WELLS REAL ESTATE FUND XIII L P - FORM 10-Q

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EX-31.1 - EXHIBIT 31.1 - WELLS REAL ESTATE FUND XIII L P	fund13q12015ex311.htm
EX-10.1 - EXHIBIT 10.1 - WELLS REAL ESTATE FUND XIII L P	fund13q12015ex101.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________



(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2015



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______

Commission file number 000-49633

_______________________________________

WELLS REAL ESTATE FUND XIII, L.P.

(Exact name of registrant as specified in its charter

_______________________________________



Georgia		58-2438244
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)



6200 The Corners Pkwy., Norcross, Georgia		30092-3365
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code		(770) 449-7800

N/A

(Former name, former address, and former fiscal year, if changed since last report)

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 T No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes T No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Fund XIII, L.P. (the "Partnership," "we," "our," "us," or the "Registrant") other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "would," "could," "expect," "intend," "plan," "anticipate," "estimate," "believe," "continue," or other similar words. Specifically, we consider, among others, statements concerning future operating results and cash flows, our ability to meet future obligations, and the amount and timing of any future distributions to limited partners to be forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission ("SEC"). We make no representations or warranties (express or implied) about the accuracy of any such forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Any such forward-looking statements are subject to unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide distributions to partners, and maintain the value of our real estate properties, may be significantly hindered. See Part I, Item 1A in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014 for a discussion of some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in our forward-looking statements.

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WELLS REAL ESTATE FUND XIII, L.P.

TABLE OF CONTENTS



			Page No.

PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements	4

		Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014	5

		Statements of Operations for the Three Months Ended March 31, 2015 (unaudited) and 2014 (unaudited)	6

		Statements of Partners' Capital for the Year Ended December 31, 2014 and the Three Months Ended March 31, 2015 (unaudited)	7

		Statements of Cash Flows for the Three Months Ended March 31, 2015 (unaudited) and 2014 (unaudited)	8

		Notes to Financial Statements (unaudited)	9

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

	Item 4.	Controls and Procedures	18

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	18

	Item 1A.	Risk Factors	18

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

	Item 3.	Defaults Upon Senior Securities	19

	Item 4.	Mine Safety Disclosures	19

	Item 5.	Other Information	19

	Item 6.	Exhibits	19

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PART I.	FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

The information presented in the Partnership's accompanying balance sheets and statements of operations, partners' capital, and cash flows reflects all adjustments that are, in management's opinion, necessary for a fair and consistent presentation of the aforementioned financial statements.

The accompanying financial statements should be read in conjunction with the notes to the Partnership's financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, all included in both this Quarterly Report on Form 10-Q and in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014. The Partnership's results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results expected for the full year.

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WELLS REAL ESTATE FUND XIII, L.P.

BALANCE SHEETS



	(Unaudited)
	March 31, 2015		December 31, 2014
Assets:
Investment in joint ventures	$	2,967,351	$	9,170,269
Cash and cash equivalents	12,535,884		6,334,881
Due from joint ventures	90,478		87,423
Other assets	18,818		17,338
Total assets	$	15,612,531	$	15,609,911

Liabilities:
Accounts payable and accrued expenses	$	21,232	$	1,841
Due to affiliates	6,207		5,655
Total liabilities	27,439		7,496

Commitments and Contingencies

Partners' Capital:
Limited Partners:
Cash Preferred – 3,213,008 units issued and outstanding	14,333,566		14,320,598
Tax Preferred – 559,040 units issued and outstanding	1,249,543		1,279,661
General Partners	1,983		2,156
Total partners' capital	15,585,092		15,602,415
Total liabilities and partners' capital	$	15,612,531	$	15,609,911

See accompanying notes.

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WELLS REAL ESTATE FUND XIII, L.P.

STATEMENTS OF OPERATIONS



	(Unaudited)
	Three Months Ended
	March 31,
	2015			2014
Equity in Income of Joint Ventures	$	58,530		$	12,636
Interest and other income	2,417			—
Total Revenues	60,947			12,636

General and Administrative Expenses	78,270			92,555
Net Loss	$	(17,323	)	$	(79,919	)

Net Income (Loss) Allocated to:
Cash Preferred Limited Partners	$	12,968		$	(79,120	)
Tax Preferred Limited Partners	$	(30,118	)	$	—
General Partners	$	(173	)	$	(799	)

Net Income (Loss) per Weighted-Average Limited Partner Unit:
Cash Preferred	$	0.00		$	(0.02	)
Tax Preferred	$	(0.05	)	$	0.00

Weighted-Average Limited Partner Units Outstanding:
Cash Preferred	3,213,008			3,213,008
Tax Preferred	559,040			559,040

See accompanying notes.

