ITEM 1. BUSINESS. - -----------------
General
Wells Real Estate Fund VI, L.P. (the "Partnership") is a Georgia public limited partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgian non- public limited partnership, as General Partners. The Partnership was formed on December 1, 1992, for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing and otherwise managing for investment purposes income-producing commercial or industrial properties.
On April 5, 1993, the Partnership commenced a public offering of its limited partnership units pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership terminated its offering on April 4, 1994, and received gross proceeds of $25,000,000 representing subscriptions from 2,500,000 Limited Partners units, composed of two classes of limited partnership interests, Class A and Class B limited partnership units.
The Partnership owns interests in properties through its equity ownership in the following joint ventures: Fund V and Fund VI Associates, a joint venture between the Partnership and Wells Real Estate Fund V, L.P. (the "Fund V - Fund VI Joint Venture"); (ii) Fund V, Fund VI, and Fund VII Associates, a joint venture between the Partnership, Wells Real Estate Fund V, L.P. and Wells Real Estate Fund VII, L.P. (the "Fund V-VI-VII Joint Venture"); (iii) Fund VI and Fund VII Associates, a joint venture between the Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VI-VII Joint Venture"); (iv) Fund II, Fund III, Fund VI and Fund VII Associates, a joint venture between the Partnership, Fund II and Fund III Associates, and Wells Real Estate Fund VII, L.P., (the "Fund II,III,VI,VII Joint Venture"); (v) Fund VI, Fund VII and Fund VIII Associates, a joint venture between the Partnership, Wells Real Estate Fund VII, L.P. and Wells Real Estate Fund VIII, L.P. (the "Fund VI,VII,VIII Joint Venture"); and (vi) Fund I, II, II- OW, VI, VII Associates, a joint venture between the Partnership, Wells Real Estate Fund I, Wells Real Estate Fund II, Wells Real Estate Fund II-OW, and Wells Real Estate Fund VII, L.P. (the "Fund I,II,II-OW,VI,VII 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 four story office building located in Hartford, Connecticut (the "Hartford Building") and (ii) two retail buildings located in Clayton County, Georgia (the "Stockbridge Village II") which are owned by the Fund V - Fund VI Joint Venture; (iii) a three-story office building located in Appleton Wisconsin (the "Marathon Building") which is owned by the Fund V-VI-VII Joint Venture; (iv) two retail buildings located in Clayton County, Georgia (the "Stockbridge Village III") which are owned by the Fund VI - Fund VII Joint Venture; (v) a shopping center expansion located in Clayton County, Georgia (the "Stockbridge Village I
Expansion") which is owned by the Fund VI - Fund VII Joint Venture; (vi) an office/retail center located in Roswell, Georgia (the "Holcomb Bridge Road Project") which is owned by the Fund II-III-VI-VII Joint Venture; (vii) a four story office building located in Jacksonville, Florida (the "BellSouth Property") which is owned by the Fund VI, VII, VIII Joint Venture; (viii) a shopping center located in Clemmons, North Carolina (the "Tanglewood Commons") which is owned by the Fund VI, VII, VIII Joint Venture; and (ix) a retail shopping center located in Cherokee County, Georgia (the "Cherokee Commons") which is owned by the Fund I-II-II-OW-VI-VII Joint Venture. All of the foregoing properties were acquired on an all cash basis.
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 compensation and 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.
ITEM 2. PROPERTIES. - -------------------
The Partnership owns interests in nine properties through its investment in joint ventures of which three are office buildings and six 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 95% occupied, as compared to 94% as of December 31, 1997 and 93% as of 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:
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of Hartford Fire Insurance Company lease.
(3) Expiration of Marathon lease of 76,000 square feet and BellSouth lease of 69,424 square feet.
The following describes the properties in which the Partnership owns an interest as of December 31, 1998:
Fund V - Fund VI Joint Venture - ------------------------------
On December 27, 1993, the Partnership and Wells Real Estate Fund V, L.P. ("Wells Fund V"), a Georgia public limited partnership affiliated with the Partnership through common general partners, entered into a joint venture agreement known as Fund V and Fund VI Associates (the "Fund V - Fund VI Joint Venture"). The investment objectives of Wells Fund V are substantially identical to those of the Partnership. As of December 31, 1998, the Partnership had contributed approximately $5,321,268, and Wells Fund V had contributed approximately $4,544,601 to the Fund V - Fund VI Joint Venture. The Partnership holds an approximately 53.5% equity interest, and Wells Fund V currently holds an approximately 46.5% equity interest in the Fund V - Fund VI Joint Venture. It is anticipated that the Partnership will fund an additional $17,000 toward the completion of the tenant improvements at the Stockbridge Village II Project, at which time it is anticipated that the Partnership will hold an approximate 54% equity interest in the Fund V - Fund VI Joint Venture. The Partnership owns interests in the following two properties through the Fund V - Fund VI Joint Venture:
The Hartford Building - ---------------------
On December 29, 1993, the Fund V - Fund VI Joint Venture purchased the Hartford Building, a four-story office building containing approximately 71,000 rentable square feet from Hartford Accident and Indemnity Company for a purchase price of $6,900,000. The Hartford Building is located on 5.56 acres of land in Southington, Hartford County, Connecticut. The funds used by the Fund V - Fund VI Joint Venture to acquire the Hartford Building were derived from capital contributions made by the Partnership and Wells Fund V totalling $3,432,707 and $3,508,797, respectively, for total capital contributions to the Fund V - Fund VI Joint Venture of $6,941,504.
The entire building is leased to Hartford Fire Insurance Company for a period of nine years and eleven months commencing on December 29, 1993. The annual base rent during the initial term is $458,400 payable in equal monthly installments of $38,200 for the first three months, and $724,200 payable in equal monthly installments of $60,350 commencing April 1, 1994 and continuing through the expiration of the initial term of the lease under the terms of its lease. Hartford also has the option to extend the initial term of the lease for two consecutive five year periods. Under the terms of its lease, Hartford is responsible for property taxes, operating expenses, general repair and maintenance work and a pro rata share of capital expenditures based upon the number of years remaining in the lease.
The occupancy rate at the Hartford Building was 100% as of years ended December 31 1998, 1997 and 1996. The average effective annual rental per square foot at the Hartford Building is $10.11 for 1998, 1997 and 1996.
Stockbridge Village II - Stockbridge South Project - --------------------------------------------------
On November 12, 1993, Wells Fund V purchased 2.46 acres of real property located in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells Fund V contributed the property as capital contribution to the Fund V - Fund VI Joint Venture.
Construction of a 5,400 square foot retail building was completed in November, 1994. A second retail building containing approximately 10,550 square feet was completed in June, 1995. The entire first building was leased by Apple Restaurants, Inc. for nine years and eleven months beginning in December 9, 1994. The annual base rent under the lease is $125,982 until December 15, 1999, at which time the annual base rent increases to $137,700.
Glenn's Open Pit Bar-B-Que leased 4,303 square feet of the second retail building for a six year term beginning July 1, 1995 and vacated in April 1997 owing substantial rent. The receivable from Glenn's was collected in December 1997. This space has been leased with occupancy expected in early 1999.
The total cost to complete the second building in Stockbridge Village II is approximately $2,941.00. As of December 31, 1998, the Partnership contributed $1,888,561, and Wells Fund V contributed $1,035,804 to the Fund V - Fund VI Joint Venture for the acquisition and development of the Stockbridge Village II Project. As set forth above, it is currently anticipated that the remaining cost to complete tenant improvements of approximately $17,000 will be contributed by the Partnership.
The occupancy rate at the Stockbridge Village II Project was 72% at year end 1998 and 1997 and 61% as of December 31, 1996. The average effective annual rental per square foot at the Stockbridge Village II Project is $14.90 for 1998, $14.88 for 1997 and $12.43 for 1996.
Fund V-VI-VII Joint Venture - ---------------------------
On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate Fund VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships affiliated with the Partnership through common general partners, entered into a joint venture agreement known as Fund V, Fund VI and Fund VII Associates (the "Fund V- VI-VII Joint Venture"). The investment objectives of Wells Fund VII are substantially identical to those of the Partnership. The Partnership owns a 42% interest in the following property through the Fund V-VI-VII Joint Venture:
The Marathon Building - ---------------------
On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a three-story office building containing approximately 76,000 rentable square feet, located on approximately 6.2 acres of land in Appleton, Wisconsin (the "Marathon Building") for a purchase price of $8,250,000 excluding acquisition costs.
