<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1998 or
-------------------------------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------------- -------------------------
Commission file number 0-23719
------------------------------------------------------
Wells Real Estate Fund X, L.P.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2250093
- ------------------------------- -------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
--------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
-------- -------
<PAGE>
Form 10-Q
Wells Real Estate Fund X, L.P.
------------------------------
INDEX
-----
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets June 30, 1998
and December 31, 1997.................................... 3
Statement of Income for the Three and Six Months
Ended June 30, 1998 and 1997............................. 4
Statements of Partners' Capital for the Year Ended
December 31, 1997 and for the Six Months
Ended June 30, 1998...................................... 5
Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1997...................... 6
Condensed Notes to Financial Statements................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 10
PART II. OTHER INFORMATION.................................................. 17
2
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets June 30, 1998 December 31, 1997
------ ------------- -----------------
<S> <C> <C>
Real Estate, at cost
Land $ 403,441 $ 0
Building and improvements, less accumulated
depreciation of $48,984 in 1998 (Note 2) 4,849,554 0
----------- -----------
Total real estate assets 5,252,995 0
----------- -----------
Cash and cash equivalents 3,621,449 18,404,232
Investment in joint venture (Note 3) 13,825,943 3,662,803
Deferred project costs 170,020 912,317
Organization cost, less accumulated
amortization of $9,375 in 1998 & $6,250 in 1997 21,875 25,000
Prepaid expenses and other assets 117,106 712,392
Due from affiliates 335,989 0
----------- -----------
Total non-real estate assets 18,092,382
Total assets $23,345,377 $23,716,744
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Sales commissions payable 0 242,387
Due to affiliates 50 105,008
Property taxes 35,281 0
Partnership distribution payable 424,087 294,309
Refundable security deposits 43,134 0
----------- -----------
Total liabilities 502,552 641,704
----------- -----------
Partners' capital:
General partners 338 338
Original limited partner 0 0
Limited Partners:
Class A 2,120,433 units outstanding
at June 30, 1998 18,047,550 18,019,767
Class B 592,458 units outstanding
at June 30, 1998 4,794,937 5,054,935
----------- -----------
Total partners' capital 22,842,825 23,075,040
----------- -----------
Total liabilities and partners' capital $23,345,377 $23,716,744
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements
3
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 120,000 $ 0 $ 120,000 $ 0
CAM reimbursements 20,067 0 20,067 0
Interest income 25,385 78,462 194,050 88,462
Equity in income of joint venture 178,125 0 240,065 0
--------- ------- --------- -------
343,577 78,462 574,182 88,462
Expenses:
Property taxes and insurance 20,908 0 20,908 0
Management and leasing expense 5,603 0 5,603 0
Depreciation 48,984 0 48,984 0
Amortization of organization costs 1,563 0 3,125 0
Computer costs 1,852 1,440 3,838 2,732
Printing and notebooks 3,762 6,784 4,564 13,155
Administrative salaries 5,721 8,985 12,734 14,311
Office expense 1,694 1,569 2,748 2,422
Postage 2,559 188 4,998 534
Other 18,019 7,359 22,790 7,568
--------- ------- --------- -------
110,665 26,325 130,292 40,722
--------- ------- --------- -------
Net earnings $ 232,912 $52,137 $ 443,890 $47,740
========= ======= ========= =======
Net income (loss) allocated to
General Partners $ (338) $ 44 $ (338) $ 0
Net income allocated to Class
A Limited Partners $ 401,436 $47,740 $ 707,280 $47,740