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WELLS REAL ESTATE FUND XIII, L.P.

STATEMENTS OF PARTNERS' CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2014

AND THE THREE MONTHS ENDED MARCH 31, 2015 (UNAUDITED)



	Limited Partners							General Partners			Total Partners' Capital
	Cash Preferred			Tax Preferred
	Units	Amount		Units	Amount
BALANCE, December 31, 2013	3,213,008	$	13,413,153	559,040	$	—		$	1,202		$	13,414,355

Net income	—	907,445		—	1,279,661			954			2,188,060
BALANCE, December 31, 2014	3,213,008	14,320,598		559,040	1,279,661			2,156			15,602,415

Net loss	—	12,968		—	(30,118		)	(173		)	(17,323		)
BALANCE, March 31, 2015	3,213,008	$	14,333,566	559,040	$	1,249,543		$	1,983		$	15,585,092

See accompanying notes.

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WELLS REAL ESTATE FUND XIII, L.P.

STATEMENTS OF CASH FLOWS



	(Unaudited)
	Three Months Ended
	March 31,
	2015			2014
Cash Flows from Operating Activities:
Net loss	$	(17,323	)	$	(79,919	)
Operating distributions received from joint ventures	87,423			220,744
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in income of joint ventures	(58,530		)	(12,636		)
Changes in assets and liabilities:
Increase in other assets	(1,480		)	—
Increase in accounts payable and accrued expenses	19,391			4,327
Increase in due to affiliates	552			8,739
Net cash provided by operating activities	30,033			141,255

Cash Flows from Investing Activities:
Net sale proceeds received from joint ventures	6,174,770			—
Investment in joint ventures	(3,800		)	—
Net cash provided by investing activities	6,170,970			—
Net Increase in Cash and Cash Equivalents	6,201,003			141,255

Cash and Cash Equivalents, beginning of period	6,334,881			3,942,050
Cash and Cash Equivalents, end of period	$	12,535,884		$	4,083,305

See accompanying notes.

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WELLS REAL ESTATE FUND XIII, L.P.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2015 (unaudited)


1.	ORGANIZATION AND BUSINESS

Wells Real Estate Fund XIII, L.P. (the "Partnership") is a Georgia public limited partnership with Leo F. Wells, III and Wells Capital, Inc. ("Wells Capital"), a Georgia corporation, serving as its general partners (collectively, the "General Partners"). Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. ("WREF"). Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of WREF. The Partnership was formed on September 15, 1998 for the purpose of acquiring, developing, owning, operating, improving, leasing, and managing income producing commercial properties for investment purposes. Upon subscription for units, the limited partners elected to have their units treated as Cash Preferred Units or Tax Preferred Units. Limited partners have the right to change their prior elections to have some or all of their units treated as Cash Preferred Units or Tax Preferred 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; (c) add or remove a general partner; (d) elect a new general partner; (e) dissolve the Partnership; (f) authorize a merger or a consolidation of the Partnership; and (g) approve a sale involving all or substantially all of the Partnership's assets, subject to certain limitations. A majority vote on any of the described matters will bind the Partnership, without the concurrence of the General Partners. Each limited partnership unit has equal voting rights, regardless of which class of unit is selected.

On March 29, 2001, the Partnership commenced a public offering of up to $45,000,000 of Cash Preferred or Tax Preferred limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act. The offering was terminated on March 28, 2003, at which time the Partnership had sold approximately 3,023,371 Cash Preferred Units and 748,678 Tax Preferred Units representing total limited partner capital contributions of $37,720,487.

The Partnership owns indirect interests in all of its real estate assets through joint ventures with other entities affiliated with the General Partners and Piedmont Operating Partnership, LP ("Piedmont OP"), formerly known as Wells Operating Partnership, L.P. Piedmont OP is a Delaware limited partnership with Piedmont Office Realty Trust, Inc. ("Piedmont REIT"), formerly known as Wells Real Estate Investment Trust, Inc., serving as its general partner. Piedmont REIT is a Maryland corporation that has elected to be taxed as a real estate investment trust. During the periods presented, the Partnership owned interests in the following joint ventures (the "Joint Ventures") and properties:



Joint Venture	Joint Venture Partners	Ownership %	Properties
Wells Fund XIII-REIT Joint Venture Partnership ("Fund XIII-REIT Associates")	• Wells Real Estate Fund XIII, L.P. • Piedmont Operating Partnership, LP	28.1% 71.9%	1. 8560 Upland Drive Two connected one-story office and assembly buildings located in Englewood, Colorado 2. Two Park Center⁽¹⁾ A four-story office building located in Hoffman Estates, Illinois
Fund XIII and Fund XIV Associates ("Fund XIII-XIV Associates")⁽²⁾	• Wells Real Estate Fund XIII, L.P. • Wells Real Estate Fund XIV, L.P.	47.3% 52.7%	3. Siemens – Orlando Building⁽³⁾ Two single-story office buildings located in Orlando, Florida

⁽¹⁾ This property was sold in May 2014.

