<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 September 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 or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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.
(A Georgia Public Limited Partnership)
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets--September 30, 1999 and December 31, 1998 3
Statements of Income for the Three Months and Nine Months
Ended September 30, 1999 and 1998 4
Statements of Partners' Capital for the Year Ended
December 31, 1998 and the Nine Months Ended September 30, 1999 5
Statements of Cash Flows for the Nine Months Ended
September 30, 1999 and 1998 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 8
PART II. OTHER INFORMATION 19
</TABLE>
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<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS:
Investment in joint ventures (Note 2) $21,542,019 $22,127,276
Cash and cash equivalents 259,220 270,262
Deferred project costs 18,363 18,363
Organizational costs, less accumulated amortization
of 12,500 in 1999 and $6,250 in September 1998 10,938 18,750
Prepaid expenses and other assets 0 1,851
Due from affiliates 545,934 579,603
------------- ------------
Total assets $22,376,474 $23,016,105
============= ============
LIABILITIES AND PARTNERS' CAPITAL:
Accounts payable $ 0 $ 3,500
Partnership distribution payable 519,153 532,000
------------- ------------
Total liabilities 519,153 535,500
Partners' capital: ------------- ------------
Limited partners:
Class A--2,159,016 units outstanding at
September 30, 1999 and 2,125,804 at
December 31, 1998 18,503,644 18,227,829
Class B--553,875 units outstanding at
September 30, 1999 and 587,087 at
December 31, 1998 3,353,677 4,252,776
------------- ------------
Total partners' capital 21,857,321 22,480,605
------------- ------------
Total liabilities and partners' capital $22,376,474 $23,016,105
============= ============
</TABLE>
See accompanying condensed notes to financial statements.
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<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 0 $ 0 $ 0 $ 120,000
Interest income 0 26,880 0 220,930
Equity in income of joint ventures (Note 2) 350,686 262,233 1,011,056 502,298
--------- --------- ---------- ----------
350,686 289,113 1,011,056 843,228
--------- --------- ---------- ----------
EXPENSES:
Operating cost--rental property 0 0 0 2,660
Management and leasing expense 0 0 0 5,603
Depreciation 0 0 0 48,984
Amortization of organizational costs 4,687 1,563 7,812 4,687
Computer costs 2,558 2,326 7,625 6,164
Printing and notebooks 2,360 184 4,769 4,748
Partnership administration 6,128 7,779 49,355 29,967
Legal and accounting 3,892 1,913 19,394 21,177
--------- --------- ---------- ----------
19,625 13,765 88,955 123,990
--------- --------- ---------- ----------
Net earnings $ 331,061 $ 275,348 $ 922,101 $ 719,238
========= ========= ========== ==========
NET LOSS ALLOCATED TO GENERAL
PARTNERS $ 0 $ 0 $ 0 $ (338)
========= ========= ========== ==========
NET INCOME ALLOCATED TO CLASS A
LIMITED PARTNERS $ 557,270 $ 482,729 $1,583,598 $1,190,009
========= ========= ========== ==========
NET LOSS ALLOCATED TO CLASS B
LIMITED PARTNERS $(226,209) $(207,381) $ (661,497) $ (470,433)
========= ========= ========== ==========
NET INCOME PER CLASS A WEIGHTED
AVERAGE LIMITED PARTNER UNIT $ 0.26 $ 0.23 $ 0.73 $ 0.57
========= ========= ========== ==========
NET LOSS PER CLASS B WEIGHTED
AVERAGE LIMITED PARTNER UNIT $ (0.41) $ (0.35) $ (1.19) $ (0.79)
========= ========= ========== ==========
CASH DISTRIBUTION PER CLASS A
LIMITED PARTNER UNIT $ 0.24 $ 0.21 $ 0.72 $ 0.53
========= ========= ========== ==========
</TABLE>
See accompanying condensed notes to financial statements.
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<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1998
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Limited Partners Total
----------------------------------------------
Class A Class B 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 B conversion 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 1,583,598 0 (661,497) 0 922,101
Partnership distributions 0 (1,545,385) 0 0 0 (1,545,385)
Class B conversion elections 35,504 257,253 (35,504) (257,253) 0 0
Class A conversion elections (2,292) (19,651) 2,292 19,651 0 0
--------- ----------- ------- ---------- ----- -----------
BALANCE, September 30, 1999 2,159,016 $18,503,644 553,875 $3,353,677 $ 0 $21,857,321
========= =========== ======= ========== ===== ===========
</TABLE>
See accompanying condensed notes to financial statements.
