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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, 1997 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 0-22039
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Wells Real Estate Fund IX, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2126622
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
3885 Holcomb Bridge Road
Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
NONE
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(Title of Class)
NONE
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Aggregate market value of the voting stock held by non-affiliates: Not Applicable
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PART I
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ITEM 1. BUSINESS
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GENERAL
Wells Real Estate Fund IX, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P., a non-public
Georgia limited partnership, as General Partners. The Partnership was formed on
August 15, 1994, for the purpose of acquiring, developing, constructing, owning,
operating, improving, leasing, and otherwise managing for investment purposes
income- producing commercial properties or industrial properties.
On January 5, 1996, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations on February 12, 1996, when it received
and accepted subscriptions for 125,000 units. The offering was terminated on
December 30, 1996, at which time the Partnership had sold 2,935,931 Class A
Status Units, and 564,069 Class B Status Units, held by a total of 1,841 and 257
Class A and Class B Limited Partners respectively, for total Limited Partner
capital contributions of $35,000,000.
The Partnership owns interests in properties through equity ownership in the
following joint ventures: (i) Fund VIII and Fund IX Associates, a joint venture
between the Partnership and Wells Real Estate Fund VIII, L.P. (the "Fund VIII -
Fund IX Joint Venture"), and (ii) Fund IX and Fund X Associates, a joint venture
between the Partnership and Wells Real Estate Fund X, L.P. (the "Fund IX - Fund
X Joint Venture").
As of December 31, 1997, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a four-
story office building in Madison, Wisconsin (the "US Cellular Building"), which
is owned by the Fund VIII - Fund IX Joint Venture; (ii) a one-story office
building in Farmer's Branch, Texas (the "TCI Building"), which is owned by the
Fund VIII - Fund IX Joint Venture; (iii) a three-story office building under
construction in Knoxville, Tennessee (the "ABB Building"), which is owned by the
Fund IX - Fund X Joint Venture; (iv) a two-story office building in Irvine,
California (the "Matsushita Building"), which is owned by the Fund VIII - Fund
IX Joint Venture; and (v) a two-story office building in Boulder County,
Colorado (the "Cirrus Logic Building"), which is owned by the Fund VIII -Fund IX
Joint Venture.
EMPLOYEES
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
the sole general partner of Wells Partners, L.P., a General Partner of the
Partnership, perform a full range of real estate services including leasing and
property management, accounting, asset management and investor relations for the
Partnership. See Item 11 "Compensation of General Partners and Affiliates," for
a summary of the fees paid to the General Partners and their affiliates during
the fiscal year ended December 31, 1997.
2
INSURANCE
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management
of the registrant, the properties are adequately insured.
COMPETITION
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES.
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The Partnership owns interests in five properties through its investment in
joint ventures of which all are office buildings. The Partnership does not have
control over the operations of the joint ventures; however, it does exercise
significant influence. Accordingly, investment in joint ventures is recorded on
the equity method. As of December 31, 1997, these properties were 84.42%
occupied, down from 100% at December 31, 1996.
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 1997, assuming no exercise of renewal options
or termination rights:
PARTNERSHIP PERCENTAGE OF
SHARE OF TOTAL
NUMBER OF ANNUALIZED ANNUALIZED PERCENTAGE OF ANNUALIZED
YEAR OF LEASE LEASES SQUARE FEET GROSS BASE GROSS BASE TOTAL SQUARE GROSS BASE
EXPIRATION EXPIRING EXPIRING RENT (1) RENT (1) FEET EXPIRING RENT
- --------------- ---------- ------------ ----------- ------------ --------------- -------------
1998 - - - - - -
1999 - - - - - -
2000 - - - - - -
2001 - - - - - -
2002 - - - - - -
2003 - - - - -
2004 - - - - - -
2005 - - - - - -
2006 - - - - - -
2007 (2) 2 131,276 $1,646,648 $822,220 100.0% 100.0%
- --------------- ---------- ------------ ----------- ------------ --------------- -------------
2 131,276 $1,646,648 $822,220 100.0% 100.0%
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(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of 76,276 square feet of US Cellular lease, Madison, Wisconsin,
and 55,000 square feet of ABB lease, Knoxville, Tennessee.
3
The following describes the properties in which the Partnership owns an interest
as of December 31, 1997:
FUND VIII - FUND IX JOINT VENTURE
- ---------------------------------
On June 10, 1996, the Partnership and Wells Real Estate Fund VIII, L.P. ("Wells
Fund VIII"), a Georgia public limited partnership, affiliated with the
Partnership through common general partners, formed a joint venture known as
Fund VIII and Fund IX Associates (the "Fund VIII - Fund IX Joint Venture"). The
investment objectives of Wells Fund VIII are substantially identical to those of
the Partnership. As of December 31, 1997, the Partnership had contributed
$14,389,358 for an approximately 50% equity interest, and Wells Fund VIII had
contributed $14,401,425 for an approximately 50% equity interest in the Fund
VIII - Fund IX Joint Venture. Although the ultimate percentages of ownership in
the Fund VIII - Fund IX Joint Venture have not yet been finally determined, it
is anticipated that Wells Fund VIII will contribute the remaining cost of
approximately $500,000 to complete the US Cellular Building, in which event, the
Partnership would have an approximately 49% equity interest in the Fund VIII
Fund IX Joint Venture.
US Cellular Building
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On June 17, 1996, the Fund VIII - Fund IX Joint Venture purchased a 7.09 acre
tract of real property in Madison, Dane County, Wisconsin for a total cost of
$859,255 including closing costs. The majority of construction has been
completed on a four-story office building containing approximately 101,727
rentable square feet (the "US Cellular Building").
In June, 1997, US Cellular, a subsidiary of BellSouth Corporation, occupied its
leased space of 76,276 rentable square feet comprising approximately 75% of the
building. The initial term of the lease is 9 years and 11 months beginning in
June 1997, with the option to extend the initial term of the lease for two
consecutive five year periods. The annual base rent payable during the initial
term is $902,418 payable in equal monthly installments of $75,201 during the
first five years and $1,016,822 payable in equal monthly installments of $84,735
during the last four years and 11 months of the initial term. The annual base
rent for each extended term will be at market rental rates. US Cellular is
required to pay additional rent equal to its share of operating expenses during
the lease term. Cellular One changed its name to US Cellular as of October 31,
1997.
The land purchase and construction costs, to date, have been funded by capital
contributions of $5,012,444 by the Partnership and $4,987,444 by Wells Fund
VIII. It is currently anticipated that the total cost to complete the property
is estimated to be approximately $10,500,000. It is anticipated that Wells Fund
VIII will fund the approximately $500,000 needed to complete construction on
this project.
4
The average effective annual rental per square foot at the US Cellular Building
was $8.87 for 1997, the first year of occupancy. The occupancy rate at year end
was 75% in 1997.
The TCI Building
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On October 10, 1996, the Fund VIII - Fund IX Joint Venture purchased a one-story
office building containing approximately 40,000 rentable square feet, located on
approximately 4.864 acres of land in Farmer's Branch, Dallas County, Texas for a
purchase price of $4,450,000 excluding acquisition costs (the "TCI Building").
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the TCI
Building were derived from capital contributions made by the Partnership and
Wells Fund VIII totaling $2,236,530 and $2,238,170, respectively, for total
contributions to the Fund VIII - Fund IX Joint Venture of $4,474,700, including
acquisition costs. The Partnership currently owns an approximately 50% equity
interest in the Fund VIII - Fund IX Joint Venture.
The TCI Building is leased to TCI Valwood Limited Partnership I for a period of
fifteen years, with options to extend the lease for three consecutive five-year
periods. The annual base rent is $430,001 during the first five years, $454,001
during the next five years and $482,001 during the last five years. The TCI
lease commenced on July 19, 1996 and was assigned by the seller to the Fund VIII
- - Fund IX Joint Venture on October 10, 1996. The lease agreement is a net lease
in that the tenant is responsible for the operating expenses including real
estate taxes.
The occupancy rate at the TCI Building at year end was 100% in 1997 and for the
last three months of 1996. The average effective rental per square foot in the
TCI Building is $11.49 for 1997 and 1996, the first year of ownership.
The Matsushita Building
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On January 10, 1997, the Fund VIII - Fund IX Joint Venture acquired a two story
office building containing approximately 65,006 rentable square feet on a 4.4
acre tract of land located at 15253 Bake Parkway, in the Irvine Spectrum planned
business community in metropolitan Orange County, California (the "Matsushita
Building"). The total consideration paid for the Matsushita Building was
$7,193,000 excluding acquisition expenses.
The Matsushita Building was originally constructed in 1984 and was completely
refurbished in 1996. The entire Matsushita Building is currently under a net
lease dated April 29, 1996 (the "Lease") to Matsushita Avionics Systems
Corporation, a Delaware corporation ("Matsushita Avionics"), which Lease was
assigned to the Fund VIII - Fund IX Joint Venture at the closing. The Lease
currently expires in September 2003, and Matsushita Avionics has the option to
extend the Lease for two additional five-year periods.
The Lease provides that Matsushita Avionics' rental payment obligations do not
commence until the ninth month of the lease term which commenced when Matsushita
Avionics took possession in September 1996. Commencing in May 1997, the ninth
month of the lease term, the monthly base rental payable by Matsushita Avionics
under the Lease is $45,879.47 through the 12th month
5
of the lease term. The monthly base rental payable under the Lease for the 13th
month of the lease term through the 30th month of the lease term is $57,709.47;
the monthly base rental payable for the 31st month of the lease term through the
60th month of the lease term is $59,611.98, and the monthly base rental payable
for the 61st month of the lease term through the 84th month of the lease term is
$61,831.58. The base rental payable during the option periods, if Matsushita
Avionics exercises its option to extend the Lease, is 95% of the then current
market rental rate for office space in other comparable buildings located in the
Irvine area of southern California. Under the Lease, Matsushita Avionics is
responsible for all utilities, taxes, insurance and other operating expenses
during the term of the Lease.
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the
Matsushita Building were derived entirely from capital contributions made to the
Fund VIII Fund IX Joint Venture by the Partnership and Wells Fund VIII. The
Partnership and Wells Fund VIII made capital contributions of approximately
$3,608,109 and $3,620,316, respectively, to fund the purchase of the building,
for total capital contributions to the Fund VIII - Fund IX Joint Venture with
respect to the Matsushita Building of approximately $7,228,425.