⁽²⁾ This joint venture wound up its affairs in 2014 and was terminated in the first quarter of 2015.

⁽³⁾ This property was sold in December 2014.

Wells Real Estate Fund XIV, L.P. was affiliated with the Partnership through common general partners prior to its dissolution. Each of the properties described above was acquired on an all-cash basis. For further information regarding the Joint Ventures and foregoing properties, refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014.

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2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly and consistently present the results for these periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and footnotes included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2014.

Use of Estimates

Preparation of the Partnership's financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from those estimates.

Investment in Joint Ventures

The Partnership has evaluated the Joint Venture and concluded that it is not a variable interest entity. The Partnership does not have control over the operations of the Joint Venture; however, it does exercise significant influence. Approval by the Partnership as well as the other joint venture partner is required for any major decision or any action that would materially affect the Joint Venture or its real property investment. Accordingly, the Partnership accounts for its investment in the Joint Venture using the equity method of accounting, whereby the original investment is recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreement, all income (loss) and distributions are allocated to the joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on a quarterly basis.

The Partnership continually evaluates the fair value of its equity interest in the joint venture. If management determines that the carrying value of its interest is less than fair value, and such loss is other than temporary, the Partnership reduces its carrying value to fair value and recognizes the loss in the statements of operations.

Evaluating the Recoverability of Real Estate Assets

The Partnership continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets owned through the Partnership's investment in the Joint Ventures may not be recoverable. When indicators of potential impairment are present which suggest that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to sell, for assets held for sale. In the event that the expected undiscounted future cash flows for assets held for use, or the estimated fair value, less costs to sell, for assets held for sale do not exceed the respective asset carrying value, management adjusts the real estate assets to their respective estimated fair values, pursuant to the provisions of the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognizes an impairment loss. Estimated fair values are determined based on the following information, dependent upon availability: (i) recently quoted market price(s) for the subject property, or highly comparable properties, under sufficiently active and normal market conditions, or (ii) the present value of future cash flows, including estimated residual value.

While various techniques and assumptions can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair value measurements and disclosures describes three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as little, if any, related market activity or information is available. Examples of Level 3 inputs include estimated holding periods, discount rates, market capitalization rates, expected lease rental rates, timing of new leases, and sales prices; additionally, the Partnership may assign an estimated probability-weighting to more than one fair value estimate based on the Partnership's assessment of the likelihood of the respective underlying assumptions occurring as of the evaluation date. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls

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is based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset or liability.

Projections of expected future cash flows require that the Partnership estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's future cash flows and fair value, and could result in the misstatement of the carrying values of real estate assets and related intangible assets held by the Partnership or the Joint Ventures and net income of the Partnership.

Comprehensive Income

For the periods presented, there were no differences between reported net loss and comprehensive loss.

Distribution of Net Cash from Operations

Net cash from operations, if available and unless reserved, is generally distributed quarterly to the limited partners as follows:


•	First, to all Cash Preferred limited partners on a per-unit basis until such limited partners have received distributions equal to a 10% per annum return on their respective net capital contributions, as defined;


•	Second, to the General Partners until the General Partners have received distributions equal to 10% of the total cumulative distributions paid by the Partnership; and


•	Third, to the Cash Preferred limited partners on a per-unit basis and the General Partners allocated on a basis of 90% and 10%, respectively.

No distributions of net cash from operations will be made to limited partners holding Tax Preferred Units.

Distribution of Net Sale Proceeds

Upon the sale of properties, unless reserved, net sale proceeds will be distributed in the following order:

•

In the event that the particular property sold is sold for a price that is less than its original property purchase price, to the limited partners holding Cash Preferred Units until they have received an amount equal to the excess of the original property purchase price over the price for which the property was sold, limited to the amount of depreciation, amortization, and cost recovery deductions taken by the limited partners holding Tax Preferred Units with respect to such property;


•	To limited partners holding units which at any time have been treated as Tax Preferred Units until the limited partners have received an amount necessary to equal the net cash from operations previously received by the limited partners holding Cash Preferred Units on a per-unit basis;


•	To all limited partners on a per-unit basis until the limited partners have received 100% of their respective net capital contributions, as defined;