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<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Nine Months Ended
------------------------------
September 30, September 30,
1999 1998
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 922,101 $ 719,238
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Equity in income of joint ventures (1,011,056) (502,298)
Depreciation 0 48,984
Amortization of organizational costs 7,812 4,687
Changes in assets and liabilities:
Prepaid expenses and other assets 1,850 56,000
Accounts payable (3,500) 0
Due to affiliates 0 (101,607)
---------------- -------------
Net cash (used in) provided by operating activities (82,793) 225,004
---------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 1,629,983 437,408
Investment in joint ventures 0 (17,571,855)
---------------- -------------
Net cash (used in) provided by investing activities 1,629,983 (17,134,447)
---------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (1,558,232) (970,414)
Sales commissions 0 (242,388)
---------------- -------------
Net cash used in financing activities (1,558,232) (1,212,802)
---------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (11,042) (18,122,245)
CASH AND CASH EQUIVALENTS, beginning of year 270,262 18,404,232
---------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 259,220 $ 281,987
================ =============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs applied to joint venture property $ 0 $ 852,287
Escrow funds applied to joint venture property 0 644,541
---------------- -------------
Total noncash investment activities $ 0 $ 1,496,828
================ =============
</TABLE>
See accompanying condensed notes to financial statements.
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<PAGE>
WELLS REAL ESTATE FUND X, L.P.
(A Georgia Public Limited Partnership)
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 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 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 organizational and offering expenses, $5,059,623 for the
purchase of the Iomega Corporation 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 September 30, 1999, the Partnership was
holding net offering proceeds of $258,018 available for investment in
properties.
As of September 30, 1999, the Partnership owns interests in properties either
directly or through equity ownership in the following joint ventures: (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 "Wells OP") (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 September 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, 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
-7-
<PAGE>
(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
(the "Iomega Corporation Building") which is owned by the Fund 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 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. 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. INVESTMENTS IN JOINT VENTURES
The Partnership owns interests in seven office buildings as of September 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 using the
equity method. For further information on its investments in joint ventures,
see Form 10-K for the Partnership for the year ended December 31, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
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 Section 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.
-8-
<PAGE>
1. RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITIONS
(a) General
As of September 30, 1999, the developed properties owned by the Partnership
were 99.7% occupied as compared to 99% occupied at September 30, 1998. Gross
revenues of the Partnership increased to $1,011,056 as compared to $843,228
for the nine months ended September 30, 1999 and 1998, respectively. The
increase was primarily due to increased earnings from joint ventures whereas
in 1998 revenues consisted of interest income earned on funds held by the
Partnership prior to the investment in the properties. Expenses of the
Partnership decreased to $88,955 as compared to $123,990 for the nine months
ended September 30, 1999 and 1998, respectively. This decrease was due
largely to the elimination of depreciation and property taxes related to the
Iomega Corporation Building which is now owned by the Fund IX-X-XI-REIT Joint
Venture.
Net income per weighted average unit for Class A Limited Partners was $.73
for the nine months ended September 30, 1999, as compared to $.57 for the
same period in 1998.
Net loss per weighted average unit for Class B Limited Partners was $1.19 for
the nine months ended September 30, 1999 and $.79 for the same period in
1998.
The Partnership's distribution from net cash from operations accrued to Class
A Limited Partners for the third quarter of 1999 was $.24 per weighted
average units as compared to $.21 in 1998.
The Partnership currently anticipates that distributions will continue to be
paid on a quarterly basis on a level at least 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 September 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 September 30, 1999, all testing of systems has
been completed.
-9-
<PAGE>
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 noninformation
technology systems are Year 2000 compliant. The cost to upgrade any
noncompliant 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.
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 conditions 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 telephone 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
dispensed 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 elevators 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 elevators shut 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 systems shut
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.