The funds used by the Fund V-VI-VII Joint Venture to acquire the Marathon Building were derived from capital contributions made by the Partnership, Wells Fund V and Wells Fund VII totalling $3,470,958, $1,337,505, and $3,470,958, respectively, for total contributions to the Fund V-VI-VII Joint Venture of $8,279,421 including acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a period of twelve years, three and one-half months, with options to extend the lease for two additional five-year periods. The annual base rent is $910,000. The current lease expires December 31, 2006. 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 Marathon Building was 100% for the years ended 1998, 1997, and 1996. The average effective annual rental per square foot in the Marathon Building is $12.78 for 1998, $12.74 for 1997 and $12.78 for 1996.
Fund VI - Fund VII Joint Venture - --------------------------------
On December 9, 1994, the Partnership and Wells Fund VII entered into a Joint Venture Agreement known as Fund VI and Fund VII Associates (the "Fund VI-Fund VII Joint Venture"). As of December 31, 1998, the Partnership contributed $2,604,916, including its cost to acquire land, and Wells Fund VII contributed $3,372,774 to the Fund VI - Fund VII Joint Venture for the acquisition and development of the Stockbridge Village III Project and the Stockbridge Village I Expansion. As of December 31, 1998, the Partnership's equity interest in the Fund VI - VII Joint Venture was approximately 43.7%, and Wells Fund VII's equity interest in the Fund VI - VII Joint Venture was approximately 56.3%. The Partnership owns interests in the following two properties through the Fund VI- Fund VII Joint Venture:
Stockbridge Village III - -----------------------
In April 1994, the Partnership purchased 3.27 acres of real property located on the north side of Georgia State Route 138 at Mt. Zion Road, Clayton County, Georgia for a cost of $1,015,673. This tract of land is located directly across Route 138 from the Stockbridge Village Shopping Center which was developed and is owned by an affiliate of the Partnership. On December 9, 1994, the Partnership contributed the property as a capital contribution to the Fund VI- Fund VII Joint Venture.
The first building is a 3,200 square foot restaurant which was completed in March 1995, at a cost of approximately $400,000 excluding land. The space is now being leased by RMS / Fazoli's, which signed a 13 year lease that commenced on December 10, 1998.
Construction began in January, 1995, on a second outparcel building containing approximately 15,000 square feet for approximately $1,500,000 excluding land. In October 1995, Damon's Clubhouse occupied 6,732 square feet restaurant. The term of the lease is for nine years and eleven months commencing October, 1995. The initial annual base rent is $102,375 through March, 2001 and $115,375 thereafter.
As of December 31, 1998, the Partnership had contributed $1,033,285, and Wells Fund VII contributed $1,917,483 to the Fund VI-Fund VII Joint Venture for the acquisition and development of the Stockbridge Village III Property.
The occupancy rate at the Stockbridge Village III Project was 100% for the year ended 1998 and 1997, and 87% at year end 1996. The average effective annual rental per square foot at the Stockbridge Village III Project was $ 13.08 for 1998, $15.67 for 1997 and $14.15 for 1996.
Stockbridge Village I Expansion - -------------------------------
On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of real property located in Clayton County, Georgia for a total price of approximately $718,000. The Stockbridge Village I Expansion consists of a multi- tenant shopping center containing approximately 29,200 square feet. Construction was substantially complete in April, 1996 with Cici's Pizza occupying a 4,000 square foot restaurant. The term of the CiCi's lease is for nine years and eleven months commencing in April, 1996. The initial base rent is $48,000. In the third year, the annual base rent increases to $50,000, in the sixth year to $52,000, and in the ninth year to $56,000. Eleven additional tenants have occupied 17,600 square feet at the property in 1996, 1997 and 1998. Negotiations are being conducted to lease the remaining space.
As of December 31, 1998, the Partnership contributed a total of $1,571,631, and Wells Fund VII contributed a total of $1,455,291 for a total cost of approximately $3,026,922 toward the development and construction of the Stockbridge Village I Expansion.
The occupancy rate at the Stockbridge Village I Expansion was 81% at year end 1998, 74% at year end 1997 and 36% at year end 1996, the first year of occupancy. The average effective annual rental per square foot was $10.08 for 1998, $6.82 for 1997 and $2.69 for 1996.
Fund II - III - VI - VII Joint Venture/Holcomb Bridge Road Project - ------------------------------------------------------------------
On January 10, 1995, the Partnership, Fund II-Fund III Joint Venture, and Wells Fund VII entered into a Joint Venture Agreement known as Fund II, III, VI and VII Associates ("Fund II-III-VI-VII Joint Venture"). The Fund II-Fund III Joint Venture is a joint venture between Wells Real Estate Fund III, L.P., a Georgia public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as general partners, and an existing joint venture (the "Fund II-Fund II-OW Joint Venture") formed by Wells Real Estate Fund II ("Wells Fund II"), a Georgia public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as general partners, and Wells Real Estate Fund II-OW ("Wells Fund II-OW"), a Georgia public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as general partners. The investment objectives of Wells Fund II, Wells Fund II-OW and Wells Fund III are substantially identical to those of the Partnership.
In January 1995, the Fund II-Fund III Joint Venture contributed to the Fund II- III-VI-VII Joint Venture approximately 4.3 acres of land at the intersection of Warsaw Road and Holcomb Bridge Road in Roswell, Fulton County, Georgia (the "Holcomb Bridge Road Property") including land improvements. Development has been completed on two buildings containing a total of approximately 49,500 square feet. Fifteen tenants
occupied the 880 Holcomb Bridge property as of December 31, 1998 for an occupancy rate of 94%. The average effective annual rental was $17.41 for 1998, $13.71 for 1997 and $9.87 per square foot for 1996.
As of December 31, 1998, Fund II-Fund III Joint Venture contributed $1,729,116 in land and improvements for an equity interest of approximately 24.0%, the Partnership contributed $1,817,179 for an equity interest of approximately 26.9%, and Wells Fund VII contributed $3,496,604 for an equity interest of approximately 49.1%. The total cost to develop the Holcomb Bridge Road Property is approximately $5,902,000, excluding land.
Fund VI-VII-VIII Joint Venture - ------------------------------
On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership affiliated with the Partnership through common general partners, formed 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 VIII are substantially identical to those of the Partnership. As of December 31, 1998, the Partnership contributed approximately $6,067,688 for an approximately 34.3% equity interest in the Fund VI-VII-VIII Joint Venture, which owns an office building in Jacksonville, Florida and a multi-tenant retail center under development in Forsyth County, North Carolina. As of December 31, 1998, Wells Fund VIII contributed $5,700,000 for an equity interest in the Fund VI-VII-VIII Joint Venture of approximately 32.3%, 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 - ------------------
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, totalling approximately $9,000,000, were funded by capital contributions of $3,500,000 by the Partnership, $3,500,000 by Wells Fund VII and $2,000,000 by the Wells Fund VIII.
The BellSouth lease is for a term of nine years and eleven months with an option to extend for an additional five years at the then 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 shares 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 at year end 1996, the first year of occupancy. The occupancy rate at year end was 100% for 1998, 1997 and 1996.
Tanglewood Commons Shopping Center - ----------------------------------
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre tract of real property located in Clemmons, Forsyth County, North Carolina. The Fund VI-VII-VIII Joint Venture is constructing 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 will be held for future development or resale. As of December 31, 1998, the Partnership contributed $2,567,688, Wells Fund VII contributed $2,432,312 and Wells Fund VIII had contributed $3,700,000 for the development of this project.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for the acquisition, development, construction and completion of the shopping center are anticipated to be approximately $8,700,000. Construction of the project began in March, 1996, and was substantially completed in the first quarter of 1997. At December 31, 1998, the Joint Venture had $319,000 reserved to fund remaining tenant improvements 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. 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.
The occupancy rate at Tanglewood Commons was 91% for 1998 and 86% for 1997. The average effective annual rental per square foot at Tanglewood Commons was $10.96 for 1998 and $8.36 for 1997, the first year of occupancy.