•	To all limited partners on a per-unit basis until the limited partners have received a cumulative 10% per annum return on their respective net capital contributions, as defined;

•

To limited partners on a per-unit basis until the limited partners have received an amount equal to their respective preferential limited partner returns (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 Cash Preferred Units and a 15% per annum cumulative return on net capital contributions for all periods during which the units were treated as Tax Preferred Units);


•	To the General Partners until they have received 100% of their respective capital contributions, as defined;

•

Then, if limited partners have received any excess limited partner distributions (defined as distributions to limited partners over the life of their investment in the Partnership in excess of their net capital contributions, as defined, plus their preferential limited partner return), to the General Partners until they have received distributions equal to 20% of the sum of any such excess limited partner distributions plus distributions made to the General Partners pursuant to this provision; and


•	Thereafter, 80% to the limited partners on a per-unit basis and 20% to the General Partners.

Allocations of Net Income, Net Loss, and Gain on Sale

For the purpose of determining allocations per the partnership agreement, net income is defined as net income recognized by the Partnership, excluding deductions for depreciation, amortization, cost recovery, and the gain on sale of assets. Net income, as

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defined, of the Partnership will be allocated each year in the same proportion that net cash from operations is distributed to the partners holding Cash Preferred Units and to the General Partners. To the extent the Partnership's net income in any year exceeds net cash from operations, such excess net income will be allocated 99% to the limited partners holding Cash Preferred 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 Tax Preferred 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 Tax Preferred Units in amounts equal to the deductions for depreciation and amortization previously allocated to them with respect to the specific 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.


3.	INVESTMENT IN JOINT VENTURES

Summary of Financial Information

Condensed financial information for the Joint Ventures for the three months ended March 31, 2015 and 2014, respectively, is presented below:



	Total Revenues				Income (Loss) from Continuing Operations						Income (Loss) from Discontinued Operations					Net Income (Loss)
	Three Months Ended				Three Months Ended						Three Months Ended					Three Months Ended
	March 31,				March 31,						March 31,					March 31,
	2015		2014		2015			2014			2015		2014			2015			2014
Fund XIII-REIT Associates	$	480,629	$	309,141	$	221,735		$	33,663		$	—	$	(344,085	)	$	221,735		$	(310,422	)
Fund XIII-XIV Associates	661		—		(8,032		)	(8,811		)	—		220,007			(8,032		)	211,196
	$	481,290	$	309,141	$	213,703		$	24,852		$	—	$	(124,078	)	$	213,703		$	(99,226	)

The Partnership allocates its share of net income, net loss, and gain (loss) on sale generated by the properties owned by the Joint Ventures to its Cash Preferred and Tax Preferred limited partners pursuant to the partnership agreement provisions outlined in Note 2. The components of income (loss) from discontinued operations recognized by the Joint Venture are provided below:



	Three Months Ended						Three Months Ended
	March 31, 2015						March 31, 2014
	Operating Income (Loss)		Gain (Loss) on Sale		Total		Operating Income (Loss)			Gain (Loss) on Sale		Total
Fund XIII-REIT Associates	$	—	$	—	$	—	$	(344,085	)	$	—	$	(344,085	)
Fund XIII-XIV Associates	—		—		—		220,007			—		220,007
	$	—	$	—	$	—	$	(124,078	)	$	—	$	(124,078	)

On May 29, 2014, Fund XIII-REIT Associates sold Two Park Center to an unaffiliated third party for a gross sales price of $8,825,000, exclusive of closing costs. As result of the sale, the Partnership received net sale proceeds of approximately $2,353,000 and was allocated a loss of approximately $66,000.

On December 31, 2014, Fund XIII-XIV Associates sold the Siemens - Orlando Building to an unaffiliated third party for a gross sales price of $13,570,000, exclusive of closing costs. As result of the sale, the Partnership received net sale proceeds of approximately $6,175,000 in January 2015 and was allocated a gain of approximately $2,153,000.

Due from Joint Ventures

As presented in the accompanying balance sheets, due from joint ventures as of March 31, 2015 and December 31, 2014 includes operating cash flow generated by the Joint Ventures during the three months ended March 31, 2015 and December 31, 2014, respectively, which is payable to the Partnership.

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4.	RELATED-PARTY TRANSACTIONS

Management and Leasing Fees

The Partnership has entered into a property management, leasing, and asset management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of the General Partners. In accordance with the property management and leasing agreement, Wells Management receives compensation for the management and leasing of the Partnership's properties, owned through the Joint Ventures, equal to the lesser of (a) 4.5% of the gross revenues collected monthly; plus, a separate competitive fee for the one-time initial lease-up of newly constructed properties generally paid in conjunction with the receipt of the first month's rent, or (b) fees that would be paid to a comparable outside firm, which is assessed periodically based on market studies. In the case of commercial properties leased on a long-term net-lease basis (ten or more years), the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term. Management and leasing fees are paid by the Joint Ventures and, accordingly, are included in equity in income of joint ventures in the accompanying statements of operations. The Partnership's share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures and payable to Wells Management is $679 and $5,976 for the three months ended March 31, 2015 and 2014, respectively.