The average effective rental per square foot at the Matsushita building is $9.91
for 1997, the first year of ownership. The occupancy rate at year end was 100%
in 1997.
For additional information regarding the Matsushita Building, refer to the Form
8-K of Wells Real Estate Fund IX, L.P. dated January 10, 1997 (Commission File
No. 0-22039).
The Cirrus Logic Building
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On February 20, 1997, the Fund VIII - Fund IX Joint Venture acquired a 4.26 acre
tract of real property in Broomfield, Colorado, located in Boulder County in the
Denver/Boulder metropolitan area (the "Denver Property"). A two-story office
building containing approximately 50,400 rentable square feet has been
constructed on the Denver Property (the "Cirrus Logic Building"). The Denver
Property is part of the Interlocken Business Park, a 963-acre business
development for advanced technology and research/development oriented companies.
The purchase price paid for the Cirrus Logic Building was $7,029,000, excluding
acquisition costs. Construction of the Cirrus Logic building was substantially
completed in March 1997 with Cirrus Logic, Inc. occupying the entire building.
Cirrus Logic is a Nasdaq-listed corporation and will use the leased premises as
office space for employees who design computer chips for the company's mass
storage division. The lease, as well as Cirrus Logic's obligation to pay rent,
commenced on the date upon which Cirrus Logic took occupancy of the building.
The lease with Cirrus Logic provides for a term of 15 years from the
commencement date. Cirrus Logic has the option to renew the lease for two
additional terms of five years each. The base rental payable during any such
extended term would be 95% of the then current market rental rate for comparable
office buildings in the Boulder County area.
The initial base annual rent payable by Cirrus Logic under its lease is equal to
10.29% of the costs related to acquiring the Denver Property and constructing
the Cirrus Logic Building; however, in no event shall the initial base annual
rent exceed $13.81 per square foot of leasable
6
space. The base annual rent derived from this formula will be increased by 10%
beginning with the sixth year of the lease and will be increased another 10%
beginning with the eleventh year of the lease.
Under its lease, Cirrus Logic is responsible for all utilities, cleaning, taxes
and other operating expenses and for maintaining property and liability
insurance on the Cirrus Logic Building. The Fund VIII - Fund IX Joint Venture
shall maintain for its own benefit liability insurance for the Cirrus Logic
Building as well as insurance for fire, vandalism and malicious mischief.
The funds used by the Fund VIII - IX Joint Venture to acquire the Cirrus Logic
Building were derived entirely from capital contributions made to the Fund VIII
- - IX Joint Venture by the Partnership and Wells Fund VIII. The Partnership and
Wells Fund VIII each made capital contributions of approximately $3,532,275 and
$3,555,495, respectively, to fund the purchase of the property, for total
capital contributions to the Fund VIII - Fund IX Joint Venture with respect to
the Cirrus Logic Building of approximately $7,087,770.
The average effective rental rate per square foot at the Cirrus Logic Building
is $13.25 for 1997, the first year of occupancy. The occupancy rate at year end
was 100% in 1997.
For additional information regarding the Cirrus Logic Building, refer to the
Form 8-K of Wells Real Estate Fund IX, L.P. dated February 20, 1997 (Commission
File No. 0-22039).
FUND IX - FUND X JOINT VENTURE
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On March 20, 1997, the Partnership and Well Real Estate Fund X, L.P. ("Wells
Fund X"), a Georgia public limited partnership affiliated with the Partnership
through common general partners, formed a joint venture known as Fund IX and
Fund X Associates (the "Fund IX-X Joint Venture"). Although the ultimate
percentages of ownership in the Fund IX-X Joint Venture have not yet been
finally determined, it is anticipated that the Partnership will hold an
approximately 50% equity interest in the two properties described below. The
Partnership has reserved sufficient funds for this purpose. The total cost to
complete both properties is anticipated to be approximately $13,000,000. As of
December 31, 1997, the Partnership had contributed $4,191,765, and Wells Fund X
had contributed $4,150,000, for total contributions of $8,341,765 to the Fund IX
- - Fund X Joint Venture for the acquisition and development of the two
properties. At this time, the Partnership's equity interest in the Fund IX -
Fund X Joint Venture is approximately 50.3%, and Well's Fund X equity interest
in the Fund IX - Fund X Joint Venture is 49.7%. The Partnership has reserved
sufficient funds to complete these projects.
The ABB Property
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On March 20, 1997, the Partnership contributed a 5.62 acre tract of real
property in Knoxville, Knox County, Tennessee and improvements thereon (the "ABB
Property"), valued at $1,306,393. As of December 31, 1997, the Partnership had
contributed $3,541,764 and Wells Fund X had contributed $3,500,000 toward the
development of this project for total contributions of $7,041,764.
7
A three-story office building containing approximately 83,885 rentable square
feet is under construction on the site. An agreement was signed with ADEVCO
Corporation to supervise, manage and coordinate the planning, design,
construction and completion of the property. Integra Construction, Inc. is
acting as the general contractor and Smallwood, Reynolds, Stewart, Stewart
Associates, Inc. as the architect.
ABB Environmental Systems, a subsidiary of ABB, Inc., has executed a lease for
55,000 rentable square feet comprising approximately 66% of the building. The
initial term of the lease will be 9 years and 11 months commencing on
substantial completion of the project which is currently anticipated to be
January 1, 1998. ABB has the option to extend the initial term of the lease
for two consecutive five year periods. The annual base rent payable during the
initial term is $646,250 payable in equal monthly installments of $53,854 during
the first five years and $728,750 payable in equal monthly installments of
$60,729 during the last four years and 11 months of the initial term. The
annual base rent for each extended term will be at market rental rates. In
addition to the base rent, ABB is required to pay additional rent equal to its
share of operating expenses during the lease term.
It is currently anticipated that the total cost to complete this project will be
approximately $7,800,000. Although the ultimate percentage of ownership in the
Fund IX - Fund X Joint Venture has not yet been finally determined, it is
currently anticipated that the Partnership will contribute approximately
$358,235 and Wells Fund X will contribute approximately $400,000 to the
remaining cost of approximately $758,235 for an approximate 50% equity interest
each.
The Partnership has reserved sufficient funds for this purpose. For further
information regarding the ABB Property and the formation of the Fund IX - Fund X
Joint Venture for the development of the ABB Property, refer to Form 8-K of
Wells Real Estate Fund IX, L.P. dated December 13, 1996 (Commission File No. 33-
83852-01) and Supplement No. 1 dated March 27, 1997, to the Prospectus of Wells
Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P. dated December 31,
1996, contained in Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.,
which was filed with the Commission on April 1, 1997 (Commission File No. 333-
7979).
Oklahoma City Project
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On May 30, 1997, the Fund IX - Fund X Joint Venture entered into an agreement
for the purchase and sale of real property with Wells Development Corporation
("Wells Development"), an affiliate of the General Partners, for the acquisition
of a one-story building to be developed on property located in Oklahoma City,
Oklahoma (the "Oklahoma City Project"). It is anticipated that the Fund IX -
Fund X Joint Venture will purchase the Oklahoma City Project for a purchase
price which is currently anticipated to be approximately $5,200,000. Under the
terms of its contract with Wells Development, the Fund IX - Fund X Joint Venture
was required to make an earnest money deposit to Wells Development in the amount
of $1,300,000. The earnest money deposit was used to fund the purchase of the
land upon which the Oklahoma City property will be developed and will also be
used to fund the initial costs of construction and development of the project.
The Partnership and Wells Fund X made the required escrow contribution of
8
$650,000 each on behalf of the Fund IX - Fund X Joint Venture to Wells
Development Corporation.
The site of the Oklahoma City Project consists of approximately 5.3 acres and,
when completed, the Oklahoma City Project will be a one-story office building
containing 57,186 net rentable square feet. An agreement was signed with ADEVCO
Corporation to supervise, manage and coordinate the planning, design,
construction and completion of the property.
Lucent Technologies, Inc., a world-wide leader in the telecommunications
technology producing a variety of communication products, has executed a lease
agreement with Wells Development to lease the entire Oklahoma City Project upon
completion. The initial item of the lease will be ten years commencing on
substantial completion of the project which is currently anticipated to be
January 1, 1998. Lucent Technologies has the option to extend the initial term
of the lease for two additional five year periods. The annual base rent payable
during the initial term is $508,383 payable in equal monthly installment of
$42,365 during the first five years and $594,152 payable in equal monthly
installments of $49,513 during the second five years of the lease term. The
annual base rent for each extended term will be at market rental rates. In
addition to the base rent, Lucent Technologies will be required to pay
additional rent equal to its share of operating expenses during the lease term.
It is currently anticipated that the total cost to complete the property which
is estimated to be approximated $5,200,000, will be contributed equally by the
Partnership and Wells Fund X for an ultimate percentage ownership of
approximately 50% for each partnership. The Partnership has reserved sufficient
funds for this purpose. For further information regarding the contract entered
into between the Fund IX - Fund X Joint Venture and Wells Development and the
development of the Oklahoma City Project, refer to Supplement No. 2 dated
September 17, 1997, to the Prospectus of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P. dated December 31, 1996, contained in Post-
Effective Amendment No. 2 to the Registration Statement of Wells Real Estate
Fund X, L.P. and Wells Real Estate Fund XI, L.P., which was filed with the
Commission on June 17, 1997 (Commission File No. 333-7979).
ITEM 3. LEGAL PROCEEDINGS
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There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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No matters were submitted to a vote of the Limited Partners during the fourth
quarter of 1997.
9
PART II
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ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
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The offering for sale of Units in the Partnership terminated on December 30,
1996, at which time the Partnership had 2,935,931 outstanding Class A Status
Units held by a total of 1,841 Limited Partners and 564,069 outstanding Class B
Status Units held by a total of 257 Limited Partners. The capital contribution
per unit is $10.00. There is no established public trading market for the
Partnership's limited partnership units, and it is not anticipated that a public
trading market for the units will develop. Under the Partnership Agreement, the
General Partners have the right to prohibit transfers of units.
Class A Status Limited Partners are entitled to a distribution from Net Cash
from Operations, as defined in the Partnership Agreement to mean cash flow, less
adequate cash reserves for other obligations of the Partnership for which there
is no provision, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of Net Cash From Operations equal to 10% of the total amount
of Net Cash From Operations distributed. Thereafter, the Limited Partners
holding Class A Status Units will receive 90% of Net Cash From Operations and
the General Partners will receive 10%. No Net Cash from Operations will be
distributed to Limited Partners holding Class B Status Units. Holders of Class
A Status Units will, except in limited circumstances, be allocated none of the
Partnership's net loss, depreciation, amortization and cost recovery deductions.
