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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
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Commission file number 0-23656
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WELLS REAL ESTATE FUND VI, L. P
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(Exact name of registrant as specified in its charter)
Georgia 58-2022628
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6200 The Corners Parkway, Suite 250, Norcross, Georgia 30092
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(Address of Principal executive offices) (Zip code)
Registrant's telephone number, including area code (770) 449-7800
Securities registered pursuant to Section 12(b) ----------------------
of the Act:
Name of exchange on
Title of each class 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 Not Applicable
by non-affiliates: ----------------------
PART I
ITEM 1. BUSINESS.
General
Wells Real Estate Fund VI, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P. ("Wells
Partners"), a Georgia non-public limited partnership, as General Partners. The
Partnership was formed on December 1, 1992, for the purpose of acquiring,
developing, constructing, owning, operating, improving, leasing and otherwise
managing for investment purposes income-producing commercial or industrial
properties. 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 5, 1993, the Partnership commenced a public offering of up to its
limited partnership units pursuant to a Registration Statement filed on Form
S-11 under the Securities Act of 1933. The Partnership terminated its offering
on April 4, 1994, and received gross proceeds of $25,000,000 representing
subscriptions from 2,500,000 Limited Partners, composed of two classes of
limited partnership interests, Class A and Class B limited partnership units.
Employees
The Partnership 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 Partnership. See item 11 - "Compensation of General
Partners and Affiliates" for a summary of the compensation and fees paid to the
General Partners and their affiliates during the year ended December 31, 2001.
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all of the
properties 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 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.
2
ITEM 2. PROPERTIES.
The Partnership owns interests in properties through the following joint
ventures between the Partnership and affiliated limited partnerships: (i) Fund V
and Fund VI Associates, a joint venture between the Partnership and Wells Real
Estate Fund V, L.P. (the "Fund V-VI Joint Venture"); (ii) Fund V, Fund VI, and
Fund VII Associates, a joint venture between the Partnership, Wells Real Estate
Fund V, L.P. and Wells Real Estate Fund VII, L.P. (the "Fund V-VI-VII Joint
Venture"); (iii) Fund VI and Fund VII Associates, a joint venture between the
Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VI-VII Joint
Venture"); (iv) Fund II, Fund III, Fund VI and Fund VII Associates, a joint
venture between the Partnership, Fund II and Fund III Associates, and Wells Real
Estate Fund VII, L.P., (the "Fund II-III-VI-VII Joint Venture"); (v) Fund VI,
Fund VII and Fund VIII Associates, a joint venture between the Partnership,
Wells Real Estate Fund VII, L.P. and Wells Real Estate Fund VIII, L.P. (the
"Fund VI-VII-VIII Joint Venture"); and (vi) Fund I-II-IIOW-VI-VII Associates, a
joint venture between the Partnership, Wells Real Estate Fund I, Fund II and
Fund IIOW Associates and Wells Real Estate Fund VII, L.P. (the "Fund
I-II-IIOW-VI-VII Joint Venture").
As of December 31, 2001, the Partnership owned interests in the following
properties through its ownership in the foregoing joint ventures: (i) a four
story office building located in Hartford, Connecticut ("Hartford Building") and
(ii) two retail buildings located in Clayton County, Georgia ("Stockbridge
Village II"), both of which are owned by the Fund V - VI Joint Venture; (iii) a
three-story office building located in Appleton Wisconsin (the "Marathon
Building"), which is owned by the Fund V-VI-VII Joint Venture; (iv) two retail
buildings located in Clayton County, Georgia ("Stockbridge Village III"); and
(v) a shopping center expansion located in Clayton County, Georgia ("Stockbridge
Village I Expansion"), both of which are owned by the Fund VI-VII Joint Venture;
(vi) an office/retail center located in Roswell, Georgia (the "Holcomb Bridge
Property"), which is owned by the Fund II-III-VI-VII Joint Venture; (vii) a four
story office building located in Jacksonville, Florida (the "BellSouth
Building") and (viii) a shopping center located in Clemmons, North Carolina (
"Tanglewood Commons"), both of which are owned by the Fund VI-VII- VIII Joint
Venture. All of the foregoing properties were acquired on an all cash basis.
The Partnership does not have control over the operations of the joint ventures;
however, it does exercise significant influence. Accordingly, investment in
joint ventures is recorded on the equity method.
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 a taxable gain of $21,867 and net
sale proceeds of $903,122 from this transaction.
The following table shows lease expirations during 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 22 43,514 $ 740,852 $ 247,241 12.1% 13.9%
2003 (2) 10 87,174 966,615 491,202 24.3 18.2
2004 4 17,195 310,377 129,428 4.8 5.8
2005 5 12,550 184,154 75,006 3.5 3.5
2006 (3) 10 191,996 2,979,539 1,102,992 53.5 56.0
2011 1 6,732 134,640 60,318 1.8 2.6
------------ ------------ ------------ ------------ ------------ ------------
52 359,161 $ 5,316,177 $ 2,106,187 100.00% 100.00%
============ ============ ============ ============ ============ ============
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Primarily expiration of Hartford lease of (71,000 square feet).
(3) Primarily expiration of Marathon lease (76,000 square feet),
BellSouth lease (69,424 square feet) and American Express lease
(22,607 square feet).
The following describes the properties in which the Partnership owns an interest
as of December 31, 2001:
Fund V-VI Joint Venture
On December 27, 1993, the Partnership and Wells Real Estate Fund V, L.P.
("Wells Fund V"), a Georgia public limited partnership affiliated with the
Partnership through common general partners, entered into the Fund V-VI
Joint Venture. The investment objectives of Wells Fund V are substantially
identical to those of the Partnership. As of December 31, 2001, the
Partnership had contributed approximately $5,329,541 and Wells Fund V had
contributed approximately $4,544,601 to the Fund V-VI Joint Venture. The
Partnership holds approximately 54% equity interest, and Wells Fund V
currently holds approximately 46% equity interest in the Fund V-VI Joint
Venture. The Partnership owns interests in the following two properties
through the Fund V-VI Joint Venture:
The Hartford Building
On December 29, 1993, the Fund V-VI Joint Venture purchased the Hartford
Building, a four-story office building containing approximately 71,000
rentable square feet from Hartford Accident and Indemnity Company for a
purchase price of $6,900,000. The Hartford Building is located on 5.56
acres of land in Southington, Hartford County, Connecticut. The funds used
by the Fund V-VI Joint Venture to acquire the Hartford Building were
derived from capital contributions made by the Partnership and Wells Fund
V totaling $3,432,707 and $3,508,797, respectively, for total capital
contributions to the Fund V-VI Joint Venture of $6,941,504.
The entire building is leased to Hartford Fire Insurance Company for a
period of nine years and eleven months commencing on December 29, 1993.
The annual base rent during the initial term is $458,400 commencing April
1, 1994 and continuing through the expiration of the initial term of the
lease under the terms of its lease. Hartford also has the option to extend
the initial term of the lease for two consecutive five year periods at
currently prevailing market rates. Under the terms of its lease, Hartford
is responsible for property taxes, operating expenses, general repair and
maintenance
4
work and a pro rata share of capital expenditures based upon the number of
years remaining in the lease.
The occupancy rate at the Hartford Building was 100% as of years ended
December 31 2001, 2000 1999, 1998 and 1997. The average effective annual
rental rate per square foot was $10.11 for 2001, 2000, 1999, 1998 and
1997.
