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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, 1998 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 0-27888
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Wells Real Estate Fund VIII, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2126618
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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 VIII, L.P. (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia
non-public 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 or industrial properties.
On January 6, 1995, 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 filed on Form S-11 under the Securities Act of 1933. The
Partnership commenced active operations on February 24, 1995, when it received
and accepted subscriptions for 125,000 units. The offering was terminated on
January 5, 1996, and received gross proceeds of $32,042,689 representing
subscriptions from 3,204,269 Limited Partners units, composed of two classes of
limited partnership interests, Class A and Class B limited partnership units.
The Partnership owns interests in properties through the following joint
ventures: (i) Fund VII and Fund VIII Associates, a joint venture between the
Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VII - Fund VIII
Joint Venture"); (ii) Fund VI, Fund VII and Fund VIII Associates, a joint
venture among the Partnership, Wells Real Estate Fund VI, L.P., and Wells Real
Estate Fund VII, L.P. (the "Fund VI-VII-VIII Joint Venture"); and (iii) Fund
VIII and Fund IX Associates, a joint venture between the Partnership and Wells
Real Estate Fund IX, L.P. (the "Fund VIII - Fund IX Joint Venture").
As of December 31, 1998, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a single-
story retail/office building located in Clayton County, Georgia (the "Hannover
Center") and (ii) a two-story office building located in Gainesville, Florida
(the "CH2M Hill") which are owned by the Fund VII - Fund VIII Joint Venture;
(iii) a four-story office building located in Jacksonville, Florida (the
"BellSouth Property") and (iv) a retail shopping center located in Clemmons,
North Carolina (the "Tanglewood Commons") which are owned by the Fund VI-VII-
VIII Joint Venture; and (v) a four-story office building in Madison, Wisconsin
(the "US Cellular Building"), (vi) a one-story office building located in
Farmers Branch, Texas (the "TCI Building"), (vii) a two-story office building
located in Orange County, California (the "Matsushita Building"), and (viii) a
two-story office building located in Boulder County, Colorado (the "Cirrus Logic
Building") which are owned by the Fund VIII- Fund IX Joint Venture.
2
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, 1998.
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 eight properties through its investment in
joint ventures of which six are office buildings and two are retail 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, 1998, these
properties were 99% occupied as compared to 90% occupied as of December 31, 1997
and 93% at December 31, 1996.
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 1998, assuming no exercise of renewal options
or termination rights:
3
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
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1999 - - - - - -
2000 - - - - - -
2001 1 22,607 $ 369,852 $ 119,647 6.6% 8.4%
2002 5 29,901 389,064 198,347 8.7% 8.8%
2003 6 75,266 801,472 439,459 22.0% 18.3%
2004 1 5,600 87,120 28,183 1.6% 2.0%
2005(2) 1 57,547 530,313 335,953 16.8% 12.1%
2006(3) 2 75,444 1,258,635 440,456 22.0% 28.6%
2007(4) 1 76,276 959,148 525,581 22.3% 21.8%
2008 - - - - - -
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17 342,641 $4,395,604 $2,087,626 100.0% 100.0%
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of CH2M Hill lease, Gainesville, Florida.
(3) Expiration of 69,424 square feet BellSouth lease, Jacksonville, Florida.
(4) Expiration of US Cellular lease, Madison, Wisconsin.
The following describes the properties in which the Partnership owns an interest
as of December 31, 1998:
Fund VII - Fund VIII Joint Venture
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On February 10, 1995, the Partnership and Wells Real Estate Fund VII, L.P.
("Wells Fund VII"), a Georgia public limited partnership affiliated with the
Partnership through common general partners, entered into a Joint Venture
Agreement known as Fund VII and Fund VIII Associates (the "Fund VII - Fund VIII
Joint Venture"). The investment objectives of Wells Fund VII are substantially
identical to those of the Partnership. The Partnership holds an approximate 63%
equity interest and Wells Fund VII holds an approximate 37% equity interest in
the Fund VII -Fund VIII Joint Venture which owns and operates an office building
and a retail/office building as described below. As of December 31, 1998, the
Partnership had contributed $4,267,621 and Wells Fund VII had contributed
$2,474,724 for a total cost of $6,742,345 to the Fund VII - Fund VIII Joint
Venture for the acquisition and development of the property.
The Hannover Center
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On April 1, 1996, Wells Fund VII contributed 1.01 acres of land located in
Clayton County, Georgia and improvements thereon valued at $512,000 to the Fund
VII - Fund VIII Joint Venture for the development of a 12,040 square foot,
single story combination retail/office building. As of December 31, 1998, Wells
Fund VII had funded approximately $1,437,801 for the
4
development of the Hannover property, and the Partnership had contributed
$190,311 to the joint venture for the development of the property.
A nine year, eleven month lease has been signed with Moovies, Inc., a video sale
and rental store, to occupy 6,020 square feet. The annual base rent: (1) for
the initial term of 36 months is $93,310; (2) for the second term of 36 months
is $102,340; (3) for the third term of 36 months is $111,370, and (4) for the
final term of eleven months is $110,367. Moovies, Inc. has the option to extend
its lease for two five year terms at market rate. The tenant, which provided
its own build-out from the existing shell, moved into the building and opened
for business June 22, 1996. The lease will expire in 2006. Two additional
tenants have occupied the remaining space at the property.
The average effective annual rental per square foot at the Hannover Property was
$10.05 for 1998, $8.92 for 1997 and $8.14 for 1996, the first year of occupancy.
The occupancy rate at year end for 1998 was 100%, and was 50% for 1997 and 1996.
CH2M Hill at Gainesville
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Wells Fund VII made an initial contribution to the Fund VII - Fund VIII Joint
Venture of $677,534, which constituted the total purchase price and all other
acquisition and development costs expended by the Fund VII - Fund VIII Joint
Venture for the purchase of a 5.0 acre parcel of land in Gainesville, Alachua
County, Florida. Construction of a 62,975 square foot office building,
containing 61,468 rentable square feet was completed in December, 1995. The
average effective annual rental per square foot at the Gainesville Property was
$9.19 for 1998, $8.63 for 1997 and $8.69 for 1996. The variance in the effective
annual rate in 1996 is due to an adjustment to rent for 1995. The occupancy
rate at year end for 1998 was 100% and was 93.5% for 1997 and 1996.
A 9 year, 11 month lease, to occupy 57,457 square feet has been signed with CH2M
Hill, Engineers, Planners, Economists, Scientists, with an option to extend for
an additional five year period. The annual base rent during the initial term is
$530,313 payable in equal monthly installments of $44,193. The annual rent for
the extended term will be at market rate. Assuming no options or termination
rights, the lease with CH2M Hill will expire in the year 2005.
As of December 31, 1998, the Partnership had contributed $4,077,310, and Wells
Fund VII had contributed $1,036,923 to the Fund VII - Fund VIII Joint Venture
toward the completion of this project.
Fund VI-VII-VIII Joint Venture
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On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund
VI, L.P. ("Wells Fund VI") a Georgia public limited partnership, affiliated with
the Partnership through common general partners, formed a joint venture known as
the Fund VI, Fund VII, and Fund VIII Associates (the "Fund VI-VII-VIII Joint
Venture"). The investment objectives of Wells Fund VI are substantially
identical to those of the Partnership. As of December 31, 1998, the Partnership
had contributed approximately $5,700,000 for an approximately 32.3% equity
interest in the
5
Fund VI-VII-VIII Joint Venture which owns an office building in
Jacksonville, Florida and a multi-tenant retail center in Clemmons, North
Carolina. As of December 31, 1998, Wells Fund VI had contributed $6,067,688
for an equity interest in the Fund VI-VII-VIII Joint Venture of approximately
34.3%, and Wells Fund VII contributed approximately $5,932,312 for an equity
interest in the Fund VI-VII-VIII Joint Venture of approximately 33.4%. The
total cost to complete both properties is approximately $17,700,000.
BellSouth Property
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On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55 acre
parcel of land in Jacksonville, Florida for a total of $1,245,059 including
closing costs. In May 1996, the 92,964 square foot office building was completed
with BellSouth Advertising and Publishing Corporation, a subsidiary of BellSouth
Company, occupying approximately 66,333 square feet and American Express Travel
Related Services Company, Inc. occupying approximately 22,607 square feet.
BellSouth occupied an additional 3,901 square feet in December, 1996. The land
purchase and construction costs, totaling approximately $9 million, were funded
by capital contributions of $2,000,000 by the Partnership, $3,500,000 by Wells
Fund VI and $3,500,000 by Wells Fund VII.
The BellSouth lease is for a term of nine years and eleven months with an option
to extend for an additional five-year period at market rate. The annual base
rent during the initial term is $1,094,426 during the first five years and
$1,202,034 for the balance of the initial lease term. The American Express lease
is for a term of five years at an annual base rent of $369,851. BellSouth and
American Express are required to pay additional rent equal to their share of
operating expenses during their respective lease terms.
The average effective annual rental per square foot at the BellSouth property
was $16.36 for 1998, $16.40 for 1997 and $14.15 for 1996, the first year of
occupancy. The occupancy rate at year end was 100% for 1998, 1997 and 1996.
Tanglewood Commons Shopping Center
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On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre
tract of real property located in Clemmons, Forsyth County, North Carolina. The
land purchase costs were funded by a capital contribution made by Wells Fund VI.
As of December 31, 1998, Fund VI had contributed $2,567,688, and Fund VII had
contributed $2,432,312 and the Partnership had contributed $3,700,000 for the
development of this project.
The Fund VI-VII-VIII Joint Venture developed and constructed one large strip
shopping center building containing approximately 67,320 gross square feet on a
12.48 acre tract. The remaining 2.2 acre portion of the property consists of
four outparcels which have been graded and are held for future development or
resale.
Total costs and expenses incurred by the Fund VI-VII-VIII Joint Venture for the
acquisition, development, construction and completion of the shopping center are
anticipated to total approximately $8,700,000. Construction of the project
began in March, 1996, and was
6
substantially completed in the first quarter of 1997. As of December 31, the
Joint Venture has reserved $319,000, to complete remaining tenant improvement
costs.