Administrative Reimbursements

Wells Capital, one of the Partnership's General Partners, and Wells Management perform certain administrative services for the Partnership, relating to accounting, property management, and other partnership administration, and incur the related expenses. Such expenses are allocated among other entities affiliated with the General Partners based on estimates of the amount of time dedicated to each fund by individual administrative personnel. In the opinion of the General Partners, this allocation is a reasonable estimation of such expenses. The Partnership incurred administrative expenses payable to Wells Capital and Wells Management of $18,469 and $47,950 for the three months ended March 31, 2015 and 2014, respectively. As presented in the accompanying balance sheets, due to affiliates as of March 31, 2015 and December 31, 2014 represents administrative reimbursements due to Wells Capital and/or Wells Management.

Operational Dependency

The Partnership has engaged Wells Capital and Wells Management to provide certain essential services, including supervision of the management and leasing of its properties, asset acquisition and disposition services, as well as other administrative responsibilities, including accounting services and investor communications and relations. These agreements are terminable by either party upon 60 days' written notice. As a result of these relationships, the Partnership's operations are dependent upon Wells Capital and Wells Management.

Wells Capital and Wells Management are owned and controlled by WREF. The operations of Wells Capital, Wells Investment Securities, Inc., Wells Management, and their affiliates represent substantially all of the business of WREF. Accordingly, we focus on the financial condition of WREF when assessing the financial condition of Wells Capital and Wells Management. In the event that WREF were to become unable to meet its obligations as they become due, we might be required to find alternative service providers. Beginning in 2013, WREF began winding down its operations and, as a result, its workforce has been reduced. As of March 31, 2015, however, the Partnership has no reason to believe that WREF does not have access to adequate liquidity and capital resources, including cash on hand, other investments, and borrowing capacity, necessary to meet its current and future obligations as they become due.


5.	ECONOMIC DEPENDENCY

The Partnership is dependent upon the ability of its current tenants to pay their contractual rent amounts as they become due. The inability of a tenant to pay future rental amounts would be likely to have a negative impact on the Partnership's results of operations. The Partnership is not currently aware of any reason why its existing tenants should not be able to pay their contractual rental amounts as they become due in all material respects. Situations preventing the tenants from paying contractual rents could result in a material adverse impact on the Partnership's results of operations.


6.	COMMITMENTS AND CONTINGENCIES

From time to time, the Partnership and its General Partners are parties to legal proceedings which arise in the ordinary course of the Partnership's business. The Partnership is not currently involved in any litigation for which the outcome would, in the judgment of the General Partners based on information currently available, have a materially adverse impact on the results of operations or financial condition of the Partnership, nor is management aware of any such litigation threatened against us.

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ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying financial statements and notes thereto. See also "Cautionary Note Regarding Forward-Looking Statements" preceding Part I, as well as our financial statements, the notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations, all provided in our Annual Report on Form 10-K for the year ended December 31, 2014.

Overview

Management believes that the Partnership typically operates through the following five key life cycle phases. The duration of each phase is dependent upon various economic, industry, market, and other internal/external factors. Some overlap naturally exists in the transition from one phase to the next.


•	Fundraising phase

The period during which the Partnership is raising capital through the sale and issuance of limited partner units to the public;


•	Investing phase

The period during which the Partnership invests the capital raised during the fundraising phase, less upfront fees, into the acquisition of real estate assets;


•	Holding phase

The period during which the Partnership owns and operates its real estate assets during the initial lease terms of the tenants;


•	Positioning-for-sale phase

The period during which the leases in place at the time of acquisition expire and, thus, the Partnership expends time, effort, and funds to re-lease such space to existing and/or new tenants. Following the holding phase, the Partnership continues to own and operate the real estate assets, evaluate various options for disposition, and market the real estate assets for sale; and


•	Disposition-and-liquidation phase

The period during which the Partnership sells its real estate investments, distributes net sale proceeds to the partners, liquidates, and terminates the Partnership.

Portfolio Overview

We are currently in the positioning-for-sale phase of our life cycle. We have sold six of the seven properties in which we have held interests. On December 31, 2014, Fund XIII-XIV Associates sold the Siemens - Orlando Building to an unaffiliated third party for a gross sales price of $13,570,000, exclusive of closing costs. As result of the sale, the Partnership received net sale proceeds of approximately $6,175,000 in January 2015 and was allocated a gain of approximately $2,153,000.