Fund I - II - II-OW - VI - VII Joint Venture - --------------------------------------------
On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund I"), a Georgia public limited partnership , the Fund II-Fund II-OW Joint Venture and Wells Fund VII, entered into a joint venture agreement known as Fund I, II, II- OW, VI and VII Associates (the "Fund I-II-II-OW-VI-VII Joint Venture"), which was formed to own and operate the Cherokee Project described below. Wells Fund I is a Georgia limited partnership having Leo F. Wells, III and Wells Capital, Inc., as general partners. The investment objectives of Wells Fund I, the Fund II-Fund II-OW Joint Venture and Wells Fund VII are substantially identical to those of the Partnership.
The Cherokee Property - ---------------------
The Cherokee Property consists of a retail shopping center known as the "Cherokee Commons Shopping Center" located in metropolitan Atlanta, Cherokee County, Georgia (the "Cherokee Project"). The Cherokee Project has been expanded to consist of approximately 103,755 net leasable square feet. The Cherokee Project was initially developed through a joint venture between Wells Fund I and the Fund II-Fund II-OW Joint Venture, which contributed the Cherokee Project to the Fund I-II-II-OW-VI-VII Joint Venture on August 1, 1995 to complete the required funding for the expansion.
As of December 31, 1998, Wells Fund I contributed property with a book value of $2,139,900, the Fund II-Fund II-OW Joint Venture contributed property with a book value of $4,860,100, the Partnership contributed cash in the amount of $953,798, and Wells Fund VII contributed cash in the amount of $953,798 to the Fund I-II-IIOW-VI-VII Joint Venture. As of December 31, 1998, the equity interest in the Fund I - II - II-OW - VI - VII Joint Venture were as follows: Wells Fund I 24%, Fund II-Fund II-OW Joint Venture 54%, Wells Fund VII 11% and the Partnership 11%.
The Cherokee Project is anchored by a 67,115 square foot lease with Kroger Food/Drug ("Kroger") which expires in 2011. Kroger's original lease was for 45,528 square feet. In 1994, Kroger expanded to the current 67,115 square feet which is approximately 65% of the total rentable square feet in the property. As of December 31, 1998, the Cherokee Project was approximately 91% occupied by 20 tenants, including Kroger. Kroger, a retail grocery chain, is the only tenant occupying 10% or more of the rentable square footage. The other tenants in the shopping center provide typical retail shopping services.
The Kroger lease calls for an annual rent of $392,915 which increased to $589,102 on August 16, 1995 due to the expansion from 45,528 square feet to 67,115 square feet. The lease expires March 31, 2011 with Kroger entitled to five successive renewals each for a term of five years.
The occupancy rate at year end for the Cherokee Property was 91% for 1998, 94% in 1997 and 93% in 1996. The average effective annual rental per square foot at the Cherokee Property was $ 8.78 for 1998, $8.49 for 1997 and $8.59 for 1996.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS. - -------------------------
There were no material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during 1998.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - ------------------------------------------------------------
No matters were submitted to a vote of the Limited Partners during the fourth quarter of 1998.
PART II -------
ITEM 5.
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS. - ---------------------------------------------------------------------------
As of February 28, 1999, the Partnership had 2,187,757 outstanding Class A Units held by a total of 1,630 Limited Partners and 312,243 outstanding Class B Units held by a total of 189 Limited Partners. The capital contribution per unit is $10.00. There is no established public trading market for the Partnership's limited partnership units, and it is not anticipated that a public trading market for the units will develop. Under the Partnership Agreement, the General Partners have the right to prohibit transfers of units.
The General Partners have estimated the investment value of properties held by the Partnership, as of December 31, 1998, to be $10.61 per Class A Unit and $13.50 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.
Cash available for distribution to the Limited Partners is distributed on a quarterly basis unless Limited Partners elect to have their cash distributions paid monthly. Under the Partnership Agreement, distributions from net cash from operations are allocated first to the Limited Partners holding Class A Units (and limited partners holding Class B units that have elected a conversion right that allows them to share in the distribution rights of limited partners holding Class A units) until they have received 10% of their adjusted capital contributions. "Net Cash From Operations" means Cash Flow, less adequate cash reserves for other obligations of the Partnership for which there is no provision. Cash available for distribution is then distributed to the General Partners until they have received an amount equal to 10% of cash distributions previously distributed to the limited partners. Any remaining cash available for distribution is split between the Limited Partners holding Class A units and the General Partners on a basis of 90% and 10% respectively. No distributions will be made to the Limited Partners holding Class B Units. No distribution has been made to the General Partner as of December 31, 1998.
Cash distributions made to Limited Partners holding Class A Units (and limited partners holding Class B Units that have elected a conversion right) during the two most recent fiscal years were as follows:
Per Class A Unit ----------------
Distributions For Total Cash Investment Return of Quarter Ended Distribution Income Capital ------------- ------------ ------ ------- March 31, 1997 $359,617 $0.17 $0.00 June 30, 1997 $362,741 $0.17 $0.00 Sept. 30, 1997 $399,873 $0.19 $0.00 Dec. 31, 1997 $432,841 $0.20 $0.00 March 31, 1998 $435,455 $0.20 $0.00 June 30, 1998 $440,837 $0.20 $0.00 Sept. 30, 1998 $438,327 $0.20 $0.00 Dec. 31, 1998 $426,161 $0.20 $0.00
Fourth quarter distribution was accrued for accounting purposes in 1998, and was not actually paid to the limited partners holding Class A Units until February 1999. Even though there is no guarantee, the General Partners anticipate that cash distributions to Limited Partners holding Class A Units will continue in 1999, at a level at least comparable with 1998 cash distributions on an annual basis.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA. - --------------------------------
The following sets forth a summary of the selected financial data for the fiscal years ended December 31, 1998, 1997, 1996, 1995 and 1994.
The Partnership which began on April 5, 1993 did not commence active operations until it received and accepted subscriptions for a minimum of 125,000 units in May, 1993.
(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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND - ------------------------------------------------------------------------- RESULTS OF OPERATION. - --------------------
The following discussion and analysis should be read in conjunction with the Selected Financial Data and the accompanying financial statements of the Partnership and notes thereto. This Report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including discussion and analysis of the financial condition of the Partnership, anticipated capital expenditures required to complete certain projects, amounts of cash distributions anticipated to be distributed to Limited Partners in the future and certain other matters. Readers of this Report should be aware that there are various factors that could cause actual results to differ materially from any forward-looking statements made in this Report, which include construction costs which may exceed estimates, construction delays, lease-up risks, inability to obtain new tenants upon the expiration of existing leases, and the potential need to fund tenant improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions - ---------------------------------------------------------
General
Gross revenues of the Partnership were $939,519 for the fiscal year ended December 31, 1998, as compared to $884,802 for the fiscal year ended December 31, 1997, and $675,782 for the fiscal year ended December 31, 1996. The increase for 1998 over 1997 and 1996 was due primarily to increased income from joint ventures partially offset by a decrease in interest income. This net increase in revenues is attributed to funds invested in joint ventures, which increased the income generated from the joint ventures but decreased the funds available to earn interest.
Expenses of the Partnership were $83,731 for 1998, as compared to $89,148 for 1997 and $86,729 for 1996. The slight change in expenses for 1998 as compared to 1997 and 1996 was primarily due to decreased legal and accounting expenses.
Net income of the Partnership was $855,788 for the fiscal year ended December 31, 1998, as compared to $795,654 for the fiscal year ended December 31, 1997, and $589,053 for the year ended December 31, 1996. The increase in net income for 1998 over 1997 and 1996 is due primarily to increased earnings from joint ventures.
The Partnership made cash distributions to the limited partners holding Class A Units of $.80 for fiscal year 1998 as compared to $.73 per Class A Unit for fiscal year 1997 and $.57 for fiscal
year 1996. The General Partners anticipate distributions per Unit will continue to increase for limited partners holding Class A Units in 1999. Distributions accrued for the fourth quarter of 1998 to the limited partners holding Class A Units were paid in February, 1999. No cash distributions were made to limited partners holding Class B Units.
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.
Property Operations - -------------------
As of December 31, 1998, the Partnership's ownership interest in Fund I,II,II- OW, VI and VII Joint Venture was 10.7%, in Fund II,III, VI and VII Joint Venture was 26.9%, in Fund V and VI Joint Venture was 53.5%, in Fund V,VI, and VII Joint Venture was 41.8%, in Fund VI and VII Joint Venture was 43.7% and in Fund VI,VII and VIII Joint Venture was 34.3%.