Stockbridge Village II
On November 12, 1993, Wells Fund V purchased 2.46 acres of real property
located in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells
Fund V contributed the property as capital contribution to the Fund V-VI
Joint Venture. Construction of a 5,400 square foot retail building was
completed in November, 1994. A second retail building containing
approximately 10,423 square feet was completed in June, 1995. The total
construction cost of the second building in Stockbridge Village II was
approximately $2,933,000. As of December 31, 2001, the Partnership had
contributed $1,896,834, and Wells Fund V contributed $1,035,804 to the
Fund V-VI Joint Venture for the acquisition and development of Stockbridge
Village II.
The entire first building is leased by Apple Restaurants, Inc. for a term
of nine years and eleven months beginning in December 9, 1994. The annual
base rent under the lease was $125,982 until December 15, 1999, at which
time the annual base rent increased to $137,700.
The occupancy rate for Stockbridge Village II at year-end was 100% in
2001, 2000 and 1999, 72% in 1998 and 1997. The average effective annual
rental rate per square foot at Stockbridge Village II was $17.23 for 2001,
$19.70 for 2000, $19.66 for 1999, $14.90 for 1998 and $14.88 for 1997.
Fund V-VI-VII Joint Venture
On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate
Fund VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships
affiliated with the Partnership through common general partners, entered
into a joint venture agreement known as Fund V, Fund VI and Fund VII
Associates (the "Fund V-VI-VII Joint Venture"). The investment objectives
of Wells Fund VII are substantially identical to those of the Partnership.
The Partnership owns a 42% interest in the following property through the
Fund V-VI-VII Joint Venture:
The Marathon Building
On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a
three-story office building containing approximately 76,000 rentable
square feet, located on approximately 6.2 acres of land in Appleton,
Wisconsin (the "Marathon Building") for a purchase price of $8,250,000,
excluding acquisition costs. The funds used by the Fund V-VI-VII Joint
Venture to acquire the Marathon Building were derived from capital
contributions made by the Partnership, Wells Fund V and Wells Fund VII
totaling $3,470,958, $1,337,505, and $3,470,958, respectively, for total
contributions to the Fund V-VI-VII Joint Venture of $8,279,421 including
acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a
period of twelve years expiring December 31, 2006, with options to extend
the lease for two additional five-year periods at currently prevailing
market rates. The annual base rent payable under the lease is $910,000.
5
The occupancy rate at the Marathon Building was 100% at year-end in 2001,
2000, 1999, 1998 and 1997. The average effective annual rental rate per
square foot in was $12.78 for 2001, 2000, 1999 and 1998 and $12.74 for
1997.
Fund VI-VII Joint Venture
On December 9, 1994, the Partnership and Wells Fund VII entered into a
Joint Venture Agreement and formed the Fund VI-VII Joint Venture. As of
December 31, 2001, the Partnership contributed $2,710,639, including its
cost to acquire land, and Wells Fund VII contributed $3,358,633 to the
Fund VI -VII Joint Venture for the acquisition and development of
Stockbridge Village III Project and Stockbridge Village I Expansion. As of
December 31, 2001, the Partnership's equity interest in the Fund VI-VII
Joint Venture was approximately 45%, and Wells Fund VII's equity interest
in the Fund VI-VII Joint Venture was approximately 55%. The Partnership
owns interests in the following two properties through the Fund VI-VII
Joint Venture:
Stockbridge Village III
In April 1994, the Partnership 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 was developed and is owned by an affiliate of the
Partnership. On December 9, 1994, the Partnership contributed this
property as a capital contribution to the Fund VI-VII Joint Venture.
As of December 31, 2001, the Partnership has contributed $1,033,285 and
Wells Fund VII has contributed $1,917,483 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. The space is now leased by RMS / Fazoli's for a term 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 approximately
$718,000. The Stockbridge Village I Expansion consists of a multi-tenant
shopping center containing approximately 29,200 square feet. Construction
was substantially complete in April 1996, upon which Cici's Pizza
restaurant took occupancy of 4,000 square feet of the premises. The term
of the CiCi's Pizza lease is nine years and eleven months commencing upon
occupancy. The initial base rent is $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.
6
As of December 31, 2001, the Partnership contributed a total of
$1,677,354, and Wells Fund VII contributed a total of $1,441,150 for a
total cost of approximately $3,118,504 toward the development and
construction of the Stockbridge Village I Expansion.
The occupancy rate at the Stockbridge Village I Expansion was 100%, 100%,
86%, 81% and 74% at year-end 2001, 2000, 1999, 1998 and 1997,
respectively. The average effective annual rental rate per square foot was
$13.87 for 2001, $11.97 for 2000, $10.74 for 1999, $10.08 for 1998 and
$6.82 for 1997.
Fund II-III-VI-VII Joint Venture
On January 10, 1995, the Partnership, Fund II-III Joint Venture, and Wells
Fund VII entered into the Fund II-III-VI-VII Joint Venture. The Fund
II-III Joint Venture is a joint venture between Wells Real Estate Fund
III, L.P. ("Wells Fund III"), a Georgia public limited partnership having
Leo F. Wells, III and Wells Capital, Inc. as general partners, and an
existing joint venture (the "Fund II-IIOW Joint Venture") formed by Wells
Real Estate Fund II ("Wells Fund II") and Wells Real Estate Fund II-OW
("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 and Wells Fund III are
substantially identical to those of the Partnership.
Holcomb Bridge Property
In January 1995, the Fund II-III Joint Venture contributed to the Fund
II-III-VI-VII Joint Venture approximately 4.3 acres of land at the
intersection of Warsaw Road and Holcomb Bridge Road in Roswell, Fulton
County, Georgia (the "Holcomb Bridge Property") including land
improvements for the development and construction of two buildings
containing a total of 49,530 square feet. Thirteen tenants occupied the
Holcomb Bridge Property at December 31, 2001, for an occupancy rate at
year end of 90%, 92%, 100%, 94%, and 94% in 2001, 2000, 1999, 1998 and
1997, respectively. The average effective annual rental rate per square
foot was $17.07 for 2001, $17.55 for 2000, $19.26 for 1999, $17.62 for
1998 and $13.71 for 1997.
As of December 31, 2001, the Fund II-III Joint Venture contributed
$1,729,116 in land and improvements for an equity interest of
approximately 24%, the Partnership contributed $1,929,541 for an equity
interest of approximately 27%, and Wells Fund VII contributed $3,525,041
for an equity interest of approximately 49%. The total cost to develop the
Holcomb Bridge Property was approximately $5,454,582, excluding land.
Fund VI-VII-VIII Joint Venture
On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate
Fund VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership
affiliated with the Partnership through common general partners, formed
the Fund VI-VII-VIII Joint Venture. The investment objectives of Wells
Fund VII and Wells Fund VIII are substantially identical to those of the
Partnership. As of December 31, 2001, the Partnership had contributed
approximately $6,067,688 for an approximate equity interest of 34% 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 VII has
contributed $5,932,312 for an equity interest in the Fund VI-VII-VIII
Joint Venture of approximately 33%, and Wells Fund VIII has contributed
approximately $5,700,000 for an equity interest in the Fund VI-VII-VIII
Joint Venture of approximately 32%. Thus, a total of
7
$17,700,000 has been contributed to the Fund VI-VII-VIII Joint Venture for
the acquisition and development of the properties aforementioned.
BellSouth Building
On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55
acre parcel of land in Jacksonville, Florida for a total of $1,245,059
including closing costs. In May 1996, the 92,964 square foot office
building was completed with BellSouth Advertising and Publishing
Corporation, a subsidiary of BellSouth Company, 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 and construction costs, totaling
approximately $9,000,000, were funded by capital contributions of
$3,500,000 from the Partnership, $3,500,000 from Wells Fund VII and
$2,000,000 from the Wells Fund VIII.