Net income (loss) allocated to
Class B Limited Partners $(358,256) $ 4,353 $(263,390) $ 0
Net income per Class A weighted
average Limited Partner Unit $ .19 $ .09 $ .34 $ .09
Net income (loss) per Class B
weighted average Limited Partner
Unit $(.28) $.05 $(.44) $ 0
Cash distribution per Class A
Limited Partner Unit $.20 $ 0 $.32 $ 0
</TABLE>
See accompanying condensed notes to financial statements
4
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997
AND FOR THE SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
LIMITED PARTNERS
------------------------------------------------
CLASS A CLASS B TOTAL
------------------------ ---------------------- GENERAL PARTNERS'
ORIGINAL UNITS AMOUNTS UNITS AMOUNTS PARTNERS CAPITAL
--------- --------- ------------- -------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1996 $ 100 0 $ 0 0 $ 0 $ 500 $ 600
Limited partner contributions 0 2,116,099 21,160,987 596,792 5,967,925 0 27,128,912
Net income (loss) 0 0 302,862 0 (24,675) (162) 278,025
Partnership distributions 0 0 (294,309) 0 0 0 (294,309)
Return of capital (100) 0 0 0 0 0 (100)
Sales commissions 0 0 (2,116,099) 0 (596,792) 0 (2,712,891)
Other offering expenses 0 0 (1,033,674) 0 (291,523) 0 (1,325,197)
----- --------- ----------- ------- ---------- ----- -----------
BALANCE,
DECEMBER 31, 1997 0 2,116,099 18,019,767 596,792 5,054,935 338 23,075,040
Net income (loss) 0 0 707,280 0 (263,390) 0 443,890
Partnership distributions 0 0 (676,105) 0 0 0 (676,105)
Class B conversion elections 0 4,334 (3,392) (4,334) (3,392) 0 0
----- --------- ----------- ------- ---------- ----- -----------
BALANCE,
JUNE 30, 1998 0 2,120,433 $18,047,550 592,458 $4,794,937 338 $22,842,825
===== ========= =========== ======= ========== ===== ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 443,890 $ 47,740
Adjustments to reconcile net income
to net cash provided by operating activities:
Changes in assets and liabilities:
Equity in earnings of joint venture (240,065) 0
Depreciation 48,984 0
Amortization of organization costs 3,125 0
Decrease (increase) in prepaid expenses and other
assets 595,286 (20,392)
Increase (decrease) due to affiliates (26,543) 61,884
------------ -----------
Net cash provided by operating activities 824,677 89,232
------------ -----------
Cash flows from investing activities:
Distributions received from joint ventures 101,418 0
Deferred project costs paid 0 (489,202)
Investment in joint ventures (9,860,540) (650,000)
Investment in real estate (5,059,623) 0
------------ -----------
Net cash used in investing activities (14,818,745) (1,139,202)
------------ -----------
Cash flows from financing activities:
Limited partners' contributions 0 12,230,056
Sales commissions paid (242,388) (1,126,097)
Offering costs paid 0 (611,503)
Distribution to partners from accumulated earnings (546,327) 0
------------ -----------
Net cash provided by (used in) financing activities (788,715) 10,492,456
------------ -----------
Net increase (decrease) in cash and cash equivalents (14,782,783) 9,442,486
Cash and cash equivalents, beginning of year 18,404,232 600
------------ -----------
Cash and cash equivalents, end of period $ 3,621,449 $ 9,443,086
============ ===========
Supplemental disclosure of noncash investing activities:
Deferred project costs applied to joint venture
property $ 742,297 $ 0
============ ===========
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
June 30, 1998
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
-----------
Wells Real Estate Fund X, L.P. (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Partners, L.P., as
General Partners. The Partnership was formed on June 20, 1996, for the
purpose of acquiring, developing, owning, operating, improving, leasing,
and otherwise managing for investment purposes, income producing commercial
properties.
On December 31, 1996, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933.