As of December 31, 1998, the Partnership owned interests through interests in joint ventures in the following operational properties:
[The Remainder of this page left intentionally blank] -----------------------------------------------------
The Hartford Building - Fund V - Fund VI Joint Venture - ------------------------------------------------------
For the Year Ended December 31 ---------------------------------- 1998 1997 1996 ---- ---- ---- Revenues: Rental income $717,499 $717,499 $717,499 -------- -------- --------
Expenses Depreciation 292,032 292,031 292,031 Management & leasing expenses 27,719 30,189 28,700 Other operating expenses (10,530) (9,983) 13,948 -------- -------- -------- 330,281 312,237 334,679 -------- -------- --------
Net income $387,218 $405,262 $382,820 ======== ======== ========
Occupied % 100 % 100 % 100 %
Partnership's Ownership % in the Fund V-Fund VI Joint Venture 53.5 % 53.5 % 52.5 %
Cash Distribution to the Partnership $365,986 $374,219 $357,530
Net Income Allocated to the Partnership $207,076 $215,449 $200,900
Net income decreased and expenses increased in 1998, as compared to 1997, due primarily to an insurance reimbursement received in 1997 from the tenant for prior year's expenses. Net income increased and expenses decreased in 1997 over 1996 due to the insurance reimbursement in 1997.
The Partnership's ownership in the Fund V-Fund VI Joint Venture increased from 52.5% in 1996, to 53.5% in 1997 and 1998 due to additional fundings by the Partnership, which increased its ownership interest and decreased the Wells Fund V's ownership interest in the Fund V- Fund VI Joint Venture.
Cash distributions remained relatively stable from 1998 as compared to 1997, and 1996. Net income allocated to the Partnership decreased in 1998 as compared to 1997 due to decreased insurance reimbursement due to the insurance reimbursement discussed above.
Real estate taxes and 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. For more detailed financial information regarding the historical operations of The
Hartford Building, refer to the Financial Statements, as of December 31, 1998, 1997 and 1996 regarding The Hartford Building commencing at page of this Annual Report on Form 10-K.
Stockbridge Village II - Fund V - Fund VI Joint Venture - -------------------------------------------------------
For the Year Ended December 31 ------------------------------ 1998 1997 1996 ---- ---- ----
Revenues: Rental income $235,776 $235,508 $196,629 -------- -------- --------
Expenses Depreciation 101,971 96,357 79,239 Management & leasing expenses 29,648 35,423 19,786 Other operating expenses 32,156 62,725 90,216 -------- -------- -------- 163,775 194,505 189,241 -------- -------- --------
Net income $ 72,001 $ 41,003 $ 7,388 ======== ======== ======== Occupied % 72% 72% 61%
Partnership's Ownership % in the Fund V-Fund VI Joint Venture 53.5% 53.5% 52.5%
Cash Distribution to the Partnership $ 89,458 $ 69,719 $ 41,056
Net Income Allocated to the Partnership $ 38,513 $ 22,033 $ 3,869
Net income is greater in 1997, as compared to 1997 and 1996, due to primarily to increase CAM reimbursements from tenants. Operating expenses for 1997, have decreased from 1996 levels due primarily to a bad debt recovery in 1997, and decreased in 1998 from 1997 due to increased CAM billings to tenants.
The Partnership's ownership percentage in the Fund V - Fund VI Joint Venture increased to 53.5% in 1998 and 1997 from 52.5% in 1996 due to additional investments by the Partnership which increased the Partnership's ownership interest in the fund V-Fund VI Joint Venture.
The Stockbridge Village II Project incurred property taxes of $23,508 for 1998, $25,491 for 1997 and $22,835 for 1996.
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 Marathon Building/Fund V-VI-VII Joint Venture - -------------------------------------------------
For the Year Ended December 31 ------------------------------ 1998 1997 1996 ---- ---- ---- Revenues: Rental income $971,447 $968,219 $971,017 -------- -------- --------
Expenses: Depreciation 350,585 350,585 350,585 Management & leasing expenses 34,632 39,671 38,841 Other operating expenses 12,261 11,905 14,636 -------- -------- -------- 397,478 402,161 404,062 -------- -------- --------
Net income $573,969 $566,058 $566,955 ======== ======== ======== Occupied % 100% 100% 100%
Partnership's Ownership % in the Fund V-VI-VII Joint Venture 41.8% 41.8% 41.8%
Cash Distribution to the Partnership $389,954 $388,557 $359,305
Net Income Allocated to the Partnership $240,091 $236,782 $237,157
Rental income remained relatively stable in 1998, 1997 and 1996. Operating expense increased slightly due to accounting fee and administrative fees increasing, as compared to 1997. Cash distribution to the partnership and net income allocated to partnership remained stable for 1998.
Real estate taxes and 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.
Stockbridge Village III/Fund VI - Fund VII Joint Venture - --------------------------------------------------------
For the Year Ended December 31, ------------------------------ 1998 1997 1996 ---- ---- ---- Revenues: Rental income $238,093 $285,256 $257,571 -------- -------- --------
Expenses: Depreciation 91,053 86,626 84,642 Management and leasing expenses 32,844 30,722 51,107 Other operating expenses 145,402 22,501 59,168 -------- -------- -------- 269,299 139,849 194,917 -------- -------- --------
Net (Loss) Income $(31,206) $145,407 $ 62,654 ======== ======== ========
Occupied % 100% 100% 87%
Partnership's Ownership % in the Fund VI - Fund VII Joint Venture 43.7% 42.5% 42.8%
Cash Distribution to the Partnership $ 27,885 $ 99,789 $ 65,756
Net (Loss) Income Allocation to the Partnership $(13,520) $ 62,151 $ 26,845
In April 1994, the Partnership purchased 3.27 acres of land located in Clayton County, Georgia. On December 9, 1994, the Partnership contributed the Stockbridge Village III property ("Stockbridge Village III") as a capital contribution to the Fund VI - Fund VII Joint Venture.
A net loss is reflected for December 31, 1998, as compared to the net income of $145,407 for December 31, 1997. The net loss was due to a decrease in rental income and an increase in other operating expenses which was due to a bad debt writeoff for Kenny Rodgers Roasters, which vacated in the first quarter of 1998. The space is now being leased by RMS / Fazoli's, which signed a 13 year lease that commenced on December 10, 1998.
The second multi-tenant retail building containing approximately 15,000 square feet was completed in October, 1995. Damon's Clubhouse, a restaurant, occupied approximately 6,732 square feet in October. The Damon's lease is for a term of nine years and eleven months with initial base rent of $102,375 for five years and increasing to $115,375 for the remainder of the lease. The remaining 8,268 square feet were fully occupied by December 31, 1997.
The Stockbridge Village III Project incurred property taxes of $25,248 for 1998, $25,009 for 1997 and $23,026 for 1996.
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.
Stockbridge Village I Expansion/Fund VI - Fund VII Joint Venture - ----------------------------------------------------------------
On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of real property located in Clayton County, Georgia. The Stockbridge Village I Expansion consists of a multi-tenant shopping center containing approximately 29,000 square feet. The majority of construction was completed in April, 1996 with Cici's Pizza leasing a 4,000 square foot restaurant. The term of the lease is for nine years and eleven months commencing April, 1997. The initial base rent is $48,000. In the third year, annual base rent will increase to $50,000, in the sixth year to $52,000, and in the ninth year to $56,000. Eleven additional tenants have occupied 17,600 square feet at the property as of December 31, 1998. Negotiations are being conducted to lease the remaining space.
Rental income, net income and cash distributions have increased due primarily to increased occupancy. The Stockbridge Village I Expansion incurred property taxes of $22,565 for 1998, $25,608 for 1997 and $9,182 for 1996.
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, refer to Item 2, Properties, page 3.
Holcomb Bridge Road Property / Fund II - III - VI - VII Joint Venture
In January, 1995, the Fund II - Fund III Joint Venture contributed 4.3 acres of land and land improvements at Holcomb Bridge Road to the Fund II - III - VI - VII Joint Venture. The project opened in April, 1996. Development has been substantially completed on two buildings with a total of 49,530 square feet. As of December 31, 1998, fifteen tenants occupied space in the retail building under leases of varying lengths.