The BellSouth lease is for a term of nine years and eleven months with an
option to extend for an additional five-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 balance of
the initial lease term. The original American Express lease was for a term
of five years with an annual base rent of $369,851 and expired in June
2001. American Express has renewed their lease for five years at an annual
base rent of $405,117 for the first year with a cumulative 3 percent
escalation 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 occupancy rate at year-end was 100% in 2001, 2000, 1999, 1998 and
1997.The average effective annual rental rate per square foot at the
BellSouth Building was $16.65 for 2001, $16.36 for 2000, 1999, and 1998,
and $16.40 for 1997.
Tanglewood Commons Shopping Center
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683
acre tract of real property located in Clemmons, Forsyth County, North
Carolina. The Fund VI-VII-VIII Joint Venture constructed one large strip
shopping center building containing approximately 67,320 gross square feet
on a 12.48 acre tract. The remaining 2.2 acre portion of the property
consists of four out parcels which have been graded and will be held for
future development or resale. As of December 31, 2001, the Partnership
contributed $2,567,688, Wells Fund VII contributed $2,432,312 and Wells
Fund VIII had contributed $3,700,000 for the development of this project.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint
Venture for the acquisition, development, construction and completion of
the shopping center is approximately $8,700,000. Construction of the
project began in March, 1996, and was substantially completed in the first
quarter of 1997.
Harris Teeter, Inc., a regional supermarket chain, executed a lease for a
minimum of 45,000 square feet with an initial term of 20 years with
extension options of four successive five year periods with the same terms
as the initial lease. The annual base rent 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 any lease year.
8
The occupancy rate at year-end was 100% in 2001 and 2000, 91% for 1999 and
1998, and 86% for 1997. The average effective annual rental rate per
square foot at Tanglewood Commons was $13.02 for 2001, $12.53 for 2000,
$11.48 for 1999, $10.96 for 1998, and $9.12 for 1997.
Fund I-II-IIOW-VI-VII Joint Venture
On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund
I"), a Georgia public limited partnership, the Fund II-Fund IIOW Joint
Venture and Wells Fund VII, entered into Fund I-II-IIOW-VI-VII Joint
Venture, which was formed to own and operate Cherokee Commons 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 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, the Partnership contributed cash
in the amount of $953,798, and Wells Fund VII contributed cash in the
amount of $953,798 to the Fund I-II-IIOW-VI-VII Joint Venture. As of
September 30, 2001, the equity interests in the Fund I-II-IIOW-VI-VII
Joint Venture were as follows: Wells Fund I at 24%, Fund II-Fund IIOW
Joint Venture at 54%, Wells Fund VII at 11% and the Partnership at 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 a 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 $9.02 per Class A Unit and $9.02 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.
9
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.
10
PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
As of February 28, 2002, the Partnership had 2,236,361 outstanding Class A Units
held by a total of 1,659 Limited Partners and 263,639 outstanding Class B Units
held by a total of 180 Limited Partners. The capital contribution per unit is
$10.00. There is no established public trading market for the Partnership's
limited partnership units, and it is not anticipated that a public trading
market for the units will develop. Under the Partnership Agreement, the General
Partners have the right to prohibit transfers of units.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners elect to have their cash distributions
paid monthly. Under the Partnership Agreement, distributions from net cash from
operations are allocated first to the Limited Partners holding Class A Units
(and limited partners holding Class B Units that have elected a conversion right
that allows them to share in the distribution rights of limited partners holding
Class A Units) until they have received 10% of their adjusted capital
contributions. Net Cash From Operations, as defined in the Partnership Agreement
to mean cash flow, less adequate cash reserves for other obligations of the
Partnership for which there is no provision, but are initially allocated none of
the depreciation, amortization, cost recovery and interest expense. These items
are allocated to Class B Unit holders until their capital account balances have
been reduced to zero. Cash available for distribution is then distributed to the
General Partners until they have received an amount equal to 10% of cash
distributions previously distributed to the limited partners. Any remaining cash
available for distribution is split between the Limited Partners holding Class A
units and the General Partners on a basis of 90% and 10% respectively. No
distributions will be made to the Limited Partners holding Class B Units. No
distributions have been made to the General Partner or holders of Class B Units
as of December 31, 2001.
11
Cash distributions made to Limited Partners holding Class A Units (and limited
partners holding Class B Units that have elected a conversion right) during 2000
and 2001 were as follows:
Per Class A Unit
-------------------------
Distribution Total
for Quarter Cash Investment Return of
Ended Distributed Income Capital
------------------ ----------- ---------- ---------
March 31, 2000 $494,887 $0.12 $0.11
June 30, 2000 494,941 0.11 0.11
September 30, 2000 494,957 0.12 0.11
December 31, 2000 481,146 0.11 0.10
March 31, 2001 481,593 0.10 0.12
June 30, 2001 467,872 0.11 0.10
September 30, 2001 468,581 0.13 0.09
December 31, 2001 461,250 0.20 0.00
Fourth quarter distributions were accrued for accounting purposes in 2001 and
paid to the limited partners holding Class A Units in February 2002.
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of the selected financial data for the years
ended December 31, 2001, 2000, 1999, 1998 and 1997.
2001 2000 1999 1998 1997
--------------------------------------------------------------------------
Total assets $ 16,894,291 $ 17,602,253 $ 18,532,975 $ 19,328,676 $ 20,218,514
Total revenues 1,281,251 1,107,788 1,056,568 939,519 884,802
Net income 1,190,997 1,027,798 969,613 855,788 795,654
Net income allocated to
Class A Limited Partners 1,190,997 1,027,798 1,274,859 1,770,058 1,677,826
Net loss allocated to
Class B Limited Partners 0 0 (305,246) (914,270) (882,172)
Net income per weighted
average (1) Class A
Limited Partner Unit $0.54 $0.47 $0.58 $0.81 $0.78
Net loss per weighted
average (1) Class B
Limited Partner Unit 0.0 0.0 (0.99) (2.80) (2.47)
Class A Limited Partner Unit:
Investment income 0.54 0.46 0.63 0.80 0.73
Return of capital $0.31 $0.43 $0.20 $0.00 $0.00
(1) The weighted average unit is calculated by averaging units over the
period they are outstanding during the time units are still being
sold or converted to Class A or Class B Limited Partner Units.
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATION.
Forward-Looking Statements
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statements
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
General
Gross revenues of the Partnership were $1,281,251, $1,107,788 and $1,056,568 for
the years ended December 31, 2001, 2000 and 1999, respectively. The 2001
increase over 2000 and 1999 was due primarily to the sale of Cherokee Commons in
2001 partially offset by fluctuations in interest income. Expenses of the
Partnership were $90,254 for the year ended 2001, as compared to $79,990 for
2000 and $86,955 for 1999. The change in expenses for 2001, as compared to 2000
and 1999 was primarily due to increased administrative salaries.
As a result, net income of the Partnership was $1,190,997, $1,027,798 and
$969,613 for the years ended December 31, 2001, 2000 and 1999, respectively.
The Partnership made cash distributions of investment income and a return of
capital to Limited Partners holding Class A Units of $0.54, $0.47 and $0.58 per
Class A Unit for the years ended December 31, 2001, 2000, 1999, respectively.
The General Partners anticipate that distributions per unit to limited partners
holding Class A Units will continue in 2002. Distributions accrued for the
fourth quarter of 2001 to the Limited Partners holding Class A Units were paid
in February 2002. No cash distributions were made to Limited Partners holding
Class B Units.
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 tenant improvements at Stockbridge Village II, Stockbridge
Village I Expansion and at the Holcomb Bridge Property, the General Partners
have used $223,932 of the Partnership's working capital reserves to reduce the
balance below this minimum amount, rather than funding the tenant improvements
out of operating cash flow, which would have the effect of reducing cash flow
distributions to Limited Partners. The General Partners anticipate that the
remaining $26,068 in working capital reserves will be sufficient to meet its
future needs.
