- ---------
Total adjustments 312,285 243,155 249,180
--------- --------- ---------
Net cash provided by operating activities 527,313 532,205 519,359
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate 0 (103,099) (497)
--------- --------- ---------
Cash flows from financing activities:
Contributions from joint venture partners 0 105,723 0
Distributions to joint venture partners (505,373) (530,298) (465,500)
--------- --------- ---------
Net cash used in financing activities (505,373) (424,575) (465,500)
--------- --------- ---------
Net increase in cash and cash equivalents 21,940 4,531 53,362
Cash and cash equivalents, beginning of year 118,152 113,621 60,259
--------- --------- ---------
Cash and cash equivalents, end of year $ 140,092 $ 118,152 $ 113,621
========= ========= =========
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Fund VI and
Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI,
VII, and VIII Associates, was formed to acquire, develop, operate, and sell real
properties. On April 25, 1995, the joint venture purchased a 5.55-acre parcel of
land in Jacksonville, Florida. A 92,964-square foot office building, known as
the BellSouth property, was completed and commenced operations in 1996. On May
31, 1995, the joint venture purchased a 14.683-acre parcel of land located in
Clemmons, Forsyth County, North Carolina. A retail shopping center, Tanglewood
Commons, was developed and was substantially completed at December 31, 1997.
F-23
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
----------- -----------
Assets
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated depreciation of $3,707,449
in 2001 and $3,031,152 in 2000 9,398,120 10,074,417
Construction in progress 3,797 3,797
----------- -----------
Total real estate assets 13,863,736 14,540,033
Cash and cash equivalents 747,198 606,802
Accounts receivable 192,807 346,018
Prepaid expenses and other assets, net 428,052 471,658
----------- -----------
Total assets $15,231,793 $15,964,511
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 76,639 $ 65,442
Partnership distributions payable 446,315 408,291
Due to affiliates 15,590 15,407
----------- -----------
Total liabilities 538,544 489,140
----------- -----------
Partners' capital:
Wells Real Estate Fund VI 5,032,488 5,300,368
Wells Real Estate Fund VII 4,906,826 5,168,016
Wells Real Estate Fund VIII 4,753,935 5,006,987
----------- -----------
Total partners' capital 14,693,249 15,475,371
----------- -----------
Total liabilities and partners' capital $15,231,793 $15,964,511
=========== ===========
F-24
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
---------- ---------- ----------
Revenues:
Rental income $2,424,385 $2,364,871 $2,294,016
Interest income 25,294 3,985 14,937
Other income 360 360 360
---------- ---------- ----------
2,450,039 2,369,216 2,309,313
---------- ---------- ----------
Expenses:
Depreciation 676,297 715,402 701,885
Operating costs, net of reimbursements 362,796 371,191 444,156
Management and leasing fees 277,863 273,632 259,352
Legal and accounting 16,296 7,650 10,286
Partnership administration 42,469 30,330 27,804
Computer costs 2,985 1,585 1,043
Bad debt expense 22,111 0 0
---------- ---------- ----------
1,400,817 1,399,790 1,444,526
---------- ---------- ----------
Net income $1,049,222 $ 969,426 $ 864,787
========== ========== ==========
Net income allocated to Wells Real Estate Fund VI $ 359,362 $ 332,032 $ 296,193
========== ========== ==========
Net income allocated to Wells Real Estate Fund VII $ 350,389 $ 323,741 $ 288,796
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 339,471 $ 313,653 $ 279,798
========== ========== ==========
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
------------ ------------ ------------ ------------
Balance, December 31, 1998 $ 5,813,110 $ 5,667,955 $ 5,491,347 $ 16,972,412
Net income 296,193 288,796 279,798 864,787
Partnership distributions (549,934) (536,202) (519,493) (1,605,629)
------------ ------------ ------------ ------------
Balance, December 31, 1999 5,559,369 5,420,549 5,251,652 16,231,570
Net income 332,032 323,741 313,653 969,426
Partnership distributions (591,033) (576,274) (558,318) (1,725,625)
------------ ------------ ------------ ------------
Balance, December 31, 2000 5,300,368 5,168,016 5,006,987 15,475,371
Net income 359,362 350,389 339,471 1,049,222