Harris Teeter, Inc., a regional supermarket chain, executed a lease for a
minimum of 45,000 square feet with an initial term of 20 years with extension
options of four successive five year periods with the same terms as the initial
lease. The annual base rent during the initial term is $488,250. In addition,
Harris Teeter has agreed to pay percentage rents equal to one percent of the
amount by which Harris Teeters gross sales exceed $35,000,000 for any lease
year. The average effective annual rental per square foot at Tanglewood Commons
was $10.96 for 1998 and $9.12 for 1997, the first year of occupancy. The
occupancy rate at year end was 91% for 1998 and 86% for December 31, 1997.
Fund VIII - Fund IX Joint Venture
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On June 10, 1996, the Partnership and Wells Real Estate Fund IX, L.P. ("Wells
Fund IX"), 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 IX are substantially identical to those of the
Partnership. As of December 31, 1998, the Partnership had contributed
$15,987,323 for an approximately 55% equity interest, and Wells Fund IX had
contributed $13,289,358 for an approximately 45% 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. Construction has been completed on a four-
story office building containing approximately 101,727 rentable square feet (the
"US Cellular Building").
In June 1997, Cellular One, 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 rate. Cellular One 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 have been funded by capital
contributions of $6,573,342 by the Partnership and $3,912,444 by Wells Fund IX
for a total cost of approximately $10,500,000.
7
The average effective annual rental per square foot at the US Cellular Building
was $ 12.60 for 1998 and $8.87 for 1997, the first year of occupancy. The
occupancy rate at year end was 100% in 1998 and 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 IX totaling $2,238,170 and $2,236,530, 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 55% 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% for 1998, 1997 and
for the last three months of 1996. The average effective rental per square foot
in the TCI Building is $11.38 for 1998, 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
8
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. 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 IX. The
Partnership and Wells Fund IX made capital contributions of approximately
$3,620,316 and $3,608,109, 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 was
$10.32 for 1998 and 1997, the first year of ownership. The occupancy rate at
year end was 100% for 1998 and 1997.
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.
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 annual initial base rent payable by Cirrus Logic under its
lease is $677,755. The base annual rent 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.
9
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 - Fund IX Joint Venture to acquire the Cirrus
Logic Building were derived entirely from capital contributions made to the Fund
VIII - Fund IX Joint Venture by the Partnership and Wells Fund IX. The
Partnership and Wells Fund IX each made capital contributions of approximately
$3,555,495 and $3,532,275, 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
was $14.65 for 1998 and $13.25 for 1997, the first year of occupancy. The
occupancy rate at year end was 100% for 1998 and 1997.
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 1998.
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 1998.
PART II
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ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
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As of February 28, 1999, the Partnership had 2,674,584 outstanding Class A
Status Units held by a total of 1,977 Limited Partners and 528,685 outstanding
Class B Status Units held by a total of 270 Limited Partners. The capital
contribution per unit is $10.00. There is no established public trading for the
Partnership's limited partnership units, and it is not anticipated that a public
trading market for the units will develop. Under the Partnership Agreement, the
General Partners have the right to prohibit transfers of units.
The General Partners have estimated the investment value of properties held by
the Partnership, as of December 31, 1998, to be $10.57 per Class A Unit and
$12.58 per Class B Units based on market conditions existing in early December
1998. The value was confirmed as reasonable by an independent MAI appraiser,
David L. Beal Company, although no actual MAI appraisal was performed due to the
inordinate expense involved with such an undertaking. The valuation does not
include any fractional interest valuation.
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
10
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 Partner as of December
31, 1998.
Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A 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, 1997 $274,097 $0.10 $0.00
June 30, 1997 $332,218 $0.13 $0.00
September 30, 1997 $496,938 $0.19 $0.00
December 31, 1997 $530,514 $0.20 $0.00
March 31, 1998 $552,051 $0.21 $0.00
June 30, 1998 $564,821 $0.21 $0.00
September 30, 1998 $572,083 $0.22 $0.00
December 31, 1998 $590,679 $0.22 $0.00
The fourth quarter distribution was accrued for accounting purposes in 1998, and
was not actually paid to Limited Partners until February, 1999. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Status Units will continue in 1999 at a level
at least comparable with 1998 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 24, 1995, and
accordingly, there is no comparative financial data available from prior fiscal
years. As of December 31, 1994, the Partnership's assets totaled approximately
$600 consisting primarily of the General Partners' capital contributions.
11
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1998, 1997, 1996 and the eleven months ended December
31, 1995.
1998 1997 1996 1995
------------- ------------- ------------- -------------
Total assets $26,072,465 $27,021,694 $27,506,234 $26,254,253
Total revenues 1,362,513 1,204,018 1,057,694 402,428
Net income 1,269,171 1,102,567 936,590 273,914
Net loss allocated
to General Partners 0 0 (297) (203)
Net income allocated to
Class A Limited Partners 2,431,246 1,947,536 1,207,540 294,221
Net loss allocated to
Class B Limited Partners (1,162,075) (844,969) (270,653) (20,104)
Net income per weighted
average (1) Class A
Limited Partner Unit 0.91 0.73 0.46 0.28
Net loss per weighted
average (1) Class B
Limited Partner Unit (2.12) (1.50) (0.47) (0.03)
Cash Distributions per
weighted average (1)
Class A Limited Partner Unit:
Investment Income 0.86 0.62 0.44 0.28
Return of Capital 0.00 0.00 0.00 0.00
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased or
converted by Limited Partners in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
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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
12
leases, and the potential need to fund tenant improvements or other capital
expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
- -------
Gross revenues of the Partnership were $1,362,513 for the year ended December
31, 1998, as compared to $1,204,018 for the year ended December 31, 1997 and
$1,057,694 for the year ended December 31, 1996. This increase was attributable
primarily to increased investment in joint ventures partially offset by
decreased interest income earned on funds held by the Partnership. Expenses of
the Partnership were $93,342 for 1998 as compared to $101,451 for 1997 and
$121,104 for 1996. The decrease in expenses in each year since 1996 consisted
primarily of decreased partnership administrative costs and decreased legal and
accounting expenses. Net income of the Partnership was $1,269,171 for the year
ended December 31, 1998, as compared to $1,102,567 for the year ended December
31, 1997 and $936,590 for the year 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 $0.86 per Class A Status Unit for the year ended
December 31, 1998, $0.62 per Class A Status Unit for the year ended December 31,
1997 and $0.44 per Class A Status Unit for the year ended December 31, 1996.
The General Partners anticipate distributions per Unit will continue to increase
for Limited Partners holding Class A Status Units in 1999. Distributions
accrued for the fourth quarter of 1998 to the Limited Partners holding Class A
Status Units were paid in February, 1999. No cash distributions were made to
Limited Partners holding Class B Status Units.
Property Operations
- -------------------
The Partnership's ownership interest in the Fund VII - Fund VIII Joint Venture
is 63%, in the Fund VI-VII-VIII Joint Venture is 32%, and in the Fund VIII -
Fund IX Joint Venture is 55%.
As of December 31, 1998, the Partnership owned equity through interests in Joint
Ventures in the following operational properties:
13
CH2M Hill at Gainesville/Fund VII - Fund VIII Joint Venture
- -----------------------------------------------------------
For the Year Ended For the Year Ended For the Year Ended
December 31, 1998 December 31, 1997 December 31, 1996
----------------- ------------------- -------------------
Revenues:
Rental income $564,683 $530,493 $534,276
-------- -------- --------
Expenses:
Depreciation 251,783 218,181 222,328
Management & leasing expense 82,031 78,850 80,258
Other operating expenses 49,250 (66,963) (1,380)
-------- -------- --------
383,064 230,068 301,206
-------- -------- --------
Net income (loss) $181,619 $300,425 $233,070
======== ======== ========
Occupied % 100% 94% 94%
Partnership's Ownership % in the
Fund VII - VIII Joint Venture 63.4% 62.0% 62.0%
Cash distribution to Partnership $276,044 $324,539 $268,812
Net income (loss) allocated to the Partnership $114,514 $186,402 $156,368
In February, 1995, the Fund VII - Fund VIII Joint Venture acquired a 5.0 acre
tract of land located in Gainesville, Alachua County, Florida for the purpose of
constructing a 62,975 square foot (61,468 rentable square feet) office building.
A 9 year, 11 month lease to occupy 57,457 square feet was signed by CH2M Hill.
The annual base rent is $530,313 payable in equal monthly installments of
$44,193. CH2M Hill occupied their portion of the building in mid-December, 1995.
Affiliated engineers signed a five year lease beginning March 27, 1998 which
occupied the remaining space. Depreciation, management and leasing expenses
increased compared to 1997, due primarily to increased occupancy. Operating
expense increase for 1998, due primarily to a refund to the tenant of property
taxes over paid in 1997. Income and distribution to the partnership decreased
due to refund of property taxes over paid to tenant.
Real estate taxes were $75 for 1995, based on undeveloped land, $79,235 for
1996, $79,428 for 1997 and $78,407 for 1998.
14
For comments on the general competitive conditions to witch 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 Hannover Center/Fund VII - Fund VIII Joint Venture
- ------------------------------------------------------
For the Year Ended For the Year Ended Nine Months Ended
December 31, 1998 December 31, 1997 December 31, 1996
------------------- ------------------- ------------------
Revenues:
Rental income $121,056 $107,379 $ 48,988
-------- -------- --------
Expenses:
Depreciation 43,925 43,925 31,391
Management & leasing expenses 11,487 11,237 4,424
Other operating expenses 20,482 25,813 28,812
-------- -------- --------
75,894 80,975 64,627
-------- -------- --------
Net income (loss) $ 45,162 $ 26,404 $(15,639)
======== ======== ========
Occupied % 100% 50% 50%
Partnership's Ownership % in the
Fund VII - VIII Joint Venture 63.4% 62.0% 62.0%
Cash distribution to Partnership $ 11,561 $ 37,892 $ 5,755
Net income (loss) allocated to the Partnership $ 28,554 $ 16,382 $ (9,703)
On April 1, 1996, Fund VII - Fund VIII Joint Venture acquired a 1.01 acre tract
of land and a 12,000 square foot combination retail/office building known as the
Hannover Retail Center.