The Partnership's net cash used in operating activities increased to $87,744 for
the year ended December 31, 2001 as compared to $64,324 and $80,493 for the
years ended December 31 2000 and 1999, respectively. The
13
increase from 2000 to 2001 is primarily due to a decrease in interest income to
the Partnership and an increase in partnership expenses. The decrease in net
cash used in operating activities from 1999 to 2000 is due to an increase in
interest income to the Partnership and a decrease in partnership expenses. Net
cash provided by investing activities increased to $1,986,277 in 2001 from
$1,898,256 in 2000 and $1,855,362 in 1999 due primarily to decreased investments
in joint ventures partially offset by a decrease in joint venture distributions
received. Net cash used in financing activities were $1,899,493, $1,960,520 and
$1,765,314 for the years ended December 31, 2001, 2000 and 1999, respectively.
The fluctuations from year to year correlate with the fluctuations in
distributions received from joint ventures in investing activities. These
changes produced cash and cash equivalents of $27,895, $28,855 and $155,443 at
December 31, 2001, 2000 and 1999, respectively.
The Partnership is unaware of any known demands, commitments, events or capital
expenditures other than that which is required for the normal operations of the
properties in which it owns a joint venture interest that will result in the
Partnership's liquidity increasing or decreasing in any material way. The
Partnership expects to meet liquidity requirements and budget demands through
cash flow from operations. Since properties are acquired on an all-cash basis,
the partnership has no permanent, long-term liquidity requirements.
Inflation
The real estate market has not been affected significantly by inflation 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. Most leases contain common area maintenance charges, real
estate tax and insurance reimbursements on a per square foot basis, or in some
cases, annual reimbursement of operating expenses above a certain per square
foot allowance. These provisions should reduce the Partnership's exposure to
increases in costs and operating expenses resulting from inflation. In addition,
a number of the Partnership's leases are for remaining 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 receivables may not be
realized.
14
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 receivable 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.
15
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., a Georgia corporation. The executive offices of Wells Capital,
Inc. are located at 6200 The Corners Parkway, Suite 250, Norcross, Georgia
30092.
Leo F. Wells, III. Mr. Wells is a resident of Atlanta, Georgia, is 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. Mr. Wells is the President of Wells & Associates, Inc., a real estate
brokerage and investment company formed in 1976 and incorporated in 1978, for
which he serves as the principal broker. Mr. Wells is also currently the sole
Director and President of Wells Management Company, Inc., a property management
company he founded in 1983. In addition, Mr. Wells is the President and Chairman
of the Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and
Wells Management Company, Inc., all of which are affiliates of the General
Partners. From 1980 to February 1985, Mr. Wells served as vice-president of
Hill-Johnson, Inc., a Georgia corporation engaged in the construction business.
From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company, and
from 1970 to 1973, he was a real estate salesman and property manager for Roy D.
Warren & Company, an Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES.
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 2001.
- --------------------------------------------------------------------------------
CASH COMPENSATION TABLE
- --------------------------------------------------------------------------------
Name of individual or Capacities in which served
number in group Form of Compensation Cash Compensation
- --------------------------------------------------------------------------------
Wells Management Property Manager - $156,226
Company, Inc. Management and Leasing
Fees
(1) The majority of these fees are not paid directly by the Partnership
but are paid by the joint venture entities which own properties for
which the property management and leasing services relate and
include management and leasing fees, some of which were accrued for
accounting purposes in 2001, but not actually paid until January,
2002.
16
ITEM 12. OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of February 28, 2002.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------- -------------------- ----------------
Class A Units Leo F. Wells, III 1,327.37 units (IRA, less than 1%
401(k) 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 as follows:
Interest in Partnership Cash Flow and Net Sale Proceeds. The General
Partners will receive a subordinated participation in net cash flow from
operations equal to 10% of net cash flow after the Limited Partners
holding Class A Units have received preferential distributions equal to
10% of their adjusted capital contribution. The General Partners will also
receive a subordinated participation in net sale proceeds and net
financing proceeds equal to 20% of residual proceeds available for
distribution after the Limited Partners holding Class A Units have
received a return of their adjusted capital contribution plus a 10%
cumulative return on their adjusted capital contributions and Limited
Partners holding Class B Units have received a return of their adjusted
capital contribution plus a 15% cumulative return on their adjusted
capital contribution; provided, 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 have received no distribution
from cash flow or net sales proceeds in 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 gross revenues for management and 3% of the gross
revenues for leasing (aggregate maximum of 6%) plus a separate one-time
fee for initial rent-up or leasing-up of newly constructed properties in
an amount not to exceed the fee customarily charged in arm's length
transactions by others rendering similar services in the same geographic
area for similar properties; and (ii) in the case of industrial and
commercial properties which are leased on a long-term basis (ten or more
years), 1% of the gross revenues except for initial leasing fees equal to
3% of the gross revenues over the first five years of the lease term; or
(B) the amounts charged by unaffiliated persons rendering comparable
services in the same geographic area. Wells Management Company, Inc.
received $156,226 in property management cash compensation for services
rendered during the year ended December 31, 2001.
17
Real Estate Commissions. In connection with the sale of Partnership
properties, the General Partners or their affiliates may receive
commissions not exceeding the lesser of (A) 50% of the commissions
customarily charged by other brokers in arm's-length transactions
involving comparable properties in the same geographic area or (B) 3% of
the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6%
cumulative return on their adjusted capital contributions. The General
Partners or their affiliates received no real estate commissions in 2001.
18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)1. Financial Statements
The Financial Statements are contained on pages F-2 through F-40 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.
19
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 22nd day of March,
2002.
