<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, 1999 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 Identification no.)
incorporation or organization)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
------------------------
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(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, 1999
and December 31, 1998 ............................. 3
Statement of Income for the Three and Six Months
Ended June 30, 1999 and 1998....................... 4
Statements of Partners' Capital for the Year Ended
December 31, 1998 and for the Six Months
Ended June 30, 1999................................ 5
Statements of Cash Flows for the Six
Months Ended June 30, 1999 and 1998................ 6
Condensed Notes to Financial Statements............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 9
PART II. OTHER INFORMATION............................................. 19
2
<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
Assets June 30, 1999 December 31, 1998
------ ------------- -----------------
Investment in joint venture (Note 2) 21,737,267 22,127,276
Cash and cash equivalents 259,099 270,262
Deferred project costs (Note 3) 18,363 18,363
Organization cost, less accumulated
amortization of $12,500 in 1999 & $6,250
in 1998 15,625 18,750
Prepaid expenses and other assets 1,000 1,851
Due from affiliates 507,832 579,603
------------ ------------
Total assets $ 22,539,186 $ 23,016,105
============ ============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable payable 0 3,500
Partnership distributions payable 500,161 532,000
------------ ------------
Total liabilities 500,161 535,500
------------ ------------
Partners' capital:
Limited Partners:
Class A - 2,149,016 units outstanding
at June 30, 1999 18,386,649 18,227,829
Class B - 543,075 units outstanding
at June 30, 1999 3,652,376 4,252,776
------------ ------------
Total partners' capital 22,039,025 22,480,605
------------ ------------
Total liabilities and partners' capital $ 22,539,186 $ 23,016,105
============ ============
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, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 0 $ 120,000 $ 0 $ 120,000
CAM reimbursements 0 20,067 0 20,067
Interest income 0 25,385 0 194,050
Equity in income of joint venture 313,173 178,125 660,370 240,065
--------- --------- ---------- ---------
313,173 343,577 660,370 574,182
--------- --------- ---------- ---------
Expenses:
Property taxes and insurance 0 20,908 0 20,908
Management and leasing expense 0 5,603 0 5,603
Depreciation 0 48,984 0 48,984
Amortization of organization costs 1,563 1,563 3,125 3,125
Computer costs 2,247 1,852 5,067 3,838
Printing and notebooks 2,122 3,762 2,409 4,564
Administrative salaries 7,267 5,721 23,660 12,734
Office expense 686 1,694 1,405 2,748
Postage 1,981 2,559 3,697 4,998
Other 22,009 18,019 29,967 22,790
--------- --------- ---------- ---------
37,875 110,665 69,330 130,292
--------- --------- ---------- ---------
Net earnings $ 275,298 $ 232,912 $ 591,040 $ 443,890
========= ========= ========== =========
Net (loss) allocated to
General Partners $ 0 $ (338) $ 0 $ (338)
Net income allocated to Class
A Limited Partners $ 452,672 $ 401,436 $1,026,328 $ 707,280
Net (loss) allocated to
Class B Limited Partners $(177,374) $(168,186) $ (435,288) $(263,052)
Net income per Class A weighted
average Limited Partner Unit $ .21 $ .19 $ .47 $ .34
Net (loss) per Class B weighted
average Limited Partner Unit $ (.32) $ (.28) $ (.77) $ (.44)
Cash distribution per Class A
Limited Partner Unit $ .23 $ .20 $ .48 $ .32
</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, 1998
AND FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Limited Partners
----------------------------------------------------
Class A Class B
------- -------
Total
General Partners'
Units Amounts Units Amounts Partners Capital
----- ------- ----- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
December 31, 1997 2,116,099 $ 18,019,767 596,792 $ 5,054,935 $ 338 $ 23,075,040
Net income (loss) 0 1,779,191 0 (728,524) (338) 1,050,329
Partnership distributions 0 (1,644,764) 0 0 0 (1,644,764)
Class A conversions elections 9,705 73,635 (9,705) (73,635) 0 0
---------- ------------ ------- ----------- ----- ------------
BALANCE,
December 31, 1998 2,125,804 18,227,829 587,087 4,252,776 0 22,480,605
Net income (loss) 0 1,026,328 0 (435,288) 0 591,040
Partnership distributions 0 (1,032,620) 0 0 0 (1,032,620)