Moovies, Inc., a video store and rental store, signed a nine year, eleven month
lease for 6,020 square feet and occupied the space and opened for business on
June 22, 1996. Accordingly, no comparative financial data is available for
1996. As of September 30, 1998, the remaining 6060 square feet was leased to
Norwest Financial and Prudential Realty, which commenced in October 1998.
Distributions decreased in 1998 due to $44,000 in construction being funded by
operating cash flow in 1998.
Real estate taxes were $12,668 for 1998 and $12,219 for 1997 and $9,650 for
1996.
15
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.
BellSouth Property / Fund VI - VII - VIII Joint Venture
- -------------------------------------------------------
For the Year Ended For the Year Ended Eight Months Ended
December 31, 998 December 31, 1997 December 31 1996
------------------------ ---------------------- --------------------------
Revenues:
Rental income $1,521,109 $1,524,708 $876,711
Interest income 7,806 8,188 60,092
Other income 9,373 360 150
---------- ---------- --------
1,538,288 1,533,256 936,953
---------- ---------- --------
Expenses:
Depreciation 444,448 443,544 290,407
Management & leasing expenses 190,025 191,176 99,330
Other operating expenses 436,403 415,114 288,815
---------- ---------- --------
1,070,876 1,049,834 678,552
---------- ---------- --------
Net income $ 467,412 $ 483,422 $258,401
========== ========== ========
Occupied % 100% 100% 100%
Partnership's Ownership % in the
Fund VI- VII - VIII Joint Venture 32.3% 32.3% 28.1%
Cash distribution to Partnership $ 305,826 $ 289,843 $110,429
Net income allocated to the $ 151,229 $ 146,895 $ 59,658
Partnership
On April 25, 1995, the Fund VI - VII - VIII Joint Venture purchased 5.55 acres
of land located in Jacksonville, Florida. In May 1996, the 92,964 square foot
office building was completed, with BellSouth Advertising and Publishing
Corporation occupying approximately 66,333 square feet and American Express
occupying approximately 22,607 square feet. An additional approximate 3,901
square feet of additional space was occupied by BellSouth commencing in
December, 1996 bringing occupancy to 100%.
Net income has decreased in 1998 as compared to 1997 due primarily to increased
costs for HVAC repairs and various other building expenses. Cash distributions
and net income and net income allocated to the partnership increased in 1998
over 1997 levels due primarily to additional funding by the partnership in early
1997, which increased the partnership ownership in the Fund VI-VII-VIII Joint
Venture. Interest income was generated from construction dollars, not as yet
funded on construction, being invested in interest bearing accounts. Since the
building opened in May, 1996, comparative income and expense figures for 1996
are not available.
16
The BellSouth Property incurred property taxes of $ 171,629 for 1998, $164,400
for 1997 and $23,234 for 1996, the first year of occupancy.
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.
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
- -------------------------------------------------
For the Year Ended Eleven Month Ended
December 31,1998 December 31,1997
------------------- -------------------
Revenues:
Rental income $737,862 $562,880
17,610 11,276
-------- --------
755,472 574,156
-------- --------
Expenses:
Depreciation 244,311 191,155
Management & leasing expense 61,562 41,589
Other operating expenses 49,338 88,873
-------- --------
355,211 321,617
-------- --------
Net income $400,261 $252,539
======== ========
Occupied % 91% 86%
Partnership's Ownership % in the
Fund VI-Fund VII-Fund-VIII
Joint Venture $ 32.3% $ 32.3%
Cash Distribution to Partnership $206,319 $118,839
Net income allocated to Partnership $129,503 $ 79,268
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre
tract of real property located in Clemmons, Forsyth County, North Carolina. The
land purchase costs were funded by a capital contribution made by Wells Fund VI.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping center
were approximately $8,700,000. A strip shopping center containing approximately
67,320 gross square feet opened on the site on February 26, 1997.
In February 1997, Harris Teeter, Inc., a regional supermarket chain, occupied
its leased space of 46,120 square feet with an initial term of 20 years. The
annual base rent during the initial term is $488,250. In addition, Harris
Teeter has agreed to pay percentage rents equal to one percent of the amount by
which Harris Teeter's gross sales exceed $35,000,000 for any lease year.
17
Tanglewood Commons incurred property taxes of $35,542 for 1998 and $58,466 for
1997, the first year of occupancy. Since this property commenced operations in
February 1997, comparable income and expense figures are not available.
The TCI Building - Fund VIII - Fund IX Joint Venture
- ----------------------------------------------------
For the Year Ended For the Year Ended Three Months Ended
December 31, 1998 December 31, 1997 December 31, 1996
------------------- ------------------- -------------------
Revenues:
Rental income $455,177 $455,177 $101,277
Interest income 32,194 6,607 0
Other income 0 4,479 0
-------- -------- --------
487,371 466,263 102,277
-------- -------- --------
Expenses:
Depreciation 166,594 166,595 50,444
Management & leasing expenses 17,199 17,496 3,884
Other operating expenses 9,236 10,082 1,050
-------- -------- --------
193,029 194,173 55,378
-------- -------- --------
Net income $294,342 $272,090 $ 45,899
======== ======== ========
Occupied % 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 54.8% 50.1% 49.9%
Cash distribution to Partnership $235,051 $206,961 $ 45,965
Net income allocated to the Partnership $158,794 $136,186 $ 22,892
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.
Net income and cash distribution have increased in 1998 as compared to 1997 due
primarily to the Partnership's increased ownership in the fund VIII-Fund IX
Joint Venture. The Partnership's ownership increased due to additional funding
by the Partnership.
18
Since the TCI Building was purchased in October 1996, comparative income and
expense figures for 1996 are not available. Real estate taxes and primarily all
operational expenses for the building are the responsibility of the tenant.
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 For the Year Ended
December 31, 1998 December 31,1997
---------------------------- ---------------------------------
Revenues:
Rental income $670,792 $644,240
Interest income 0 1,511
-------- --------
670,792 645,751
-------- --------
Expenses:
Depreciation 215,669 215,670
Management & leasing expense 26,050 30,872
Other operating expenses 16,180 3,973
-------- --------
257,899 250,515
-------- --------
Net income $412,893 $395,236
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the 54.8% 50.1%
Fund VIII - Fund IX Joint Venture
Cash distribution to Partnership $358,857 $185,783
Net income allocated to Partnership $222,754 $197,953
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. The entire
Matsushita Building is currently under a net lease to Matsushita Avionics
Systems Corporation and began paying rent in May, 1997.
Since the Matsushita Building was purchased in January 1997, comparative income
and expense figures are not available. 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 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The Cirrus Logic Building/Fund VIII - Fund IX Joint Venture
- -----------------------------------------------------------
For the Year Ended Ten Months Ended
December 31, 1998 December 31, 1997
------------------- ------------------
Revenues:
Rental income $738,156 $584,373
Interest income 0 21,402
-------- --------
738,156 605,775
-------- --------
Expenses:
Depreciation 291,064 236,049
Management & leasing expense 39,149 25,605
Other operating expenses 62,038 5,330
-------- --------
392,251 266,984
-------- --------
Net income $345,905 $338,791
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture $54.8% $50.1%
Cash distribution to Partnership $309,040 $234,721
Net income allocated to Partnership
$185,782 $169,670
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.
Since the Cirrus Logic Building was purchased in February 1997 and was not
completed until March 1997, comparative income and expense figures are not
available. The building incurred property taxes of $101,229 for 1998 and $44,623
for 1997, the first year of occupancy.
The Partnership's ownership in the fund VIII-Fund IX- Joint Venture increased
due to additional funding by the Partnership.
20
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
- ----------------------------------------------------------
Year Ended Seven Months Ended
December 31, 1998 December 31, 1997
------------------ -------------------
Revenues:
Rental income $1,282,076 $519,542
---------- --------
Expenses:
Depreciation 601,509 276,566
Management & leasing expense 139,396 47,957
Other operating expenses (118,009) (8,883)
---------- --------
622,896 315,640
---------- --------
Net income $ 659,180 $203,902
========== ========
Occupied % 100% 75%
Partnership's Ownership % in the 54.8% 50.1%
Fund VIII - Fund IX Joint Venture
Cash distribution to Partnership $647,955 $191,778
Net income allocated to Partnership $355,237 $102,151
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 incurred by the Fund VIII - Fund IX Joint Venture for the acquisition,
development, construction and completion of the 101,727 rentable square foot
building was approximately $10,371,000. In June 1997, US Cellular, a subsidiary
of BellSouth Corporation, occupied its leased space of 76,276 square feet
comprising approximately 75% of the building. One additional tenant has occupied
the remaining 25% of the building in 1998.
Since the US Cellular Building opened in June, 1997, comparative income and
expenses figures are not available. Other operating expenses are negative due
to tenant reimbursement reflected in this category which include management and
leasing expense reimbursement. The building incurred property taxes of $ 50,825
for 1998 and $93,865 for 1997, the first year of occupancy.
The Partnership's ownership in the Fund VIII-Fund IX Joint Venture increased due
to additional funding by the Partnership.
21
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.
Liquidity and Capital Resources
- -------------------------------
During the offering, which terminated on January 5, 1996 the Partnership raised
a total of $32,042,689 in capital through the sale of 3,204,269 Units. No
additional units will be sold by the Partnership. As of December 31, 1998, the
Partnership incurred $6,087,744 in acquisition and advisory fees, selling
commissions and organizational and offering expenses, a repurchase of 1,000
limited partnership units, and investment by the Partnership of $25,954,945 in
Joint Ventures.
The Partnership's net cash (used in) provided by operating activities decreased
to ($63,946) in 1998 as compared to $7,909 for 1997 due primarily to decreased
interest income earned on funds held by the Partnership prior to investment in
properties offset by changes in prepaid assets and due to affiliates. Net cash
provided by investing activities of $442,645 in 1998 is primarily the result of
distributions received from the joint ventures offset by investments in the
joint ventures. Distribution to partners began in 1996 and increased in 1997 and
1998. Net cash (used in) financing activities has increased due primarily to
increased Partnership distributions.
The Partnership's distributions paid and payable through the fourth quarter of
1998 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
1998. The Partnership expects to meet liquidity requirements and budget demands
through cash flow from operations.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
Inflation
- ----------
The real estate market has not been affected significantly by inflation 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.