Wells Real Estate Fund VI, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
---------------------------------
Individual General Partner and as
President and Chief Financial
Officer of Wells Capital, Inc.,
the General Partner of Wells
Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
Signature Title Date
- ----------------------- ---------------------------------- -----------------
/s/ Leo F. Wells, III Individual General Partner, March 22, 2002
- --------------------- President and Sole Director of
Leo F. Wells, III Wells Capital, Inc., the
General Partner of Wells
Partners, L.P.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS THAT 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
20
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- --------------------------------------------------------------------------------
Independent Auditors' Reports F-2
Balance Sheets as of December 31, 2001 and 2000 F-3
Statements of Income for the Years Ended December 31, 2001,
2000 and 1999 F-4
Statements of Partners' Capital for the Years Ended
December 31, 2001, 2000 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
Audited Financial Statements - The Hartford Building F-34
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VI,
L.P. (a Georgia public limited partnership) as of December 31, 2001 and 2000 and
the related statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund VI, 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 VI, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
----------- -----------
INVESTMENT IN JOINT VENTURES $16,403,394 $17,090,238
CASH AND CASH EQUIVALENTS 27,895 28,855
DUE FROM AFFILIATES 462,092 480,960
ACCOUNTS RECEIVABLE 0 2,200
PREPAID EXPENSES AND OTHER ASSETS 910 0
----------- -----------
Total assets $16,894,291 $17,602,253
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Partnership distributions payable $ 461,250 $ 481,447
Accounts payable 2,534 2,000
----------- -----------
Total liabilities 463,784 483,447
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--2,236,360 units and 2,198,969 units as of
December 31, 2001 and 2000, respectively 16,430,507 17,118,806
Class B--263,640 units and 301,031 units as of
December 31, 2001 and 2000, respectively 0 0
----------- -----------
Total partners' capital 16,430,507 17,118,806
----------- -----------
Total liabilities and partners' capital $16,894,291 $17,602,253
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
----------- ----------- -----------
REVENUES:
Equity in income of joint ventures $ 1,280,565 $ 1,092,222 $ 1,050,106
Interest income 686 15,566 6,462
----------- ----------- -----------
1,281,251 1,107,788 1,056,568
----------- ----------- -----------
EXPENSES:
Partnership administration 58,638 50,167 53,350
Legal and accounting 18,076 17,950 23,619
Computer costs 13,540 11,873 9,986
----------- ----------- -----------
90,254 79,990 86,955
----------- ----------- -----------
NET INCOME $ 1,190,997 $ 1,027,798 $ 969,613
=========== =========== ===========
NET INCOME ALLOCATED TO CLASS A LIMITED
PARTNERS $ 1,190,997 $ 1,027,798 $ 1,274,859
=========== =========== ===========
NET LOSS ALLOCATED TO CLASS B LIMITED
PARTNERS $ 0 $ 0 $ (305,246)
=========== =========== ===========
NET INCOME PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.54 $ 0.47 $ 0.58
=========== =========== ===========
NET LOSS PER WEIGHTED AVERAGE CLASS B
LIMITED PARTNER UNIT $ 0.00 $ 0.00 $ (0.99)
=========== =========== ===========
DISTRIBUTION PER WEIGHTED AVERAGE
CLASS A LIMITED PARTNER UNIT $ 0.85 $ 0.89 $ 0.83
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
Limited Partners
------------------------------------------------------------
Class A Class B Total
---------------------------- ---------------------------- Partners'
Units Amount Units Amount Capital
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 1998 2,187,757 $ 18,608,322 312,243 $ 292,359 $ 18,900,681
Net income (loss) 0 1,274,859 0 (305,246) 969,613
Partnership distributions 0 (1,813,355) 0 0 (1,813,355)
Class A conversion elections (1,751) (14,903) 1,751 14,903 0
Class B conversion elections 9,963 2,016 (9,963) (2,016) 0
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 1999 2,195,969 18,056,939 304,031 0 18,056,939
Net income 0 1,027,798 0 0 1,027,798
Partnership distributions 0 (1,965,931) 0 0 (1,965,931)
Class B conversion elections 3,000 0 (3,000) 0 0
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2000 2,198,969 17,118,806 301,031 0 17,118,806
Net income 0 1,190,997 0 0 1,190,997
Partnership distributions 0 (1,879,296) 0 0 (1,879,296)
Class B conversion elections 37,391 0 (37,391) 0 0
------------ ------------ ------------ ------------ ------------
BALANCE, DECEMBER 31, 2001 2,236,360 $ 16,430,507 263,640 $ 0 $ 16,430,507
============ ============ ============ ============ ============
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,190,997 $ 1,027,798 $ 969,613
----------- ----------- -----------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (1,280,565) (1,092,222) (1,050,106)
Changes in assets and liabilities:
Accounts receivable 2,200 (2,200) 0
Prepaid expenses and other assets (910) 300 0
Accounts payable and accrued expenses 534 2,000 0
----------- ----------- -----------
Total adjustments (1,278,741) (1,092,122) (1,050,106)
----------- ----------- -----------
Net cash used in operating activities (87,744) (64,324) (80,493)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures 0 (105,416) (13,943)
Distributions received from joint ventures 1,986,277 2,003,672 1,869,305
----------- ----------- -----------
Net cash provided by investing activities 1,986,277 1,898,256 1,855,362
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners in excess of accumulated earnings (895,946) (940,621) (41,177)
Distributions to partners from accumulated earnings (1,003,547) (1,019,899) (1,724,137)
----------- ----------- -----------
Net cash used in financing activities (1,899,493) (1,960,520) (1,765,314)
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (960) (126,588) 9,555
CASH AND CASH EQUIVALENTS, beginning of year 28,855 155,443 145,888
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 27,895 $ 28,855 $ 155,443
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 0 $ 307 $ 581
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000, AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VI, L.P. (the "Partnership") is a public limited
partnership organized on December 1, 1992 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P.
("Wells Partners"), a Georgia nonpublic limited partnership. The Partnership has
two classes of limited partnership interests, Class A and Class B units. Limited
partners have the right to change their prior elections to have some or all of
their units treated as Class A units or Class B units once every five years.
Limited partners may vote to, among other things, (a) amend the partnership
agreement, subject to certain limitations, (b) change the business purpose or
investment objectives of the Partnership, and (c) remove a general partner. A
majority vote on any of the above-described matters will bind the Partnership,
without the concurrence of the general partners. Each limited partnership unit
has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real properties,
including properties which are to be developed, are currently under development
or construction, are newly constructed, or have operating histories. 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 ("Cherokee
Commons"), (ii) an office/retail center in Roswell, Georgia ("880 Holcomb
Bridge"), (iii) the Hartford Building, a four-story office building located in
Southington, Connecticut, (iv) the Stockbridge Village II property, two retail
buildings located in Clayton County, Georgia, (v) the Marathon Building, a
three-story office building located in Appleton, Wisconsin, (vi) the Stockbridge
Village III Retail Center, two retail buildings located in Stockbridge, Georgia,
(vii) a retail center expansion in Stockbridge, Georgia ("Stockbridge
Expansion"), (viii) the BellSouth property, a four-story office building in
Jacksonville, Florida, and (ix) a retail shopping center in Clemmons, Forsyth
County, North Carolina ("Tanglewood Commons").
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 limited partners quarterly. In accordance with the partnership
agreement, distributions are paid first to limited partners holding Class A
units until they have received a 10% per annum return on their adjusted capital
contributions, as defined. Cash available for distribution is then paid to the
general partners until they have received an amount equal to 10% of
distributions. Any remaining cash available for distribution is split between
the limited partners holding Class A units and the general partners on a basis
of 90% and 10%, respectively. No distributions will be made to the limited
partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners, on a per unit basis, until each limited partner
has received 100% of his/her adjusted capital contribution, as
defined
. To limited partners holding Class B units, on a per unit basis,
until they receive an amount equal to the net cash available for
distribution received by the limited partners holding Class A units
. To all limited partners, on a per unit basis, until they receive a
cumulative 10% per annum return on their adjusted capital
contributions, as defined
. To 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
F-8
made, if applicable: (a) allocations made pursuant to a qualified income offset
provision in the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been restored
to zero, (c) allocations to Class B limited partners in amounts equal to
deductions for depreciation and amortization previously allocated to them with
respect to the specific partnership property sold, but not in excess of the
amount of gain on sale recognized by the Partnership with respect to the sale of
such property, and (d) allocations to Class A limited partners and general
partners in amounts equal to deductions for depreciation and amortization
previously allocated to them with respect to the specific partnership property
sold, but not in excess of the amount of gain on sale recognized by the
Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investments in joint ventures are recorded using the equity method of
accounting.
Real Estate Assets
Real estate assets held through investments in affiliated joint ventures
are stated at cost less accumulated depreciation. Major improvements and
betterments are capitalized when they extend the useful lives of the
related assets. All repairs and maintenance 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 joint ventures as of December 31, 2001 or 2000.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized over
the life of the related lease or real estate asset, whichever is shorter.
Revenue Recognition
All leases on real estate held by the joint ventures are classified as
operating leases, and the related rental income is recognized on a
straight-line basis over the terms of the respective leases.
Partners' Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to the
Partnership by the joint ventures are made in accordance with the terms of
the individual joint venture agreements. Generally, these items are
allocated in proportion to the partners' respective ownership interests.
Cash is paid by the joint ventures to the Partnership quarterly.