These deductions will be allocated to the Class B Status Units, until their
capital account balances have been reduced to zero. No distributions have been
made to the General Partners as of December 31, 1997.
Cash available to distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A Status Limited Partners during the
two most recent fiscal years were as follows:
PER CLASS A STATUS UNIT
--------------------------------------------
DISTRIBUTION FOR TOTAL CASH INVESTMENT RETURN OF
QUARTER ENDED DISTRIBUTED INCOME CAPITAL
- ------------------------ -------------- ------------- -------------
March 31, 1996 $ 0 $0.00 $0.00
June 30, 1996 $ 0 $0.00 $0.00
September 30, 1996 $149,279 $0.19 $0.00
December 31, 1996 $178,917 $0.09 $0.00
March 31, 1997 $222,805 $0.09 $0.00
June 30, 1997 $275,283 $0.09 $0.00
September 30, 1997 $395,513 $0.13 $0.00
December 31, 1997 $397,755 $0.15 $0.00
10
The fourth quarter distribution was accrued for accounting purposes in 1997, and
was not actually paid to Limited Partners until February, 1998. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Status Units will continue in 1998 at a level
at least comparable with 1997 cash distributions on an annual basis.
ITEM 6. SELECTED FINANCIAL DATA.
- ---------------------------------
The Partnership did not commence active operations until it received and
accepted subscriptions for a minimum of 125,000 Units on February 12, 1996, and
accordingly, there is no comparative financial data available from prior fiscal
years. As of December 31, 1995, the Partnership's assets totaled approximately
$142,829 consisting primarily of the General Partners' capital contributions and
deferred offering costs.
The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 1997, and the eleven months ended December 31, 1996:
1997 1996
---------------- ---------------
Total assets $29,945,898 $30,913,877
Total revenues 1,199,300 406,891
Net income 1,091,766 298,756
Net loss allocated
to General Partners (206) (294)
Net income allocated to
Class A Limited Partners 1,564,778 330,270
Net loss allocated to
Class B Limited Partners (472,806) (31,220)
Net income per weighted
average (1) Class A
Limited Partner Unit 0.53 0.28
Net loss per weighted
average (1) Class B
Limited Partner Unit (0.77) (0.11)
Cash Distributions per
weighted average (1)
Class A Limited Partner Unit:
Investment Income 0.46 0.28
Return of Capital 0.00 0.00
- ----------
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased by
Limited Partners in the Partnership.
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- -------------------------------------------------------------------------
RESULTS OF OPERATION.
- ---------------------
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying financial statements of the
Partnership and notes thereto.
This Report contains forward-looking statements, within the meaning of Section
27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of
1934, including discussion and analysis of the financial condition of the
Partnership, anticipated capital expenditures required to complete certain
projects, amounts of cash distributions anticipated to be distributed to Limited
Partners in the future and certain other matters. Readers of this Report should
be aware that there are various factors that could cause actual results to
differ materially from any forward-looking statement made in the Report, which
include construction costs which may exceed estimates, construction delays,
lease-up risks, inability to obtain new tenants upon the expiration of existing
leases, and the potential need to fund tenant improvements or other capital
expenditures out of operating cash flow.
RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITIONS
- ---------------------------------------------------------
General
- -------
The Partnership commenced active operations on February 12, 1996, when it
received and accepted subscriptions for 125,000 units. The offering was
terminated on December 30, 1996, at which time the Partnership had sold
2,935,931 Class A Status Units and 564,069 Class B Status Units, held by a total
of 1,841 and 257 Limited Partners respectively, for total Limited Partner
contributions of $35,000,000. After payment of $1,400,000 in Acquisition and
Advisory Fees and expenses, payment of $5,250,000 in selling commissions and
organization and offering expenses, the investment by the Partnership of
$14,389,359 in the Fund VIII - Fund IX Joint Venture, and $3,541,765 in the Fund
IX - Fund X Joint Venture, and $650,000 escrow contribution on behalf of the
Fund IX Fund X Joint Venture, as of December 31, 1997, the Partnership was
holding net offering proceeds of $9,768,877 available for investment in
properties.
It is anticipated that an additional investment in the Fund VIII - Fund IX Joint
Venture of approximately $500,000 will be required to complete US Cellular
Building and an additional investment in the Fund IX - Fund X Joint Venture of
approximately $758,235 will be required to complete the ABB Project and
$3,900,000 will be required to complete the acquisition of the Lucent Project.
The Partnership has reserved $2,308,235 out of its net offering proceeds of
approximately $9,768,877 available for investment in properties for these
purposes.
Gross revenues of the Partnership were $1,199,300 for the year ended December
31, 1997, as compared to $406,891 for the eleven months ended December 31, 1996.
This increase was attributable primarily to increased investments in joint
ventures and varying interest income earned on funds held by the Partnership.
Expenses of the Partnership were $107,534 for 1997, as compared to $108,135 for
the eleven months ended December 31, 1996, and consisted primarily of legal,
accounting and partnership administrative costs. Net income of the Partnership
was
12
$1,091,766 for the year ended December 31, 1997, as compared to $298,756 for the
eleven months ended December 31, 1996.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed of," which is
effective for fiscal years beginning after December 15, 1995. SFAS No. 121
establishes standards for determining when impairment losses on long-lived
assets have occurred and how impairment losses should be measured. The joint
ventures adopted SFAS No. 121, effective January 1, 1995. The impact of
adopting SFAS No. 121 was not material to the financial statements of the joint
ventures.
The Partnership made cash distributions of investment income to Limited Partners
holding Class A Status Units of $0.46 per Class A Status Unit for the year ended
December 31, 1997, and $0.28 per Class A Status Unit for the eleven months ended
December 31, 1996. The General Partners anticipate distributions per Unit will
continue to increase for Limited Partners holding Class A Status Units in 1998.
Distributions accrued for the fourth quarter of 1997 to the Limited partners
holding Class A Status Units were paid in February, 1998. No cash distributions
were made to Limited Partners holding Class B Status Units.
Property Operations
- -------------------
The Partnerships ownership interest in the Fund VIII - Fund IX Joint Venture is
50%, and in the Fund IX - Fund X Joint Venture, the Partnership's ownership
interest is 50.3%.
13
As of December 31, 1997, the Partnership owned an interest in the following
operational properties:
The TCI Building - Fund VIII -Fund IX Joint Venture
- ---------------------------------------------------
FOR THE YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
-------------------------- --------------------------
Revenues:
Rental income $459,656 $101,277
Interest income 6,607 0
Other income 4,479 0
-------- --------
470,742 101,277
-------- --------
Expenses:
Depreciation 166,595 50,444
Management & leasing expenses 17,496 3,884
Other operating expenses 14,561 1,050
-------- --------
198,652 55,378
-------- --------
Net income $272,090 $ 45,899
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII Fund IX Joint Venture 49.9% 50.1%
Cash distribution to Partnership $206,543 $ 46,197
Net income allocated to the Partnership $135,904 $ 23,007
On October 10, 1996, the Fund VIII - Fund IX Joint Venture purchased a one-story
office building containing approximately 40,000 rentable square feet, located on
approximately 4.864 acres of land in Farmer's Branch, Dallas, Texas (the "TCI
Building") for a purchase price of $4,450,000 excluding acquisition costs.
The TCI Building is leased to TCI Valwood Limited Partnership I for a period of
fifteen years, with options to extend the lease for three consecutive five-year
periods. The annual base rent is $430,001 during the first five years, $454,001
during the next five years and $482,001 during the last five years. The TCI
lease commenced on July 19, 1996, and was assigned by the seller to the Fund
VIII - Fund IX Joint Venture at closing.
Since the TCI Building was purchased in October 1996, comparative income and
expense figures for the prior year are not available. Real estate taxes and
primarily all operational expenses for the building are the responsibility of
the tenant.
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the TCI
Building were derived from capital contributions made by the Partnership and
Wells Fund VIII, totaling $2,236,530 and $2,238,170, respectively. The
Partnership currently owns an approximately 50% equity interest in the Fund VIII
- - Fund IX Joint Venture.
14
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The US Cellular Building/Fund VIII - Fund IX Joint Venture
- ----------------------------------------------------------
SEVEN MONTHS ENDED
DECEMBER 31, 1997
---------------------------------
Revenues:
Rental income $519,542
Expenses:
Depreciation 276,566
Management & leasing expense 47,957
Other operating expenses (8,883)
--------
315,640
--------
Net income $203,902
========
Occupied % 75.0%
Partnership's Ownership % in the
Fund VIII Fund IX Joint Venture 49.9%
Cash distribution to Partnership $191,052
Net income allocated to Partnership $101,751
On June 17, 1996, the Fund VIII - Fund IX Joint Venture purchased a 7.09 acre
tract of real property in Madison, Dane County, Wisconsin. Total cost and
expenses to be incurred by the Fund VIII - Fund IX Joint Venture for the
acquisition, development, construction and completion of the 101,727 rentable
square foot building is estimated to be approximately $10,500,000. It is
anticipated that Wells Fund VIII will fund the approximately $500,000 needed to
complete construction on this project.
In June 1997, Cellular One, a subsidiary of BellSouth Corporation, occupied its
leased space of 76,276 square feet comprising approximately 75% of the building.
The initial term of the lease is 9 years and 11 months beginning in June 1997,
with the option to extend the initial term of the lease for two consecutive
five-year periods. The annual base rent payable during the initial term is
$902,418 payable in equal monthly installments of $75,201 during the first five
years and $1,016,822 payable in equal monthly installments of $84,735 during the
last four years and 11 months of the initial term. The annual base rent for
each extended term will be at market rental rates. Cellular One changed its
name to US Cellular as of October 31, 1997.
15
Since the US Cellular Building opened June 15, 1997, comparative income and
expenses figures are not available for prior periods. The building incurred
property taxes of $93,865 for 1997, the first year of occupancy.
