<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, 2000 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 0-25731
--------------------------------------------------------
WELLS REAL ESTATE FUND XI, L.P.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2250094
--------------------------------------------- --------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
6200 The Corners Pkwy., 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 XI, 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, 2000 and December 31, 1999 3
Statement of Income for the Three and Nine Months ended September 30, 2000 and 1999 4
Statements of Partners' Capital for the Year Ended December 31, 1999
and the Nine Months Ended September 30, 2000 5
Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 1999 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 21
</TABLE>
-2-
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
-------------- --------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 61,325 $ 22,351
Investment in joint ventures (Note 2) 13,798,487 14,093,790
Due from affiliates 345,144 314,099
Prepaid expenses and other assets 15,092 10,560
-------------- --------------
Total assets $ 14,220,048 $ 14,440,800
============== ==============
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Due to affiliates $ 65,000 $ 65,000
Partnership distributions payable 318,570 275,737
-------------- --------------
Total liabilities 383,570 340,737
-------------- --------------
Partners' capital:
Limited partners:
Class A--1,341,356 units outstanding at September 30, 2000
and 1,336,906 units at December 31, 1999 11,980,111 11,804,940
Class B--311,924 units outstanding at September 30, 2000 and
316,374 units at December 31, 1999 1,856,367 2,295,123
-------------- --------------
Total partners' capital 13,836,478 14,100,063
-------------- --------------
Total liabilities and partners' capital $ 14,220,048 $ 14,440,800
============== ==============
</TABLE>
See accompanying condensed notes to financial statements.
-3-
<PAGE>
WELLS REAL ESTATE FUND XI, 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,
2000 1999 2000 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES:
Equity in income of joint ventures $ 245,292 $ 205,332 $ 723,934 $ 392,127
Interest income 4,906 12,818 4,906 159,004
--------------- --------------- --------------- ---------------
250,198 218,150 728,840 551,131
--------------- --------------- --------------- ---------------
EXPENSES:
Computer costs 2,354 2,558 8,447 5,699
Partnership administration 10,993 13,531 36,875 47,039
Legal and accounting 615 8,499 17,539 39,698
Amortization of organization costs 0 6,250 0 9,375
--------------- --------------- --------------- ---------------
13,962 30,838 62,861 101,811
--------------- --------------- --------------- ---------------
NET INCOME $ 236,236 $ 187,312 $ 665,979 $ 449,320
=============== =============== =============== ===============
NET INCOME ALLOCATED TO CLASS A LIMITED
PARTNERS $ 365,268 $ 313,127 $ 1,040,718 $ 687,495
=============== =============== =============== ===============
NET LOSS ALLOCATED TO CLASS B LIMITED
PARTNERS $ (129,032) $ (125,815) $ (374,739) $ (238,175)
=============== =============== =============== ===============
NET INCOME PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.27 $ 0.24 $ 0.78 $ 0.52
=============== =============== =============== ===============
NET LOSS PER WEIGHTED AVERAGE CLASS B
LIMITED PARTNER UNIT $ (0.41) $ (0.37) $ (1.20) $ (0.70)
=============== =============== =============== ===============
CASH DISTRIBUTION PER CLASS A LIMITED
PARTNER UNIT $ 0.24 $ 0.20 $ 0.69 $ 0.50
=============== =============== =============== ===============
</TABLE>
See accompanying condensed notes to financial statements.
-4-
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1999
AND THE NINE MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
Limited Partners
-----------------------------------------------------
Class A Class B Total
--------------------------- ------------------------ Partners'
Original Units Amounts Units Amounts Capital
---------- ----------- ------------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ 100 1,302,942 $11,439,315 350,338 $2,961,011 $14,400,426
Net income (loss) 0 0 1,009,368 0 (378,840) 630,528
Partnership distributions 0 0 (930,791) 0 0 (930,791)
Class B conversion 0 33,964 287,048 (33,964) (287,048) 0
Return of capital (100) 0 0 0 0 (100)
---------- ----------- ------------- ---------- ------------ -------------
BALANCE, December 31, 1999 0 1,336,906 11,804,940 316,374 2,295,123 14,100,063
Net income (loss) 0 0 1,040,718 0 (374,739) 665,979
Partnership distributions 0 0 (929,564) 0 0 (929,564)
Class B conversions 0 4,450 64,017 (4,450) (64,017) 0
---------- ----------- ------------- ---------- ------------ -------------
BALANCE, September 30, 2000 $ 0 1,341,356 $11,980,111 311,924 $1,856,367 $13,836,478
========== =========== ============= ========== ============ =============
</TABLE>
See accompanying condensed notes to financial statements.