Class A conversion elections 25,504 184,763 (25,504) (184,763) 0 0
Class B conversion elections (2,292) (19,651) 2,292 19,651 0 0
---------- ------------ ------- ----------- ----- ------------
BALANCE,
June 30, 1999 2,149,016 $ 18,386,649 543,075 $ 3,652,376 $ 0 $ 22,039,025
========== ============ ======= =========== ===== ============
</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, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 591,040 $ 443,890
Adjustments to reconcile net income
to net cash provided by operating activities:
Changes in assets and liabilities:
Equity in earnings of joint venture (660,370) (240,065)
Depreciation 0 48,984
Amortization of organization costs 3,125 3,125
Decrease in account payable (3,500) 0
Decrease in prepaid expenses and other assets 851 595,286
Decrease due to affiliates 0 (26,543)
---------- -----------
Net cash provided by operating activities 68,855 824,677
---------- -----------
Cash flows from investing activities:
Distributions received from joint ventures 1,122,151 101,418
Investment in joint ventures 0 (9,860,540)
Investment in real estate 0 (5,059,623)
---------- -----------
Net cash provided by (used in) in investing activities 1,122,151 (14,818,745)
---------- -----------
Cash flows from financing activities:
Sales commissions paid (0) (242,388)
Distribution to partners from accumulated earnings (1,064,489) (546,327)
---------- -----------
Net cash provided by (used in) financing activities (1,064,459) (788,715)
---------- -----------
Net (decrease) in cash and cash equivalents (11,163) (14,782,783)
Cash and cash equivalents, beginning of year 270,262 18,404,232
---------- -----------
Cash and cash equivalents, end of period $ 259,099 $ 3,621,449
========= ===========
Supplemental disclosure of noncash investing activities:
Deferred project costs applied to joint venture
property $ 0 $ 742,297
========= ===========
</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, 1999
(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 1,601 and 208 Class A and Class B 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 Acquisition expenses, $4,069,338 in selling commissions and
organization and offering expenses, $5,059,623 purchase of the Iomega
building an investment of $13,360,539 in the Fund IX-X-XI-REIT Joint
Venture and an investment of $3,296,237 in the Fund X-XI Joint Venture,
as of June 30, 1999, the Partnership was holding net offering proceeds of
$258,018 available for investment in properties.
As of June 30, 1999, The Partnership owns interests in properties either
directly or through its ownership in the following joint venture: (i) 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"), and (ii) Fund
X-XI Associates, a joint venture between the Partnership and Wells Real
Estate Fund XI, L.P. (the "Fund X-XI Joint Venture"). Wells Operating
Partnership, L.P., ("Wells OP") is a Delaware Limited partnership having
Wells Real Estate Investment Trust, Inc. (the "Wells REIT"), a Maryland
corporation, as its general partner.
As of June 30, 1999, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (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,
7
<PAGE>
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 IX-X-XI-REIT Joint Venture; (v) a one-story office building located in
Oklahoma City, Oklahoma (the "Lucent Technologies Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture. (vi) a one-story office and
warehouse building located in Fountain Valley, California (the "Cort
Building"), which is owned by Wells / Orange County Associates (the "Cort
Joint Venture"), a joint venture between the Fund X-XI Joint Venture and
Wells Operating Partnership, L.P., and (vii) a two-story warehouse and
office building located in Fremont, California (the "Fairchild Building"),
which is owned by Wells/Fremont Joint Venture (the "Fremont Joint
Venture"), a joint venture between the Fund X-XI Joint Venture and Wells
Operating Partnership, L.P.
(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, 1998.
(2) Investment in Joint Ventures
----------------------------
The partnership owns interest in seven office buildings as of June 30,
1999, through its ownership in the Fund IX-X-XI-REIT Joint Venture and the
Fund X-XI Joint Venture. 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. For further information on its investments in joint venture,
see Form 10-K for the Partnership for the year ended December 31, 1998.