As of December 31, 1997, the funds used by the Fund VIII - Fund IX Joint Venture
to acquire and develop the US Cellular Building were derived from capital
contributions made by the Partnership and Wells Fund VIII, totaling $5,012,444
and $4,987,444, respectively. The Partnership currently owns an approximately
50% equity interest in the Fund VIII - Fund IX Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The Matsushita Building/Fund VIII - Fund IX Joint Venture
- ---------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1997
------------------------------------
Revenues:
Rental income $644,240
Interest income 1,511
--------
645,751
--------
Expenses:
Depreciation 215,670
Management & leasing expense 30,872
Other operating expenses 3,973
--------
250,515
--------
Net income $395,236
========
Occupied % 100.0%
Partnership's Ownership % in the
Fund VIII Fund IX Joint Venture 49.9%
Cash distribution to Partnership $185,102
Net income allocated to Partnership $197,283
On January 10, 1997, the Fund VIII - Fund IX Joint Venture acquired a two-story
office building containing approximately 65,006 rentable square feet on a 4.4
acre tract of land located in the Irvine Spectrum planned business community in
metropolitan Orange County, California (the "Matsushita Building") for a
purchase price of $7,193,000 excluding acquisition costs.
16
The entire Matsushita Building is currently under a net lease to Matsushita
Avionics Systems Corporation. Matsushita Avionics' rental payment obligations
do not begin until the ninth month of the lease term which commenced when
Matsushita Avionics took possession in September 1996. Commencing in May 1997,
the ninth month of the lease term, the monthly base rental payable by Matsushita
Avionics under the lease is $45,879.47 through the 12th month of the lease term.
The monthly base rental payable under the lease for the 13th month of the lease
term through the 30th month of the lease term is $57,709.47; the monthly base
rental payable for the 31st month of the lease term through the 60th month of
the lease term is $59,611.98; and the monthly base rental payable for the 61st
month of the lease term through the 84th month of the lease term is $61,831.58.
The base rental payable during the option periods, if Matsushita Avionics
exercises its option to extend the lease, is 95% of the then current market
rental rate for office space in other comparable buildings located in the Irvine
area of southern California.
Since the Matsushita Building was purchased in January 1997, comparative income
and expense figures for the prior year are not available. Real estate taxes and
primarily all operational expenses for the building are the responsibility of
the tenant.
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the
Matsushita Building were derived from capital contributions made by the
Partnership and Wells Fund VIII, totaling $3,608,109 and $3,620,316,
respectively. The Partnership currently owns an approximately 50% equity
interest in the Fund VIII - Fund IX Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
17
The Cirrus Logic Building/Fund VIII - Fund IX Joint Venture
- -----------------------------------------------------------
TEN MONTHS ENDED
DECEMBER 31, 1997
---------------------------------
Revenues:
Rental income $584,373
Interest income 21,402
--------
605,775
--------
Expenses:
Depreciation 236,049
Management & leasing expense 25,605
Other operating expenses 5,330
--------
266,984
--------
Net income $338,791
========
Occupied % 100.0%
Partnership's Ownership % in the
Fund VIII Fund IX Joint Venture 49.9%
Cash distribution to Partnership $234,008
Net income allocated to Partnership $169,121
On February 20, 1997, the Fund VIII - Fund IX Joint Venture purchased a two-
story partially completed office building in Boulder County, Colorado (the
"Cirrus Logic Building") for $7,029,000, excluding acquisition costs.
Construction of the 49,460 square foot building was substantially completed in
March 1997.
Cirrus Logic, Inc. has leased the entire building for a fifteen year term
beginning March 17, 1997. The annual base rental under the term of the Cirrus
Logic lease is $617,656 for the first five years, will be increased by 10% in
the sixth through tenth years and will be increased an additional 10% in years
eleven through fifteen.
Since the Cirrus Logic Building was purchased in February 1997 and was not
completed until March 1997, comparative income and expense figures for the prior
year are not available. Real estate taxes and primarily all operational expenses
for the building are the responsibility of the tenant.
The funds used by the Fund VIII - Fund IX Joint Venture to acquire the Cirrus
Logic Building were derived from capital contributions made by the Partnership
and Wells Fund VIII, totaling $3,532,276 and $3,555,495, respectively. The
Partnership currently owns an approximately 50% equity interest in the Fund VIII
- - Fund IX Joint Venture.
18
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The ABB Building/Fund IX-Fund X Joint Venture
- --------------------------------------------
ONE MONTH ENDED
DECEMBER 31, 1997
---------------------------------
Revenues:
Rental income $ 28,512
Expenses:
Depreciation 36,863
Management & leasing expense 1,711
Operating costs, net of reimbursements 10,118
--------
48,692
========
Net loss $(20,180)
========
Occupied % 67.06%
Partnership's Ownership % in the
Fund IX Fund X Joint Venture 49.70%
Net loss allocated to Partnership $(10,145)
Since the ABB Project was started in March, 1997, comparative income and expense
figures for prior years are not available.
On March 20, 1997, the Partnership contributed a 5.62 acre tract of real
property in Knoxville, Knox County, Tennessee and improvements thereon (the "ABB
Property"), valued at $1,306,393. ABB Environmental Systems, a subsidiary of
ABB, Inc. has executed a lease for 55,000 rentable square feet comprising
approximately 66% of the building. The initial term of the lease will be 9-
years and 11-months commencing on substantial completion of the project. The
annual base rent is $646,250 for the first 5-years and $728,750 during the last
4-years and 11-months.
The funds used by the Fund IX - Fund X Joint Venture to complete the ABB
Building were derived from capital contributions made by the Partnership and
Wells Fund X totaling $3,541,764 and $3,500,000, respectively. The Partnership
owns an approximate 50% equity interest in the Fund IX - Fund X Joint Venture.
Real estate taxes and primarily all operational expenses for the building are
the responsibility of the tenant.
19
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 3. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Partnership commenced active operations on February 24, 1996, when it
received and accepted subscriptions for 125,000 Units. As of December 31, 1997,
the Partnership raised $35,000,000 in capital through the sale of 3,500,000
Units. After payment of $6,650,000 in acquisition and advisory fees, selling
commissions and organizational and offering expenses, and the investment by the
Partnership of $17,931,123 in Joint Ventures and $650,000 escrow contribution on
behalf of the Fund IX - Fund X Joint Venture, as of December 31, 1997, the
Partnership was holding net offering proceeds of approximately $9,768,877
available for investment in additional properties.
The Partnership's net cash provided by operating activities in 1997 of $501,390,
as compared to $151,150 that was provided by operating activities in 1996, is
due primarily to increased interest income earned on funds held by the
Partnership prior to investment in properties and increased equity in the
earnings of joint ventures. Net cash used in investing activities increased to
$12,899,768 in 1997 from $6,544,019 in 1996 which was primarily the result of
investment in the joint ventures. Net cash used in financing activities of
$1,395,478 as compared to $29,950,254 which was provided by financing activities
in 1996 was the result of the offering being terminated on December 31, 1996, as
well as distributions to partners from accumulated earnings which began in 1997.
The Partnership's distributions paid and payable through the fourth quarter of
1997 have been paid from net cash from operations and from distributions
received from its equity investment in joint ventures. The Partnership
anticipates that distributions will continue to be paid on a quarterly basis
from such sources. No cash distributions were paid to Class B Unit holders for
1997. The Partnership expects to meet liquidity requirements and budget demands
through cash flow from operations.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures, from limited partnership contributions
and, as of December 31, 1997, has reserved approximately $758,235 needed to
complete the ABB Project and $1,900,000 needed to complete the acquisition of
the Lucent Project which are both owned by the Fund IX - Fund X Joint Venture.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
20
INFLATION
- ---------
The real estate market has not been affected significantly by inflation in the
past three years due to the relatively low inflation rate. There are provisions
in the majority of tenant leases to protect the Partnership from the impact of
inflation. These leases contain common area maintenance charges (CAM charges),
real estate tax and insurance reimbursements on a per square foot bases, or in
some cases, annual reimbursement of operating expenses above a certain per
square foot allowance. These provisions should reduce the Partnership's
exposure to increases in costs and operating expenses resulting from inflation.
The General Partners have verified that all operational computer systems are
year 2000 compliant. This includes systems supporting accounting, property
management and investor services. Also, as part of this review, all building
control systems have been verified as compliant. The current line of business
applications are based on compliant operating systems and database servers. All
of these products are scheduled for additional upgrades before the year 2000.
Therefore, it is not anticipated that the year 2000 will have significant impact
on operations.
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.
- --------------------
The Partnership's change in accountants during 1995 was previously reported in
the Partnership's Form 8-K dated September 11, 1995. There were no
disagreements with the Partnership's accountants or other reportable events
during 1997.
21
PART III
--------
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP.
- ---------------------------------------------
WELLS PARTNERS, L.P. Wells Partners, L.P. is a private Georgia limited
- --------------------
partnership formed on October 25, 1990. The sole General Partner of Wells
Partners, L.P. is Wells Capital, Inc., a Georgia corporation. The executive
offices of Wells Capital, Inc. are located at 3885 Holcomb Bridge Road,
Norcross, Georgia 30092.
LEO F. WELLS, III. Mr. Wells is a resident of Atlanta, Georgia, is 54 years of
- -----------------
age and holds a Bachelor of Business Administration Degree in Economics from the
University of Georgia. Mr. Wells is the President and sole Director of Wells
Capital, Inc. Mr. Wells is the President of Wells & Associates, Inc., a real
estate brokerage and investment company formed in 1976 and incorporated in 1978,
for which he serves as principal broker. Mr. Wells is also currently the sole
Director and President of Wells Management Company, Inc., a property management
company he founded in 1983. In addition, Mr. Wells is the President and
Chairman of the Board of Wells Investment Securities, Inc., Wells & Associates,
Inc., and Wells Management Company, Inc. which are affiliates of the General
Partners. From 1980 to February 1985, Mr. Wells served as Vice-President of
Hill-Johnson, Inc., a Georgia corporation engaged in the construction business.
From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company and
from 1970 to 1973, he was a real estate salesman and property manager for Roy D.
Warren & Company, an Atlanta real estate company.
22
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES.
- ---------------------------------------------------------
The following table summarizes the compensation and fees (including
reimbursement of expenses) paid to the General Partners and their affiliates
during the year ended December 31, 1997.
CASH COMPENSATION TABLE
-----------------------
( A ) ( B ) ( C )
NAME OF INDIVIDUAL OR NUMBER IN CAPACITIES IN WHICH SERVED FORM
GROUP OF COMPENSATION CASH COMPENSATION
- ------------------------------- ------------------------------- ----------------------
Wells Management Company, Inc. Property Manager - $61,979
Management & Leasing Fees
- ----------
(1) These fees are not paid directly by the Partnership but are paid by the
joint venture entities which owns properties for which the property
management and leasing services relate and include management and leasing
fees which were accrued for accounting purposes in 1997 but not actually
paid until January, 1998.