Year 2000
- ---------
The Partnership is presently reviewing the potential impact of Year 2000
compliance issues on its information systems and business operations. A full
assessment of Year 2000 compliance issues was begun in late 1997 and is expected
to be completed by March 31, 1999. Renovations and replacements of equipment
have been and are being made as warranted as the assessment progresses. The
costs incurred by the Partnership and its affiliates thus far for renovations
and
22
replacements have been immaterial. Some testing of systems has begun and
all testing is expected to be complete by June 30, 1999.
As to the status of the Partnership's information technology systems, it is
presently believed that all major systems and software packages with the
exception of the accounting and property management package are Year 2000
compliant. The Partnership's affiliated entities are purchasing the upgrade for
the accounting and property management package system; however, it is not slated
to be available until the end of the first quarter of 1999. At the present
time, it is believed that all major non-information technology systems are Year
2000 compliant. The cost to upgrade any non-compliant systems is believed to be
immaterial.
The Partnership is in the process of confirming with the Partnership's
vendors, including third-party service providers such as banks, that their
systems will be Year 2000 compliant. Based on the information received thus
far, the primary third-party service providers with which the Partnership has
relationships have confirmed their Year 2000 readiness.
The Partnership relies on computers and operating systems provided by
equipment manufacturers, and also on application software designed for use with
its accounting, property management and investment portfolio tracking. The
Partnership has preliminarily determined that any costs, problems or
uncertainties associated with the potential consequences of Year 2000 issues are
not expected to have a material impact on the future operations or financial
condition of the Partnership. The Partnership will perform due diligence as to
the Year 2000 readiness of each property owned by the Partnership and each
property contemplated for purchase by the Partnership.
The Partnership's reliance on embedded computer systems (i.e.,
microcontrollers) is limited to facilities related matters, such as office
security systems and environmental control systems.
The Partnership is currently formulating contingency plans to cover any areas
of concern. Alternate means of operating the business are being developed in
the unlikely circumstance that the computer and phone systems are rendered
inoperable. An off-site facility from which the Partnership could operate is
being sought as well as alternate means of communication with key third-party
vendors. A written plan is being developed for testing and dispensation to each
staff member of the Advisor of the Partnership.
Management believes that the Partnership's risk of Year 2000 problems is
minimal. In the unlikely event there is a problem, the worst case scenarios
would include the risks that the elevator or security systems within the
Partnership's properties would fail or the key third-party vendors upon which
the Partnership relies would be unable to provide accurate investor information.
In the event that the elevator shuts down, the Partnership has devised a plan
for each building whereby the tenants will use the stairs until the elevators
are fixed. In the event that the security system shuts down, the Partnership
has devised a plan for each building to hire temporary on-site security guards.
In the event that a third-party vendor has Year 2000 problems relating to
investor information, the Partnership intends to perform a full system back-up
of all investor information as of December 31, 1999 so that the Partnership will
have accurate hard-copy investor information.
23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ----------------------------------------------------
The Financial Statements of the Registrant and supplementary data are detailed
under Item 14 (a) and filed as part of the report on the pages indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE.
- --------------------
There were no disagreements with the Partnership's accountants or other
reportable events during 1998.
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 55 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.
24
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, 1998.
CASH COMPENSATION TABLE
-----------------------
( A ) ( B ) ( C )
Name of Individual or Capacities in which served Form
Number in Group of Compensation Cash Compensation
- ----------------------------------------------------------------------------------------------
Wells Management Company, Inc. Property Manager -
Management & Leasing Fees $200,145 (1)
(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 1998 but not actually
paid until January, 1999.
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, 1999.
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- -------------- ------------------- -------------------- ----------------
Class A Units Leo F. Wells, III 140.88 Units Less than 1%
(IRA, 401(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:
25
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, 1998.
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 $200,145 for the year ended December 31, 1998.
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, 1998.
26
PART IV
-------
ITEM 14. EXHIBITS FINANCIAL STATEMENTS SCHEDULES, AND REORTS ON FORM 8-K.
- -------------------------------------------------------------------------
(a) 1. The Financial Statement are contained on Pages F-2 through F-28 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 1998.
(c) The Exhibits filed in response to Item 601 of Regulations S-K are listed
on the Exhibit Index attached hereto.
(d) See (a) 2 above
27
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 26th day of March,
1999.
Wells Real Estate Fund VIII, 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 26, 1999
- ------------------------------ 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.
28
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Financial Statements Page
- -------------------- ----
Independent Auditors' Report F-2
Balance Sheets as of December 31, 1998, 1997 and 1996 F-3
Statements of Income for the Year's Ended December 31, 1998, 1997
And 1996. F-4
Statements of Partners' Capital for the Year's Ended December 31, 1998,
1997 and 1996. F-5
Statements of Cash Flows for the Year's Ended December 31, 1998,
1997 and 1996. F-6
Notes to Financial Statements for December 31, 1998, 1997 and
1996 F-7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VIII, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VIII,
L.P. (a Georgia public limited partnership) as of December 31, 1998 and 1997 and
the related statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1998. 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 and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund VIII,
L.P. as of December 31, 1998 and 1997 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998 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, 1998 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 27, 1999
F-2
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
1998 1997
----------- -----------
INVESTMENT IN JOINT VENTURES $25,451,768 $24,501,876
CASH AND CASH EQUIVALENTS 8,792 1,848,493
DUE FROM AFFILIATES 605,655 548,507
DEFERRED PROJECT COSTS 0 103,318
ORGANIZATION COSTS, less accumulated
amortization of $25,000 in 1998 and $18,750 in 1997 6,250 12,500
PREPAID EXPENSES AND OTHER ASSETS 0 7,000
----------- -----------
Total assets $26,072,465 $27,021,694
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Partnership distributions payable $ 591,948 $ 530,714
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A 23,113,046 22,828,363
Class B 2,367,471 3,662,617
----------- -----------
Total partners' capital 25,480,517 26,490,980
----------- -----------
Total liabilities and partners' capital $26,072,465 $27,021,694
=========== ===========
The accompanying notes are an integral part of these balance sheets.
F-3
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
----------- ---------- ----------
REVENUES:
Equity in income of joint ventures $ 1,346,367 $1,034,907 $ 241,819
interest income 16,146 169,111 815,875
----------- ---------- ----------
1,362,513 1,204,018 1,057,694
----------- ---------- ----------
EXPENSES:
Partnership administration 59,470 58,391 74,440
Legal and accounting 15,355 27,592 35,745
Amortization of organization costs 6,250 6,250 6,250
Other 12,267 9,218 4,669
----------- ---------- ----------
93,342 101,451 121,104
----------- ---------- ----------
NET INCOME $ 1,269,171 $1,102,567 $ 936,590
=========== ========== ==========
NET LOSS ALLOCATED TO GENERAL PARTNERS $ 0 $ 0 $ (297)
=========== ========== ==========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 2,431,246 $1,947,536 $1,207,540
=========== ========== ==========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $(1,162,075) $ (844,969) $ (270,653)
=========== ========== ==========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.91 $ 0.73 $ 0.46
=========== ========== ==========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ (2.12) $ (1.50) $ (0.47)
=========== ========== ==========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.86 $ 0.62 $ 0.44
=========== ========== ==========
The accompanying notes are an integral part of these statements.
F-4
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Limited Partners
-----------------------------------------------------------------
Class A Class B Total
------------------------------ --------------------- General Partners'
Original Units Amount Units Amount Partners Capital
-------- ---------------- ----------- ------- ----------- -------- -----------
BALANCE, December 31, 1995 $ 100 2,456,287 $20,902,202 558,167 $ 4,730,099 $ 297 $25,632,698
Net income (loss) 0 0 1,207,540 0 (270,653) (297) 936,590
Limited partner contributions 0 166,349 1,642,845 23,466 255,302 0 1,898,147
Partnership distributions 0 0 (1,152,299) 0 0 0 (1,152,299)
Sales commissions and discounts 0 0 (154,881) 0 (34,568) 0 (189,449)
Other offering expenses 0 0 (77,623) 0 (17,284) 0 (94,907)
----- --------- ----------- ------- ----------- ----- -----------
BALANCE, December 31, 1996 100 2,622,636 22,367,784 581,633 4,662,896 0 27,030,780
Net income (loss) 0 0 1,947,536 0 (844,969) 0 1,102,567
Partnership distributions 0 0 (1,633,767) 0 0 0 (1,633,767)
Class B conversion elections 0 22,044 155,310 (22,044) (155,310) 0 0
Return of capital (100) (1,000) (8,500) 0 0 0 (8,600)
----- --------- ----------- ------- ----------- ----- -----------
BALANCE, December 31, 1997 0 2,643,680 22,828,363 559,589 3,662,617 0 26,490,980
Net income (loss) 0 0 2,431,246 0 (1,162,075) 0 1,269,171
Partnership distributions 0 0 (2,279,634) 0 0 0 (2,279,634)
Class B conversion elections 0 30,904 133,071 (30,904) (133,071) 0 0
----- --------- ----------- ------- ----------- ----- -----------
BALANCE, December 31, 1998 $ 0 2,674,584 $23,113,046 528,685 $ 2,367,471 $ 0 $25,480,517
===== ========= =========== ======= =========== ===== ===========
The accompanying notes are an integral part of these statements.