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<PAGE>
2. PROPERTY OPERATIONS
As of September 30, 1999, the Partnership owned interests in the following
operational properties:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The ABB Building/ September 30, September 30, September 30, September 30,
Fund IX-X-XI-REIT Joint Venture 1999 1998 1999 1998
- ------------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $261,986 $208,370 $784,065 $590,342
Interest income 15,024 6,000 46,765 6,000
------------- ------------- ------------- -------------
277,010 214,370 830,830 596,342
------------- ------------- ------------- -------------
Expenses:
Depreciation 135,499 120,433 403,699 305,211
Management and leasing expenses 32,260 25,577 93,666 75,765
Other operating expenses (17,097) 3,050 (13,390) 49,717
------------- ------------- ------------- -------------
150,662 149,060 483,975 430,693
------------- ------------- ------------- -------------
Net income $126,348 $ 65,310 $346,855 $165,649
============= ============= ============= =============
Occupied % 98.28% 95% 98.28% 95%
============= ============= ============= =============
Partnership's ownership % in the Fund IX-X-IX-REIT Joint
Venture 48.4% 49.7% 48.4% 49.7%
============= ============= ============= =============
Cash distribution to the Partnership $127,722 $ 93,101 $366,308 $190,861
============= ============= ============= =============
Net income allocated to the Partnership $ 61,194 $ 32,566 $169,048 $ 80,040
============= ============= ============= =============
</TABLE>
Rental income increased in 1999 over 1998 due primarily to the increased
occupancy level of the property. Other operating expenses were negative for
the nine-month period ended September 30, 1999 and three-month period ended
September 30, 1999 due to an offset of tenant reimbursements in operating
costs, as well as management and leasing fee reimbursement. Tenants are
billed an estimated amount for current year common-area maintenance which is
then reconciled during the second quarter of the following year and the
difference billed to the tenants. Total expenses increased for the
nine-month period ended September 30, 1999 over the same period for 1998 due
to increased depreciation and management and leasing fees as the building was
leased up.
Cash distributions and net income allocated to the Partnership for the
quarter and nine-month period increased significantly in 1999 over 1998
amounts. The Partnership's ownership in the Fund IX-X-XI-REIT Joint Venture
decreased in 1999, as compared to 1998, due to additional funding by Wells
Fund IX and Fund XI to the joint venture in 1999.
One major tenant, the Associates, vacated its lease space in September 1999.
A new lease was executed with Center Partners Inc., a division of WPP Group,
U.S.A., for 23,992 rentable square feet. The initial term of the lease will
be five years commencing January 1, 2000 and will expire on December 31,
2004. Center Partners Inc. has the option to extend the initial term of the
lease for two consecutive five-year periods. The annual base rent payable
during the initial term payable in equal monthly installments is $299,900 for
the first year, $307,337.52 for the second year, $315,014.96 for the third
year, $322,932.32 for the fourth year, and $331,089.60 for the fifth year.
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<PAGE>
It is currently anticipated that the total cost to complete the tenant
improvements and for leasing commissions estimated to be approximately
$257,490 will be contributed by the Partnership and Wells Fund IX.
-12-
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<TABLE>
<CAPTION>
Nine Months Four Months
Three Months Ended Ended Ended
----------------------------
The Lucent Technologies Building/ September 30, September 30, September 30, September 30,
Fund IX-X-XI-REIT Joint Venture 1999 1998 1999 1998
- --------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $145,752 $133,600 $437,256 $143,485
-------- -------- -------- --------
Expenses:
Depreciation 45,801 51,514 137,403 55,896
Management and leasing expenses 5,370 5,084 16,109 5,084
Other operating expenses 1,766 7,584 13,964 7,584
-------- -------- -------- --------
52,937 64,182 167,476 68,564
-------- -------- -------- --------
Net income $ 92,815 $ 69,418 $269,780 $ 74,921
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership % in the Fund IX-X-XI-REIT Joint
Venture 48.4% 49.7% 48.4% 49.7%
======== ======== ====== ========
Cash distribution to the Partnership $ 61,561 $ 57,043 $181,528 $110,433
======== ======== ======== ========
Net income allocated to the Partnership $ 44,952 $ 34,606 $131,423 $ 36,915
======== ======== ======== ========
</TABLE>
Since the Lucent Technologies Building was purchased by the Fund IX-X-XI-REIT
Joint Venture in June 1998, comparable income and expense figures for the prior
year's period ended September 30, 1998 covered only four months. Accordingly,
the prior year cannot be compared to the nine months ended September 30, 1999.
Rental income increased slightly for the three months ended September 30, 1999
as compared to the same period in 1998. Total expenses decreased for the
three-month period ended September 30, 1999 as compared to the same period for
1998 due largely to the decrease in other operating expenses.
Cash distributions and net income allocated to the Partnership for the
three-month period remained relatively stable for the period ended September 30,
1999 and 1998.
The Partnership's ownership in the Fund IX-X-XI-REIT Joint Venture decreased
in 1999, as compared to 1998, due to additional funding by Wells Fund IX and
Fund XI to the joint venture.