23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- -------------------------------------------------------------------------
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of February 28, 1998.
(2) (3)
(1) NAME AND ADDRESS OF AMOUNT AND NATURE OF (4)
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ---------------------- ----------------------- -------------------- ----------------------
Class A Units Leo F. Wells, III 128.70 Units Less than 1%
(IRA, (k) Plan)
No arrangements exist which would, upon operation, result in a change in control
of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
The compensation and fees paid or to be paid by the Partnership to the General
Partners and their affiliates in connection with the operation of the
Partnership are as follows:
INTEREST IN PARTNERSHIP CASH FLOW AND NET SALES PROCEEDS.
- --------------------------------------------------------
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners holding
Class A Status Units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A Status Units have received a return of
their adjusted capital contributions plus a 10% cumulative return on their
adjusted capital contributions and Limited Partners holding Class B Units have
received a return of their adjusted capital contributions plus a 15% cumulative
return on their adjusted capital contributions; provided, however, that in no
event shall the General Partners receive in the aggregate in excess of 15% of
net sales proceeds and net financing proceeds remaining after payments to
Limited Partners from such proceeds of amounts equal to the sum of their
adjusted capital contributions plus a 6% cumulative return on their adjusted
capital contributions. The General Partners did not receive any distributions
from net cash flow from operations or net sales proceeds for the year ended
December 31, 1997.
24
PROPERTY MANAGEMENT AND LEASING FEES.
- ------------------------------------
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to the lessor of (A) (i) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate one-time fee for initial rent-up or leasing-up of newly
constructed properties in an amount not to exceed the fee customarily charged in
arm's-length transactions by others rendering similar services in the same
geographic area for similar properties; and (ii) in the case of industrial and
commercial properties which are leased on a long-term 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.
Management and leasing fees are not paid directly by the Partnership but by the
joint venture entity which owns the properties. The Partnership's share of
these fees were $61,979 for the year ended December 31, 1997.
REAL ESTATE COMMISSIONS
- -----------------------
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. No real estate commissions were
paid to the General Partners or affiliates for the year ended December 31, 1997.
25
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- --------------------------------------------------------------------------
(a) 1. The Financial Statements are contained on Pages F-2 through F-23 of this
Annual Report on Form 10-K, and the list of the Financial Statements
contained herein is set forth on page F-1, which is hereby incorporated
by reference.
(a) 2. Financial Statement Schedule III
Information with respect to this item begins on Page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed on
the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the Commission during the fourth
quarter of 1997.
(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.
26
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 17h day of March,
1998:
WELLS REAL ESTATE FUND IX, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
-------------------------------------------
LEO F. WELLS, III
Individual General Partner and as President
and Chief Financial Officer of Wells
Capital, Inc., the General Partner of Wells
Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
Signature Title
- ---------- -----
/s/Leo F. Wells, III Individual General Partner, March 17, 1998
- ------------------------------ President and Sole Director of
Leo F. Wells, III Wells Capital, Inc., the
General Partner of Wells
Partners, L.P.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
27
INDEX TO FINANCIAL STATEMENTS
-----------------------------
FINANCIAL STATEMENTS PAGE
- ----------------------------------------------------------------------- ----
Independent Auditors' Report F-2
Balance Sheets as of December 31, 1997 and 1996 F-3
Statements of Income for the Year Ended December 31, 1997
and for the Eleven Months ended December 31, 1996 F-4
Statements of Partners' Capital for the Year Ended December 31, 1997,
and for the Eleven Months ended December 31, 1996 F-5
Statements of Cash Flows for the Year Ended December 31, 1997,
and for the Eleven Months ended December 31, 1996 F-6
Notes to Financial Statements for December 31, 1997 and 1996 F-7
F-1
[LETTERHEAD OF ARTHUR ANDERSEN LLP APPEARS HERE]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Wells Real Estate Fund IX, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND IX,
L.P. (a Georgia public limited partnership) as of December 31, 1997 and 1996 and
the related statements of income, partners' capital, and cash flows for the
years then ended. These financial statements and the schedule referred to below
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund IX, L.P.
as of December 31, 1997 and 1996 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments
and Accumulated Depreciation as of December 31, 1997 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 9, 1998
F-2
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
------------ ------------
NONOPERATING REAL ESTATE ASSETS, AT COST:
Land $ 0 $ 607,930
Construction in progress 0 482,959
----------- -----------
Total nonoperating real estate assets 0 1,090,889
INVESTMENT IN JOINT VENTURE 18,551,918 4,929,728
CASH AND CASH EQUIVALENTS 9,764,129 23,557,985
DUE FROM AFFILIATES 335,512 46,197
DEFERRED PROJECT COSTS 523,278 1,161,078
ORGANIZATIONAL COSTS, LESS ACCUMULATED AMORTIZATION OF $12,500 IN 1997 AND $6,250 IN 1996 18,750 25,000
PREPAID EXPENSES AND OTHER ASSETS 752,311 103,000
----------- -----------
Total assets $29,945,898 $30,913,877
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 0 $ 393,001
Due to affiliate 0 422,996
Partnership distributions payable 437,180 178,771
Sales commissions payable 0 166,701
----------- -----------
Total liabilities 437,180 1,161,469
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
General partners 0 206
Limited partners:
Class A 25,322,591 24,911,231
Class B 4,186,127 4,840,871
Original limited partner 0 100
----------- -----------
Total partners' capital 29,508,718 29,752,408
----------- -----------
Total liabilities and partners' capital $29,945,898 $30,913,877
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
------------ ------------
REVENUES:
Equity in income of joint ventures $ 593,914 $ 23,007
Interest income 605,386 383,884
---------- --------
1,199,300 406,891
---------- --------
EXPENSES:
Partnership administration 61,885 90,469
Legal and accounting 31,125 7,008
Amortization of organization costs 6,250 6,250
Computer costs 8,274 4,408
---------- --------
107,534 108,135
---------- --------
NET INCOME $1,091,766 $298,756
========== ========
NET LOSS ALLOCATED TO GENERAL PARTNERS $ (206) $ (294)
========== ========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $1,564,778 $330,270
========== ========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ (472,806) $(31,220)
========== ========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.53 $ 0.28
========== ========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ (0.77) $ (0.11)
========== ========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.46 $ 0.28
========== ========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
LIMITED PARTNERS
-----------------------------------------------------------
Class A CLASS B TOTAL
------------------------ -------------------- GENERAL PARTNERS'
ORIGINAL UNITS AMOUNT UNITS AMOUNT PARTNERS CAPITAL
---------- ---------- ----------- -------- ---------- -------- -----------
BALANCE, DECEMBER 31, 1995 $ 100 0 $ 0 0 $ 0 $ 500 $ 600
Net income (loss) 0 0 330,270 0 (31,220) (294) 298,756
Limited partner contributions 0 2,935,931 29,359,306 564,069 5,640,694 0 35,000,000
Partnership distributions 0 0 (328,196) 0 0 0 (328,196)
Sales commissions and discounts 0 0 (2,935,927) 0 (564,073) 0
Other offering expenses 0 0 (1,441,752) 0 (277,000) 0 (1,718,752)
Class A conversion elections 0 (8,488) (72,470) 8,488 72,470 0 0
----- ---------- ----------- -------- ---------- ----- -----------
BALANCE, DECEMBER 31, 1996 100 2,927,443 24,911,231 572,557 4,840,871 206 29,752,408
Net income (loss) 0 0 1,564,778 0 (472,806) (206) 1,091,766
Partnership distributions 0 0 (1,330,748) 0 (0) 0 (1,330,748)
Sales commission 0 0 (4,608) 0 0 0 (4,608)
Return of capital (100) 0 0 0 0 0 (100)
Class B conversion elections 0 22,333 181,938 (22,333) (181,938) 0 0
----- ---------- ----------- -------- ---------- ----- -----------
BALANCE, DECEMBER 31, 1997 $ 0 2,949,776 $25,322,591 550,224 $4,186,127 $ 0 $29,508,718
===== ========== =========== ======== ========== ===== ===========
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1997 1996
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,091,766 $ 298,756
------------ -----------
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Equity in income of joint ventures (593,914) (23,007)
Amortization of organizational costs 6,250 6,250
Changes in assets and liabilities:
Prepaid expenses and other assets 689 (103,000)
Organizational costs 0 (31,250)
Accounts payable and accrued expenses (3,401) 3,401
------------ -----------
Total adjustments (590,376) (147,606)
------------ -----------
Net cash provided by operating activities 501,390 151,150
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture (12,116,292) (4,748,974)
Earnest money deposit (650,000)
Distributions received from joint ventures 527,390 0
Deferred project costs paid (271,266) (1,118,789)
(Decrease) increase in construction payable (389,600) 389,600
Investment in real estate 0 (1,065,856)
------------ -----------
Net cash used in investing activities (12,899,768) (6,544,019)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (1,072,339) (149,425)
Limited partners' contributions 0 35,000,000
Sales commissions and discounts paid (171,304) (3,333,299)
Offering costs paid (151,735) (1,567,022)
Return of capital (100) 0
------------ -----------
Net cash (used in ) provided by financing activities (1,395,478) 29,950,254
------------ -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (13,793,856) 23,557,385
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 23,557,985 600
------------ -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 9,764,129 $23,557,985
============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs applied to real estate and joint venture property $ 637,800 $ 228,977
============ ===========
Transfer of nonoperating real estate assets to joint venture for partnership interest $ 1,090,889 $ 0
============ ===========
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Wells Real Estate Fund IX, L.P. (the "Partnership") is a public limited
partnership organized on August 15, 1994 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P.
("Wells Partners"), a Georgia nonpublic limited partnership. The Partnership
began offering units for sale in the beginning of 1996. The Partnership has
two classes of limited partnership units. Upon subscription for units, each
limited partner must elect whether to have their units treated as Class A
units or Class B units. Thereafter, limited partners shall have the right to
change their prior elections to have some or all of their units treated as
Class A units or Class B units one time during each quarterly accounting
period. Limited partners may vote to, among other things, (a) amend the
partnership agreement, subject to certain limitations, (b) change the
business purpose or investment objectives of the Partnership, and (c) remove
a general partner. A majority vote on any of the described matters will bind
the Partnership, without the concurrence of the general partners. Each
limited partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real properties,
including properties which are either to be developed, currently under
development or construction, newly constructed, or have operating histories.