The first quarter 2015 operating distributions to limited partners holding Cash Preferred Units were reserved. Our General Partners distributed net sale proceeds of approximately $8,540,000 in April 2015.

Property Summary

As we move further into the positioning-for-sale phase, we will continue to focus on re-leasing space that may become vacant upon the expiration of our current leases. In doing so, we will seek to maximize returns to our limited partners by attempting to negotiate long-term leases at market rental rates while attempting to minimize down time, re-leasing expenditures, ongoing property level costs, and portfolio costs. As of April 30, 2015, we owned an interest in one remaining property.

Information relating to the properties owned, or previously owned, by the Joint Ventures is provided below:


•	The AmeriCredit Building was sold on April 13, 2005.


•	The John Wiley Building was sold on April 13, 2005.


•	The 7500 Setzler Parkway building was sold on January 31, 2007.


•	The Randstad – Atlanta Building was sold on April 24, 2007.


•	Two Park Center was sold on May 29, 2014.


•	The Siemens – Orlando Building was sold on December 31, 2014.

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•	8560 Upland Drive, located in Englewood, Colorado, is currently 100% leased to FedEx Ground Package System, Inc. and Quantum Corporation.

Liquidity and Capital Resources

Overview

The Partnership is an investment vehicle formed for the purpose of acquiring, owning, and operating income-producing real properties, or investing in joint ventures formed for the same purpose, and has invested all of the partners' original net offering proceeds available for investment. Thus, it is unlikely that we will acquire interests in any additional properties or joint ventures. Historically, our investment strategy has generally involved acquiring properties that are preleased to creditworthy tenants on an all-cash basis through joint ventures with affiliated partnerships.

Our operating strategy entails funding expenditures related to the recurring operations of our remaining property with operating cash flows, including current and prior period operating distributions received from the Joint Ventures, and assessing the amount of remaining cash flows that will be required to fund known future re-leasing costs and other capital improvements. Any residual operating cash flows are generally considered available for distribution to the Cash Preferred limited partners and, unless reserved, are generally paid quarterly. To the extent that operating cash flows are insufficient to fund our recurring operations, net sale proceeds will be utilized. As a result, the ongoing monitoring of our cash position is critical to ensuring that adequate liquidity and capital resources are available. Economic downturns in our remaining market could adversely impact the ability of our tenants to honor lease payments and our ability to re-lease space on favorable terms as leases expire or space otherwise becomes vacant. In the event of either situation, cash flows and, consequently, our ability to provide funding for capital needs could be adversely affected.

Short-Term Liquidity

During the three months ended March 31, 2015, we generated net cash flows from operating activities, including operating distributions received from the Joint Ventures, of approximately $30,000. Operating distributions from the Joint Ventures generally consist of rental revenues and tenant reimbursements, less property operating expenses, management fees, general administrative expenses, and capital expenditures. We continued to reserve the net operating cash flows generated during the three months ended March 31, 2015. The extent to which any future operating distributions are paid to limited partners will be largely dependent upon the amount of cash generated from the remaining Joint Venture, our expectations of future cash flows, and determination of near-term cash needs to fund our share of capital improvements for our remaining property.

During the three months ended March 31, 2015, we invested approximately $4,000 in Fund XIII-XIV Associates to fund remaining expenses after the sale of the Siemens-Orlando Building. In January 2015, we received net sale proceeds of approximately $6,175,000 from the sale of the Siemens - Orlando Building. In April 2015, we distributed net sale proceeds to our limited partners of approximately $8.5 million from the sales of the Randstad - Atlanta Building, Two Park Center, and the Siemens - Orlando Building.

We believe that the cash on hand and distributions due from the Joint Venture will be sufficient to cover our working capital needs, including those provided for within our total liabilities of approximately $27,000, as of March 31, 2015.

Long-Term Liquidity

We expect that our future sources of capital will be primarily derived from operating cash flows generated from our remaining property owned by the Joint Venture and net proceeds generated from the sale of that property. Our future long-term liquidity requirements will include, but not be limited to, funding our share of tenant improvements, renovations, expansions, and other significant capital improvements necessary for marketing and selling our remaining property owned by the remaining Joint Venture. We expect to continue to use substantially all future net cash from operations, including distributions received from the Joint Venture, to fund (i) leasing costs and capital expenditures necessary to position our remaining property for sale and (ii) our general and administrative expenses. To the extent that residual operating cash flows remain after considering these funding requirements, we would then distribute such residual operating cash flow to the limited partners.