F-5
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
----------- ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,269,171 $ 1,102,567 $ 936,590
----------- ------------ -----------
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Equity in income of joint ventures (1,346,367) (1,034,907) (241,819)
Amortization of organization costs 6,250 6,250 6,250
Changes in assets and liabilities:
Prepaid expenses and other assets 7,000 92,000 (35,000)
Accounts payable and accrued expenses 0 (5,500) 50
Due to affiliates, net of deferred offering costs 0 (152,501) (42,803)
----------- ------------ -----------
Total adjustments (1,333,117) (1,094,658) (313,322)
----------- ------------ -----------
Net cash (used in) provided by operating activities (63,946) 7,909 623,268
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures (694,758) (10,675,811) (7,865,131)
Purchase of joint venture interest (1,156,101) 0 0
Deferred project costs paid 0 0 (66,435)
Distributions received from joint ventures 2,293,504 1,229,282 279,984
----------- ------------ -----------
Net cash provided by (used in) investing activities 442,645 (9,446,529) (7,651,582)
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (2,218,400) (1,420,506) (1,130,772)
Limited partners' contributions 0 0 1,898,147
Sales commission paid 0 0 (369,853)
Return of capital 0 (8,600) 0
Offering costs paid 0 0 (94,907)
----------- ------------ -----------
Net cash (used in) provided by financing activities (2,218,400) (1,429,106) 302,615
----------- ------------ -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,839,701) (10,867,726) (6,725,699)
CASH AND CASH EQUIVALENTS, beginning of year 1,848,493 12,716,219 19,441,918
----------- ------------ -----------
CASH AND CASH EQUIVALENTS, end of year $ 8,792 $ 1,848,493 $12,716,219
=========== ============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs contributed to joint ventures $ 103,318 $ 593,983 $ 337,782
=========== ============ ===========
Increase in deferred project cost accrual $ 0 $ 0 $ (152,501)
=========== ============ ===========
The accompanying notes are an integral part of these statements.
F-6
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997, AND 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VIII, 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
has two classes of limited partnership interests, Class A and Class B units.
Limited partners shall have the right to change their prior elections to have
some or all of their units treated as Class A 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
above described matters will bind the Partnership, without the concurrence of
the general partners. Each limited partnership unit has equal voting rights,
regardless of class.
The Partnership was formed to acquire and operate commercial real properties,
including properties which are either to be developed, currently under
development or construction, newly constructed, or have operating histories.
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 Jacksonville, Florida (the "BellSouth property"); (ii) a
retail shopping center in Clemmons, Forsyth County, North Carolina; (iii) an
office building in Gainesville, Florida; (iv) a retail office building
located in Stockbridge, Georgia; (v) an office building in Madison, Wisconsin
(the "U.S. Cellular Building"); (vi) an office building in Farmers Branch,
Texas (the "Dallas property"); (vii) a two-story office building in Orange
County, California (the "Matsushita Building"); and (viii) a two-story office
building in Boulder County, Colorado (the "Cirrus Logic Building").
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 rental rates, occupancy, and an appropriate level of operating
expenses in future years. Management believes that the steps it is taking
will enable the Partnership to realize its investment in its assets.
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 are 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 contributions, as defined
. To limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital contributions,
as defined
. To limited partners on a per unit basis until they receive an amount
equal to their preferential limited partners 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 the 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 and amortization. Net income, as defined, of the
Partnership will be allocated each year in the same proportions that net cash
from operations is distributed to the partners. To the extent the
Partnership's net income in any year exceeds net cash from operations, it
will be allocated 99% to the limited partners holding Class A units and 1% to
the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year will
be allocated as follows: (a) 99% to the limited partners holding Class B
units and 1% to the general partners until their capital accounts are reduced
to zero, (b) then to any partner having a positive balance in his capital
account in an amount not to exceed such positive balance, and (c) thereafter
to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to the qualified income offset
provisions of the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero, and (c) allocations to limited partners holding Class B
units in amounts equal to the deductions for depreciation and amortization
previously allocated to them with respect to the specific partnership
property sold, but not in excess of the amount of gain on sale recognized by
the Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investments in joint ventures are recorded using the
equity method of accounting.
Real Estate Assets. Real estate assets held by the joint ventures are stated
at cost less accumulated depreciation. Major improvements and betterments
are capitalized when they extend the useful life of the related asset. All
repairs and maintenance are expensed as incurred.
Management continually monitors events and changes in circumstances which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present that
indicate the carrying amounts of real estate assets may not be recoverable,
management assesses the recoverability of real estate assets by determining
whether the carrying value of such real estate assets will be recovered
through the future cash flows expected from the use of the asset and its
eventual
F-9
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, 1998.
Depreciation for buildings and improvements is calculated using the straight-
line method over 25 years. Tenant improvements are amortized over the life
of the related lease or the life of the asset, whichever is shorter.
Revenue Recognition. All leases on real estate assets held by the joint
ventures are classified as operating leases, and the related rental income is
recognized on a straight-line basis over the terms of the respective leases.
Partners' Distributions and Allocations of Profit and Loss. Cash available
for distribution and allocations of profit and loss to the Partnership by the
joint ventures are made in accordance with the terms of the individual joint
venture agreements. Generally, these items are allocated in proportion to
the partners' respective ownership interests. Cash is paid from the joint
ventures to the Partnership quarterly.
Deferred Lease Acquisition Costs. Costs incurred to procure operating leases
are capitalized and amortized on a straight-line basis over the terms of the
related leases.
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, 1998, 1997, and 1996 is computed based on the weighted
average number of units outstanding during the period.
Reclassifications
Certain prior year items have been reclassified to conform with the current
year financial statement presentation.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to Wells
Capital, Inc. (the "Company"), the general partner of Wells Partners, for
acquisition and advisory services. These payments, as stipulated by the
partnership agreement, can be up to 5% of the limited partner contributions,
subject to certain overall limitations contained in the partnership
agreement. Aggregate fees paid through December 31, 1998 were $1,273,995 and
amounted to 4% of the limited partners' contributions received. These fees
are allocated to specific properties as they are purchased or developed and
are included in
F-10
capitalized assets of the joint ventures. Deferred project costs at December
31, 1997 represent fees not yet applied to properties.
3. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 1998 and 1997 represents the
Partnership's share of cash distributed from its joint venture investments
for the fourth quarters of 1998 and 1997:
1998 1997
-------- --------
Fund VI, VII, and VIII Associates $121,231 $125,015
Fund VII and VIII Associates 120,024 87,463
Fund VIII and IX Associates 364,400 336,029
-------- --------
$605,655 $548,507
======== ========
The Partnership entered into a property management agreement with Wells
Management, Inc. ("Wells Management"), an affiliate of the general partners.
In consideration for supervising the management of the Partnership's
properties, the Partnership will generally pay Wells Management management
and leasing fees equal to (a) 3% of the gross revenues for management and 3%
of the gross revenues for leasing (aggregate maximum of 6%) plus a separate
fee for the one-time initial lease-up of newly constructed properties in an
amount not to exceed the fee customarily charged in arm's-length transactions
by others rendering similar services in the same geographic area for similar
properties or (b) in the case of commercial properties, which are leased on a
long-term net basis (ten or more years), 1% of the gross revenues except for
initial leasing fees equal to 3% of the gross revenues over the first five
years of the lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $200,145, $164,662, and $58,378 for the
years ended December 31, 1998, 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 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 of other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners of other Wells Real Estate Funds
may be in competition with the Partnership for tenants in similar geographic
markets.
F-11
4. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1998 and 1997 are summarized as follows:
1998 1997
-------------------- --------------------
Amount Percent Amount Percent
----------- ------- ----------- -------
Fund VI, VII, and VIII Associates $ 5,491,347 32% $ 5,722,761 32%
Fund VII and VIII Associates 4,008,114 63 3,873,022 62
Fund VIII and IX Associates 15,952,307 55 14,906,093 50
----------- -----------
$25,451,768 $24,501,876
=========== ===========
The following is a rollforward of the Partnership's investment in the joint
ventures for the years ended December 31, 1998 and 1997:
1998 1997
----------- -----------
Investment in joint ventures, beginning of year $24,501,876 $13,787,531
Equity in income of joint ventures 1,346,367 1,034,907
Contributions to joint ventures 798,076 11,269,794
Purchases of joint venture interest 1,156,101 0
Distributions from joint ventures (2,350,652) (1,590,356)
----------- -----------
Investment in joint ventures, end of year $25,451,768 $24,501,876
=========== ===========
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Wells
Real Estate Fund VI, L.P. ("Fund VI") and Wells Real Estate Fund VII, L.P.
("Fund VII"). The joint venture, Fund VI, VII, and VIII Associates, was
formed to acquire, develop, operate, and sell real properties. On April 25,
1995, the joint venture purchased a 5.55-acre parcel of land in Jacksonville,
Florida. A 92,964-square-foot office building, known as the BellSouth
property, was completed and commenced operations in 1996. On May 31, 1995,
the joint venture purchased a 14.683-acre parcel of land located in Clemmons,
Forsyth County, North Carolina. A retail shopping center was developed and
was substantially complete at December 31, 1997.
F-12
During 1996, Fund VI and Fund VII each withdrew $500,000 from the joint
venture in order to contribute needed funds to the Fund II, III, VI, and VII
Associates joint venture. In addition, deferred project costs related to
Fund VI and Fund VII of $23,160 and $21,739, respectively, were unapplied
when the contributions were withdrawn. During 1996, the Partnership made an
additional contribution of $2,815,965, which included $115,965 of deferred
project costs that were applied. Ownership percentages were recomputed
accordingly.