-5-
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------------
September 30, September 30,
2000 1999
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 665,979 $ 449,320
Adjustments to reconcile net income to net cash used in operating
activities:
Equity in earnings of joint venture (723,934) (392,127)
Changes in assets and liabilities:
Amortization of organization costs 0 9,375
Accounts receivable 0 21,500
Accounts payable 0 (1,125)
Prepaid expenses and other assets (4,532) (9,964)
Due to affiliates 0 (22,944)
--------------- ---------------
Net cash (used in) provided by operating activities (62,487) 54,035
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture 0 (9,005,977)
Distributions received from joint ventures 988,192 409,070
--------------- ---------------
Net cash provided by (used in) investing activities 988,192 (8,596,907)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales commissions 0 (214,609)
Distributions to partners from accumulated earnings (886,731) (533,082)
Return of original limited partner investment 0 (100)
--------------- ---------------
Net cash used in financing activities (886,731) (747,791)
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,974 (9,292,663)
CASH AND CASH EQUIVALENTS, beginning of year 22,351 9,290,800
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 61,325 $ 2,137
=============== ===============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs applied to joint venture property $ 0 $ 375,210
=============== ===============
</TABLE>
See accompanying condensed notes to financial statements.
-6-
<PAGE>
WELLS REAL ESTATE FUND XI, L.P.
(A Georgia Public Limited Partnership)
CONDENSED NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
Wells Real Estate Fund XI, 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 September 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, 1997, 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 March 3, 1998 when it received
and accepted subscriptions for 125,000 units. The offering was terminated on
December 31, 1998 at which time the Partnership had sold 1,314,906 Class A
Status Units, and 338,374 Class B Status Units, held by a total of 1,250 and
95 Class A and Class B Limited Partners, respectively, for total Limited
Partner capital contributions of $16,532,802. As of September 30, 2000, the
Partnership had paid a total of $578,648 in acquisition and advisory fees and
expenses, $2,066,600 in selling commissions and organization and offering
expenses, and had invested $3,357,436 in the Fund IX-X-XI-REIT Joint Venture,
$2,398,767 in the Fund X-XI Joint Venture, and $8,131,351 in the Fund XI-XII-
REIT Joint Venture.
The Partnership owns interests in properties through equity ownership in the
following joint ventures: (i) the Fund X and Fund XI Joint Venture, a joint
venture between the Partnership and Wells Real Estate Fund X, L.P. (the "Fund
X-XI Joint Venture"); (ii) the Fund IX-X-XI-REIT Joint Venture, a joint
venture among the Partnership and Wells Real Estate Fund IX, L.P., Wells Real
Estate Fund X, L.P., and Wells Operating Partnership, L.P. ("Wells OP"), a
Delaware limited partnership having Wells Real Estate Investment Trust, Inc.,
as general partner (the "Fund IX-X-XI-REIT Joint Venture"); and (iii) the
Fund XI-XII-REIT Joint Venture, a joint venture among the Partnership and
Wells Real Estate Fund XII, L.P., and Wells OP (the "Fund XI-XII-REIT Joint
Venture").
As of September 30, 2000, 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 "Alstom Power-
Knoxville Building"), formerly the ABB Building, which is owned by the Fund
IX-X-XI-REIT Joint Venture; (ii) a two-story office building located in
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, Colorado (the "360 Interlocken Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture; (iv) a one-story office building in Oklahoma
City, Oklahoma (the "Avaya Building"), formerly the Lucent Technologies
Building, which is owned by the Fund IX-X-XI-REIT Joint Venture; (v) a
single-story warehouse and office building located in Ogden, Weber County,
Utah (the
-7-
<PAGE>
"Iomega Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture;
(vi) a two-story office building located in Fremont, California (the
"Fairchild Building"), which is owned by Wells/Fremont Associates (the
"Fremont Joint Venture"), a joint venture between the Fund X-XI Joint Venture
and Wells OP; (vii) 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 OP; (viii) a two-story
manufacturing and office building located in Fountain Inn, South Carolina
(the "EYBL CarTex Building"), which is owned by Fund XI-XII-REIT Joint
Venture; (ix) a three-story office building located in Leawood, Johnson
County, Kansas (the "Sprint Building"), which is owned by Fund XI-XII-REIT
Joint Venture; (x) a one-story office building and warehouse located in
Tredyffin Township, Chester County, Pennsylvania (the "Johnson Matthey
Building"), which is owned by Fund XI-XII-REIT Joint Venture; and (xi) a two-
story office building located in Ft. Myers, Lee County, Florida (the "Gartner
Building"), which is owned by Fund XI-XII-REIT Joint Venture.