Capital Resources

The Joint Venture incurs capital expenditures primarily related to building improvements for the purpose of maintaining the quality of our remaining property, and tenant improvements for the purpose of readying the property for re-leasing and sale. As leases expire, we will work with the remaining Joint Venture to attempt to re-lease space to an existing tenant or market the space to prospective new tenants. Generally, tenant improvements funded in connection with lease renewals require less capital than those

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funded in connection with new leases. However, external conditions, such as the supply of and demand for comparable space available within a given market, drive capital costs as well as rental rates.

Operating cash flows, if available, are generally distributed from the Joint Venture to us approximately one month following calendar quarter-ends. However, the remaining Joint Venture will reserve operating distributions, or a portion thereof, as needed in order to fund known capital and other expenditures. Our cash management policy typically includes first utilizing current period operating cash flows until depleted, at which point operating reserves are utilized to fund capital and other required expenditures. In the event that current and prior period accumulated operating cash flows are insufficient to fund such costs, net sale proceeds reserves, if available, would then be utilized. Any capital or other expenditures not funded from the operations of the Joint Venture will be required to be funded by us and our joint venture partner on a pro rata basis.

As of March 31, 2015, we have received, used, distributed, and held net sale proceeds allocated to the Partnership from the sale of properties as presented below:



	Net Sale Proceeds		Partnership's Approximate Ownership %		Net Sale Proceeds Allocated to the Partnership		Use of Net Sale Proceeds			Net Sale Proceeds Distributed to Partners		Undistributed Net Sale Proceeds
Property Sold	Net Sale Proceeds		Partnership's Approximate Ownership %		Net Sale Proceeds Allocated to the Partnership		Amount		Purpose	Net Sale Proceeds Distributed to Partners		Undistributed Net Sale Proceeds
AmeriCredit Building (sold in 2005)	$	14,301,802	28.11	%	$	4,020,236	$	—	—	$	4,020,236	$	—
John Wiley Building (sold in 2005)	$	21,427,599	28.11	%	6,023,298		—		—	6,023,298		—
7500 Setzler Parkway (sold in 2007)	$	8,723,080	47.30	%	4,126,017		—		—	4,126,017		—
Randstad-Atlanta Building (sold in 2007)	$	8,992,600	47.30	%	4,253,500		—		—	4,240,448		13,052
Two Park Center (sold in 2014)	$	8,369,237	28.11	%	2,352,592		—		—	—		2,352,592
Siemens-Orlando Building (sold in 2014)	$	13,054,482	47.30	%	6,174,770		—		—	—		6,174,770
Total					$	26,950,413	$	—		$	18,409,999	$	8,540,414

Our General Partners distributed net sale proceeds of approximately $8,540,000 in April 2015 from the sales of the Randstad - Atlanta Building, Two Park Center, and the Siemens - Orlando Building.

Results of Operations

Comparison of the three months ended March 31, 2014 versus the three months ended March 31, 2015

Equity in Income of Joint Ventures

Equity in income of Joint Ventures increased from $12,636 for the three months ended March 31, 2014 to $58,530 for the three months ended March 31, 2015, primarily due to an increase in occupancy at 8560 Upland Drive. We expect equity in income of Joint Ventures to remain at a similar level as compared to the first quarter of 2015.

General and Administrative Expenses

General and administrative expenses decreased from $92,555 for the three months ended March 31, 2014 to $78,270 for the three months ended March 31, 2015, primarily due to a decrease in administrative reimbursements and administrative costs allocated to the Partnership. The decrease reflects a decrease in amount of time allocated to the partnership. With the winding down of WREF and reduction in workforce, we anticipate that general and administrative expenses will vary primarily based on future changes in estimates of time allocated to the Partnership.

Application of Critical Accounting Policies

Summary

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If management's judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements.

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Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses.

Below is a discussion of the accounting policies used by us and the Joint Ventures, which are considered to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.

Investment in Real Estate Assets

We are required to make subjective assessments as to the useful lives of our depreciable assets. We consider the period of future benefit of the assets to determine the appropriate useful lives. These assessments have a direct impact on net income (loss). The estimated useful lives of the Joint Ventures' assets are depreciated using the straight-line method over the following useful lives:



Buildings		40 years
Building improvements		5-25 years
Land improvements		20 years
Tenant improvements		Shorter of lease term or economic life
Intangible lease assets		Lease term

In the event that the Joint Ventures utilize inappropriate useful lives or methods of depreciation, our net income (loss) would be misstated.