Partnership distributions (627,242) (611,579) (592,523) (1,831,344)
------------ ------------ ------------ ------------
Balance, December 31, 2001 $ 5,032,488 $ 4,906,826 $ 4,753,935 $ 14,693,249
============ ============ ============ ============
F-25
Fund VI, VII, and VIII 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 $ 1,049,222 $ 969,426 $ 864,787
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 676,297 715,402 701,885
Changes in assets and liabilities:
Accounts receivable 153,211 (74,810) (71,269)
Prepaid expenses and other assets, net 43,606 58,171 87,773
Accounts payable 11,197 (18,717) 32,133
Due to affiliates 183 (874) 6,546
----------- ----------- -----------
Total adjustments 884,494 679,172 757,068
----------- ----------- -----------
Net cash provided by operating activities 1,933,716 1,648,598 1,621,855
Cash flows from investing activities:
Investment in real estate 0 (136,564) (64,749)
Cash flows from financing activities:
Distributions to joint venture partners (1,793,320) (1,641,434) (1,621,225)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 140,396 (129,400) (64,119)
Cash and cash equivalents, beginning of year 606,802 736,202 800,321
----------- ----------- -----------
Cash and cash equivalents, end of year $ 747,198 $ 606,802 $ 736,202
=========== =========== ===========
Fund VII and VIII Associates
On February 10, 1995, the Partnership entered into a joint venture agreement
with Fund VIII. The joint venture, Fund VII and VIII Associates, was formed to
acquire, develop, operate, and sell real properties. During 1995, the joint
venture purchased a five-acre parcel of land in Gainesville, Alachua County,
Florida. A 62,975-square foot office building, the CH2M Hill Building, was
constructed and began operations during 1995. In April 1996, the Partnership
contributed 1.01 acres of land located in Stockbridge, Georgia, and improvements
thereon to the joint venture for the development of a 12,000-square foot,
single-story combination retail/office building. The building, The Hannover
Center, was completed and commenced operations in 1996.
F-26
The following are the financial statements for Fund VII and VIII Associates:
Fund VII and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
2001 2000
---------- ----------
Assets
Real estate assets, at cost:
Land $ 822,320 $ 822,320
Building and improvements, less accumulated depreciation of $1,668,189 in
2001 and $1,396,480 in 2000 4,227,542 4,545,871
Personal property, less accumulated depreciation of $181,212 in 2001 and
$151,423 in 2000 116,671 146,460
---------- ----------
Total real estate assets 5,166,533 5,514,651
Cash and cash equivalents 151,078 76,565
Accounts receivable 93,860 70,209
Prepaid expenses and other assets, net 51,894 70,969
---------- ----------
Total assets $5,463,365 $5,732,394
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 17,125 $ 13,160
Due to affiliates 572 2,497
Partnership distributions payable 221,966 87,738
---------- ----------
Total liabilities 239,663 103,395
---------- ----------
Partners' capital:
Wells Real Estate Fund VII 1,913,806 2,062,351
Wells Real Estate Fund VIII 3,309,896 3,566,648
---------- ----------
Total partners' capital 5,223,702 5,628,999
---------- ----------
Total liabilities and partners' capital $5,463,365 $5,732,394
========== ==========
F-27
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
--------- --------- ---------
Revenues:
Rental income $ 741,552 $ 686,642 $ 769,052
Interest income 6,037 0 0
Other income 360 360 300
--------- --------- ---------
747,949 687,002 769,352
--------- --------- ---------
Expenses:
Depreciation 348,118 375,575 347,646
Management and leasing fees 138,767 114,334 124,040
Legal and accounting 10,884 20,113 13,952
Partnership administration 22,760 26,162 29,182
Bad debt expense 3 42,564 0
Operating costs, net of reimbursements (66,129) (48,017) (28,354)
--------- --------- ---------
454,403 530,731 486,466
--------- --------- ---------
Net income $ 293,546 $ 156,271 $ 282,886
========= ========= =========
Net income allocated to Wells Real Estate Fund VII $ 107,588 $ 57,275 $ 103,681
========= ========= =========
Net income allocated to Wells Real Estate Fund VIII $ 185,958 $ 98,996 $ 179,205
========= ========= =========
Fund VII And VIII 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 VII Fund VIII Capital