The following describes additional information about the properties in
which the Partnership owned an interest as of June 30, 1999:
Fund IX, Fund X, Fund XI and REIT Joint Venture
-----------------------------------------------
Iomega Building
---------------
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a 4.0 acre
tract of vacant land adjacent to the Iomega Building located in Ogden,
Utah. This site is intended
8
<PAGE>
for additional parking and loading dock area and will include at least 400
new parking stalls and new site work for truck maneuver space, in
accordance with the requirements of the tenant and the city of Ogden. The
project was completed on July 31, 1999. The tenant, Iomega Corporation, has
agreed to extend the term of its lease to April 30, 2009 and will pay as
additional rent an amount equal to thirteen percent (13%) per annum payable
in monthly installments of the direct and indirect cost of acquiring the
property and construction of improvements. This additional rent was due and
payable commencing on May 1, 1999. At the time of writing, we have billed
the tenant for the rental on the parking lot which was due May 1, 1999.
The land was purchased at a cost of $212,000 excluding acquisition costs.
It is anticipated that the total cost to complete the project will be
$612,689. The funds used to acquire the land and for the improvements were
funded entirely from capital contributions made by Wells Fund XI in the
amount of $851,000. The project was completed at a total cost of $874,625.
It is anticipated that the shortfall will be funded by Wells Real Estate
Fund XI.
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, 1999, developed properties owned by the Partnership were 99.7%
occupied as compared to 95% occupied at June 30, 1998. Gross revenues of the
Partnership increased to $660,370 from $574,182 for the six months ended June
30, 1999 and 1998, respectively. The increase was primarily due to earnings from
joint ventures whereas in 1998 revenues consisted primarily of interest income
earned on funds held by the Partnership prior to the investment in properties.
Expenses of the partnership decreased to $69,330 from $130,292 for the six
months ended June 30, 1999 and 1998, respectively. The decrease was due largely
to the elimination of
9
<PAGE>
depreciation and property taxes related to the Iomega Building which is now
owned by the IX-X-XI-REIT Joint Venture.
Net income per weighted average unit for Class A Limited Partners was $0.47 for
the six months ended June 30, 1999, as compared to $0.34 for the same period in
1998.
Net loss per weighted average unit for Class B Limited Partners was $0.77 for
the six months ended June 30, 1999, and $0.44 for the same period in 1998.
The Partnership's distribution from net cash from operations accrued to Class A
unit holders for the second quarter of 1999 was $0.48 per weighted average units
as compared to $0.32 in 1998.
The Partnership currently anticipates that distributions will continue to be
paid on a quarterly basis on a level at lease consistent with 1999
distributions.
Liquidity and Capital Resources
- -------------------------------
The Partnership expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations which the
Partnership believes will continue to be adequate to meet both operating
requirements and distributions to limited partners. At this time, given the
nature of the joint ventures in which the Partnership has invested, there are no
known improvements or renovations to the properties expected to be funded from
cash flow from operations.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures from limited partners' capital
contributions. As of June 30, 1999, the Partnership was holding $258,018
available for investment in additional properties.
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 was
completed during the first half of 1999. Renovations and replacements of
equipment have been and are being made as warranted. The costs incurred by the
Partnership and its affiliates thus far for renovations and replacements have
been immaterial. As of June 30, 1999 all testing of systems has been completed.
As to the status of the Partnership's information technology systems, it is
presently believed that all major systems and software packages are year 2000
compliant. 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 has confirmed with the Partnership's vendors, including
third-party service providers such as banks, that their systems are Year 2000
compliant.
10
<PAGE>
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 General Partner 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.