Income, depreciation, management and leasing expenses increased compared to 1997, due primarily to increased occupancy in fourth quarter of 1997. Since the Holcomb Bridge Road Property was under construction and not occupied until first quarter, 1996, 12-month income and expense figures are not available.
The Holcomb Bridge Road Property incurred property taxes of $52,162 for 1998, $85,230 for 1997 and $37,191 for 1996.
For comments on the general competitive conditions to which the property may be subject, see Item, Business, page 2. For additional information on tenants, etc. refer to Item 2, Properties, page 3.
BellSouth Property / Fund VI - VII - VIII Joint Venture - -------------------------------------------------------
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 3,091 square feet 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 cost for HVAC repairs and various other building expenses. Cash distributions and net income allocated to the partnership decreased in 1998 from 1997 levels due primarily to additional funding by Wells Fund VIII in early 1997, which decreased 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, 12-month income and expense figures for 1996 are not available.
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 - -------------------------------------------------------
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 the Partnership. Total costs 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 rent equal to one percent of the amount by which Harris Teeter gross sales exceed $35,000,000 for any lease year.
Tanglewood Commons incurred property taxes of $52,229 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 for the prior year are not available.
For comments on the general competitive conditions to which the property may be subject, see Item , Business, page 2. For additional information on tenants, etc. refer to Item 2, Properties page 3.
Cherokee Commons Shopping Center / Fund I - II - II-OW - VI - VII Joint Venture. - -------------------------------------------------------------------------------
For the Year Ended December 31 ------------------------------ 1998 1997 1996 ---- ---- ---- Revenues: Rental Income $909,831 $880,652 $890,951 Interest Income 84 67 73 -------- -------- -------- 909,915 880,719 891,024 -------- -------- -------- Expenses: Depreciation 444,660 440,882 429,419 Management & leasing expenses 82,517 78,046 48,882 Other operating expenses 84,676 138,294 180,841 -------- -------- -------- 611,853 657,222 659,142 -------- -------- --------
Net income $298,062 $223,497 $231,882 ======== ======== ========
Occupied % 91% 94% 93%
Partnership's Ownership % 10.7% 10.7% 10.7%
Cash Distribution to Partnership $ 79,238 $ 65,047 $ 72,510
Net Income Allocated to the Partnership $ 31,916 $ 23,931 $ 24,830
Rental income increased in 1998 over 1997 due primarily to a one time adjustment made to the straight line rent schedule. Rental income decreased in 1997, as compared to 1996, due to decreased occupancy at the property for the first three quarters of 1997. The increase in occupancy in the fourth quarter of 1997, was due to a new 1,200 square foot lease executed in 1997. Operating expenses of the property decreased to $84,676 in 1998 from $138,294 in 1997 and $180,841 in 1996. The decrease in operating expense in 1998, as compared to 1997 is due to decreased expenditures for tenants improvements, common area expenses and legal fees. The decrease in operating expenses in 1997, as compared to 1996, is due to a change in estimated billing of common area maintenance charges and property taxes which was partially offset by increases in plumbing repair and contract labor expenses. Net income of the property increased to
$298,062 in 1998 and decreased to $223,497 in 1997 from $231,882 in 1996, due to the reasons discussed above.
Real estate taxes were $77,311 for 1998, $67,259 for 1997 and $63,696 for 1996.
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 its offering, which terminated on April 4, 1994, the Partnership raised a total of $25,000,000 in capital through the sale of 2,500,000 units. No additional units will be sold by the Partnership. From the original funds raised, the Partnership incurred $4,619,157 in commissions, acquisition fees, organization and offering costs; invested $20,239,843 in properties; reserved $124,000 as working capital reserves; and the remainder of approximately $17,000 is reserved for investment in the Fund V - Fund VI Joint Venture to complete the Stockbridge Village II Project.
Pursuant to the terms of the Partnership Agreement, the Partnership is required to maintain working capital reserves in an amount equal to the cash operating expenses required to operate the Partnership for a six-month period not to be reduced below 1% of Limited Partners' capital contributions. As set forth above, in order to fund tenant improvements at the Stockbridge Village II, Stockbridge Expansion and at the Holcomb Bridge Road Property, the General Partners have used $126,000 of the Partnership's working capital reserves to reduce the balance below this minimum amount, rather than funding the tenant improvements out of operating cash flow, which would have the effect of reducing cash flow distributions to Limited Partners. It is anticipated that future rental revenues from these projects will be allocated to restore the Partnership's minimum working capital reserve levels over time in the future.
The Partnership net cash used in operating activities increased from $2,716 for the year ended December 31, 1996 to $57,206 for the year ended December 31, 1997 and to $70,649 for the year ended December 31, 1998 primarily due to decreased interest income in 1997 and 1998. Net cash provided by investing activities increased from $809,967 in 1996 to $1,189,264 in 1997 and to $1,693,826 in 1998 due primarily to decreased investments in joint ventures, a return of capital in 1996 due to a transfer of funds from Tanglewood Project to the Holcomb Bridge Road Project and increases in distributions received from joint ventures. Cash flow from financing activities varied from ($1,185,516) in 1996 to ($1,452,803) in 1997 and ($1,745,626) in 1998 due to increased in distributions to partners.
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.
The Partnership is unaware of any known demands, commitments, events or capital expenditures other than that which is required for the normal operations of the properties in which it owns a joint venture interest that will result in the Partnership's liquidity increasing or decreasing in any material way.
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. Most leases contain common area maintenance charges, real estate tax and insurance reimbursements on a per square foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. These provisions should reduce the Partnership's exposure to increases in costs and operating expenses resulting from inflation. In addition, a number of the Partnership's leases are for terms of less than five years which may permit the Partnership to replace existing leases with new leases at higher base rental rates if the existing leases are below market rate. There is no assurance, however, that the Partnership would be able to replace existing leases with new leases at higher base rentals.
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 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.
ITEM 8.
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.
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.
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 Capital. Mr. Wells is the President of Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which he serves as 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.
ITEM 11.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES. - ---------------------------------------------------------
The following table summarizes the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 1998.
CASH COMPENSATION TABLE
(A) (B) (C) Name of individual or Capacities in which served number in group Form of Compensation Cash Compensation - --------------------- -------------------------- -----------------
Wells Management Property Manager - $124,660 Company, Inc. Management and Leasing Fees
(1) The majority of these fees are not paid directly by the Partnership but are paid by the joint venture entities which own properties for which the property management and leasing services relate and include management and leasing fees which were accrued for accounting purposes in 1998, but not actually paid until January, 1999.
ITEM 12.
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) Title of Class Name and Address of Amount and Nature Percent of Class Beneficial Owner of Beneficial Ownership
Class A Units Leo F. Wells, III 1327.37 units IRA less than 1% (401(k))
No arrangements exist which would, upon operation, result in a change in control of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. - --------------------------------------------------------
The compensation and fees paid or to be paid by the Partnership to the General Partners and their affiliates in connection with the operation of the Partnership are as follows:
Interest in Partnership Cash Flow and Net Sale Proceeds. The General ------------------------------------------------------- Partners will receive a subordinated participation in net cash flow from operations equal to 10% of net cash flow after the Limited Partners holding Class A Units have received preferential distributions equal to 10% of their adjusted capital contribution. The General Partners will also receive a subordinated participation in net sale proceeds and net financing proceeds equal to 20% of residual proceeds available for distribution after Limited Partners holding Class A Units have received a return of their adjusted capital contributions plus a 10% cumulative return on their adjusted capital contributions and Limited Partners holding Class B Units have received a return of their adjusted capital contribution plus a 15% cumulative return on their adjusted capital contribution; however, that in no event shall the General Partners receive in the aggregate in excess of 15% of net sale proceeds and net financing proceeds remaining after payments to Limited Partners from such proceeds of amounts equal to the sum of their adjusted capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners received no distribution from cash flow or from net sales proceeds in 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 lesser of: (A)(i) 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 other rendering similar services in the same geographic area for similar properties; and (ii) in the cash of industrial and commercial properties which are leased on a long-term basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term; or (B) the amounts charged by unaffiliated persons rendering comparable services in the same geographic area. Wells Management Company, Inc. received $124,660 in property management and leasing fees relating to the Partnership in 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 totalling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners or their affiliates received no real estate commissions in 1998.