Investment in Joint Ventures

We have evaluated the Joint Ventures and concluded that none are variable interest entities. We do not have control over the operations of the Joint Ventures; however, we do exercise significant influence. Approval by us as well as the other joint venture partners is required for any major decision or any action that would materially affect the Joint Ventures or their real property investments. Accordingly, we account for our investments in the Joint Ventures using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements, all income (loss) and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on a quarterly basis.

Evaluating the Recoverability of Real Estate Assets

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate assets and related intangible assets in which we have an ownership interest through investments in the Joint Ventures, may not be recoverable. When indicators of potential impairment are present which suggest that the carrying amounts of real estate assets and related intangible assets may not be recoverable, we assess the recoverability of the real estate assets and related intangible assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to sell, for assets held for sale. In the event that such expected undiscounted future cash flows for assets held for use, or the estimated fair values, less costs to sell, for assets held for sale, do not exceed the respective assets' carrying values, we adjust the real estate assets and related intangible assets to their respective estimated fair values, pursuant to the provisions of the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognize an impairment loss. Estimated fair values are determined based on the following information, dependent upon availability: (i) recently quoted market price(s) for the subject property, or highly comparable properties, under sufficiently active and normal market conditions, or (ii) the present value of future cash flows, including estimated residual value.

Projections of expected future cash flows require that we estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's future cash flows and fair value, and could result in the misstatement of the carrying values of real estate assets and related intangible assets held by the Joint Ventures and our net income (loss).

Related-Party Transactions

We have entered into agreements with Wells Capital, Wells Management, an affiliate of our General Partners, and their affiliates, whereby we pay certain fees and expense reimbursements to Wells Capital, Wells Management, and their affiliates for asset management; the management and leasing of our properties; and administrative services relating to accounting, property

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management, and other partnership administration, and we incur the related expenses. See Note 4 to our financial statements included in this report for a description of these fees and expense reimbursements we have incurred.

Commitments and Contingencies

We are subject to certain commitments and contingencies with regard to certain transactions. See Note 4 and Note 6 to our financial statements included in this report for further explanations. Examples of such commitments and contingencies include:


•	commitments under existing lease agreements; and


•	property management and leasing agreements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since we do not borrow any money, make any foreign investments or invest in any market risk-sensitive instruments, we are not subject to risks relating to interest rates, foreign currency exchange rate fluctuations, or the other market risks contemplated by Item 305 of Regulation S-K.


ITEM 4.	CONTROLS AND PROCEDURES

Management's Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management of Wells Capital, one of our General Partners, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act as of the end of the quarterly period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer of Wells Capital concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of assurance that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in the reports we file under the Exchange Act is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II.	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

We are from time to time a party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any litigation the outcome of which would, in management's judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such litigation threatened against us during the quarter ended March 31, 2015, requiring disclosure under Item 103 of Regulation S-K.


ITEM 1A.	RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


(a)	We did not sell any equity securities that were not registered under the Securities Act during the quarter ended March 31, 2015.


(b)	Not applicable.


(c)	We did not redeem any securities during the quarter ended March 31, 2015.

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ITEM 3.	DEFAULTS UPON SENIOR SECURITIES


(a)	We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended March 31, 2015.


(b)	Not applicable.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION


(a)	During the quarter ended March 31, 2015, there was no information required to be disclosed in a report on Form

8-K which was not disclosed in a report on Form 8-K.


(b)	Not applicable.


ITEM 6.	EXHIBITS

The Exhibits to this report are set forth on Exhibit Index to First Quarter Form 10-Q attached hereto.

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SIGNATURES

Pursuant to the requirements 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.



	WELLS REAL ESTATE FUND XIII, L.P. (Registrant)

	By:	WELLS CAPITAL, INC. (General Partner)

May 14, 2015		/s/ RANDY A. SIMMONS
		Randy A. Simmons
		On behalf of the registrant and as Senior Vice President and Principal Financial Officer of Wells Capital, Inc.

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EXHIBIT INDEX

TO FIRST QUARTER FORM 10-Q

WELLS REAL ESTATE FUND XIII, L.P.



Exhibit Number				Description of Document

10.1				First Amendment to the Purchase and Sale Agreement for the sale of 8560 Upland Drive

31.1				Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2				Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1				Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS				XBRL Instance Document.

101.SCH				XBRL Taxonomy Extension Schema.

101.CAL				XBRL Taxonomy Extension Calculation Linkbase.

101.DEF				XBRL Taxonomy Extension Definition Linkbase.

101.LAB				XBRL Taxonomy Extension Label Linkbase.

101.PRE				XBRL Taxonomy Extension Presentation Linkbase.

WELLS REAL ESTATE FUND XIII L P - FORM 10-Q - May 14, 2015

Attached files

WELLS REAL ESTATE FUND XIII L P Reports