The Partnership owns an interest in the following properties through joint
ventures between the Partnership and other Wells Real Estate Funds: (i) an
office building in Madison, Wisconsin (the "U.S. Cellular Building"); (ii)
office building in Farmers Branch, Texas (the "Dallas property"); (iii) a
two-story office building in Orange County, California (the "Matsushita
Building"); (iv) a two-story office building in Boulder County, Colorado (the
"Cirrus Logic Building"); and (v) a three-story office building in Knoxville,
Tennessee (the "ABB Property").
USE OF ESTIMATES AND FACTORS AFFECTING THE PARTNERSHIP
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
F-7
The carrying values of the real estate assets are based on management's
current intent to hold the real estate assets as long-term investments. The
success of the Partnership's future operations and the ability to realize the
investment in its assets will be dependent on the Partnership's ability to
maintain an appropriate level of rental rates, occupancy, and operating
expenses in future years. Management believes that the steps 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, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
DISTRIBUTIONS OF NET CASH FROM OPERATIONS
Cash available for distribution, as defined by the partnership agreement, is
distributed to the limited partners quarterly. In accordance with the
partnership agreement, such distributions are paid first to limited partners
holding Class A units until they have received a 10% per annum return on
their net capital contributions, as defined. Then, such distributions are
paid to the general partners until they have received 10% of the total amount
distributed thus far. Any remaining cash available for distribution is split
between the limited partners holding Class A units and the general partners
on a basis of 90% and 10%, respectively. No distributions will be made to
the limited partners holding Class B units.
DISTRIBUTION OF SALES PROCEEDS
Upon sales of properties, the net sales proceeds will be distributed in the
following order:
. To limited partners holding units, which at any time have been
treated as Class B units, until they receive an amount necessary to
equal the net cash available for distribution received by the limited
partners holding Class A units
. To limited partners on a per unit basis until each limited partner
has received 100% of their net capital contribution, as defined
. To all limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital contribution, as
defined
. To limited partners on a per unit basis until they receive an amount
equal to their preferential limited partner return (defined as the
sum of a 10% per annum cumulative return on net capital contributions
for all periods during which the units were treated as Class A units
and a 15% per annum cumulative return on net capital contributions
for all periods during which the units were treated as Class B units)
. To all general partners until they have received 100% of their
capital contributions; in the event that limited partners have
received aggregate cash distributions from the Partnership over the
life of their investment in excess of a
F-8
return of their net capital contributions plus their preferential
partner return, then the general partners shall receive an additional
sum equal to 25% of such excess
. Thereafter, 80% to the limited partners on a per unit basis and 20%
to the general partners
ALLOCATION OF NET INCOME, NET LOSS, AND GAIN ON SALE
Net income is defined as net income recognized by the Partnership, excluding
deductions for depreciation, amortization, and cost recovery. 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, amortization, and cost recovery deductions for each
fiscal year will be allocated as follows: (a) 99% to the limited partners
holding Class B units and 1% to the general partners until their capital
accounts are reduced to zero; (b) then to any partner having a positive
balance in his capital account in an amount not to exceed such positive
balance; and (c) thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (i) allocations made pursuant to the qualified income offset
provisions of the partnership agreement; (ii) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero; and (iii) allocations to limited partners holding Class B
units in amounts equal to the deductions for depreciation, amortization, and
cost recovery previously allocated to them with respect to the specific
Partnership property sold, but not in excess of the amount of gain on sale
recognized by the Partnership with respect to the sale of such property.
INVESTMENT IN JOINT VENTURES
BASIS OF PRESENTATION. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, the Partnership's investment in joint ventures is
recorded using the equity method of accounting.
REAL ESTATE ASSETS. Real estate assets held by the joint ventures are stated
at cost less accumulated depreciation. Major improvements and betterments
are capitalized when they extend the useful life of the related asset. All
ordinary repairs and maintenance are expensed as incurred.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of,"
which is effective for fiscal years beginning after December 15, 1995. SFAS
No. 121 establishes standards for determining
F-9
when impairment losses on long-lived assets have occurred and how impairment
losses should be measured.
Management continually monitors events and changes in circumstances which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present that
indicate the carrying amounts of real estate assets may not be recoverable,
management assesses the recoverability of real estate assets under SFAS No.
121 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, 1997.
Depreciation for buildings and land improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized over
the life of the related lease or the life of the asset, whichever is shorter.
REVENUE RECOGNITION. All leases on real estate assets held by the joint
ventures are classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective leases.
PARTNERS' DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS. Cash available
for distribution and allocations of profit and loss to the Partnership by the
joint ventures are made in accordance with the terms of the joint venture
agreements. Generally, these items are allocated in proportion to the
partners' respective ownership interests. Cash is paid from the joint
ventures to the Partnership quarterly.
DEFERRED LEASE ACQUISITION COSTS. Costs incurred to procure operating leases
are capitalized and amortized on a straight-line basis over the terms of the
related leases.
CASH AND CASH EQUIVALENTS
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid instruments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market accounts.
PER UNIT DATA
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 1997 and 1996 is computed based on the weighted average
number of units outstanding during the period.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to Wells
Capital, Inc. (the "Company"), the general partner of Wells Partners, for
acquisition and advisory services. These payments, as stipulated by the
partnership agreement, can be up to 5% of
F-10
the limited partner contributions, subject to certain overall limitations
contained in the partnership agreement. Aggregate fees paid through December
31, 1997 were $1,390,055 and amounted to 4% of the limited partners'
contributions received. As of December 31, 1996, $271,266 of fees had not yet
been paid and were included in due to affiliate. These fees are allocated to
specific properties as they are purchased or developed and are included in
capitalized assets of the Partnership or the joint venture. Deferred project
costs at December 31, 1997 and 1996 represent fees not yet applied to
properties.
3. DEFERRED OFFERING COSTS
Organization and offering expenses to the extent they exceed 5% of gross
proceeds were paid by the Company and not by the Partnership. Organization
and offering expenses do not include sales or underwriting commissions but do
include such costs as legal and accounting fees, printing costs, and other
offering expenses.
As of December 31, 1996, the Company paid organization and offering expenses
on behalf of the Partnership in the aggregate amount of $1,927,333, of which
the Company was reimbursed $1,750,000, which did not exceed the 5%
limitation. Wells Investment Securities, Inc., a related party, agreed to
absorb $104,037 of the excess offering and organization expenses. The
Company absorbed the remaining $73,296 of offering and organization expenses
which exceeded the 5% limitation. The liability of $151,730 for the unpaid
balance of the aforementioned expenses was included in due to affiliate at
December 31, 1996.
4. RELATED-PARTY TRANSACTIONS
Due from affiliate at December 31, 1997 and 1996 represents the Partnership's
share of cash to be distributed from Fund VIII and IX Associates for the
fourth quarters of 1997 and 1996.
The Partnership entered into a property management agreement with Wells
Management Company, Inc. ("Wells Management"), an affiliate of the general
partners. In consideration for supervising the management of the
Partnership's properties, the Partnership will generally pay Wells Management
management and leasing fees equal to: (a) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate fee for the one-time initial lease-up of newly constructed
properties, and (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 $61,979 and $1,947 for the years ended
December 31, 1997 and 1996, respectively, which were paid to Wells
Management.
The Company performs certain administrative services for the Partnership,
such as accounting and other partnership administration, and incurs the
related expenses. Such expenses are allocated among the various Wells Real
Estate Funds based on time spent on
F-11
each fund by individual administrative personnel. In the opinion of
management, such allocation is a reasonable estimation of such expenses.
The general partners are also general partners in other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners, while serving in the capacity as general partners for other Wells
Real Estate Funds, may be in competition with the Partnership for tenants in
similar geographic markets.
5. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in ventures at December
31, 1997 and 1996 are summarized as follows:
1997 1996
--------------------------- --------------------------
AMOUNT PERCENT AMOUNT PERCENT
------------- ------------ ------------- -----------
Fund VIII and IX Associates $14,849,125 50% $4,929,728 50%
Fund IX and X Associates 3,702,793 50 0 0
----------- ----------
$18,551,918 $4,929,728
=========== ==========
The following is a rollforward of the Partnership's investment in the joint
ventures for the years ended December 31, 1997 and 1996:
1997 1996
----------- ----------
Investment in joint ventures, beginning of year $ 4,929,728 $ 0
Equity in income of joint ventures 593,914 23,007
Contributions to joint ventures 13,844,981 4,952,919
Distributions from joint ventures (816,705) (46,198)
----------- ----------
Investment in joint ventures, end of year $18,551,918 $4,929,728
=========== ==========
FUND VIII AND IX ASSOCIATES
On June 10, 1996, the Partnership entered into a joint venture with Wells
Real Estate Fund VIII. The joint venture, Fund VIII and IX Associates, was
formed to acquire, develop, operate, and sell real properties. On June 19,
1996, the joint venture purchased a 7.09-acre parcel of land in Madison,
Wisconsin. The parcel was developed and commenced operations as the U.S.
Cellular Building in 1997. On October 10, 1996, the joint venture purchased
a 40,000-square-foot, one-story office building, known as the Dallas
property, in Farmers Branch, Texas. On January 10, 1997, the joint venture
purchased a 63,417-square foot, two-story office building, known as the
Matsushita Building, in Orange County, California. On February 20, 1997, the
joint venture purchased a two-story partially completed office building,
known as the Cirrus Logic Building, in Boulder County, Colorado.
Construction of the 49,460-square-foot building was completed and commenced
operations in 1997.