----------- ----------- -----------
Balance, December 31, 1998 $ 2,317,761 $ 4,008,114 $ 6,325,875
Net income 103,681 179,205 282,886
Partnership distributions (229,839) (397,269) (627,108)
----------- ----------- -----------
Balance, December 31, 1999 2,191,603 3,790,050 5,981,653
Net income 57,275 98,996 156,271
Partnership distributions (186,527) (322,398) (508,925)
----------- ----------- -----------
Balance, December 31, 2000 2,062,351 3,566,648 5,628,999
Net income 107,588 185,958 293,546
Partnership distributions (256,133) (442,710) (698,843)
----------- ----------- -----------
Balance, December 31, 2001 $ 1,913,806 $ 3,309,896 $ 5,223,702
=========== =========== ===========
F-28
Fund VII and VIII 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 $ 293,546 $ 156,271 $ 282,886
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 348,118 375,575 347,646
Changes in assets and liabilities:
Accounts receivable (23,651) 41,076 (62,704)
Prepaid expenses and other assets, net 19,075 19,381 13,919
Accounts payable 3,965 (7,601) (3,707)
Due to affiliates (1,925) 270 727
--------- --------- ---------
Total adjustments 345,582 428,701 295,881
--------- --------- ---------
Net cash provided by operating activities 639,128 584,972 578,767
Cash flows from investing activities:
Investment in real estate 0 (21,904) (5,294)
Cash flows from financing activities:
Distributions to joint venture partners (564,615) (554,511) (630,161)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 74,513 8,557 (56,688)
Cash and cash equivalents, beginning of year 76,565 68,008 124,696
--------- --------- ---------
Cash and cash equivalents, end of year $ 151,078 $ 76,565 $ 68,008
========= ========= =========
Supplemental disclosure of noncash activities:
Write-off of fully depreciated real estate assets $ 46,620 $ 0 $ 0
========= ========= =========
4. 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 $ 1,113,684 $ 882,982 $ 895,795
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 331,708 294,679 406,751
Expenses deducted for financial reporting purposes,
capitalized for income tax purposes 46,517 615 2,865
Rental income accrued for financial reporting purposes in
excess of amounts for income tax purposes 46,060 (4,882) (49,745)
Gain on sale of property for financial reporting purposes
in excess of amounts for income tax purposes (159,560) 0 0
----------- ----------- -----------
Income tax basis net income $ 1,378,409 $ 1,173,394 $ 1,255,666
=========== =========== ===========
F-29
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 $ 15,807,751 $ 16,534,159 $ 17,533,827
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 2,020,769 1,689,061 1,394,382
Joint venture change in ownership 7,814 7,814 7,814
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of
capital for financial reporting purposes 3,595,776 3,595,776 3,595,776
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for
income tax purposes (192,719) (238,779) (233,897)
Accumulated expenses deducted for financial
reporting purposes, capitalized for income tax
purposes 73,516 26,999 26,384
Partnership's distributions payable 463,881 453,615 458,148
Gain on sale of property for financial reporting
purposes in excess of amounts for income tax
purposes (159,560) 0 0
------------ ------------ ------------
Income tax basis partners' capital $ 21,617,228 $ 22,068,645 $ 22,782,434
============ ============ ============
5. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases
at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 2,171,804
2003 1,892,772
2004 1,771,736
2005 1,663,071
2006 1,001,577
Thereafter 2,512,402
-----------
$11,013,362
===========
Three tenants contributed approximately 22%, 16%, and 14% of rental income
during the year ended December 31, 2000. In addition, three tenants will
contribute approximately 27%, 21%, and 18% of future minimum rental income.
F-30
The future minimum rental income due Fund II, III, VI, and VII Associates
under noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 30:
2002 $ 604,859
2003 319,952
2004 285,696
2005 167,194
2006 21,308
Thereafter 0
----------
$1,399,009
==========
Three tenants contributed approximately 15%, 15%, and 14% of rental income
for the year ended December 31, 2001. In addition, four tenants will
contribute approximately 38%, 17%, 13%, and 11% of future minimum rental
income.