11
<PAGE>
Property Operations
- -------------------
As of June 30, 1999, the Company owned interests in the following operational
properties:
The ABB Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 261,987 $ 190,986 $ 522,079 $ 381,972
16,681 0 31,741 0
--------- --------- --------- ---------
278,668 190,986 553,820 381,972
--------- --------- --------- ---------
Expenses:
Depreciation 134,100 93,684 268,200 184,778
Management & leasing expense 29,504 24,906 61,406 50,188
Other operating expenses 25,829 8,899 3,707 46,667
--------- --------- --------- ---------
189,433 127,489 333,313 281,633
--------- --------- --------- ---------
Net income $ 89,235 $ 63,497 $ 220,507 $ 100,339
========= ========= ========= =========
Occupied % 98.% 67% 98.% 67%
Partnership's Ownership % in the Fund 48.5% 42.0% 48.5% 42.0%
IX-X-XI-REIT Joint Venture
Cash distribution to the Partnership $ 109,121 $ 71,475 $ 238,587 $ 97,760
Net income allocated to the Partnership $ 43,237 $ 28,533 $ 107,854 $ 47,474
</TABLE>
Rental income increased in 1999 over 1998 due primarily to the increased
occupancy level of the property. Total expenses increased in 1999 as compared to
1998 due largely to the increase in depreciation expenses. Other operating
expenses decreased for the six months ended June 30, 1999, as compared to the
same period in 1998, due primarily to differences in the annual adjustment for
common area maintenance billing to the tenants. Tenants are billed an estimated
amount for the current year common area maintenance which is then reconciled the
second quarter of the following year and the difference billed to the tenant.
Operating expenses were higher for the three month period ended June 30, 1999,
as compared to the six months ended June 30, 1999, because upon reconciliation
of the common area maintenance, some tenants received credit for overpayments.
Cash distributions and net income allocated to the Partnership for the quarter
and six month period increased significantly in 1999 over the 1998 amounts. The
Partnership's ownership in the Fund IX-X-XI-REIT Joint Venture increased in 1999
as compared to 1998 due to additional funding by the Partnership and Wells Fund
XI to the Joint Venture in 1999.
12
<PAGE>
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Five Months Ended
------------------ ---------------- -----------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 256,829 $ 254,939 $ 513,657 $ 389,023
--------- --------- --------- ---------
Expenses:
Depreciation 81,576 81,576 163,152 135,960
Management & leasing expense 12,058 17,928 23,675 17,928
Other operating expenses (4,450) 610 (4,087) (89)
--------- --------- --------- ---------
89,184 100,114 182,740 153,799
--------- --------- --------- ---------
Net income $ 167,645 $ 154,825 $ 330,917 $ 235,224
========= ========= ========= =========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the Fund 48.5% 42.0% 48.5% 42.0%
IX-X-XI-REIT Joint Venture
Cash distribution to the Partnership $ 118,000 $ 105,501 $ 235,727 $ 168,319
Net income allocated to the Partnership $ 81,233 $ 70,190 $ 161,611 $ 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.
Rental income remained relatively stable for the three and six months ended June
30, 1999 as compared to the same period in 1998. The six month period ended June
30, 1999, cannot be compared to 1998, because that year covered approximately 5
months. Other operating expenses are negative for the second quarter due to an
offset of tenant reimbursements in operating costs as well as management and
leasing fee reimbursements. Tenants are billed an estimated amount for the
current year operating expenses which is then reconciled the second quarter of
the following year and the difference billed to the tenant.
Cash distributions and net income allocated to the Partnership increased in 1999
as compared to 1998. The Partnership's ownership in the Fund IX-X-XI-REIT Joint
Venture increased in 1999 as compared to 1998 due to additional funding by the
Partnership and Wells Fund XI to the Joint Venture.
13
<PAGE>
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Four Months Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 207,758 $ 212,442 $ 414,279 $ 238,575
--------- --------- --------- ---------
Expenses:
Depreciation 71,670 71,065 143,340 94,639
Management & leasing expense 17,755 19,237 35,619 19,237
Other operating costs 12,884 (48,278) 10,633 (48,278)
--------- --------- --------- ---------
102,309 42,024 189,592 65,598
--------- --------- --------- ---------
Net income $ 105,449 $ 170,418 $ 224,687 $ 172,977
========= ========= ========= =========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the Fund 48.5% 42.0% 48.5% 42.0%
IX-X-XI-REIT Joint Venture
Cash distribution to Partnership $ 85,100 $ 105,624 $ 178,238 $ 117,939
Net income allocated to Partnership $ 51,096 $ 77,091 $ 109,689 $ 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 tract of land located 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.