The Partnership commenced active operations on February 4, 1997, when it
received and accepted subscriptions for 125,000 units. The offering was
terminated on December 30, 1997, at which time the Partnership had sold
2,116,099 Class A Status Units, and 596,792 Class B Status Units, held by a
total of 1,588 and 218 Limited Partners, respectively, for total Limited
Partner capital contributions of $27,128,912. After payment of $1,085,157
in Acquisition and Advisory Fees and expenses, $4,069,338 in selling
commissions and organization and offering expenses, $5,059,623 purchase of
the Iomega building and an investment of $13,360,539 in the Fund IX-X-XI-
REIT Joint Venture as of June 30, 1998, the Partnership was holding net
offering proceeds of $3,554,255 available for investment in properties.
The Partnership owns interests in properties either directly or through
equity ownership in the following joint venture: Fund IX-X-XI-REIT
Associates, a joint venture among the Partnership, Wells Real Estate Fund
IX, L.P., Wells Real Estate Fund XI, L.P. and Wells Operating Partnership,
L.P. (the "Fund IX-X-XI-REIT Joint Venture").
As of June 30, 1998, the Partnership owned interests in the following
properties through its ownership of the foregoing joint venture: (i) a
three story office building in Knoxville, Tennessee (the "ABB Building"),
which is owned by the Fund IX-X-XI-REIT Joint Venture; (ii) a two story
office building located in Louisville, Boulder County, Colorado (the
"Ohmeda Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture;
(iii) a three story office building located in Broomfield, Boulder County,
Colorado (the "360 Interlocken Building"), which is owned by the Fund IX-X-
XI-REIT Joint Venture; (iv) a one-story warehouse facility located in
Ogden, Utah ("Iomega Corporation Building") which is owned by the
Partnership; and (v) a one-story office building located in
7
<PAGE>
Oklahoma City, Oklahoma (the "Lucent Technologies Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture.
(b) Basis of Presentation
-------------------------
The financial statements of Wells Real Estate Fund X, L.P. (the
"Partnership") have been prepared in accordance with instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These quarterly statements have not been examined by independent
accountants, but in the opinion of the General Partners, the statements for
the unaudited interim periods presented include all adjustments, which are
of a normal and recurring nature, necessary to present a fair presentation
of the results for such periods. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1997.
(2) Iomega Building
---------------
On April 1, 1998, the Partnership purchased a single story warehouse and
office building containing 100,000 rentable square feet on 8.03 acres of
land in Ogden, Weber County, Utah (the "Iomega Building") from SCI
Development Services, Inc. for a purchase price of $5,025,000.
The entire building is currently under a net lease agreement dated April 9,
1996, with Iomega Corporation ("Iomega"), which was assigned to the
Partnership at closing. The lease has a ten year term and expires on June
31, 2006. Iomega is a manufacturer of computer storage devices with total
sales in excess of $1.7 billion.
The monthly base rent payable under the lease is $40,000 through November
12, 1999. Beginning on the 40th and 80th months of the lease term, the
monthly base rent payable under the lease will be increased to reflect an
amount equal to 100% of the increase in the Consumer Price Index (as
defined in the lease) during the preceding 40 months; provided however,
that in no event shall the base rent be increased with respect to any one
year by more than 6% or by less than 3% per annum, compounded annually, on
a cumulative basis from the beginning of the lease term. Under the lease,
Iomega is responsible for all utilities, taxes, insurance and other
operating costs with respect to the Iomega Building during the term of the
lease. The Partnership, as landlord, is responsible for maintenance of the
structural soundness of the roof, foundation and exterior walls of the
Iomega Building, reasonable wear and tear and uninsured losses and damages
caused by Iomega excluded.
For additional information regarding the Iomega Building, refer to Form 8-K
of Wells Real Estate Fund X, L.P. dated April 1, 1998, filed with the
Commission on April 16, 1998, and Form 8-K/A of Wells Real Estate Fund X,
L.P. dated April 1, 1998, filed with the Commission on May 14, 1998
(Commission File No. 0-23719).
8
<PAGE>
(3) Investment in Joint Venture
---------------------------
The Partnership owns interests in five office buildings as of June 30,
1998, directly or through its ownership in the Fund IX-X-XI-REIT Joint
Venture. The Partnership does not have control over the operations of this
Joint Venture; however, it does exercise significant influence.