The future minimum rental income due Fund V, VI, and VII Associates under
noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 990,000
2003 990,000
2004 990,000
2005 990,000
2006 990,000
Thereafter 0
----------
$4,950,000
==========
One tenant contributed 100% of rental income for the year ended December
31, 2001 and will contribute 100% of future minimum rental income.
The future minimum rental income due Fund VI and VII Associates under
noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 632,544
2003 460,691
2004 418,929
2005 392,162
2006 281,375
Thereafter 1,251,668
----------
$3,437,369
==========
Two tenants contributed approximately 13% and 10% of rental income for the
year ended December 31, 2001. In addition, two tenants will contribute
approximately 38% and 27% of future minimum rental income.
F-31
The future minimum rental income due Fund VI, VII, and VIII Associates
under noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 2,482,965
2003 2,405,444
2004 2,273,500
2005 2,214,804
2006 1,165,554
Thereafter 5,453,538
-----------
$15,995,805
===========
Three tenants contributed approximately 48%, 22%, and 16% of rental income
for the year ended December 31, 2001. In addition, three tenants will
contribute approximately 51%, 33%, and 12% of future minimum rental income.
The future minimum rental income due Fund VII and VIII Associates under
noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 774,165
2003 723,286
2004 622,118
2005 577,925
2006 91,805
Thereafter 0
----------
$2,789,299
==========
Two tenants contributed approximately 12% and 11% of rental income for the
year ended December 31, 2001. In addition, two tenants will contribute
approximately 74% and 16% of future minimum rental income.
6. 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 $215,183 $233,372 $268,852 $486,094
Net income 195,383 205,299 250,976 462,026
Net income allocated to Class A limited
partners 195,383 205,299 250,976 462,026
Net income per weighted average Class A
limited partner unit $ 0.10 $ 0.10 $ 0.12 $ 0.22
Distribution per weighted average Class A
limited partner unit 0.23 0.22 0.22 0.22
F-32
2000 Quarters Ended
----------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
Revenues $ 268,938 $ 239,136 $227,808 $226,516
Net income 244,065 213,500 216,964 208,453
Net income allocated to Class A limited
partners 487,666 373,078 216,964 208,453
Net loss allocated to Class B limited partners (243,601) (159,578) 0 0
Net income per weighted average Class A
limited partner unit $ 0.24 $ 0.18 $ 0.11 $ 0.10
Net loss per weighted average Class B limited
partner unit (0.65) (0.42) 0.00 0.00
Distribution per weighted average Class A
limited partner unit 0.23 0.24 0.23 0.22
7. 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-33
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VII, 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) Certificate of Limited Partnership of Wells Real Estate Fund VII,
L.P. (Exhibit 3(d) to Form S-11 Registration Statement of Wells
Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P.,
File No. 33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate Fund VII,
L.P. dated April 5, 1994 (Exhibit to Form 10-K of Wells Real
Estate Fund VII, L.P. for the fiscal year ended December 31,
1994, File No. 0-25606)
*4(b) First Amendment to Agreement of Limited Partnership of Wells Real
Estate Fund VII, L.P. dated April 5, 1994 (Exhibit to Form 10-K
of Wells Real Estate Fund VII, L.P. for the fiscal year ended
December 31, 1994, File No. 0-25606)
*10(a) Management Agreement dated April 5, 1994, between Wells Real
Estate Fund VII, L.P. and Wells Management Company, Inc. (Exhibit
to Form 10-K of Wells Real Estate Fund VII, L.P. for the fiscal
year ended December 31, 1994, File No. 0-25606)
*10(b) Leasing and Tenant Coordinating Agreement dated April 5, 1994,
between Wells Real Estate Fund VII, L.P. and Wells Management
Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund
VII, L.P. for the fiscal year ended December 31, 1994, File No.
0-25606)
*10(c) Custodial Agency Agreement dated April 1, 1994, between Wells
Real Estate Fund VII, L.P. and NationsBank of Georgia, N.A.