F-12
Following are the financial statements for Fund VIII and IX Associates:
FUND VIII AND IX ASSOCIATES
(A GEORGIA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
Assets
1997 1996
----------- ------------
Nonoperating real estate assets, at cost:
Land $ 0 $ 896,698
Construction in progress 0 4,340,033
----------- -----------
Total nonoperating real estate assets 0 5,236,731
----------- -----------
Operating real estate assets, at cost:
Land 4,724,579 677,914
Building and improvements, less accumulated depreciation of
$945,324 in 1997 and $50,444 in 1996
24,122,271 3,938,508
Construction in progress 272,779 0
----------- -----------
Total operating real estate assets 29,119,629 4,616,422
----------- -----------
Total real estate assets 29,119,629 9,853,153
Cash and cash equivalents 1,088,438 675,353
Accounts receivable 389,347 7,489
Prepaid expenses and other assets 237,710 0
----------- -----------
Total assets $30,835,124 $10,535,995
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 388,723 $ 608,622
Due to affiliates 20,399 0
Partnership distributions payable 670,784 92,163
----------- -----------
Total liabilities 1,079,906 700,785
----------- -----------
Partners' capital:
Wells Real Estate Fund VIII 14,906,093 4,905,482
Wells Real Estate Fund IX 14,849,125 4,929,728
----------- -----------
Total partners' capital 29,755,218 9,835,210
----------- -----------
Total liabilities and partners' capital $30,835,124 $10,535,995
=========== ===========
F-13
FUND VIII AND IX ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE PERIOD FROM INCEPTION (JUNE 10, 1996)
TO DECEMBER 31, 1996
1997 1996
---------- ----------
Revenues:
Rental income $2,203,332 $101,277
Interest income 29,520 0
Other income 4,479 0
---------- --------
2,237,331 101,277
---------- --------
Expenses:
Depreciation 894,880 50,444
Management and leasing fees 115,073 3,884
Lease acquisition costs 6,857 0
Property administration 21,006 1,050
Legal and accounting 13,602 0
Operating costs, net of reimbursements (24,106) 0
---------- --------
1,027,312 55,378
---------- --------
Net income $1,210,019 $ 45,899
========== ========
Net income allocated to Wells Real Estate Fund VIII $ 605,960 $ 22,892
========== ========
Net income allocated to Wells Real Estate Fund IX $ 604,059 $ 23,007
========== ========
F-14
FUND VIII AND IX ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE PERIOD FROM INCEPTION (JUNE 10, 1996)
TO DECEMBER 31, 1996
WELLS REAL WELLS REAL TOTAL
ESTATE ESTATE PARTNERS'
FUND VIII FUND IX CAPITAL
----------- ----------- -----------
Balance, June 10, 1996 $ 0 $ 0 $ 0
Net income 22,892 23,007 45,899
Partnership contributions 4,928,555 4,952,919 9,881,474
Partnership distributions (45,965) (46,198) (92,163)
----------- ----------- -----------
Balance, December 31, 1996 4,905,482 4,929,728 9,835,210
Net income 605,960 604,059 1,210,019
Partnership contributions 10,213,894 10,132,043 20,345,937
Partnership distributions (819,243) (816,705) (1,635,948)
----------- ----------- -----------
Balance, December 31, 1997 $14,906,093 $14,849,125 $29,755,218
=========== =========== ===========
F-15
FUND VIII AND IX ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
FOR THE PERIOD FROM INCEPTION (JUNE 10, 1996)
TO DECEMBER 31, 1996
1997 1996
------------ -----------
Cash flows from operating activities:
Net income $ 1,210,019 $ 45,899
------------ -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 894,880 50,444
Changes in assets and liabilities:
Accounts receivable (381,858) (7,489)
Prepaid expenses and other assets (237,710) 0
Accounts payable 115,507 520
Due to affiliates 20,399 0
------------ -----------
Total adjustments 411,218 43,475
------------ -----------
Net cash provided by operating activities 1,621,237 89,374
------------ -----------
Cash flows from investing activities:
(Decrease) increase in construction payables (335,406) 608,102
Investment in real estate (19,131,612) (9,489,739)
------------ -----------
Net cash used in investing activities (19,467,018) (8,881,637)
------------ -----------
Cash flows from financing activities:
Contributions from joint venture partners 19,316,193 9,467,616
Distributions to joint venture partners (1,057,327) 0
------------ -----------
Net cash provided by financing activities 18,258,866 9,467,616
------------ -----------
Net increase in cash and cash equivalents 413,085 675,353
Cash and cash equivalents, beginning of period 675,353 0
------------ -----------
Cash and cash equivalents, end of period $ 1,088,438 $ 675,353
============ ===========
Supplemental disclosure of noncash activities:
Deferred project costs applied by partners $ 1,029,744 $ 413,858
============ ===========
F-16
FUND IX AND X ASSOCIATES
On March 20, 1997, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund X, L.P. The joint venture, Fund IX and X
Associates, was formed to acquire, develop, operate, and sell real
properties. On March 20, 1997, the Partnership contributed a 5.62-acre tract
of real property in Knoxville, Tennessee, and improvements thereon, known as
the ABB Property, to the Fund IX and X Associates joint venture. A 83,885-
square-foot, three-story office building was constructed and commenced
operations at the end of 1997.
Following are the financial statements for Fund IX and X Associates:
FUND IX AND X ASSOCIATES
(A GEORGIA JOINT VENTURE)
BALANCE SHEET
DECEMBER 31, 1997
Assets
Real estate assets, at cost:
Land $ 607,930
Building and improvements, less accumulated depreciation of $36,863 6,445,300
Construction in progress 35,622
----------
Total real estate assets 7,088,852
Cash and cash equivalents 289,171
Accounts receivable 40,512
Prepaid expenses and other assets 329,310
----------
Total assets $7,747,845
==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 379,770
Due to affiliates 2,479
----------
Total liabilities 382,249
----------
Partners' capital:
Wells Real Estate Fund IX 3,702,793
Wells Real Estate Fund X 3,662,803
----------
Total partners' capital 7,365,596
----------
Total liabilities and partners' capital $7,747,845
==========
F-17
FUND IX AND X ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENT OF LOSS
FOR THE PERIOD FROM INCEPTION (MARCH 20, 1997)
TO DECEMBER 31, 1997
Revenues:
Rental income $ 28,512
--------
Expenses:
Depreciation 36,863
Management and leasing fees 1,711
Operating costs, net of reimbursements 10,118
--------
48,692
--------
Net loss $(20,180)
========
Net loss allocated to Wells Real Estate Fund IX $(10,145)
========
Net loss allocated to Wells Real Estate Fund X $(10,035)
========
FUND IX AND X ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENT OF PARTNERS' CAPITAL
FOR THE PERIOD FROM INCEPTION (MARCH 20, 1997)
TO DECEMBER 31, 1997
WELLS REAL WELLS REAL TOTAL
ESTATE ESTATE PARTNERS'
FUND IX FUND X CAPITAL
---------- ---------- ----------
Balance, December 31, 1996 $ 0 $ 0 $ 0
Net loss (10,145) (10,035) (20,180)
Partnership contributions 3,712,938 3,672,838 7,385,776
---------- ---------- ----------
Balance, December 31, 1997 $3,702,793 $3,662,803 $7,365,596
========== ========== ==========
F-18
FUND IX AND X ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MARCH 20, 1997)
TO DECEMBER 31, 1997
Cash flows from operating activities:
Net loss $ (20,180)
-----------
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 36,863
Changes in assets and liabilities:
Accounts receivable (40,512)
Prepaid expenses and other assets (329,310)
Accounts payable 379,770
Due to affiliates 2,479
-----------
Total adjustments 49,290
-----------
Net cash provided by operating activities 29,110
Cash flows from investing activities:
Investment in real estate from partners (5,715,847)
Cash flows from financing activities:
Contributions received from partners 5,975,908
-----------
Net increase in cash and cash equivalents 289,171
Cash and cash equivalents, beginning of period 0
-----------
Cash and cash equivalents, end of period $ 289,171
===========
Supplemental disclosure of noncash activities:
Deferred project costs applied by partners, net of deferred project costs transferred $ 318,981
-----------
Contribution of real estate assets $ 1,090,887
-----------
F-19
6. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended December
31, 1997 and 1996 is calculated as follows:
1997 1996
----------- -----------
Financial statement net income $ 1,091,766 $ 298,756
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes in excess of
amounts for income tax purposes 193,418 7,891
Rental income accrued for financial reporting purposes in excess of
amounts for income tax purposes (221,689) (2,095)
Expenses deductible when paid for income tax purposes, accrued for
financial reporting purposes 10,184 0
Expenses capitalized for income tax purposes, deducted for financial
reporting purposes 10,145 0
----------- -----------
Income tax basis net income $1,083,824 $304,552
=========== ===========
The Partnership's income tax basis partners' capital at December 31, 1997 and
1996 is computed as follows:
1997 1996
----------- -----------
Financial statement partners' capital $29,508,718 $29,752,408
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes in excess of
amounts for income tax purposes 201,309 7,891
Capitalization of syndication costs for income tax purposes, which
are accounted for as cost of capital for financial reporting
purposes 5,223,360 5,218,752
Rental income accrued for financial reporting purposes in excess of
amounts for income tax purposes (223,784) (2,095)
Expenses deductible when paid for income tax purposes, accrued for
financial reporting purposes 10,184 0
Expenses capitalized for income tax purposes, deducted for financial
reporting purposes 10,145 0
Partnership's distributions payable 437,180 178,771
----------- -----------
Income tax basis partners' capital $35,167,112 $35,155,727
=========== ===========
7. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interest in the joint venture under noncancelable operating leases
at December 31, 1997 is as follows:
F-20
Year ending December 31:
1998 $ 1,880,781
1999 1,848,290
2000 1,855,178
2001 1,865,690
2002 1,940,053
Thereafter 9,970,948
-----------
$19,360,940
===========
Three significant tenants contributed approximately 21%, 23%, and 26% of
revenues for the year ended December 31, 1997. In addition, five significant
tenants will contribute approximately 19%, 33%, 13%, 33%, and 16% of future
minimum rental income.
The future minimum rental income due Fund VIII and IX Associates under
noncancelable operating leases at December 31, 1997 is as follows:
Year ending December 31:
1998 $ 3,107,233
1999 3,042,420
2000 3,056,160
2001 3,077,130
2002 3,225,470
Thereafter 16,316,453
-----------
$31,824,866
===========
Four significant tenants contributed 21%, 23%, 26%, and 30% of rental income
for the year ended December 31, 1997. In addition, four significant tenants
will contribute approximately 20%, 34%, 33%, and 13% of future minimum rental
income.
The future minimum rental income due under noncancelable operating leases at
December 31, 1997 is as follows:
Year ending December 31:
1998 $ 646,250
1999 646,250
2000 646,250
2001 646,250
2002 646,250
Thereafter 3,583,021
----------
$6,814,271
==========
One significant tenant contributed 100% of rental income for the year ended
December 31, 1997 and will contribute 100% of future minimum rental income.