Accordingly, investment in joint venture is recorded on the equity method.
For further information on investments in joint ventures, see Form 10-K for
the Partnership for the year ended December 31, 1997.
The following describes additional information about the properties in
which the Partnership owned an interest as of June 30, 1998:
FUND IX-X-XI-REIT JOINT VENTURE
-------------------------------
On June 11, 1998, Fund IX and Fund X Associates (the "Fund IX-Fund X Joint
Venture"), a joint venture between the Partnership and Wells Real Estate
Fund IX, L.P. ("Wells Fund IX"), a Georgia public limited partnership
affiliated with the Partnership through common general partners, was
amended and restated to admit Wells Real Estate Fund XI, L.P. ("Wells Fund
XI"), a Georgia public limited partnership, and Wells Operating
Partnership, L.P., ("Wells OP"), a Delaware limited partnership having
Wells Real Estate Investment Trust, Inc. (the "Wells REIT"), a Maryland
corporation, as general partner. Wells OP and the Wells REIT are also
affiliated with the Partnership and its General Partners.
The Joint Venture, which changed its name to the Fund IX-X-XI-REIT Joint
Venture, had previously acquired and owned the following three properties:
(i) the ABB Building located in Knoxville, Knox County, Tennessee, (ii) the
Ohmeda Building located in Louisville, Boulder County, Colorado, and (iii)
the 360 Interlocken Building located in Broomfield, Boulder County,
Colorado. On June 24, 1998, the Fund IX-X-XI-REIT Joint Venture purchased
the Lucent Technologies Building located in Oklahoma City, Oklahoma County,
Oklahoma.
Lucent Technologies/Oklahoma City Project
-----------------------------------------
On May 30, 1997, the Joint Venture entered into an agreement for the
purchase and sale of real property with Wells Development Corporation
("Wells Development"), an affiliate of the General Partners, for the
acquisition and development of a one-story office building containing
57,186 net rentable square feet on 5.3 acres of land (the "Lucent
Technologies Building"). On June 24, 1998, the Fund IX-X-XI-REIT Joint
Venture purchased this property for a purchase price of $5,504,276.
Lucent Technologies, Inc., a world-wide leader in the telecommunications
technology producing a variety of communication products, has occupied the
entire Lucent Technologies Building. The initial term of the lease is ten
years commencing on January 5, 1998. Lucent Technologies has the option to
extend the initial term of the lease for
9
<PAGE>
two additional five year periods. The annual base rent payable during the
initial term is $508,383 payable in equal monthly installment of $42,365
during the first five years and $594,152 payable in equal monthly
installments of $49,513 during the second five years of the lease term.
The annual base rent for each extended term will be at market rental rates.
In addition to the base rent, Lucent Technologies will be required to pay
additional rent equal to its share of operating expenses during the lease
term.
For additional information regarding the Lucent Technologies Building,
refer to Supplement No. 2 dated June 30, 1998 to the Prospectus of Wells
Real Estate Fund XI, L.P. dated December 31, 1997, contained in Post-
Effective Amendment No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., which was filed
with the Commission on July 9, 1998 (Commission File No. 333-7979).
As of June 30, 1998, the Partnership had an approximate 42.0% equity
interest in the Fund IX-X-XI-REIT Joint Venture. As of June 30, 1998,
Wells Fund IX had an approximate 45.8% equity interest; Wells Fund XI had
an approximate 7.8% equity interest, and Wells OP had an approximate 4.4%
equity interest in the Fund IX-X-XI-REIT Joint Venture.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- -------------------------------------------------------------------------
RESULTS OF OPERATION.