(Exhibit 10(f) to Post-Effective Amendment No. 5 to Form S-11
Registration Statement of Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(d) Joint Venture Agreement of Fund V, Fund VI and Fund VII
Associates dated September 8, 1994, among Wells Real Estate Fund
V, L.P., Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P. (Exhibit 10(j) to Post-Effective Amendment No. 6
to Form S-11 Registration Statement of Wells Real Estate Fund VI,
L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(e) Agreement for the Purchase and Sale of Property dated August 24,
1994, between Interglobia Inc. - Appleton and NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates
(Exhibit 10(k) to Post-Effective Amendment No. 6 to Form S-11
Registration Statement of Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(f) Assignment and Assumption of Agreement for the Purchase and Sale
of Real Property dated September 9, 1994, between NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates, and
NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and
Fund VII Associates (Exhibit 10(l) to Post-Effective Amendment
No. 6 to Form S-11 Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No.
33-55908)
*10(g) Building Lease dated February 14, 1991, between Interglobia Inc.
- Appleton and Marathon Engineers/Architects/Planners, Inc.
(included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(h) Limited Guaranty of Lease dated January 1, 1993, by J. P. Finance
OY and Fluor Daniel, Inc. for the benefit of Interglobia Inc. -
Appleton (included as Exhibit B to Assignment, Assumption and
Amendment of Lease referred to as Exhibit 10(i) below, which is
included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(i) Assignment, Assumption and Amendment of Lease dated January 1,
1993, among Interglobia Inc. - Appleton, Marathon
Engineers/Architects/Planners, Inc. and Jaakko Poyry Fluor Daniel
(included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(j) Second Amendment to Building lease dated August 15, 1994, between
Interglobia Inc. - Appleton and Jaakko Poyry Fluor Daniel
(successor-in-interest to Marathon Engineers/Architects/Planners,
Inc.) (included as Exhibit D-1 to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
2
*10(k) Assignment and Assumption of Lease dated September 6, 1994,
between Interglobia Inc. - Appleton and NationsBank of Georgia,
N.A., as Agent for Fund V, Fund VI and Fund VII Associates
(Exhibit 10(q) to Post-Effective Amendment No. 6 to Form S-11
Registration Statement of Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(l) Agreement for the Purchase and Sale of Real Property dated April
7, 1994, between 138 Industrial Ltd. and NationsBank of Georgia,
N.A., as Agent for Wells Real Estate Fund VI, L.P. (Exhibit 10(s)
to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal
year ended December 31, 1994, File No. 0-23656)
*10(m) Land and Building Lease Agreement dated August 22, 1994, between
KRR Stockbridge, Inc. d/b/a Kenny Rogers Roasters and NationsBank
of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P.
(Exhibit 10(t) to Form 10-K of Wells Real Estate Fund VI, L.P.
for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(n) Joint Venture Agreement of Fund VI and Fund VII Associates dated
December 9, 1994 (Exhibit 10(u) to Form 10-K of Wells Real Estate
Fund VI, L.P. for the fiscal year ended December 31, 1994, File
No. 0-23656)
*10(o) Building Lease Agreement dated December 19, 1994, between Damon's
of Stockbridge, LLC d/b/a Damon's Clubhouse and NationsBank of
Georgia, N.A., as Agent for Fund VI and Fund VII Associates,
(Exhibit 10(v) to Form 10-K of Wells Real Estate Fund VI, L.P.
for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(p) Joint Venture Agreement of Fund II, III, VI and VII Associates
dated January 10, 1995 (Exhibit 10(w) to Form 10-K of Wells Real
Estate Fund VI, L.P. for the fiscal year ended December 31, 1995,
File No. 0-23606)
*10(q) Fund VII and Fund VIII Associates Joint Venture Agreement dated
February 10, 1995 (Exhibit 10(g) to Post-Effective Amendment No.
1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(r) Agreement for the Purchase and Sale of Real Property dated March
31, 1994 (Exhibit 10(h) to Post-Effective Amendment No. 1 to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(s) Letter Agreement amending Agreement for the Purchase and Sale of
Real Property dated July 27, 1994 (Exhibit 10(i) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
3
*10(t) Letter Agreement amending Agreement for the Purchase and Sale of
Real Property dated October 27, 1994 (Exhibit 10(j) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(u) Letter Agreement between NationsBank of Georgia, N.A., as Agent
for Wells Real Estate Fund VII, L.P., as Landlord, and CH2M Hill,
Inc., as Tenant (Exhibit 10(k) to Post-Effective Amendment No. 1
to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(v) First Amendment to Lease Agreement between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., as
Landlord, and CH2M Hill, Inc., as Tenant (Exhibit 10(l) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(w) Second Amendment to Lease Agreement between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., as
Landlord, and CH2M Hill, Inc, as Tenant (Exhibit 10(m) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(x) Development Agreement between Wells Real Estate Fund VII, L.P.