Deferred Lease Acquisition Costs
Costs incurred to procure operating leases are capitalized and amortized
on a straight-line basis over the terms of the related leases. 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, as follows:
2001 2000
-------- --------
Fund V and VI Associates $ 72,277 $115,089
Fund V, VI, and VII Associates 98,591 99,030
Fund VI and VII Associates 62,122 64,313
Fund VI, VII, and VIII Associates 173,414 155,253
Fund I, II, II-OW, VI, and VII Associates--Cherokee 8,261 20,703
Fund II, III, VI, and VII Associates 47,427 26,572
-------- --------
$462,092 $480,960
======== ========
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 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 $156,226, $157,719, and $161,779 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 are also general partners of other Wells Real Estate Funds.
As such, there may exist conflicts of interest where the general partners in
their capacity as general partners of 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 $ 907,949 11% $ 749,777 11%
Fund II, III, VI, and VII Associates 1,350,182 26 1,456,417 26
Fund V and VI Associates 4,179,416 54 4,378,890 54
Fund V, VI, and VII Associates 2,669,167 42 2,812,772 42
Fund VI and VII Associates 2,264,192 45 2,392,014 45
Fund VI, VII, and VIII Associates 5,032,488 34 5,300,368 34
----------- -----------
$16,403,394 $17,090,238
=========== ===========
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 $ 17,090,238 $ 17,884,649
Equity in income of joint ventures 1,280,565 1,092,222
Contributions to joint ventures 0 105,723
Distributions from joint ventures (1,967,409) (1,992,356)
------------ ------------
Investment in joint ventures, end of year $ 16,403,394 $ 17,090,238
============ ============
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
Assets
2001 2000
---------- ----------
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
========== ======== ========
F-14
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with
Fund II and III Associates--Brookwood Grill and Fund VII. The joint venture,
Fund II, III, VI, and VII Associates, was formed for the purpose of acquiring,
developing, operating, and selling real properties. During 1995, Fund II and III
Associates--Brookwood Grill contributed a 4.3-acre tract of land to the Fund II,
III, VI, and VII Associates joint venture. Development on this property of two
buildings containing a total of approximately rentable 49,500 square feet was
substantially completed in 1996.
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
Assets
2001 2000
---------- ----------
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--
Brookwood Grill $ 63,326 $ 55,489 $ 81,669
======== ======== ========
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 Total
Brookwood Real Estate Real Estate Partners'
Grill Fund VI Fund VII 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 and VI Associates
On December 27, 1993, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund V, L.P. ("Fund V"), known as Fund V and VI
Associates, for the purpose of investing in commercial real properties. In
December 1993, the joint venture purchased a 71,000-square foot, four-story
office building known as the Hartford Building in Southington, Connecticut. On
June 26, 1994, Fund V contributed its interest in a parcel of land, the
Stockbridge Village II property, to the joint venture. The Stockbridge Village
II property consists of two separate restaurants and began operations during
1995. During 1999, the Partnership made additional capital contributions to Fund
V and VI Associates. Ownership interests were recomputed accordingly. Following
are the financial statements for Fund V and VI Associates:
F-17
Fund V and VI Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
---------- ----------
Real estate assets, at cost:
Land $1,622,733 $1,622,733
Building and improvements, less accumulated depreciation of
$2,769,703 in 2001 and $2,372,711 in 2000 6,013,993 6,410,985
Construction in progress 85,550 0
---------- ----------
Total real estate assets 7,722,276 8,033,718
Cash and cash equivalents 120,054 197,279
Accounts receivable 95,299 109,677
Prepaid expenses and other assets, net 36,095 45,685
---------- ----------
Total assets $7,973,724 $8,386,359
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 28,030 $ 18,615
Partnership distributions payable 147,840 197,717
---------- ----------
Total liabilities 175,870 216,332
---------- ----------
Partners' capital:
Wells Real Estate Fund V 3,618,438 3,791,137
Wells Real Estate Fund VI 4,179,416 4,378,890
---------- ----------
Total partners' capital 7,797,854 8,170,027
---------- ----------
Total liabilities and partners' capital $7,973,724 $8,386,359
========== ==========
F-18
Fund V and VI Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999
---------- ---------- ----------
Revenues:
Rental income $ 990,117 $1,029,287 $1,028,611
Interest income 5,848 750 0
---------- ---------- ----------
995,965 1,030,037 1,028,611
---------- ---------- ----------
Expenses:
Depreciation 396,992 396,990 396,993
Operating costs, net of reimbursements 21,877 18,330 30,325
Management and leasing fees 62,264 67,354 65,167
Legal and accounting 12,000 7,677 7,400
Partnership administration 22,896 14,185 17,194
---------- ---------- ----------
516,029 504,536 517,079
---------- ---------- ----------
Net income $ 479,936 $ 525,501 $ 511,532
========== ========== ==========
Net income allocated to Wells Real Estate Fund V $ 222,705 $ 243,848 $ 237,527
========== ========== ==========
Net income allocated to Wells Real Estate Fund VI $ 257,231 $ 281,653 $ 274,005
========== ========== ==========
Fund V and VI 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 V Fund VI Capital
----------- ----------- -----------
Balance, December 31, 1998 $ 4,159,768 $ 4,789,883 $ 8,949,651
Net income 237,527 274,005 511,532
Partnership contributions 0 14,524 14,524
Partnership distributions (416,596) (480,571) (897,167)
----------- ----------- -----------
Balance, December 31, 1999 3,980,699 4,597,841 8,578,540
Net income 243,848 281,653 525,501
Partnership distributions (433,410) (500,604) (934,014)
----------- ----------- -----------
Balance, December 31, 2000 3,791,137 4,378,890 8,170,027
Net income 222,705 257,231 479,936
Partnership distributions (395,404) (456,705) (852,109)
----------- ----------- -----------
Balance, December 31, 2001 $ 3,618,438 $ 4,179,416 $ 7,797,854
=========== =========== ===========
F-19
Fund V and VI 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 $ 479,936 $ 525,501 $ 511,532
--------- --------- ---------
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 396,992 396,990 396,993
Changes in assets and liabilities:
Accounts receivable 14,378 25,552 (38,399)
Prepaid expenses and other assets, net 9,590 9,589 (5,675)
Accounts payable 9,415 321 1,817
Due to affiliates 0 (1,775) (5,034)
--------- --------- ---------
Total adjustments 430,375 430,677 349,702
--------- --------- ---------
Net cash provided by operating activities 910,311 956,178 861,234
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (85,550) 0 (8,235)
--------- --------- ---------
Cash flows from financing activities:
Contributions from joint venture partners 0 0 14,524
Distributions to joint venture partners (901,986) (936,556) (903,049)
--------- --------- ---------
Net cash used in financing activities (901,986) (936,556) (888,525)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (77,225) 19,622 (35,526)
Cash and cash equivalents, beginning of year 197,279 177,657 213,183
--------- --------- ---------
Cash and cash equivalents, end of year $ 120,054 $ 197,279 $ 177,657
========= ========= =========
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement
with Fund V and Fund VII. The joint venture, Fund V, VI, and VII Associates, was
formed for the purpose of investing in commercial real properties. In September
1994, Fund V, VI, and VII Associates purchased a 75,000-square foot, three-story
office building known as the Marathon Building in Appleton, Wisconsin.
F-20
Following are the financial statements for Fund V, VI, and VII Associates:
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
---------- ----------
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-21
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-22
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 VII. The joint venture, Fund VI and VII Associates, was formed for the
purpose of investing in commercial properties. In December 1994, the Partnership
contributed its interest in a parcel of land, the Stockbridge Village III Retail
Center property located in Stockbridge, Georgia, to the joint venture. The
Stockbridge Village III Retail Center property is comprised of two separate 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, the Partnership made additional capital contributions to Fund VI
and VII Associates; during 1999, the Partnership and Fund VII made additional
capital contributions to the joint venture. Ownership percentage interests were
recomputed accordingly.