- ---------------------
The following discussion and analysis should be read in conjunction with the
accompanying financial statements of the Partnership and notes thereto. This
Report contains forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934,
including discussion and analysis of the financial condition of the Partnership,
anticipated capital expenditures required to complete certain projects, amounts
of cash distributions anticipated to be distributed to Limited Partners in the
future and certain other matters. Readers of this Report should be aware that
there are various factors that could cause actual results to differ materially
from any forward-looking statement made in this Report, which include
construction costs which may exceed estimates, construction delays, lease-up
risks, inability to obtain new tenants upon 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
- -------
As of June 30, 1998, the properties owned by the Partnership were 95% occupied.
Gross revenues of the Partnership of $574,182 for the six months ended June 30,
1998, consisted of rental income, equity in income of joint ventures, and
interest income earned on funds held by the Partnership prior to the investment
in properties, as compared to $88,462 for the six months ended June 30, 1997,
which consisted of interest income. Expenses of the Partnership were
10
<PAGE>
$130,292 and consisted primarily of depreciation, property taxes, printing,
computer, administrative salaries, office and partnership administrative costs,
as compared to $40,722 for the same period of 1997.
Net decrease in cash and cash equivalents of $14,782,781 was primarily due to
investment in joint ventures and real estate.
Cash distributions of $0.20 per weighted average Unit were paid to Class A
Limited Partners for the three months ended June 30, 1998, while no cash
distributions were paid to Limited Partners during the second quarter of 1997.
The Partnership currently anticipates that distributions will continue to be
paid on a quarterly basis on a level at least consistent with 1998
distributions.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures from limited partners' contributions. It
is anticipated that the Partnership will contribute approximately $65,000 to the
Fund IX-X-XI-REIT Joint Venture for the completion of the ABB Building, which
the Partnership has reserved out of remaining Limited Partners' capital
contributions.
Since properties are acquired on all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
The General Partners have verified that all operational computer systems are
year 2000 compliant. This includes systems supporting accounting, property
management and investor services. Also, as part of this review, all building
control systems have been verified as compliant. The current line of business
applications are based on compliant operating systems and database servers. All
of these products are scheduled for additional upgrades before the year 2000.
Therefore, it is not anticipated that the year 2000 will have significant impact
on the Partnership's operations.
Recent Accounting Pronouncements
- --------------------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", requires certain transactions (e.g., unrealized
gains/losses on available for sale securities) that are not reflected in net
income to be displayed as other comprehensive income. The Statement also
requires an entity to report total comprehensive income (i.e., net income plus
other comprehensive income) for every period in which an income statement is
presented. SFAS No. 130 is effective for annual and interim periods beginning
after December 15, 1997. None of the transactions required to be reported in
other comprehensive income pertain to the Partnership; consequently, adoption of
this Statement had no impact on the Partnership's disclosures.
Effective April 3, 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities". SOP 98-5 is effective for fiscal years beginning after December
15, 1998, and initial application is required to be reported as a cumulative
effect of change in accounting principle. This SOP provides guidance
11
<PAGE>
on the financial reporting of start-up costs and organization costs. It
requires costs of start-up activities and organization costs to be expensed as
incurred. Adoption of this Statement by the Partnership in the first quarter of
1999 may result in the write-off of certain capitalized organization costs.
Adoption of this Statement is not expected to have a material impact on the
Partnership's results of operations and financial condition.
Property Operations
- -------------------
As of June 30, 1998, the Partnership owned interest in the following operational
properties:
Iomega Building
- ---------------
<TABLE>
<CAPTION>
Three Month Ended
-----------------
June 30, 1998
-----------------
<S> <C>
Revenues:
Rental income $120,000
Expenses:
Depreciation 48,984
Management & leasing expenses 5,603
Operating costs, net of reimbursements 2,205
--------
56,792
--------
Net income $ 63,208
========
Occupied % 100%
Partnership's ownership % 100%
Cash generated to the Partnership $112,192
Net income generated to the Partnership $ 63,208
</TABLE>
On April 1, 1998, the Partnership acquired a single story warehouse and office
building containing approximately 100,000 rentable square feet on a 8.03 acre
tract of land in Ogden, Weber County, Utah (the "Iomega Building") for a
purchase price of $5,025,000.