Rental income remained relatively stable for the three month period ended June
30, 1999 as compared to the same period for 1998. The six month period ended
June 30, 1999 cannot be compared to 1998 since those figures reflect only four
months activities.
Cash distributions and net income allocated to the Partnership for three months
ended June 30, 1999 decreased as compared to the same period last year.
Operating expenses increased significantly for the period ended June 30, 1999,
as compared to the same period for 1998. This is attributed to the large
increase in property taxes, utilities and security costs. The Partnership's
ownership in the Fund IX-X-XI REIT Joint Venture increased in 1999 as compared
to 1998 due to additional funding by the Partnership to the Joint Venture.
14
<PAGE>
Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended One Month Ended Six Month Ended One Month Ended
------------------ --------------- --------------- ---------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 145,752 $ 9,885 $ 291,504 $ 9,885
--------- ------- --------- --------
Expenses:
Depreciation 45,801 4,382 91,602 4,382
Management & leasing
expenses 5,370 0 10,739 0
Other operating expenses 9,184 0 12,198 0
--------- ------- --------- --------
60,355 4,382 114,539 4,382
--------- ------- --------- --------
Net income $ 85,397 $ 5,503 $ 176,965 $ 5,503
========= ======= ========= ========
Occupied % 100% 100% 100% 100%
Partnership's ownership % in the 48.5% 42.0% 48.5% 42.0%
Fund IX-X-XI-REIT
Cash distributed to Partnership $ 57,996 $53,390 $ 119,968 $ 53,390
Net income allocated to the
Partnership $ 41,379 $ 2,309 $ 86,470 $ 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. Under the terms of the lease, tenant
is responsible for all utilities, property taxes and other operating expenses.
Since the Lucent Technologies Building was purchased by the IX-X-XI-REIT Joint
Venture in June 1998, comparable income and expense figures for the three months
and six months ended June 30, 1998 only reflect one month's activity thus,
comparative financial information from the previous year's period is not
available. This therefore cannot be compared to the three months and six months
ended June 30, 1999, which covers three and six full months. The Partnership's
ownership in the Fund IX-X-XI-REIT Joint Venture increased in 1999, as compared
to 1998, due to additional fundings by the Partnership and Wells Fund XI to the
Joint Venture.
15
<PAGE>
Iomega Building/Fund IX-X-XI-REIT Joint Venture
- -----------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1999 June 30, 1998 June 30, 1999
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental income $ 123,873 $ 120,000 $ 247,746
-------- --------- ---------
Expenses:
Depreciation 48,495 48,984 96,990
Management & leasing expenses 3,735 5,603 9,338
Other operating expenses 4,238 2,205 2,525
-------- --------- --------
56,468 56,792 108,853
-------- --------- --------
Net income $ 67,405 $ 63,208 $ 138,893
======== ========= ========
Occupied % 100% 100% 100%
Partnerships ownership % in the Fund
IX-X-XI-REIT Joint Venture 48.5% 0% 48.5%
Cash distributed to the Partnership $ 54,283 $ 111,453 $ 112,743
Net income allocated to the
Partnership $ 32,661 $ 67,866 $ 68,643
</TABLE>
On April 1, 1998, the Partnership aquired a single story warehouse and office
building containing approximately 108,250 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.
On July 1, 1998, the Partnership contributed the Iomega Building to the Fund
IX-X-XI-REIT Joint Venture. The entire Iomega Building is under a net lease with
Iomega Corporation until July 31, 2006.
Since the Iomega Building was purchased in April 1998, comparative income and
expense figures for the period ended June 30, 1998 only reflect three months of
activities.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a 4 acre tract
of vacant land adjacent to the Iomega Building located in Ogden, Utah. This site
is intended for additional parking and loading dock area and will include at
least 400 new parking stalls and new site work for truck maneuver space, in
accordance with the requirements of the tenant and the city of Ogden. The
project was completed on July 31, 1999. The tenant, Iomega Corporation, has
agreed to extend the term of its lease to April 30, 2009 and will pay as
additional rent an amount equal to thirteen percent (13%) per annum payable in
monthly installments of the direct and
16
<PAGE>
indirect cost of acquiring the property and construction of improvements. This
additional rent was due and payable commencing on May 1, 1999.