F-23
Following are the financial statements for Fund VI and VII Associates:
Fund VI and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
---------- ----------
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-24
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-25
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 VII
and Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI,
VII, and VIII Associates, was formed to acquire, develop, operate, and sell real
properties. On April 25, 1995, the joint venture purchased a 5.55-acre parcel of
land in Jacksonville, Florida. A 92,964-square foot office building, known as
the BellSouth property, was completed and commenced operations in 1996. On May
31, 1995, the joint venture purchased a 14.683-acre parcel of land located in
Clemmons, Forsyth County, North Carolina. A retail shopping center, Tanglewood
Commons, was developed and was substantially completed at December 31, 1997.
F-26
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2001 and 2000
Assets
2001 2000
----------- -----------
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-27
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-28
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
=========== =========== ===========
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 $ 1,190,997 $ 1,027,798 $ 969,613
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 337,333 327,267 392,268
Expenses deductible when paid for income tax purposes,
accrued for financial reporting purposes 33,684 100 4,985
Rental income accrued for financial reporting purposes in
excess of amounts for income tax purposes 49,647 (10,329) (44,181)
Gain on sale of property for financial reporting purposes
in excess of amount for income tax purposes (159,560) 0 0
----------- ----------- -----------
Income tax basis net income $ 1,452,101 $ 1,344,836 $ 1,322,685
=========== =========== ===========
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 $16,430,507 $17,118,806 $18,056,939
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 2,093,463 1,756,130 1,428,863
Joint venture change in ownership 8,730 8,730 8,730
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of
capital for financial reporting purposes 3,655,694 3,655,694 3,655,694
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for
income tax purposes (230,129) (279,776) (269,447)
Accumulated expenses deductible when paid for
income tax purposes, accrued for financial
reporting purposes 67,830 34,147 34,047
Partnership's distributions payable 461,250 481,448 476,036
Gain on sale of property for financial reporting
purposes in excess of amount for income tax
purposes (159,560) 0 0
----------- ----------- -----------
Income tax basis partners' capital $22,327,785 $22,775,179 $23,390,862
=========== =========== ===========
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 $ 2,262,469
2003 2,046,724
2004 1,555,588
2005 1,443,772
2006 997,384
Thereafter 2,425,857
-----------
$10,731,794
===========
Four tenants contributed approximately 20%, 15%, 15%, and 13% of rental income.
In addition, three tenants will contribute approximately 28%, 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 31:
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 and VI Associates under
noncancelable operating leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 1,032,440
2003 966,018
2004 186,004
2005 96,689
2006 99,173
Thereafter 0
-----------
$ 2,380,324
===========
Two tenants contributed approximately 73% and 14% of rental income for the year
ended December 31, 2001. In addition, three tenants will contribute
approximately 58%, 20%, and 15% of future minimum rental income.
The future minimum rental income due Fund V, VI, and VII Associates under
noncancelable operating leases at December 31, 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.
F-31
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.
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.
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 $244,007 $264,062 $296,046 $477,136
Net income 223,624 235,557 278,977 452,839
Net income allocated to Class A limited
partners 223,624 235,557 278,977 452,839
Net income per weighted average Class A
limited partner unit $0.10 $0.11 $0.13 $0.20
Distribution per weighted average Class A
limited partner unit 0.22 0.21 0.21 0.21
F-32
2000 Quarters Ended
-----------------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
Revenues $289,216 $269,631 $265,965 $282,976
Net income 263,183 243,852 255,374 265,389
Net income allocated to Class A limited
partners 263,183 243,852 255,374 265,389
Net income per weighted average Class A
limited partner unit $0.12 $0.11 $0.12 $0.12
Distribution per weighted average Class A
limited partner unit 0.23 0.23 0.23 0.20
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
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund V, L.P. and
Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of THE HARTFORD BUILDING as of
December 31, 2001 and 2000 and the related statements of income, partners'
capital, and cash flows for each of the three years in the period ended December
31, 2001. These financial statements are the responsibility of the property'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 The Hartford Building 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.
Atlanta, Georgia
January 25, 2002
F-34
THE HARTFORD BUILDING
BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
ASSETS
2001 2000
---------- ----------
REAL ESTATE ASSETS:
Land $ 528,042 $ 528,042
Building and improvements, less accumulated depreciation of
$2,128,853 in 2001 and $1,836,822 in 2000 4,758,900 4,965,619
---------- ----------
Total real estate assets 5,286,942 5,493,661
CASH AND CASH EQUIVALENTS 52,579 120,872
ACCOUNTS RECEIVABLE 32,855 19,544
---------- ----------
Total assets $5,372,376 $5,634,077
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable $ 10,195 $ 1,000
Distributions payable to partners 90,021 169,716
Due to affiliate 0 0
---------- ----------
Total liabilities 100,216 170,716
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' CAPITAL:
Wells Real Estate Fund V, L.P. 2,782,049 2,884,693
Wells Real Estate Fund VI, L.P. 2,490,111 2,578,668
---------- ----------
Total partners' capital 5,272,160 5,463,361
---------- ----------
Total liabilities and partners' capital $5,372,376 $5,634,077
========== ==========
The accompanying notes are an integral part of these balance sheets.
F-35
THE HARTFORD BUILDING
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
-------- -------- --------
REVENUES:
Rental income $717,499 $717,499 $717,499
Interest income 5,848 750 0
-------- -------- --------
723,347 718,249 717,499
-------- -------- --------
EXPENSES:
Depreciation 292,031 292,031 292,031
Operating costs, net of reimbursements 16,230 8,001 7,582
Management and leasing fees 29,160 29,133 28,968
Legal and accounting 6,500 4,250 3,700
-------- -------- --------
343,921 333,415 332,281
-------- -------- --------
NET INCOME $379,426 $384,834 $385,218
======== ======== ========
The accompanying notes are an integral part of these statements.
F-36
THE HARTFORD BUILDING
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
Wells Real Wells Real Total
Estate Estate Partners'
Fund V, L.P. Fund VI, L.P. Capital
----------- ----------- -----------
BALANCE, December 31, 1998 $ 3,162,033 $ 2,918,791 $ 6,080,824
Net income 178,879 206,339 385,218
Distributions (317,598) (371,351) (688,949)
----------- ----------- -----------
BALANCE, December 31, 1999 3,023,314 2,753,779 5,777,093
Net income 178,574 206,260 384,834
Distributions (317,195) (381,371) (698,566)
----------- ----------- -----------
BALANCE, December 31, 2000 2,884,693 2,578,668 5,463,361
Net income 176,065 203,361 379,426
Distributions (278,709) (291,918) (570,627)
----------- ----------- -----------
BALANCE, December 31, 2001 $ 2,782,049 $ 2,490,111 $ 5,272,160
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-37
THE HARTFORD BUILDING
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 379,426 $ 384,834 $ 385,218
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 292,031 292,031 292,031
Changes in assets and liabilities:
Accounts receivable (13,311) 6,701 6,703
Accounts payable 9,195 1,000 (1,550)
Due to affiliate 0 0 0
--------- --------- ---------
Total adjustments 287,915 299,732 297,184
--------- --------- ---------
Net cash provided by operating activities 667,341 684,566 682,402
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate (85,312) 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid to partners (650,322) (698,880) (695,749)
--------- --------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (68,293) (14,314) (13,347)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 120,872 135,186 148,533
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 52,579 $ 120,872 $ 135,186
========= ========= =========
The accompanying notes are an integral part of these statements.