The entire Iomega Building is under a net lease with Iomega Corporation until
June 31, 2006.
Since the Iomega Building was purchased in April 1998, comparable income and
expense figures for the prior year are not available.
12
<PAGE>
The ABB Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1998
------------------ ----------------
<S> <C> <C>
Revenues:
Rental income $190,986 $381,972
Expenses:
Depreciation 93,684 184,778
Management & leasing expense 24,906 50,188
Other operating expenses 8,899 46,667
-------- --------
127,489 281,633
-------- --------
Net income $ 63,497 $100,339
======== ========
Occupied % 67% 67%
Partnership's Ownership % in the Fund
IX-X-XI-REIT Joint Venture 42.0% 42.0%
Cash distribution to Partnership $ 71,475 $ 97,760
Net income allocated to Partnership $ 28,533 $ 47,474
</TABLE>
ABB Environmental Systems, a subsidiary of ABB, Inc., occupied its leased space
of 55,000 rentable square feet comprising approximately 66% of the building in
December 1996. The initial term of the lease is 9 years and 11 months. ABB has
the option under its lease to extend the initial term of the lease for two
consecutive five year periods. The annual base rent payable during the initial
term is $646,250 payable in equal monthly installments of $53,854 during the
first five years and $728,750 payable in equal monthly installments of $60,729
during the last four years and 11 months of the initial term. The annual base
rent for each extended term will be at market rental rates. In addition to the
base rent, ABB is required to pay additional rent equal to its share of
operating expenses during the lease term.
It is currently anticipated that the total cost to complete the project will be
approximately $7,800,000. It is currently anticipated that the Partnership will
contribute $65,000 and that Wells Fund IX will contribute $63,235 to the
remaining cost of approximately $128,235.
Since the ABB Building was opened in December 1997, comparative income and
expense figures for the prior year are not available.
13
<PAGE>
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Five Months Ended
June 30, 1998 June 30, 1998
------------------ -----------------
<S> <C> <C>
Revenues:
Rental income $254,939 $389,023
Expenses:
Depreciation 81,576 135,960
Management & leasing expense 17,928 17,928
Other operating expenses 610 (89)
-------- --------
100,114 153,799
-------- --------
Net income $154,825 $235,224
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the Fund
IX-X-XI-REIT Joint Venture 42.0% 42.0%
Cash distribution to Partnership $105,501 $168,319
Net income allocated to Partnership $ 70,190 $111,985
</TABLE>
On February 13, 1998, the Fund IX-X-XI-REIT Joint Venture (formerly, the Fund
IX-X Joint Venture) acquired a two story office building containing
approximately 106,750 rentable square feet on a 15-acre tract of land located in
Louisville, Boulder County, Colorado (the "Ohmeda Building") for a purchase
price of $10,325,000, excluding acquisition costs.
The entire Ohmeda building is currently under a net lease with Ohmeda, Inc. and
was assigned to the Fund IX-X-XI-REIT Joint Venture at closing. The lease
currently expires in January 2005.
The monthly base rental payable under the lease is $83,709.79 through January
31, 2003; $87,890.83 from February 1, 2003 through January 31, 2004; and
$92,249.79 from February 1, 2004 through January 31, 2005. Under the lease,
Ohmeda is responsible for all utilities, taxes, insurance and other operating
costs with respect to the Ohmeda Building under the term of the lease. In
addition, Ohmeda shall pay a $21,000 per year management fee for maintenance and
administrative services of the Ohmeda Building. The Fund IX-X-XI-REIT Joint
Venture, as landlord, is responsible for maintenance of the roof, exterior and
structural walls, foundations, other structural members and floor slab, provided
that the landlord's obligation to make repairs specifically excludes items of
cosmetic and routine maintenance such as the painting of walls.