F-21
8. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial information
for the years ended December 31, 1997 and 1996:
1997 QUARTERS ENDED
--------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- --------- ------------ -----------
Revenues $238,614 $ 277,454 $ 385,988 $ 297,244
Net income 190,050 333,151 285,263 283,302
Net loss allocated to general partners (206) 0 0 0
Net income allocated to Class A limited
partners 249,937 435,426 434,699 401,708
Net loss allocated to Class B limited partners (59,681) (102,275) (149,436) (118,406)
Net income per weighted average Class A
limited partner unit outstanding $ 0.09 $ 0.15 $ 0.15 $ 0.14
Net loss per weighted average Class B limited
partner unit outstanding (0.10) (0.18) (0.27) (0.22)
Cash distribution per weighted average Class
A limited partner unit outstanding 0.09 0.09 0.13 0.15
1996 QUARTERS ENDED
----------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- --------- ------------ -----------
Revenues $11,172 $69,153 $135,635 $190,931
Net income 981 38,322 112,038 149,477
Net (loss) income allocated to general
partners (10) 10 0 (294)
Net income allocated to Class A limited
partners 0 37,241 112,038 180,991
Net (loss) income allocated to Class B
limited partners (971) 971 0 (31,220)
Net income per weighted average Class A
limited partner unit outstanding $ 0.00 $ 0.07 $ 0.12 $ 0.09
Net (loss) income per weighted average Class
B limited partner unit outstanding (0.01) 0.01 0.00 (0.11)
Cash distribution per weighted average Class
A limited partner unit outstanding 0.00 0.00 0.19 0.09
F-22
9. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
F-23
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
GROSS AMOUNT AT WHICH CARRIED AT
INITIAL COST DECEMBER 31, 1997
--------------------------- COSTS OF --------------------------------
BUILDINGS AND CAPITALIZED BUILDINGS AND
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS
- --------------------------- ------------ ----------- ------------- ------------ ------------ -------------
KNOXVILLE PROPERTY (A) None $ 582,897 $ 0 $ 6,542,818 $ 607,930 $ 6,482,163
TCI-DALLAS PROPERTY (B) None 650,000 0 4,016,866 677,914 3,988,952
U.S. CELLULAR PROPERTY (C) None 833,942 0 9,484,766 896,698 9,149,231
MATSUSHITA PROPERTY (D) None 2,108,304 5,120,835 383,594 2,220,993 5,391,740
CIRRUS LOGIC PROPERTY (E) None 881,840 6,182,710 402,096 928,974 6,537,672
---------- ----------- ----------- ---------- -----------
Total $5,056,983 $11,303,545 $20,830,140 $5,332,509 $31,549,758
========== =========== =========== ========== ===========
GROSS AMOUNT AT WHICH CARRIED
AT DECEMBER 31, 1997
------------------------------- LIFE ON WHICH
CONSTRUCTION ACCUMULATED DATE OF DATE DEPRECIATION
DESCRIPTION IN PROGRESS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED (F)
- --------------------------- ------------ ------------ ------------- ------------ ------------ ---------------
KNOXVILLE PROPERTY (A) $ 35,622 $ 7,125,715 $ 36,863 1997 12/10/96 20 to 25 years
TCI-DALLAS PROPERTY (B) 0 4,666,866 217,039 1996 10/10/96 20 to 25 years
U.S. CELLULAR PROPERTY (C) 272,779 10,318,708 276,566 1997 06/17/96 20 to 25 years
MATSUSHITA PROPERTY (D) 0 7,612,733 215,670 1997 01/10/97 20 to 25 years
CIRRUS LOGIC PROPERTY (E) 0 7,466,646 236,049 1997 02/20/97 20 to 25 years
-------- ----------- --------
Total $308,401 $37,190,668 $982,187
======== =========== ========
- ----------
(a) The Knoxville Property is a 5.622-acre tract of real property under
construction in Knoxville, Tennessee. It is owned by Fund IX and X
Associates. The Partnership owned a 50% interest in Fund IX and X Associates
at December 31, 1997.
(b) The Dallas Property consists of a one-story office building located in
Farmers Branch, Texas. It is owned by Fund VIII and IX Associates. The
Partnership owned a 50% interest in Fund VIII and IX Associates at December
31, 1997.
(c) The U.S. Cellular Property consists of a four-story office building located
in Madison, Wisconsin. It is owned by Fund VIII and IX Associates. The
Partnership owned a 50% interest in Fund VIII and IX Associates at December
31, 1997.
(d) The Matsushita Property consists of a two-story office building located in
Irvine, California. It is owned by Fund VIII and IX Associates. The
Partnership owned a 50% interest in Fund VIII and IX Associates at December
31, 1997.
(e) The Cirrus Logic Property consists of a two-story office building located in
Broomfield, Colorado. It is owned by Fund VIII and IX Associates. The
Partnership owned a 50% interest in Fund VIII and IX Associates at December
31, 1997.
(f) Depreciation lives used for buildings are 25 years. Depreciation lives used
for land improvements are 20 years.
S-1
WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Accumulated
Cost Depreciation
----------- ------------
BALANCE AT DECEMBER 31, 1995 $ 0 $ 0
1996 additions 10,994,486 50,444
----------- --------
BALANCE AT DECEMBER 31, 1996 10,994,486 50,444
1997 additions 26,196,182 931,743
----------- --------
BALANCE AT DECEMBER 31, 1997 $37,190,668 $982,187
=========== ========
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund IX, L.P.)
The following documents are filed as exhibits to this report. Those exhibits
previously filed and incorporated herein by reference are identified below by an
asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real
Estate Fund IX, L.P. (Exhibit 3(a) to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund IX, L.P.
(Exhibit 3(c) to Form S-11 Registration Statement of Wells Real Estate
Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(a) Leasing and Tenant Coordinating Agreement between Wells Real Estate
Fund IX, L.P. and Wells Management Company, Inc. (Exhibit 10(d) to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(b) Management Agreement between Wells Real Estate Fund IX, L.P. and Wells
Management Company, Inc. (Exhibit 10(e) to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(c) Amended and Restated Custodial Agency Agreement between Wells Real
Estate Fund IX, L.P. and NationsBank of Georgia, N.A. (Exhibit 10(f) to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(d) Joint Venture Agreement of Fund VIII and Fund IX Associates dated June
10, 1996 (Exhibit 10(aa) to Post-Effective Amendment No. 11 to Form S-
11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(e) Agreement for the Purchase and Sale of Real Property dated April 23,
1996, between American Family Mutual Insurance Company and Wells
Capital, Inc. (Exhibit 10(bb) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(f) Agreement to Lease dated June 18, 1996, between Fund VIII and IX
Associates and Westel-Milwaukee, Inc., d/b/a Cellular One (Exhibit
10(cc) to Post-Effective Amendment No. 11 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(g) Development Agreement dated June 18, 1996, between Fund VIII and Fund
IX Associates and ADEVCO Corporation (Exhibit 10(dd) to Post-Effective
Amendment No. 11 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(h) Owner-Contractor Agreement dated June 18, 1996, with Kraemer Brothers,
Inc. (Exhibit 10(ee) to Post-Effective Amendment No. 11 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(i) First Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated October 10, 1996 (Exhibit 10(ii) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(j) Agreement for the Purchase and Sale of Property dated October 10, 1996,
between TCI Valwood Limited Partnership I and Fund VIII and Fund IX
Associates (Exhibit 10(ff) to Post-Effective Amendment No. 12 to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(k) Build to Suite Industrial Lease Agreement dated November 1, 1995,
between Industrial Developments International, Inc. and TCI Central,
Inc., as amended July 16, 1996 and August 29, 1996 (Exhibit 10(gg) to
Post-Effective Amendment No. 12 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(l) Assignment and Assumption of Lease dated October 10, 1996, between TCI
Valwood Limited Partnership I and The Bank of New York, as Agent for
Fund VIII and Fund IX Associates (Exhibit 10(hh) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(m) Real Estate Option Agreement dated December 9, 1996, between The
Development Corporation of Knox County and Wells Real Estate Fund IX,
L.P. (Exhibit 10(jj) to Post-Effective Amendment No. 13 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(n) Lease Agreement dated December 10, 1996, between Wells Real Estate Fund
IX, L.P. and ABB Flakt, Inc. (Exhibit 10(kk) to Post-Effective
Amendment No. 13 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(o) Development Agreement dated December 10, 1996, between Wells Real
Estate Fund IX, L.P. and ADEVCO Corporation (Exhibit 10(ll) to Post-
Effective Amendment No. 13 to Form S-11 Registration Statement of Wells
Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(p) Owner-Contractor Agreement dated November 1, 1996, between Wells Real
Estate Fund IX, L.P. and Integra Construction, Inc. (Exhibit 10(mm) to
Post-Effective Amendment No. 13 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(q) Second Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated January 7, 1997 (Exhibit 10(ii) to Form 10-K of Wells
Real Estate Fund VIII, L.P. for the fiscal year ended December 31,
1997, File No. 0-27888)
*10(r) Agreement for the Purchase and Sale of Property with Magellan Bake
Parkway Limited Partnership dated December, 1996 (Exhibit 10(jj) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, File No. 0-27888)
*10(s) Office Lease with Matsushita Avionics Systems Corporation dated April
29, 1996 (Exhibit 10(kk) to Form 10-K of Wells Real Estate Fund VIII,
L.P. for the fiscal year ended December 31, 1997, File No. 0-27888)
*10(t) Third Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated February 18, 1997 (Exhibit 10(ll) to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1997, File No. 0-27888)
*10(u) Agreement for the Purchase and Sale of Property with Orix Prime West
Bloomfield II Venture dated February 5, 1997 (Exhibit 10(mm) to Form
10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1997, File No. 0-27888)
*10(v) Lease with Cirrus Logic, Inc. dated July 5, 1995 (Exhibit 10(nn) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, File No. 0-27888)
*10(w) Agreement for the Purchase and Sale of Real Property dated May 30,
1997, between Fund IX and Fund X Associates and Wells Development
Corporation (Exhibit 10(k) to Post-Effective Amendment No. 2 to Form S-
11 Registration Statement of Wells Real Estate Fund X, L.P. and Wells
Real Estate Fund XI, L.P., File No. 333-7979)
*10(x) Net Lease Agreement dated May 30, 1997, between Wells Development
Corporation and Lucent Technologies, Inc. (Exhibit 10(l) to Post-
Effective Amendment No. 2 to Form S-11 Registration Statement of Wells
Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., File No.
333-7979)
*10(y) Development Agreement dated May 30, 1997, between Wells Development
Corporation and ADEVCO Corporation (Exhibit 10(m) to Post-Effective
Amendment No. 2 to Form S-11 Registration Statement of Wells Real
Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., File No. 333-
7979)