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<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Eight Months
Three Months Ended Ended Ended
----------------------------
Ohmeda Building/ September 30, September 30, September 30, September 30,
Fund IX-X-XI-REIT Joint Venture 1999 1998 1999 1998
- ------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $256,829 $254,940 $770,486 $643,963
-------- -------- -------- --------
Expenses:
Depreciation 81,576 81,576 244,728 217,536
Management and leasing expenses 11,618 11,618 35,293 29,546
Other operating expenses 3,899 1,171 (188) 1,082
-------- -------- -------- --------
97,093 94,365 279,833 248,164
-------- -------- -------- --------
Net income $159,736 $160,575 $490,653 $395,799
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership % in the Fund IX-X-XI-REIT Joint
Venture 48.4% 49.7% 48.4% 49.7%
======== ======== ======== ========
Cash distribution to the Partnership $114,110 $181,636 $349,837 $287,137
======== ======== ======== ========
Net income allocated to the Partnership $ 77,362 $121,845 $238,973 $192,035
======== ======== ======== ========
</TABLE>
Rental income remained relatively stable for the three months ended September
30, 1999 as compared to the same period in 1998. The nine-month period ended
September 30, 1999 cannot be compared to 1998 since the 1998 figures reflect
only eight months' activities. Other operating expenses were negative for the
nine month period ended September 30, 1999 due to an offset of tenant
reimbursements in operating costs, as well as management and leasing fee
reimbursements. Cash distributions and net income allocated to the Partnership
increased for the nine-month period ended September 30, 1999 as compared to the
same period in 1998.
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<PAGE>
<TABLE>
<CAPTION>
Nine Months Seven Months
Three Months Ended Ended Ended
-----------------------------
The 360 Interlocken Building/ September 30, September 30, September 30, September 30,
Fund IX-X-XI-REIT Joint Venture 1999 1998 1999 1998
------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $207,791 $215,289 $622,070 $453,864
------------- ------------- ------------- -------------
Expenses:
Depreciation 71,670 71,793 215,010 166,432
Management and leasing expenses 18,899 18,086 54,518 37,323
Other operating expenses, net of
reimbursements
(5,291) (7,850) 5,342 (56,128)
------------- ------------- ------------- -------------
85,278 82,029 274,870 147,627
------------- ------------- ------------- -------------
Net income $122,513 $133,260 $347,200 $306,237
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 48.42% 49.7% 48.42% 49.7%
============= ============= ============= =============
Cash distribution to the Partnership $ 93,321 $ 97,790 $271,558 $215,729
============= ============= ============= =============
Net income allocated to the Partnership $ 59,333 $ 66,424 $169,022 $144,721
============= ============= ============= =============
</TABLE>
Rental income remained relatively stable for the three-month period ended
September 30, 1999 as compared to the same period for 1998. The nine-month
period ended September 30, 1999 cannot be compared to 1998 since the 1998
figures reflect only seven months' activities.
The Partnership's ownership interest in the Fund IX-X-XI-REIT Joint Venture
decreased in 1999, as compared to 1998, due to additional funding by Wells Fund
IX and Fund XI to the joint venture in 1999.
Cash distributed and net income allocated to the Partnership for the nine months
ended September 30, 1999 decreased as compared to the same period of last year.
Operating expenses increased significantly for the nine-month period ended
September 30, 1999, as compared to the same period for 1998, largely attributed
to the increase in property taxes, utilities, and security. Other operating
expenses are negative for prior periods due to an offset of tenant
reimbursements in operating costs as well as management and leasing fee
reimbursements.
-15-
<PAGE>
<TABLE>
<CAPTION>
Nine Months Six Months
Three Months Ended Ended Ended
-----------------------------
The Iomega Building/ September 30, September 30, September 30, September 30,
Fund IX-X-XI-REIT Joint Venture 1999 1998 1999 1998
----------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $150,009 $126,666 $397,755 $246,666
------------- ------------- ------------- -------------
Expenses:
Depreciation 48,495 48,594 145,485 97,578
Management and leasing expenses 8,291 5,596 17,629 11,199
Other operating expenses 1,290 3,526 3,815 5,731
------------- ------------- ------------- -------------
58,076 57,716 166,929 114,508
------------- ------------- ------------- -------------
Net income $ 91,933 $ 68,950 $230,826 $132,158
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the
Fund IX-X-XI-REIT Joint Venture 48.4% 49.7% 48.4% 49.7%
============= ============= ============= =============
Cash distribution to the Partnership $ 66,137 $ 55,277 $177,591 $167,469
============= ============= ============= =============
Net income allocated to the Partnership $ 44,526 $ 34,374 $112,393 $ 97,582
============= ============= ============= =============
</TABLE>
On April 1, 1998, the Partnership acquired 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 for a purchase price of $5,025,000.