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1998 and 1997
Assets
1998 1997
----------- -----------
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated
depreciation of $1,613,865 in 1998 and $925,106 in 1997 11,276,322 11,747,642
Construction in progress 17,866 94,715
----------- -----------
Total real estate assets 15,756,007 16,304,176
Cash and cash equivalents 800,321 1,059,001
Accounts receivable 183,952 104,021
Prepaid expenses and other assets 633,589 712,814
----------- -----------
Total assets $17,373,869 $18,180,012
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 52,026 $ 100,792
Partnership distributions payable 339,696 386,390
Due to affiliates 9,735 5,177
----------- -----------
Total liabilities 401,457 492,359
----------- -----------
Partners' capital:
Wells Real Estate Fund VI 5,813,110 6,058,082
Wells Real Estate Fund VII 5,667,955 5,906,810
Wells Real Estate Fund VIII 5,491,347 5,722,761
----------- -----------
Total partners' capital 16,972,412 17,687,653
----------- -----------
Total liabilities and partners' capital $17,373,869 $18,180,012
=========== ===========
F-13
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
---------- ---------- ----------
Revenues:
Rental income $2,258,971 $2,087,588 $ 876,711
Interest income 25,416 19,464 147,581
Other income 9,373 360 150
---------- ---------- ----------
2,293,760 2,107,412 1,024,442
---------- ---------- ----------
Expenses:
Depreciation 688,759 634,699 290,407
Operating costs, net of reimbursements 451,299 460,873 262,090
Management and leasing fees 251,587 232,765 99,330
Legal and accounting 9,205 15,934 17,251
Property administration 25,109 27,180 15,975
Computer costs 128 0 642
---------- ---------- ----------
1,426,087 1,371,451 685,695
---------- ---------- ----------
Net income $ 867,673 $ 735,961 $ 338,747
========== ========== ==========
Net income allocated to Wells Real Estate Fund VI $ 297,181 $ 258,122 $ 134,875
========== ========== ==========
Net income allocated to Wells Real Estate Fund VII $ 289,760 $ 251,676 $ 131,609
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 280,732 $ 226,163 $ 72,263
========== ========== ==========
F-14
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998, 1997, and 1996
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
---------- ---------- ----------- -----------
Balance, December 31, 1995 $6,866,299 $6,706,493 $2,084,185 $15,656,977
Net income 134,875 131,609 72,263 338,747
Partnership contributions 0 0 2,815,965 2,815,965
Partnership distributions (209,556) (204,429) (123,033) (537,018)
Return of contributions (523,160) (521,739) 0 (1,044,899)
---------- ---------- ---------- -----------
Balance, December 31, 1996 6,268,458 6,111,934 4,849,380 17,229,772
Net income 258,122 251,676 226,163 735,961
Partnership contributions 0 0 1,055,900 1,055,900
Partnership distributions (468,498) (456,800) (408,682) (1,333,980)
---------- ---------- ---------- -----------
Balance, December 31, 1997 6,058,082 5,906,810 5,722,761 17,687,653
Net income 297,181 289,760 280,732 867,673
Partnership distributions (542,153) (528,615) (512,146) (1,582,914)
---------- ---------- ---------- -----------
Balance, December 31, 1998 $5,813,110 $5,667,955 $5,491,347 $16,972,412
========== ========== ========== ===========
F-15
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
----------- ----------- -----------
Cash flows from operating activities:
Net income $ 867,673 $ 735,961 $ 338,747
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 688,759 634,699 290,407
Changes in assets and liabilities:
Accounts receivable (79,931) (76,170) 5,149
Prepaid expenses and other assets 79,225 (21,073) (427,363)
Accounts payable 6,234 8,312 37,480
Due to affiliates 4,558 3,622 1,555
----------- ----------- -----------
Total adjustments 698,845 549,390 (92,772)
----------- ----------- -----------
Net cash provided by operating activities 1,566,518 1,285,351 245,975
----------- ----------- -----------
Cash flows from investing activities:
Decrease in construction payables (55,000) (110,795) (607,204)
Investment in real estate (140,590) (828,992) (7,381,063)
----------- ----------- -----------
Net cash used in investing activities (195,590) (939,787) (7,988,267)
----------- ----------- -----------
Cash flows from financing activities:
Contributions received from joint venture partners 0 1,000,000 2,700,000
Return of contributions from joint venture partners 0 0 (1,000,000)
Distributions to joint venture partners (1,629,608) (1,216,246) (375,952)
----------- ----------- -----------
Net cash (used in) provided by financing activities (1,629,608) (216,246) 1,324,048
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (258,680) 129,318 (6,418,244)
Cash and cash equivalents, beginning of year 1,059,001 929,683 7,347,927
----------- ----------- -----------
Cash and cash equivalents, end of year $ 800,321 $ 1,059,001 $ 929,683
=========== =========== ===========
Supplemental disclosure of noncash items:
Deferred project costs contributed $ 0 $ 55,900 $ 71,066
=========== =========== ===========
Fund VII and VIII Associates
On February 10, 1995, the Partnership entered into a joint venture agreement
with Fund VII. The joint venture, Fund VII and VIII Associates, was formed
to acquire, develop, operate, and sell real properties. During 1995, the
joint venture purchased a five acre parcel of land in Gainesville, Alachua
County, Florida. A 62,975-square-foot office building was constructed and
began operations during 1995. In April 1996, Fund VII contributed 1.01 acres
of land located in Stockbridge, Georgia, and improvements thereon to the
joint venture for the development of a 12,000-square-foot, single-story
combination retail/office building. The building was completed and commenced
operations in 1996.
Following are the financial statements for Fund VII and VIII Associates:
F-16
Fund VII and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1998 and 1997
Assets
1998 1997
---------- ----------
Real estate assets, at cost:
Land $ 882,320 $ 822,320
Building and improvements, less accumulated
depreciation of $735,803 in 1998 and $467,401 in 1997 5,119,836 5,020,941
Personal property, less accumulated depreciation
of $89,365 in 1998 and $62,059 in 1997 208,518 235,824
Construction in progress 0 9,002
---------- ----------
Total real estate assets 6,210,674 6,088,087
Cash and cash equivalents 124,696 238,222
Accounts receivable 48,581 14,398
Prepaid expenses and other assets 104,269 77,894
---------- ----------
Total assets $6,488,220 $6,418,601
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 24,468 $ 26,953
Due to affiliates 1,500 844
Partnership distributions payable 136,377 140,964
---------- ----------
Total liabilities 162,345 168,761
---------- ----------
Partners' capital:
Wells Real Estate Fund VII 2,317,761 2,376,818
Wells Real Estate Fund VIII 4,008,114 3,873,022
---------- ----------
Total partners' capital 6,325,875 6,249,840
---------- ----------
Total liabilities and partners' capital $6,488,220 $6,418,601
========== ==========
F-17
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1998, 1997, and 1996
Revenues:
1998 1997 1996
-------- -------- --------
Rental income $685,637 $637,692 $583,264
Other income 0 180 320
-------- -------- --------
685,637 637,872 583,584
-------- -------- --------
Expenses:
Depreciation 295,708 262,106 249,262
Management and leasing fees 93,519 90,087 88,650
Legal and accounting 9,450 9,973 23,554
Property administration 26,095 24,830 17,202
Computer costs 0 107 2,073
Operating costs, net of reimbursements 34,084 (76,060) (14,588)
-------- -------- --------
458,856 311,043 366,153
-------- -------- --------
Net income $226,781 $326,829 $217,431
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $ 83,713 $124,045 $ 70,767
======== ======== ========
Net income allocated to Wells Real Estate Fund VIII $143,068 $202,784 $146,664
======== ======== ========
F-18
Fund VII And VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998, 1997, and 1996
Wells Real Wells Real Total
Estate Estate Partners'
Fund VII Fund VIII Capital
---------- ---------- ----------
Balance, December 31, 1995 $1,062,320 $3,702,179 $4,764,499
Net income 70,767 146,664 217,431
Partnership contributions 1,487,301 458,393 1,945,694
Partnership distributions (145,914) (274,567) (420,481)
---------- ---------- ----------
Balance, December 31, 1996 2,474,474 4,032,669 6,507,143
Net income 124,045 202,784 326,829
Partnership distributions (221,701) (362,431) (584,132)
---------- ---------- ----------
Balance, December 31, 1997 2,376,818 3,873,022 6,249,840
Net income 83,713 143,068 226,781
Partnership contributions 25,800 279,626 305,426
Partnership distributions (168,570) (287,602) (456,172)
---------- ---------- ----------
Balance, December 31, 1998 $2,317,761 $4,008,114 $6,325,875
========== ========== ==========
F-19
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998, 1997, and 1996
1998 1997 1996
--------- --------- ----------
Cash flows from operating activities:
Net income $ 226,781 $ 326,829 $ 217,431
--------- --------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 295,708 262,106 249,262
Changes in assets and liabilities:
Accounts receivable (34,183) (14,398) 15,995
Prepaid expenses and other assets (26,375) (5,931) (71,963)
Accounts payable (2,485) (24,340) 51,293
Due to affiliates 656 844 (960)
--------- --------- ----------
Total adjustments 233,321 218,281 243,627
--------- --------- ----------
Net cash provided by operating activities 460,102 545,110 461,058
--------- --------- ----------
Cash flows from investing activities:
Decrease in construction payables 0 0 (285,787)
Investment in real estate (406,380) (6,016) (136,623)
Contributions from partners 293,511 0 536,394
--------- --------- ----------
Net cash (used in) provided by investing activities (112,869) (6,016) 113,984
--------- --------- ----------
Cash flows from financing activities:
Distributions to joint venture partners (460,759) (549,304) (326,610)
--------- --------- ----------
Net (decrease) increase in cash and cash equivalents (113,526) (10,210) 248,432
Cash and cash equivalents, beginning of year 238,222 248,432 0
--------- --------- ----------
Cash and cash equivalents, end of year $ 124,696 $ 238,222 $ 248,432
========= ========= ==========
Supplemental disclosure of noncash activities:
Deferred project costs contributed $ 11,915 $ 0 $ 37,387
========= ========= ==========
Contribution of real estate assets $ 0 $ 0 $1,371,913
========= ========= ==========
Fund VIII and IX Associates
On June 10, 1996, the Partnership entered into a joint venture with Wells
Real Estate Fund IX, L.P ("Wells Fund IX"). 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-20
During 1998, the Partnership purchased a portion of Wells Fund IX's joint
venture interest for $1,100,000. In addition, the related deferred project
costs of $56,101 were transferred from Wells Fund IX to the Partnership. In
addition, the Partnership contributed $518,450 in 1998 to Fund VIII and IX
Associates, which included $32,352 of deferred project costs that were
applied. Ownership percentage interests were recomputed accordingly.