PART IV -------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. - -------------------------------------------------------------------------
(a)1. Financial Statements The Financial Statements are contained on pages through of this Annual Report on Form 10-K, and the list of the Financial Statements contained herein is set forth on page, 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 Regulation S-K are listed on the Exhibit Index attached hereto.
(d) See (a) 2 above.
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 VI, 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 Leo F. Wells, III of 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ----------------------------------------------------
INDEX TO THE FINANCIAL STATEMENTS
Financial Statements Page - -------------------- ----
Independent Auditors' Reports Balance Sheets as of December 31, 1998 and 1997 Statements of Income for the Years Ended December 31, 1998, 1997 and 1996 Statements of Partners' Capital for the Years Ended December 31, 1998, 1997 and 1996 Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 Notes to Financial Statements for December 31, 1998, 1997, and 1996 Audited Financial Statements - The Hartford Building
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VI, L.P. (a Georgia public limited partnership) as of December 31, 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. aA audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wells Real Estate Fund VI, L.P. as of December 31, 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
WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
The accompanying notes are an integral part of these balance sheets.
WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, 1996
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND VI, 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 VI, L.P. (the "Partnership") is a public limited partnership organized on April 5, 1993 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 once every five years. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c) remove a general partner. A majority vote on any of the above described matters will bind the Partnership, without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real properties, including properties which are to be developed, are currently under development or construction, are newly constructed, or have operating histories. The Partnership owns an interest in the following properties through joint ventures between the Partnership and other Wells Real Estate Funds: (i) a shopping center located in Cherokee County, Georgia ("Cherokee Commons"), (ii) an office/retail center in Roswell, Georgia, (iii) the Hartford Building, a four-story office building located in Southington, Connecticut, (iv) the Stockbridge Village II property, two retail buildings located in Clayton County, Georgia, (v) the Marathon Building, a three-story office building located in Appleton, Wisconsin, (vi) the Stockbridge Village III Retail Center, two retail buildings located in Stockbridge, Georgia, (vii) a retail center expansion in Stockbridge, Georgia, (viii) the BellSouth property, a four-story office building in Jacksonville, Florida, and (ix) a retail shopping center in Clemmons, Forsyth County, North Carolina.
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.
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.
Distribution of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement, is distributed to limited partners quarterly. In accordance with the partnership agreement, distributions are paid first to limited partners holding Class A units until they have received a 10% per annum return on their adjusted capital contributions, as defined. Cash available for distribution is then paid to the general partners until they have received an amount equal to 10% of distributions. Any remaining cash available for distribution is split between the limited partners holding Class A units and the general partners on a basis of 90% and 10%, respectively. No distributions will be made to the limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the following order:
. To limited partners, on a per unit basis, until each limited partner has received 100% of its adjusted capital contribution, as defined
. To limited partners holding Class B units, on a per unit basis, until they receive an amount equal to the net cash available for distribution received by the limited partners holding Class A units
. To all limited partners, on a per unit basis, until they receive a cumulative 10% per annum return on their adjusted capital contributions, as defined
. To all limited partners, on a per unit basis, until they receive an amount equal to their respective cumulative distributions, as defined
. To the general partners until they have received 100% of their capital contributions, as defined
. Thereafter, 80% to the limited partners and 20% to the general partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership, excluding deductions for depreciation and amortization. Net income, as defined, of the Partnership will be allocated each year in the same proportions that net cash from operations is distributed to the partners. To the extent the Partnership's net income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners holding Class A units and 1% to the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year will be allocated as follows: (a) 99% to the limited partners holding Class B units and 1% to the general partners until their capital accounts are reduced to zero, (b) then to any partner having a positive balance in his capital account in an amount not to exceed such positive balance, and (c) thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be allocated generally in the same manner that the net proceeds from such sale are distributed to partners after the following allocations are made, if applicable: (a) allocations made pursuant to a qualified income offset provision in the partnership agreement, (b) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero, (c) allocations to Class B limited partners in amounts equal to deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property, and (d) allocations to Class A limited partners and general partners in amounts equal to deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation. The Partnership does not have control over the operations of the joint ventures; however, it does exercise significant influence. Accordingly, investments in joint ventures are recorded using the equity method of accounting.
Real Estate Assets. Real estate assets held through investments in affiliated joint ventures are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related assets. All repairs and maintenance are expensed as incurred.
Management continually monitors events and changes in circumstances which could indicate that carrying amounts of real estate assets may not be recoverable. When events or changes in circumstances are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of real estate assets by determining whether the carrying value of such real estate assets will be recovered through the future cash flows expected from the use of the asset and its eventual disposition. Management has determined that there has been no impairment in the carrying value of real estate assets held by the joint ventures as of December 31, 1998.
Depreciation for buildings and improvements is calculated using the straight- line method over 25 years.
Revenue Recognition. All leases on real estate held by the joint ventures are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the respective leases.
Partners' Distributions and Allocations of Profit and Loss. Cash available for distribution and allocations of profit and loss to the Partnership by the joint ventures are made in accordance with the terms of the individual joint venture agreements. Generally, these items are allocated in proportion to the partners' respective ownership interests. Cash is paid by the joint ventures to the Partnership quarterly.
Deferred Lease Acquisition Costs. Costs incurred to procure operating leases are capitalized and amortized on a straight-line basis over the terms of the related leases.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts.
Per Unit Data
Net income (loss) per unit, with respect to the Partnership for the years ended December 31, 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 6% of the limited partner contributions, subject to certain overall limitations contained in the partnership agreement. Aggregate fees paid through December 31, 1998 were $932,216 and amounted to 3.7% of the limited partner contributions received. These fees are allocated to specific properties as they are purchased or developed and are included in real estate assets at the joint ventures. Deferred project costs at December 31, 1998 and 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 to be distributed from its joint venture investments for the fourth quarters of 1998 and 1997, as follows:
The Partnership entered into a property management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of the general partners. In consideration for supervising the management of the Partnership's properties, the Partnership will generally pay Wells Management management and leasing fees equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time 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 $124,660, $170,646, and $93,349 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.
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:
The following is a rollforward of the Partnership's investment in joint ventures for the years ended December 31, 1998 and 1997:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
In August 1995, the Partnership entered into a joint venture agreement with Wells Real Estate Fund I, Fund II and II-OW (a joint venture between Wells Real Estate Fund II and Wells Real Estate Fund II-OW), and Wells Real Estate Fund VII, L.P. ("Fund VII"). The joint venture, Fund I, II, II-OW, VI, and VII Associates--Cherokee, was formed for the purpose of owning and operating Cherokee Commons, a retail shopping center containing approximately 103,755 square feet, located in Cherokee County, Georgia. Until the formation of this joint venture, Cherokee Commons was part of the Fund I and II Tucker-- Cherokee joint venture. Concurrent with the formation of the Fund I, II, II- OW, VI, and VII Associates--Cherokee joint venture, Cherokee Commons was transferred from the Fund I and II Tucker--Cherokee joint venture. Percentage ownership interests in Fund I, II, II-OW, VI, and VII Associates-- Cherokee were determined at the time of formation based on contributions. Under the terms of the joint venture agreement, Fund VI and Fund VII each contributed approximately $1 million to the new joint venture in return for a 10.7% ownership interest. Fund I's ownership interest in the Cherokee joint venture changed from 30.6% to 24%, and Fund II and II-OW joint venture's ownership
interest changed from 69.4% to 54.6%. The $2 million in cash contributed to Cherokee was used to fund an expansion of the property for an existing tenant.
Following are the financial statements for Fund I, II, II-OW, VI, and VII Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 1998 and 1997
Assets
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1998, 1997, and 1996
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998, 1997, and 1996
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998, 1997, and 1996
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with Fund II and III Associates, and Fund VII. The joint venture, Fund II, III, VI, and VII Associates,
was formed for the purpose of acquiring, developing, operating, and selling real properties. During 1995, Fund II and III Associates contributed a 4.3- acre tract of land from its 880 Property--Brookwood Grill to the Fund II, III, VI, and VII Associates joint venture. During 1996, 1997, and 1998, the Partnership and Fund VII made contributions to the joint venture. Ownership percentage interests were recomputed accordingly. Development was substantially completed in 1996 on two buildings containing a total of approximately 49,500 square feet.