Since the Ohmeda Building was purchased in February 1998, comparative income and
expense figures are not available for the prior year.
14
<PAGE>
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Four Months Ended
June 30, 1998 June 30, 1998
------------------ -----------------
<S> <C> <C>
Revenues:
Rental income $212,442 $238,575
Expenses:
Depreciation 71,065 94,639
Management & leasing expense 19,237 19,237
Other operating costs, net of reimbursements (48,278) (48,278)
-------- --------
42,024 65,598
-------- --------
Net income $170,418 $172,977
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the Fund
IX-X-XI-REIT Joint Venture 42.0% 42.0%
Cash distribution to Partnership $105,624 $117,939
Net income allocated to Partnership $ 77,091 $ 78,297
</TABLE>
On March 20, 1998, the Fund IX-X-XI-REIT Joint Venture (formerly, the Fund IX-X
Joint Venture) acquired a three-story multi-tenant office building containing
approximately 51,974 rentable square feet on a 5.1 acre tract of land in
Broomfield, Boulder County, Colorado (the "360 Interlocken Building") for a
purchase price of $8,275,000, excluding acquisition costs.
The 360 Interlocken Building was completed in December 1996. The first floor
has multiple tenants and contains 15,599 rentable square feet; the second floor
is leased to ODS Technologies, L.P. and contains 17,146 rentable square feet;
and the third floor is leased to Transecon, Inc. and contains 19,229 rentable
square feet.
Since the 360 Interlocken Building was purchased in March 1998, comparable
income and expense figures for the prior year are not available.
15
<PAGE>
The Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
One Month Ended
---------------
June 30, 1998
---------------
<S> <C>
Revenues:
Rental income $ 9,885
Expenses:
Depreciation 4,382
-------
4,382
-------
Net income $ 5,503
=======
Occupied % 100%
Partnership's ownership % in the Fund
IX-X-XI-REIT Joint Venture 42.0%
Cash distributed to Partnership $53,390
Net income allocated to the Partnership $ 2,309
</TABLE>
On June 24, 1998, Fund IX-X-XI-REIT Joint Venture acquired a one-story office
building containing approximately 57,186 rentable square feet on a 5.3 acre
tract of land in Oklahoma City, Oklahoma (the "Lucent Technologies Building")
for a purchase price of $5,504,276, excluding acquisition cost.
The Lucent Technologies Building was completed in January 1998 with Lucent
Technologies occupying the entire building.
Since the Lucent Technologies Building was purchased in June 1998, comparable
income and expense figures for the prior year are not available.
16
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). During the quarter ended June 30, 1998, the Partnership filed
the following Current Reports on Form 8-K:
(i) Current Report on Form 8-K dated April 1, 1998, filed with the
Commission on April 16, 1998, reporting the acquisition of the
Iomega Building; and
(ii) Amendment No. 1 to Current Report on Form 8-K/A dated April 1,
1998, filed with the Commission on May 14, 1998, providing
required financial statements relating to the acquisition of the
Iomega Building.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLS REAL ESTATE FUND X, L.P.
(Registrant)
Dated: August 10, 1998 By: /s/ Leo F. Wells, III
----------------------------------
Leo F. Wells, III, as Individual
General Partner and as President
and Chief Financial
Officer of Wells Capital, Inc., the
General Partner of Wells Partners, L.P.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,621,449
<SECURITIES> 13,825,943
<RECEIVABLES> 335,989
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,301,979
<DEPRECIATION> 48,984
<TOTAL-ASSETS> 23,345,377
<CURRENT-LIABILITIES> 502,552
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 22,842,825
<TOTAL-LIABILITY-AND-EQUITY> 23,345,377
<SALES> 0
<TOTAL-REVENUES> 343,577
<CGS> 0
<TOTAL-COSTS> 110,665
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 232,912
<INCOME-TAX> 232,912
<INCOME-CONTINUING> 232,912
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232,912
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0
</TABLE>