The land was purchased at a cost of $212,000 excluding acquisition costs. It is
anticipated that the total cost to complete the project will be $612,689. The
funds used to acquire the land and for the improvements are being funded
entirely from capital contributions made by Wells Fund XI in the amount of
$851,000. The project was completed at a total cost of $874,625. It is
anticipated that the shortfall will be funded by Wells Real Estate Fund XI.
Cort Building / Wells / Orange County Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1999 June 30, 1999
------------- -------------
<S> <C> <C>
Revenues:
Rental income $ 198,886 $ 397,771
--------- ---------
Expenses:
Depreciation 46,641 93,282
Management & leasing expenses 7,590 15,180
Other operating expenses 5,281 13,453
--------- --------
59,512 121,915
--------- --------
Net income $ 139,374 $ 275,856
========= =========
Occupied % 100% 100%
Partnerships ownership % 35.1% 35.1%
Cash distributed to the Partnership $ 57,790 $ 114,635
Net income allocated to the
Partnership $ 48,920 $ 96,825
</TABLE>
On July 31, 1998, the Cort Joint Venture acquired a one-story office and
warehouse building containing approximately 52,000 rentable square feet on a
3.65 acre tract of land in Fountain Valley, California (the "Cort Building") for
a purchase price of $6,400,000, excluding acquisitions costs.
The Cort Building is 100% occupied by one tenant with a 15-year lease term that
commenced on November 1, 1988 and expires on October 31, 2003. The monthly base
rent payable under the lease is $63,247 through April 30, 2001, at which time
the monthly base rent will be increased 10% to $69,574 for the remainder of the
lease term. The lease is a triple net lease, whereby the terms of the lease
require the tenant to reimburse the Cort Joint Venture of certain operating
expenses, as defined in the lease, related to the building.
17
<PAGE>
Since the Cort Building was purchased in July 1998, comparable income and
expenses figures for the prior year are not available.
Fairchild Building / Wells / Fremont Joint Venture
- --------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1999 June 30, 1999
------------- -------------
<S> <C> <C>
Revenues:
Rental income $ 225,211 $ 450,421
--------- ---------
Expenses:
Depreciation 71,382 142,764
Management & leasing expenses 9,343 18,667
Other operating expenses 6,315 7,315
--------- ---------
87,040 168,746
--------- ---------
Net income $ 138,171 $ 281,675
========= =========
Occupied % 100% 100%
Partnerships ownership % 11.25% 11.25%
Cash distributed to the Partnership $ 25,539 $ 51,773
Net income allocated to the
Partnership $ 18,028 30,005
</TABLE>
On July 21, 1998, the Wells/Fremont Joint Venture acquired a two-story warehouse
and office building containing approximately 58,424 rentable square feet on a
3.05 acre tract of land in Fremont, California (the "Fairchild Building") for a
purchase price of $8,900,000 excluding acquisitions costs.
The building is 100% occupied by Fairchild Technologies, U.S.A., Inc. with a
lease expiration of November 30, 2004. The monthly base rent payable under the
lease is $68,128 with a 3% increase on each anniversary of the commencement
date. The lease is a triple net lease, whereby the terms require the tenant to
reimburse the landlord for certain operating expenses, as defined in the lease,
related to the building.
Since the Fairchild Building was purchased in July of 1998, comparable income
and expense figures for the prior year are not available.
18
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the second quarter of
1999.
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, 1999 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.
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 259,099
<SECURITIES> 21,737,267
<RECEIVABLES> 507,832
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 22,539,186
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,539,186
<CURRENT-LIABILITIES> 500,161
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 22,039,025
<TOTAL-LIABILITY-AND-EQUITY> 22,539,186
<SALES> 0
<TOTAL-REVENUES> 660,370
<CGS> 0
<TOTAL-COSTS> 69,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 591,040
<INCOME-TAX> 591,040
<INCOME-CONTINUING> 591,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 591,040
<EPS-BASIC> .47
<EPS-DILUTED> 0
</TABLE>