The following are the financial statements for Fund II, III, VI, and VII Associates:
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1998 and 1997
Assets
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income (Loss)
for the Years Ended December 31, 1998, 1997, and 1996
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998, 1997, and 1996
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998, 1997, and 1996
Fund V and VI Associates
On December 27, 1993, the Partnership entered into a joint venture agreement with Wells Real Estate Fund V, L.P. ("Fund V"). The joint venture, Fund V and VI Associates, was formed for the purpose of investing in commercial real properties. In December 1993, the joint venture purchased a 71,000-square- foot, four-story office building known as the Hartford Building in Southington, Connecticut. On June 26, 1994, Fund V contributed its interest in a parcel of land, the Stockbridge Village II property, to the joint venture. The Stockbridge Village II property consists of two separate restaurants and began operations during 1995.
Following are the financial statements for Fund V and VI Associates:
FUND V AND VI ASSOCIATES
(A GEORGIA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
Assets
Liabilities and Partners' Capital
FUND V AND VI ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUND V AND VI ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUND V AND VI ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement with Fund V and Fund VII. The joint venture, Fund V, VI, and VII Associates, was formed for the purpose of investing in commercial real properties. In September 1994, Fund V, VI, and VII Associates purchased a 75,000-square- foot, three-story office building known as the Marathon Building in Appleton, Wisconsin.
Following are the financial statements for Fund V, VI, and VII Associates:
FUND V, VI, AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
Assets
Liabilities and Partners' Capital
FUND V, VI, AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUND V, VI, AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUND V, VI, AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
Fund VI and VII Associates
On December 9, 1994, the Partnership entered into a joint venture agreement with Fund VII. The joint venture, Fund VI and VII Associates, was formed for the purpose of investing in commercial real properties. In December 1994, the Partnership contributed its interest in a parcel of land, the Stockbridge Village III Retail Center property, located in Stockbridge, Georgia, to the joint venture. The Stockbridge Village III Retail Center
property is comprised of two separate outparcel buildings totaling approximately 18,500 square feet. One of the outparcel buildings began operations during 1995. The other outparcel began operations during 1996. On June 7, 1995, Fund VI and VII Associates purchased 3.38 acres of real property located in Stockbridge, Georgia. The retail center expansion consists of a multi-tenant shopping center containing approximately 29,000 square feet.
During 1997 and 1998, both the Partnership and Fund VII made contributions to Fund VI and VII Associates, and during 1996, Fund VII made contributions to the joint venture. Ownership percentage interests were recomputed accordingly.
Following are the financial statements for Fund VI and VII Associates:
FUND VI AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
Assets
Liabilities and Partners' Capital
FUND VI AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUND VI AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
FUNDS VI AND VII ASSOCIATES
(A GEORGIA JOINT VENTURE)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Fund VII and Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI, VII, and VIII Associates, was formed to acquire, develop, operate, and sell real properties. On April 25, 1995, the joint venture purchased a 5.55- acre parcel of land in Jacksonville, Florida. A 92,964-square foot office building, known as the Bell South 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.
During 1996, the Partnership and Fund VII each withdrew $500,000 from the joint venture in order to contribute needed funds to Fund II, III, VI, and VII Associates. In addition, deferred project costs related to the Partnership and Fund VII of $23,160 and $21,739, respectively, were unapplied when the contributions were withdrawn. During 1996,
Fund VIII made an additional contribution of $2,815,965, which included $115,965 of deferred project costs that were applied. Ownership percentage interests 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
Liabilities and Partners' Capital
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1998, 1997, and 1996
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1998, 1997, and 1996
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1998, 1997, and 1996
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:
The Partnership's income tax basis partners' capital at December 31, 1998, 1997, and 1996 is computed as follows:
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:
Three significant tenants contributed approximately 26%, 20%, and 15% of rental income, which is included in equity in income of joint ventures, for the year ended December 31, 1998. In addition, four significant tenants will contribute approximately 21%, 21%, 18%, and 12% of future minimum rental income.
The future minimum rental income due Fund I, II, II-OW, VI, and VII Associates--Cherokee under noncancelable operating leases at December 31, 1998 is as follows:
One tenant contributed approximately 65% of rental income for the year ended December 31, 1998 and will contribute approximately 88% of future minimum rental income.
The future minimum rental income due Fund II, III, VI, and VII Associates under noncancelable operating leases at December 31, 1998 is as follows: Year ending December 31:
Four significant tenants contributed approximately 15%, 14%, 13%, and 12% of rental income for the year ended December 31, 1998. In addition, two significant tenants will contribute approximately 31% and 14% of future minimum rental income.
The future minimum rental income due Fund V and VI Associates under noncancelable operating leases at December 31, 1998 is as follows:
Two significant tenants contributed approximately 75% and 14% of rental income for the year ended December 31, 1998. In addition, three significant tenants will contribute approximately 69%, 16%, and 14% of future minimum rental income.
The future minimum rental income due Fund V, VI, and VII Associates under noncancelable operating leases at December 31, 1998 is as follows:
One tenant contributed 100% of rental income for the year ended December 31, 1998 and will contribute 100% of future minimum rental income.
The future minimum rental income due Fund VI and VII Associates under noncancelable operating leases at December 31, 1998 is as follows:
One significant tenant contributed approximately 19% of rental income for the year ended December 31, 1998. In addition, three significant tenants will contribute approximately 29%, 18%, and 15% 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:
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.
7. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 1998 and 1997:
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.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund V, L.P. and Wells Real Estate Fund VI, L.P.:
We have audited the accompanying balance sheets of THE HARTFORD BUILDING as of December 31, 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 are the responsibility of the building's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hartford Building 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.
ARTHUR ANDERSEN LLP
Atlanta, Georgia January 27, 1999
THE HARTFORD BUILDING
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
The accompanying notes are an integral part of these balance sheets.
THE HARTFORD BUILDING
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
The accompanying notes are an integral part of these statements.
THE HARTFORD BUILDING
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
The accompanying notes are an integral part of these statements.
THE HARTFORD BUILDING
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
The accompanying notes are an integral part of these statements.
THE HARTFORD BUILDING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997, AND 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Hartford Building ("Hartford") is a four-story office building located in Southington, Connecticut. The building is owned by Fund V and VI Associates, a joint venture between Wells Real Estate Fund V, L.P. ("Fund V") and Wells Real Estate Fund VI, L.P. ("Fund VI"). Fund V own 46% of Hartford and Fund VI owns 54% of Hartford at December 31, 1998 and 1997. Allocation of net income and distributions are made in accordance with ownership percentages.
Use of Estimates
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.
Income Taxes
Hartford is not deemed to be a taxable entity for federal income tax purposes.
Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful life of the related asset. All repairs and maintenance are expensed as incurred.
Management continually monitors events and changes in circumstances which could indicate that carrying amounts of real estate assets may not be recoverable. When events or changes in circumstances are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of real estate assets by determining whether the carrying value of such real estate assets will be recovered through the future cash flows expected from the use of the asset and its eventual disposition. Management has determined that there has been no impairment in the carrying value of Hartford as of December 31, 1998.
Depreciation is calculated using the straight-line method over 25 years.
Revenue Recognition
The lease on Hartford is classified as an operating lease, and the related rental income is recognized on a straight-line basis over the terms of the lease.
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 statement of cash flows, Hartford considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts.
2. RENTAL INCOME
The future minimum rental income due Hartford under noncancelable operating leases at December 31, 1998 is as follows:
Year ending December 31: 1999 $ 724,200 2000 724,200 2001 724,200 2002 724,200 Thereafter 663,850 ---------- $3,560,650 ==========
One tenant contributed 100% of rental income for the year ended December 31, 1998 and represents 100% of the future minimum rental income above.
3. RELATED-PARTY TRANSACTIONS
Fund V and Fund VI entered into a property management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of Fund V and Fund VI. In consideration for supervising the management of Hartford, Fund V and Fund VI 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.
Hartford incurred management and leasing fees of $27,719, $30,189, and $28,700 for the years ended December 31, 1998, 1997, and 1996, respectively, which were paid to Wells Management
WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(a) The Hartford Building is a four-story, 71,000-square-foot building located in Southington, Connecticut. It is owned by Fund V and VI Associates. The Partnership owned a 53% interest in Fund V and VI Associates at December 31, 1998.
(b) Stockbridge Village II consists of two retail buildings located in Clayton County, Georgia. It is owned by Fund V and VI Associates. The Partnership owned a 53% interest in Fund V and VI Associates at December 31, 1998.