and ADEVCO Corporation (Exhibit 10(n) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real Estate
Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(y) Owner-Contractor Agreement between Wells Real Estate Fund VII,
L.P., as Owner, and Integra Construction, Inc., as Contractor
(Exhibit 10(o) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(z) Architect's Agreement between Wells Real Estate Fund VII, L.P.,
as Owner, and Smallwood, Reynolds, Stewart, Stewart & Associates,
Inc., as Architect (Exhibit 10(p) to Post-Effective Amendment No.
1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(aa) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII
Associates dated April 17, 1995 (Exhibit 10(q) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
4
*10(bb) Agreement for the Purchase and Sale of Real Property dated
February 13, 1995, between G.L. National, Inc. and Wells Capital,
Inc. (Exhibit 10(r) to Post-Effective Amendment No. 3 to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(cc) Agreement to Lease dated February 15, 1995, between NationsBank
of Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P.,
and BellSouth Advertising & Publishing Corporation (Exhibit 10(s)
to Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(dd) Development Agreement dated April 25, 1995, between Fund VI, Fund
VII and Fund VIII Associates and ADEVCO Corporation (Exhibit
10(t) to Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(ee) Owner-Contractor Agreement dated April 24, 1995, between Fund VI,
Fund VII and Fund VIII Associates, as Owner, and McDevitt Street
Bovis, Inc., as Contractor (Exhibit 10(u) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(ff) Architect's Agreement dated February 15, 1995, between Wells Real
Estate Fund VII, L.P., as Owner, and Mayes, Suddereth &
Etheredge, Inc., as Architect (Exhibit 10(v) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(gg) First Amendment to Joint Venture Agreement of Fund VI and Fund
VII Associates (Exhibit 10(dd) to Form 10-K of Wells Real Estate
Fund VI, L.P. for the fiscal year ended December 31, 1995, File
No. 0-23656)
*10(hh) First Amendment to Joint Venture Agreement of Fund VI, Fund VII
and Fund VIII Associates dated May 30, 1995 (Exhibit 10(w) to
Post-Effective Amendment No. 4 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
*10(ii) Real Estate Purchase Agreement dated April 13, 1995 (Exhibit
10(x) to Post-Effective Amendment No. 4 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P., File No. 33-83852)
5
*10(jj) Lease Agreement dated February 27, 1995, between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., and
Harris Teeter, Inc. (Exhibit 10(y) to Post-Effective Amendment
No. 4 to Form S-11 Registration Statement of Wells Real Estate
Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(kk) Development Agreement dated May 31, 1995, between Fund VI, Fund
VII and Fund VIII Associates and Norcom Development, Inc.
(Exhibit 10(z) to Post- Effective Amendment No. 4 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(ll) Joint Venture Agreement of Fund I, II, II-OW, VI and VII
Associates dated August 1, 1995 (Exhibit 10(ii) to Form 10-K of
Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1995, File No. 0-23656)
*10(mm) Lease Modification Agreement No. 3 with The Kroger Co. dated
December 31, 1993 (Exhibit 10(k) to Form 10-K of Wells Real
Estate Fund I for the fiscal year ended December 31, 1993, File
No. 0-14463)
*10(nn) First Amendment to Joint Venture Agreement of Fund VII and Fund
VIII Associates dated April 1, 1996 (Exhibit to Form 10-K of
Wells Real Estate Fund VII, L.P. for the fiscal year ended
December 31, 1996, File No. 0-25606)
*10(oo) Lease Agreement with Moovies, Inc. dated May 20, 1996 (Exhibit to
Form 10-K of Wells Real Estate Fund VII, L.P. for the fiscal year
ended December 31, 1996, File No. 0-25606)
*10(pp) Purchase and Sale Agreement for the sale of Cherokee Commons
Shopping Center dated August 6, 2001 (Exhibit 10(p) to Form 10-K
of Wells Real Estate Fund I for the fiscal year ended December
31, 2001, File No. 0-14463)
6