F-38
THE HARTFORD BUILDING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000, AND 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Hartford Building ("Hartford") is a four-story office building located in
Southington, Connecticut, and is owned by Fund V and Fund VI Associates, a joint
venture between Wells Real Estate Fund V, L.P. ("Fund V") and Wells Real Estate
Fund VI, L.P. ("Fund VI"). As of December 31, 2001 and 2000, Fund V owned 46%
and Fund VI owned 54% of The Hartford Building, respectively. Allocations of net
income and distributions are made in accordance with ownership percentages.
Use of Estimates
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.
Income Taxes
The Hartford Building is not deemed to be a taxable entity for federal income
tax purposes.
Real Estate Assets
Real estate assets 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 Hartford as of December 31, 2001 or December 31, 2000.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized over the
life of the related lease or the life of the asset, whichever is shorter.
Revenue Recognition
The lease on The Hartford Building is classified as an operating lease, and the
related rental income is recognized on a straight-line basis over the term of
the lease.
F-39
Cash and Cash Equivalents
For the purposes of the statements of cash flows, Hartford 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.
2. RENTAL INCOME
The future minimum rental income due to Hartford under noncancelable operating
leases at December 31, 2001 is as follows:
Year ending December 31:
2002 $ 724,400
2003 663,850
2004 0
2005 0
2006 0
Thereafter 0
----------
$1,388,250
==========
One tenant contributed 100% of rental income for the year ended December 31,
2001 and represents 100% of the future minimum rental income above.
3. RELATED-PARTY TRANSACTIONS
Fund V and Fund VI Associates entered into a property management agreement with
Wells Management Company, Inc. ("Wells Management"), an affiliate of Fund V and
Fund VI Associates. In consideration for supervising the management of The
Hartford Building, Fund V and Fund VI Associates generally pays 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.
Hartford incurred management and leasing fees of $29,160, $29,133, and $28,968
for the years ended December 31, 2001, 2000, and 1999, respectively.
4. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against The Hartford Building and its partners.
In the normal course of business, The Hartford Building and its partners may
become subject to such litigation or claims.
F-40
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VI, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Exhibit
Number Description of Document
- ------- -----------------------
*3(a) Certificate of Limited Partnership of Wells Real Estate Fund VI,
L.P. (Exhibit 3(c) to Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No.
33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate Fund VI, L.P.
(Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the
fiscal year ended December 31, 1993, File No. 0-23656)
*10(a) Management Agreement between Wells Real Estate Fund VI, L.P. and
Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real
Estate Fund VI, L.P. for the fiscal year ended December 31, 1993,
File No. 0-23656)
*10(b) Leasing and Tenant Coordinating Agreement between Wells Real Estate
Fund VI, L.P. and Wells Management Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1993, File No. 0-23656)
*10(c) Custodial Agency Agreement dated March 25, 1993, between Wells Real
Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to
Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1993, File No. 0-23656)
*10(d) Fund V and Fund VI Associates Joint Venture Agreement dated December
27, 1993 (Exhibit 10(g) to Post-Effective Amendment No. 1 to
Registration Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(e) Sale and Purchase Agreement dated November 17, 1993, with Hartford
Accident and Indemnity Company (Exhibit 10(h) to Post-Effective
Amendment No. 1 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(f) Lease with Hartford Fire Insurance Company December 29, 1993
(Exhibit 10(i) to Post-Effective Amendment No. 1 to Registration
Statement of
Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
*10(g) Amended and Restated Custodial Agency Agreement dated April 1, 1994,
between Wells Real Estate Fund VI, L.P. and NationsBank of Georgia,
N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for
the fiscal year ended December 31, 1994, File No. 0-23656)
*10(h) First Amendment to Joint Venture Agreement of Fund V and Fund VI
Associates dated July 1, 1994 (Exhibit 10(x) to Form 10-K of Wells
Real Estate Fund V, L.P. for the fiscal year ended December 31,
1994, File No. 0-21580)
*10(i) Land and Building Lease Agreement dated March 29, 1994, between
Apple Restaurants, Inc. and NationsBank of Georgia, N.A., as Agent
for Wells Real Estate Fund V, L.P. (Exhibit 10(y) to Form 10-K of
Wells Real Estate Fund V, L.P. for the fiscal year ended December
31, 1994, File No. 0-21580)
*10(j) Building Lease Agreement dated September 9, 1994, between Glenn's
Open-Pit Bar-B-Que, Inc. and NationsBank of Georgia, N.A., as Agent
for Fund V and Fund VI Associates (Exhibit 10(z) to Form 10-K of
Wells Real Estate Fund V, L.P. for the fiscal year ended December
31, 1994, File No. 0-21580)
*10(k) 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 Registration
Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate
Fund VII, L.P., File No. 33-55908)
*10(l) Agreement for the Purchase and Sale of Property dated August 24,
1994, between Interglobia Inc. - Appleton and NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit
10(k) to Post-Effective Amendment No. 6 to Registration Statement of
Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
*10(m) Assignment and Assumption of Agreement for the Purchase and Sale of
Real Property dated September 9, 1994, between NationsBank of
Georgia, N.A., as Agent for Fund V and Fund VI Associates, and
NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund
VII Associates (Exhibit 10(l) to Post-Effective Amendment No. 6 to
Registration Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(n) Building Lease dated February 14, 1991, between Interglobia Inc. -
Appleton and Marathon Engineers/Architects/Planners, Inc. (included
as
2
part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6
to Registration Statement of Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(o) 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(p) below, which is
included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(p) Assignment, Assumption and Amendment of Lease dated January 1, 1993,
among Interglobia Inc.- Appleton, Marathon
Engineers/Architects/Planners, Inc. and Jaakko Poyry Fluor Daniel
(included as part of Exhibit D to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(q) Second Amendment to Building lease dated August 15, 1994, between
Interglobia Inc. - Appleton and Jaakko Poyry Fluor Daniel
(successor-in-interest to Marathon Engineers/Architects/Planners,
Inc.) (included as Exhibit D-1 to Exhibit 10(k) to Post-Effective
Amendment No. 6 to Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(r) Assignment and Assumption of Lease dated September 6, 1994, between
Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as
Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(q) to
Post-Effective Amendment No. 6 to Registration Statement of Wells
Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(s) Agreement for the Purchase and Sale of Real Property dated April 7,
1994, between 138 Industrial Ltd. and NationsBank of Georgia, N.A.,
as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K
of Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1994, File No. 0-23656)
*10(t) 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
to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
3
*10(u) Joint Venture Agreement of Fund VI and Fund VII Associates dated
December 9, 1994 (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(v) Building Lease Agreement dated December 19, 1994, between Damon's of
Stockbridge, LLC d/b/a Damon's Clubhouse and NationsBank of Georgia,
N.A., as Agent for Fund VI and Fund VII Associates (Exhibit to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1994, File No. 0-23656)
*10(w) Joint Venture Agreement of Fund II, III, VI and VII Associates dated
January 10, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI,
L.P. for the fiscal year ended December 31, 1995, File No. 0-23656)
*10(x) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII
Associates, dated April 17, 1995 (Exhibit 10(q) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(y) Agreement for the Purchase and Sale of Real Property dated 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(z) 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(aa) 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(bb) 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(cc) 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-
4
11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(dd) First Amendment to Joint Venture Agreement of Fund VI and Fund VII
Associates dated May 25, 1995, filed herewith
*10(ee) 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(ff) 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)
*10(gg) 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(hh) 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(ii) Joint Venture Agreement of Fund I, II, II-OW, VI and VII Associates
dated August 1, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund
VI, L.P. for the fiscal year ended December 31, 1995, File No.
0-23656)
*10(jj) 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(kk) Purchase and Sale Agreement for the sale of the Cherokee Commons
Shopping Center dated August 6, 2001 (Exhibit 10(p) to the Form 10-K
of Wells Real Estate Fund I for the fiscal year ended December 31,
2001, File No. 0-14463)
5