(c) The Marathon Building is a three-story, 75,000-square-foot building located in Appleton, Wisconsin. It is owned by Fund V, VI, and VII Associates. The Partnership owned a 42% interest in Fund V, VI, and VII Associates at December 31, 1998.
(d) Stockbridge Village III consists of two retail buildings located in Stockbridge, Georgia. It is owned by Fund VI and VII Associates. The Partnership owned a 44% interest in Fund VI and VII Associates at December 31, 1998.
(e) Stockbridge Village I Expansion is a retail shopping center located in Stockbridge, Georgia. It is owned by Fund VI and VII Associates. The Partnership owned a 44% interest in Fund VI and VII Associates at December 31, 1998.
(f) The 880 Property is an office-retail shopping center located in Roswell, Georgia. It is owned by Fund II, III, VI, and VII Associates. The Partnership owned a 26% interest in Fund II, III, VI, and VII Associates at December 31, 1998.
(g) The BellSouth Property is a four-story, 93,000 square-foot building located in Jacksonville, Florida. It is owned by the Fund VI, VII, and VIII Associates. The Partnership owned a 34% interest in Fund VI, VII, and VIII Associates at December 31, 1998.
(h) Tanglewood Commons is a retail shopping center located in Clemmons, Forsyth County, North Carolina. It is owned by the Fund VI, VII, and VIII Associates. The Partnership owned a 34% interest in Fund VI, VII, and VIII Associates at December 31, 1998.
(i) Cherokee Commons is a retail shopping center located in Cherokee County, Georgia. It is owned by Fund I, II, II-OW, VI, and VII Associates--Cherokee. The Partnership owned an 11% interest in Fund I, II, II-OW, VI, and VII Associates--Cherokee at December 31, 1998.
(j) Depreciation lives used for buildings were 40 years through September 1995, changed to 25 years thereafter. Depreciation lives used for land improvements are 20 years.
S-1
WELLS REAL ESTATE FUND VI, 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 $57,518,842 $3,936,743
1997 additions 2,236,092 2,339,142 1997 deductions (47,840) (15,208) ----------- ---------- BALANCE AT DECEMBER 31, 1997 59,707,094 6,260,677
1998 additions 333,473 2,406,187 ----------- ---------- BALANCE AT DECEMBER 31, 1998 $60,040,567 $8,666,864 =========== ==========
S-2
EXHIBIT INDEX -------------
(Wells Real Estate Fund VI, L.P.)
The following documents are filed as exhibits to this report. Those exhibits previously filed and incorporated herein by reference are identified below by an asterisk. For each such asterisked exhibit, there is shown below the description of the previous filing. Exhibits which are not required for this report are omitted.
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*3(a) Certificate of Limited Partnership of Wells Real Estate N/A Fund VI, L.P. (Exhibit 3(c) to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate N/A Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656)
*10(a) Management Agreement between Wells Real Estate Fund VI, N/A L.P. and Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656)
*10(b) Leasing and Tenant Coordinating Agreement between Wells N/A Real Estate Fund VI, L.P. and Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656)
*10(c) Custodial Agency Agreement dated March 25, 1993, between N/A Wells Real Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656)
*10(d) Fund V and Fund VI Associates Joint Venture Agreement N/A dated December 27, 1993 (Exhibit 10(g) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(e) Sale and Purchase Agreement dated November 17, 1993, N/A with Hartford Accident and Indemnity Company (Exhibit 10(h) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(f) Lease with Hartford Fire Insurance Company December 29, N/A 1993 (Exhibit 10(i) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(g) Amended and Restated Custodial Agency Agreement dated N/A April 1, 1994, between Wells Real Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(h) First Amendment to Joint Venture Agreement of Fund V and N/A Fund VI Associates dated July 1, 1994 (Exhibit 10(x) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580)
*10(i) Land and Building Lease Agreement dated March 29, 1994, N/A between Apple Restaurants, Inc. and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund V, L.P. (Exhibit 10(y) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580)
*10(j) Building Lease Agreement dated September 9, 1994, N/A between Glenn's Open-Pit Bar-B-Que, Inc. and NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit 10(z) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(k) Joint Venture Agreement of Fund V, Fund VI and Fund VII N/A Associates dated September 8, 1994, among Wells Real Estate Fund V, L.P., Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P. (Exhibit 10(j) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(l) Agreement for the Purchase and Sale of Property dated N/A August 24, 1994, between Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(m) Assignment and Assumption of Agreement for the Purchase N/A and Sale of Real Property dated September 9, 1994, between NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates, and NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(l) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(n) Building Lease dated February 14, 1991, between N/A Interglobia Inc. - Appleton and Marathon Engineers/Architects/Planners, Inc. (included as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(o) Limited Guaranty of Lease dated January 1, 1993, by J. N/A P. Finance OY and Fluor Daniel, Inc. for the benefit of Interglobia Inc. - Appleton (included as Exhibit B to Assignment, Assumption and Amendment of Lease referred to as Exhibit 10(p) below, which is included as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(p) Assignment, Assumption and Amendment of Lease dated N/A January 1, 1993, among Interglobia Inc. - Appleton, Marathon Engineers/Architects/Planners, Inc. and Jaakko Poyry Fluor Daniel (included as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(q) Second Amendment to Building lease dated August 15, N/A 1994, between Interglobia Inc. - Appleton and Jaakko Poyry Fluor Daniel (successor-in-interest to Marathon Engineers/Architects/Planners, Inc.) (included as Exhibit D-1 to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(r) Assignment and Assumption of Lease dated September 6, N/A 1994, between Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(q) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(s) Agreement for the Purchase and Sale of Real Property N/A dated April 7, 1994, between 138 Industrial Ltd. and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(t) Land and Building Lease Agreement dated August 22, 1994, N/A between KRR Stockbridge, Inc. d/b/a Kenny Rogers Roasters and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(u) Joint Venture Agreement of Fund VI and Fund VII N/A Associates dated December 9, 1994 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(v) Building Lease Agreement dated December 19, 1994, N/A between Damon's of Stockbridge, LLC d/b/a Damon's Clubhouse and NationsBank of Georgia, N.A., as Agent for Fund VI and Fund VII Associates (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656)
*10(w) Joint Venture Agreement of Fund II, III, VI and VII N/A Associates dated January 10, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995, File No. 0-23656)
*10(x) Joint Venture Agreement of Fund VI, Fund VII and Fund N/A VIII Associates dated April 17, 1995 (Exhibit 10(q) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(y) Agreement for the Purchase and Sale of Real Property N/A 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)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(z) Agreement to Lease dated February 15, 1995, between N/A NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P. and BellSouth Advertising & Publishing Corporation (Exhibit 10(s) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(aa) Development Agreement dated April 25, 1995, between Fund N/A VI, Fund VII and Fund VIII Associates and ADEVCO Corporation (Exhibit 10(t) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(bb) Owner-Contractor Agreement dated April 24, 1995, between N/A Fund VI, Fund VII and Fund VIII Associates, as Owner, and McDevitt Street Bovis, Inc., as Contractor (Exhibit 10(u) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(cc) Architect's Agreement dated February 15, 1995, between N/A 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(dd) First Amendment to Joint Venture Agreement of Fund VI N/A and Fund VII Associates dated May 25, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995, File No. 0-23656)
*10(ee) First Amendment to Joint Venture Agreement of Fund VI, N/A 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)
Exhibit Sequential Number Description of Document Page Number - ------- ----------------------- -----------
*10(ff) Real Estate Purchase Agreement dated April 13, 1995 N/A (Exhibit 10(x) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(gg) Lease Agreement dated February 27, 1995, between N/A NationsBank of Georgia, N.A., as agent for Wells Real Estate Fund VII, L.P., and Harris Teeter, Inc. (Exhibit 10(y) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(hh) Development Agreement dated May 31, 1995, between Fund N/A VI, Fund VII and Fund VIII Associates and Norcom Development, Inc. (Exhibit 10(z) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(ii) Joint Venture Agreement of Fund I, II, II-OW, VI and VII N/A Associates dated August 1, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995, File No. 0-23656)
*10(jj) Lease Modification Agreement No. 3 with The Kroger Co. N/A dated December 31, 1993 (Exhibit 10(k) to Form 10-K of Wells Real Estate Fund I for the fiscal year ended December 31, 1993, File No. 0-14463)