Following are the financial statements for Fund VIII and IX Associates:
Fund VIII and IX Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1998 and 1997
Assets
1998 1997
----------- -----------
Real estate assets, at cost:
Land $ 4,724,579 $ 4,724,579
Building and improvements, less accumulated
depreciation of $2,220,160 in 1998 and
$945,324 in 1997 23,687,510 24,122,271
Construction in progress 0 272,779
----------- -----------
Total real estate assets 28,412,089 29,119,629
Cash and cash equivalents 907,778 1,088,438
Accounts receivable 504,608 389,347
Prepaid expenses and other assets 209,329 237,710
----------- -----------
Total assets $30,033,804 $30,835,124
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 189,141 $ 388,723
Due to affiliates 26,627 20,399
Partnership distributions payable 706,250 670,784
----------- -----------
Total liabilities 922,018 1,079,906
----------- -----------
Partners' capital:
Wells Real Estate Fund VIII 15,952,307 14,906,093
Wells Real Estate Fund IX 13,159,479 14,849,125
----------- -----------
Total partners' capital 29,111,786 29,755,218
----------- -----------
Total liabilities and partners' capital $30,033,804 $30,835,124
=========== ===========
F-21
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1998 and 1997 and
for the Period From Inception (June 10, 1996) to December 31, 1996
1998 1997 1996
---------- ---------- --------
Revenues:
Rental income $3,146,201 $2,203,332 $101,277
Interest income 32,194 29,520 0
Other income 0 4,479 0
---------- ---------- --------
3,178,395 2,237,331 101,277
---------- ---------- --------
Expenses:
Depreciation 1,274,836 894,880 50,444
Management and leasing fees 221,794 121,930 3,884
Property administration 29,299 21,006 1,050
Legal and accounting 22,806 13,602 0
Operating costs, net of reimbursements (82,660) (24,106) 0
---------- ---------- --------
1,466,075 1,027,312 55,378
---------- ---------- --------
Net income $1,712,320 $1,210,019 $ 45,899
========== ========== ========
Net income allocated to Wells Real Estate Fund VIII $ 922,567 $ 605,960 $ 22,892
========== ========== ========
Net income allocated to Wells Real Estate Fund IX $ 789,753 $ 604,059 $ 23,007
========== ========== ========
F-22
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998 and 1997 and
for the Period From Inception (June 10, 1996) to December 31, 1996
Wells Real Wells Real Total
Estate Estate Partners'
Fund VII 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
Net income 922,567 789,753 1,712,320
Transfer of joint venture interest 1,156,101 (1,156,101) 0
Partnership contributions 518,450 0 518,450
Partnership distributions (1,550,904) (1,323,298) (2,874,202)
----------- ----------- -----------
Balance, December 31, 1998 $15,952,307 $13,159,479 $29,111,786
=========== =========== ===========
F-23
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998 and 1997 and
for the Period From Inception (June 10, 1996) to December 31, 1996
1998 1997 1996
----------- ------------ -----------
Cash flows from operating activities:
Net income $ 1,712,320 $ 1,210,019 $ 45,899
----------- ------------ -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,274,836 894,880 50,444
Changes in assets and liabilities:
Accounts receivable (115,261) (381,858) (7,489)
Prepaid expenses and other assets 28,381 (237,710) 0
Accounts payable 49,288 115,507 520
Due to affiliates 6,228 20,399 0
----------- ------------ -----------
Total adjustments 1,243,472 411,218 43,475
----------- ------------ -----------
Net cash provided by operating activities 2,955,792 1,621,237 89,374
----------- ------------ -----------
Cash flows from investing activities:
(Decrease) increase in construction payables (248,870) (335,406) 608,102
Investment in real estate (534,944) (19,131,612) (9,489,739)
----------- ------------ -----------
Net cash used in investing activities (783,814) (19,467,018) (8,881,637)
----------- ------------ -----------
Cash flows from financing activities:
Contributions from joint venture partners 486,098 19,316,193 9,467,616
Distributions to joint venture partners (2,838,736) (1,057,327) 0
----------- ------------ -----------
Net cash provided by financing activities (2,352,638) 18,258,866 9,467,616
----------- ------------ -----------
Net (decrease) increase in cash and cash equivalents (180,660) 413,085 675,353
Cash and cash equivalents, beginning of year 1,088,438 675,353 0
----------- ------------ -----------
Cash and cash equivalents, end of year $ 907,778 $ 1,088,438 $ 675,353
=========== ============ ===========
Supplemental disclosure of noncash activities:
Deferred project costs contributed $ 32,352 $ 1,029,744 $ 413,858
=========== ============ ===========
F-24
5. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended
December 31, 1998, 1997, and 1996 is calculated as follows:
1998 1997 1996
---------- ---------- ----------
Financial statement net income $1,269,171 $1,102,567 $ 936,590
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income tax
purposes 486,066 332,046 94,314
Expenses deductible when paid for income tax purposes,
accrued for financial reporting
purposes 5,249 12,319 1,365
Rental income accrued for financial reporting purposes
in excess of amounts for income tax
purposes (59,723) (215,837) (7,363)
Other (17,571) (17,571) (22,932)
---------- ---------- ----------
Income tax basis net income $1,683,192 $1,213,524 $1,001,974
========== ========== ==========
The Partnership's income tax basis partners' capital at December 31, 1998,
1997, and 1996 is computed as follows:
1998 1997 1996
----------- ----------- -----------
Financial statement partners' capital $25,480,517 $26,490,980 $27,030,780
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes
in excess of amounts for income tax purposes 921,125 435,059 103,013
Capitalization of syndication costs for income tax
purposes, which are accounted for as
cost of capital for financial reporting purposes 4,774,787 4,774,787 4,774,787
Accumulated expenses deductible when paid for income
tax purposes, accrued for financial
reporting purposes 106,259 101,010 65,759
Accumulated rental income accrued for financial
reporting purposes in excess of amounts
for income tax purposes (282,923) (223,200) (7,363)
Partnership's distributions payable 591,948 530,714 317,453
Other (97,433) (40,503) 0
----------- ----------- -----------
Income tax basis partners' capital $31,494,080 $32,068,847 $32,284,429
=========== =========== ===========
F-25
6. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases at
December 31, 1998 is as follows:
Year ending December 31:
1999 $ 2,869,287
2000 2,885,749
2001 2,863,791
2002 2,899,669
2003 2,597,150
Thereafter 8,960,006
-----------
$23,075,652
===========
Five significant tenants contributed approximately 10%, 10%, 21%, 16%, and
14% of rental income, which is included in equity in income of joint
ventures, for the year ended December 31, 1998. In addition, five
significant tenants will contribute approximately 24%, 19%, 14%, 14%, and 11%
of future minimum rental income.
The future minimum rental income due Fund VI, VII, and VIII Associates under
noncancelable operating leases at December 31, 1998 is as follows:
Year ending December 31:
1999 $ 2,209,325
2000 2,222,645
2001 2,110,978
2002 1,955,979
2003 1,895,574
Thereafter 9,893,439
-----------
$20,287,940
===========
Three significant tenants contributed approximately 46%, 24%, and 16% of
rental income for the year ended December 31, 1998. In addition, two
significant tenants will contribute approximately 40% and 48% of future
minimum rental income.
The future minimum rental income due Fund VII and VIII Associates under
noncancelable operating leases at December 31, 1998 is as follows:
Year ending December 31:
1999 $ 773,137
2000 780,472
2001 784,716
2002 792,225
2003 734,230
Thereafter 1,200,032
----------
$5,064,812
==========
F-26
Two significant tenants contributed approximately 77% and 15% of rental
income for the year ended December 31, 1998. In addition, two significant
tenants will contribute approximately 70% and 16% of future minimum rental
income.
The future minimum rental income due Fund VIII and IX Associates under
noncancelable operating leases as of December 31, 1998 is as follows:
Year ending December 31:
1999 $ 3,042,420
2000 3,056,160
2001 3,077,130
2002 3,225,470
2003 2,775,782
Thereafter 9,129,962
-----------
$24,306,924
===========
Five significant tenants contributed approximately 14%, 30%, 23%, 21% and 10%
of rental income for the year ended December 31, 1998. In addition, four
significant tenants will contribute approximately 41%, 34%, 24%, and 15% of
future minimum rental income.
7. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial information
for the years ended December 31, 1998 and 1997:
1998 Quarters Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
Revenues $ 344,289 $ 333,626 $ 288,804 $ 395,794
Net income 327,696 304,015 265,995 371,465
Net income allocated to Class A limited partners 591,940 610,559 592,469 636,278
Net loss allocated to Class B limited partners (264,244) (306,544) (326,474) (264,813)
Net income per weighted average Class A limited partner unit $ 0.22 $ 0.23 $ 0.22 $ 0.24
Net loss per weighted average Class B limited partner unit (0.47) (0.55) (0.60) (0.50)
Cash distribution per weighted average Class A limited partner
unit 0.21 0.21 0.22 0.22
F-27
1997 Quarters Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
Revenues $ 216,766 $ 261,709 $ 394,181 $ 331,362
Net income 181,780 224,486 382,209 314,092
Net income allocated to Class A limited partners 327,726 422,125 630,233 567,452
Net loss allocated to Class B limited partners (145,946) (197,639) (248,024) (253,360)
Net income per weighted average Class A limited partner unit
outstanding $ 0.12 $ 0.16 $ 0.24 $ 0.21
Net loss per weighted average Class B limited partner unit
outstanding (0.25) (0.36) (0.44) (0.45)
Cash distribution per weighted average Class A limited partner
unit outstanding 0.10 0.13 0.19 0.20
8. 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-28
WELLS REAL ESTATE FUND VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
Gross Amount at Which
Initial Cost Carried at December 31,
------------------------- Costs of ---------------------------
Buildings and Capitalized Buildings and
Description Encumbrances Land Improvements Improvements Land Improvements
- ------------------------ ------------ ---------- ------------- ------------ ------------ -------------
BELLSOUTH PROPERTY (a) None $1,244,256 $ 0 7,425,154 $ 1,301,890 $ 7,367,520
TANGLEWOOD COMMONS (b) None 3,020,040 0 5,680,422 3,159,928 5,522,668
GAINESVILLE PROPERTY (c) None 222,627 0 5,094,425 288,058 5,028,994
HANNOVER PROPERTY (d) None 512,001 869,037 337,752 534,262 1,184,528
TCI-DALLAS PROPERTY (e) None 650,000 0 4,016,866 677,914 3,988,952
U.S. CELLULAR PROPERTY (f) None 833,942 0 10,052,063 896,698 9,989,307
MATSUSHITA PROPERTY (g) None 2,108,304 5,120,835 383,594 2,220,993 5,391,740
CIRRUS LOGIC PROPERTY (h) None 881,840 6,182,710 402,096 928,974 6,537,672
---------- ----------- ----------- ----------- -----------
Total $9,473,010 $12,172,582 $33,392,372 $10,008,717 $45,011,381
========== =========== =========== =========== ===========
Gross Amount at Which Carried
at December 31, 1998
---------------------------- Life on Which
Construction Accumulated Date of Date Depreciation
Description in Progress Total Depreciation Construction Acquired Is Computed (i)
- ------------------------ ----------- ----------- ------------ ------------ -------- ---------------
BELLSOUTH PROPERTY (a) $ 0 $ 8,669,410 $1,178,399 1996 04/25/95 20 to 25 years
TANGLEWOOD COMMONS (b) 17,866 8,700,462 435,466 1997 05/31/95 20 to 25 years
GAINESVILLE PROPERTY (c) 0 5,317,052 705,927 1995 01/20/95 20 to 25 years
HANNOVER PROPERTY (d) 0 1,718,790 119,241 1996 01/16/95 20 to 25 years
TCI-DALLAS PROPERTY (e) 0 4,666,866 383,633 1996 10/10/96 20 to 25 years
U.S. CELLULAR PROPERTY (f) 0 10,886,005 878,075 1997 06/17/96 20 to 25 years
MATSUSHITA PROPERTY (g) 0 7,612,733 431,339 1997 01/10/97 20 to 25 years
CIRRUS LOGIC PROPERTY (h) 0 7,466,646 527,113 1997 02/20/97 20 to 25 years
------- ----------- ----------
Total $17,866 $55,037,964 $4,659,193
======= =========== ==========
(a) The BellSouth Property consists of a four-story office building located in
Jacksonville, Florida. It is owned by Fund VI, VII, and VIII Associates. The
Partnership owned a 32% interest in Fund VI, VII, and VIII Associates at
December 31, 1998.