On July 1, 1998, the Partnership contributed the Iomega Corporation Building to
the Fund IX-X-XI-REIT Joint Venture. The entire Iomega Corporation Building is
under a net lease with Iomega Corporation until July 31, 2006.
Since the Iomega Corporation Building was purchased in April 1998, comparable
income and expense figures for the period ended September 30, 1998 only reflect
six months of activity.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a four-acre
tract of vacant land adjacent to the Iomega Corporation Building located in
Ogden, Utah. This site is being used for additional parking and a loading-dock
area, which includes at least 400 new parking stalls and new site work for truck
maneuver space, in accordance with the requirements of the tenants 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 an additional base rent, an amount equal to 13% per annum payable in
monthly installments of the direct and indirect cost of acquiring the property
and construction of improvements. This additional base rent commenced on May 1,
1999.
The land was purchased at a cost of $212,000 excluding acquisition costs. The
funds used to acquire the land and for the improvements are funded entirely out
of capital contributions made by Wells Fund XI to the Fund IX-X-XI-REIT Joint
Venture in the amount of $874,625. The project was completed at a total cost of
$874,625.
-16-
<PAGE>
<TABLE>
<CAPTION>
Nine Months
Three Months Ended Ended
---------------------------------
Fairchild Building/ September 30, September 30, September 30,
Wells/Fremont Joint Venture 1999 1998 1999
-------------------------------------------- ----------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental income $225,210 $175,381 $675,631
--------- --------- ---------
Expenses:
Depreciation 71,382 70,324 214,146
Management and leasing expenses 9,303 7,315 27,970
Other operating expenses 6,457 71,011 13,772
--------- --------- ---------
87,142 148,650 255,888
--------- --------- ---------
Net income $138,068 $ 26,731 $419,743
========= ========= =========
Occupied % 100% 100% 100%
========= ========= =========
Partnership's ownership % 11.25% 0% 11.25%
========= ========= =========
Cash distribution to the Partnership $ 25,526 $ 0 $ 77,299
========= ========= =========
Net income allocated to the Partnership $ 14,649 $ 0 $ 44,702
========= ========= =========
</TABLE>
On July 21, 1998, the 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, 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 cover only three months. Other operating
expenses at September 30, 1998 include interest expense incurred prior to the
inclusion of the Fund X-XI Joint Venture into the Fremont Joint Venture on
October 6, 1998.
-17-
<PAGE>
<TABLE>
<CAPTION>
Three Months Two Months Nine Months
Ended Ended Ended
Cort Building/ September 30, September 30, September 30,
Wells/Orange County Joint Venture 1999 1998 1999
- -------------------------------------------------------- -------------------- ------------------ ----------------
<S> <C> <C> <C>
Revenues:
Rental income $ 198,885 $ 133,857 $ 596,656
-------------------- ------------------ ----------------
Expenses:
Depreciation 46,641 45,288 139,923
Management and leasing expenses 7,590 5,144 22,770
Other operating expenses 5,993 29,700 19,446
-------------------- ------------------ ----------------
60,224 80,132 182,139
-------------------- ------------------ ----------------
Net income $ 138,661 $ 53,725 $ 414,517
==================== ================== ================
Occupied % 100% 100% 100%
==================== ================== ================
Partnership's ownership % 35.1% 35.1% 35.1%
==================== ================== ================
Cash distribution to the Partnership $ 57,557 $ 27,399 $ 172,192
==================== ================== ================
Net income allocated to the Partnership $ 48,670 $ 14,208 $ 145,495
==================== ================== ================
</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.
Since the Cort Building was purchased on July 31, 1998, comparable income and
expense figures for the prior year covered only the two-month period ended
September 30, 1998. Other operating expenses at September 30, 1998 include
interest expense incurred prior to the inclusion of the Fund X-XI Joint Venture
into the Cort Joint Venture on September 1, 1998.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) NO REPORTS ON FORM 8-K WERE FILED DURING THE THIRD 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: November 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 259,220
<SECURITIES> 21,542,019
<RECEIVABLES> 545,934
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 22,376,474
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,376,474
<CURRENT-LIABILITIES> 519,153
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,857,321
<TOTAL-LIABILITY-AND-EQUITY> 22,376,474
<SALES> 0
<TOTAL-REVENUES> 1,011,056
<CGS> 0
<TOTAL-COSTS> 88,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 922,101
<INCOME-TAX> 922,101
<INCOME-CONTINUING> 922,101
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 922,101
<EPS-BASIC> .73
<EPS-DILUTED> 0
</TABLE>