(b) Tanglewood Commons is a retail shopping center located in Clemmons, Forsyth
County, North Carolina. It is owned by Fund VI, VII, and VIII Associates.
The Partnership owned a 32% interest in Fund VI, VII, and VIII Associates at
December 31, 1998.
(c) The Gainesville Property consists of a two-story building located in
Gainesville, Florida. It is owned by Fund VII and VIII Associates. The
Partnership owned a 63% interest in Fund VII and VIII Associates at December
31, 1998.
(d) The Hannover Property consists of a one-story building located in
Stockbridge, Georgia. It is owned by Fund VII and VIII Associates. The
Partnership owned a 63% interest in Fund VII and VIII Associates at December
31, 1998.
(e) The TCI 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 55% interest in Fund VIII and IX Associates at December 31, 1998.
(f) 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 55% interest in Fund VIII and IX Associates at December
31, 1998.
(g) 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 55% interest in Fund VIII and IX Associates at December
31, 1998.
(h) 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 55% interest in Fund VIII and IX Associates at December
31, 1998.
(i) Depreciation lives used for buildings were 40 years through September 30,
1995, changed to 25 years thereafter. Depreciation lives used for land
improvements are 20 years.
S-1
Wells Real Estate Fund VIII, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
Accumulated
Cost Depreciation
----------- ------------
BALANCE AT DECEMBER 31, 1996 $32,859,516 $ 608,204
1997 additions 21,052,266 1,791,686
----------- ----------
BALANCE AT DECEMBER 31, 1997 $53,911,782 $2,399,890
1998 additions 1,126,182 2,259,303
----------- ----------
BALANCE AT DECEMBER 31, 1998 $55,037,964 $4,659,193
=========== ==========
S-2
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VIII, 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 VIII, L.P. dated January 6, 1995 (Exhibit to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1995, File No. 0-27888)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund VIII,
L.P. (Exhibit 3(b) to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund VIII, L.P., File No.
33-83852)
*10(a) Management Agreement dated January 6, 1995, between Wells Real Estate
Fund VIII, L.P. and Wells Management Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1995, File No. 0-27888)
*10(b) Leasing and Tenant Coordinating Agreement dated January 6, 1995,
between Wells Real Estate Fund VIII, L.P. and Wells Management
Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VIII,
L.P. for the fiscal year ended December 31, 1995, File No. 0-27888)
*10(c) Custodial Agency Agreement dated November 15, 1994, between Wells Real
Estate Fund VIII, L.P. and NationsBank of Georgia, N.A. (Exhibit to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1995, File No. 0-27888)
*10(d) Fund VII and Fund VIII Associates Joint Venture Agreement dated
February 10, 1995 (Exhibit 10(g) to Post-Effective Amendment No. 1 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(e) Agreement for the Purchase and Sale of Real Property dated March 31,
1994 (Exhibit 10(h) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(f) Letter Agreement amending Agreement for the Purchase and Sale of Real
Property dated July 27, 1994 (Exhibit 10(i) to Post-Effective
Amendment No. 1 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(g) Letter Agreement amending Agreement for the Purchase and Sale of Real
Property dated October 27, 1994 (Exhibit 10(j) to Post-Effective
Amendment No. 1 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(h) Letter Agreement between NationsBank of Georgia, N.A., as Agent for
Wells Real Estate Fund VII, L.P., as Landlord, and CH2M Hill, Inc., as
Tenant (Exhibit 10(k) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(i) First Amendment to Lease Agreement between NationsBank of Georgia,
N.A., as Agent for Wells Real Estate Fund VII, L.P., as Landlord, and
CH2M Hill, Inc., as Tenant (Exhibit 10(l) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(j) Second Amendment to Lease Agreement between NationsBank of Georgia,
N.A., as Agent for Wells Real Estate Fund VII, L.P., as Landlord, and
CH2M Hill, Inc, as Tenant (Exhibit 10(m) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(k) Development Agreement between Wells Real Estate Fund VII, L.P. and
ADEVCO Corporation (Exhibit 10(n) to Post-Effective Amendment No. 1 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(l) Owner-Contractor Agreement between Wells Real Estate Fund VII, L.P.,
as Owner, and Integra Construction, Inc., as Contractor (Exhibit 10(o)
to Post-Effective Amendment No. 1 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(m) Architect's Agreement between Wells Real Estate Fund VII, L.P., as
Owner, and Smallwood, Reynolds, Stewart, Stewart & Associates, Inc.,
as Architect (Exhibit 10(p) to Post-Effective Amendment No. 1 to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(n) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII Associates
dated April 17, 1995 (Exhibit 10(q) to Post-Effective Amendment No. 3
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(o) Agreement for the Purchase and Sale of Real Property dated February
13, 1995, between G.L. National, Inc. and Wells Capital, Inc. (Exhibit
10(r) to Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(p) Agreement to Lease dated February 15, 1995, between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., and
BellSouth Advertising & Publishing Corporation (Exhibit 10(s) to Post-
Effective Amendment No. 3 to Form S-11 Registration Statement of Wells
Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(q) Development Agreement dated April 25, 1995, between Fund VI, Fund VII
and Fund VIII Associates and ADEVCO Corporation (Exhibit 10(t) to
Post-Effective Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(r) Owner-Contractor Agreement dated April 24, 1995, between Fund VI, Fund
VII and Fund VIII Associates, as Owner, and McDevitt Street Bovis,
Inc., as Contractor (Exhibit 10(u) to Post-Effective Amendment No. 3
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(s) Architect's Agreement dated February 15, 1995, between Wells Real
Estate Fund VII, L.P., as Owner, and Mayes, Suddereth & Etheredge,
Inc., as Architect (Exhibit 10(v) to Post-Effective Amendment No. 3 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(t) First Amendment to Joint Venture Agreement of Fund VI, Fund VII and
Fund VIII Associates dated May 30, 1995 (Exhibit 10(w) to Post-
Effective Amendment No. 4 to Form S-11 Registration Statement of Wells
Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(u) Real Estate Purchase Agreement dated April 13, 1995 (Exhibit 10(x) to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(v) Lease Agreement dated February 27, 1995, between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., and
Harris Teeter, Inc. (Exhibit 10(y) to Post-Effective Amendment No. 4
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(w) Development Agreement dated May 31, 1995, between Fund VI, Fund VII
and Fund VIII Associates and Norcom Development, Inc. (Exhibit 10(z)
to Post-Effective Amendment No. 4 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(x) First Amendment to Joint Venture Agreement of Fund VII and Fund VIII
Associates dated April 1, 1996 (Exhibit 10(nn) to Form 10-K of Wells
Real Estate Fund VII, L.P. for the fiscal year ended December 31,
1996, File No. 0-25606)
*10(y) Lease Agreement with Moovies, Inc. dated May 20, 1996 (Exhibit 10(oo)
to Form 10-K of Wells Real Estate Fund VII, L.P. for the fiscal year
ended December 31, 1996, File No. 0-25606)
*10(z) 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(aa) 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(bb) 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(cc) 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(dd) 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(ee) 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(ff) 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(gg) 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(hh) 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(ii) Second Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated January 7, 1997, Exhibit 10 (ii) to Form of Wells
Real Estate Fund VIII, L.P. for the Fiscal year ended December 31,
1997, File No. 0-27888)
*10(jj) Agreement for the Purchase and Sale of Property with Magellan Bake
Parkway Limited Partnership dated December, 1996. Exhibit 10 (jj) to
Form of Wells Real Estate Fund VIII, L.P. for the Fiscal year ended
December 31, 1997, File No. 0-27888)
*10(kk) Office Lease with Matsushita Avionics Systems Corporation dated
April 29, 1996. Exhibit 10 (kk) to Form of Wells Real Estate Fund
VIII, L.P. for the Fiscal year ended December 31, 1997, File No. 0-
27888)
*10(ll) Third Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated February 18, 1997 Exhibit 10 (ll) to Form of Wells
Real Estate Fund VIII, L.P. for the Fiscal year ended December 31,
1997, File No. 0-27888)
*10(mm) Agreement for the Purchase and Sale of Property with Orix Prime
West Bloomfield II Venture dated February 5, 1997 Exhibit 10 (mm) to
Form of Wells Real Estate Fund VIII, L.P. for the Fiscal year ended
December 31, 1997, File No. 0-27888)
*10(nn) Lease with Cirrus Logic, Inc. dated July 5, 1995. Exhibit 10 (nn) to
Form of Wells Real Estate Fund VIII, L.P. for the Fiscal year ended
December 31, 1997, File No. 0-27888)