(b) Basis of Presentation
The financial statements of 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, 1999.
2. INVESTMENT IN JOINT VENTURES
The Partnership owns interests in eleven properties as of September 30, 2000
through its ownership in joint ventures. 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 investments in joint
ventures, see Form 10-K for the Partnership for the year ended December 31,
1999.
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 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 the
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
As of September 30, 2000, the properties owned by the Partnership were 100%
occupied as compared to 99.8% occupied at September 30, 1999. Gross revenues
of the Partnership increased to $728,840 from $551,131 for the nine months
ended September 30, 2000 and 1999, respectively. This increase in revenues
was attributable primarily to increase in equity in income of joint ventures
as the Partnership invested in four additional joint venture properties
offset partially by decreased interest income earned on funds held by the
Partnership prior to investment in properties. Expenses of the Partnership
were $62,861 for the nine months ended September 30, 2000, as compared to
$101,811 for the same period in 1999. The decrease was due to an overall
decrease in partnership administrative expenses.
The Partnership's net cash (used in) provided by operating activities was
$(62,487) for 2000, as compared to $54,035 for 1999. Net cash provided by
(used in) investing activities increased to $988,192 from $(8,596,907) as
investing in joint ventures decreased. Net cash used in financing activities
increased from $747,791 to $886,731 due to increased distributions to
partners from accumulated earnings. Cash and cash equivalents increased from
$2,137 as of September 30, 1999 to $61,325 for the same period in 2000.
Net income per unit for Class A Limited Partners was $.78 and $.52 for the
nine months ended September 30, 2000 and 1999, respectively. Net loss per
unit for Class B Limited Partners was $1.20 for the nine months ended
September 30, 2000, as compared to $.70 for the same period in 1999. The
Partnership's distributions to Class A unit holders for the third quarter of
2000 was $.24 per weighted average unit, as compared to $.20 for the same
period in 1999.
The Partnership currently anticipates that distributions will continue to be
paid on a quarterly basis on a level at least consistent with 2000
distributions.
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.
-9-
<PAGE>
2. PROPERTY OPERATIONS
As of September 30, 2000, the Partnership owned interests in the following
operational properties:
The Alstom Power-Knoxville Building (formerly the ABB Building)/
Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------- --------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 288,969 $ 261,986 $ 895,551 $ 784,065
Interest income 19,871 15,024 53,575 46,765
--------------- --------------- -------------- ---------------
308,840 277,010 949,126 830,830
--------------- --------------- -------------- ---------------
Expenses:
Depreciation 98,454 135,499 295,362 403,699
Management and leasing expenses 36,277 32,260 112,232 93,666
Other operating expenses (26,544) (17,097) (69,178) (13,390)
--------------- --------------- -------------- ---------------
108,187 150,662 338,416 483,975
--------------- --------------- -------------- ---------------
Net income $ 200,653 $ 126,348 $ 610,710 $ 346,855
=============== =============== ============== ===============
Occupied percentage 100% 98% 100% 98%
=============== =============== ============== ===============
Partnership's ownership percentage 8.84% 8.85% 8.84% 8.85%
=============== =============== ============== ===============
Cash distribution to the Partnership $ 26,379 $ 23,412 $ 79,829 $ 62,830
=============== =============== ============== ===============
Net income allocated to the Partnership $ 17,748 $ 11,214 $ 54,075 $ 28,826
=============== =============== ============== ===============
</TABLE>
Rental income increased in 2000, over 1999, due primarily to the increased
occupancy level of the property. Total expenses decreased due to a decrease in
depreciation expense. This decrease resulted from an accelerated depreciation on
tenant improvement for a short-term lease in 1999 for 23,092 square feet. Other
operating expenses are negative 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 common area maintenance
which is then reconciled the following year and the difference billed to the
tenant. Net income and cash distributions increased in 2000, over 1999, due to a
combination of increased rental income and decreased operating expenses.
The Partnership's percentage ownership interest in the Fund IX-X-XI-REIT Joint
Venture decreased due to additional capital contributions made by Wells Fund IX
and Wells Fund X to the Joint Venture.
-10-
<PAGE>
The Avaya Building (formerly the Lucent Technologies Building)/
Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ----------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Rental income $145,752 $145,752 $ 437,256 $437,256
---------- ---------- ---------- ----------
Expenses:
Depreciation 45,801 45,801 137,403 137,403
Management and leasing expenses 5,369 5,370 16,109 16,109
Other operating expenses 1,669 1,766 9,688 13,964
---------- ---------- ---------- ----------
52,839 52,937 163,200 167,476
---------- ---------- ---------- ----------
Net income $ 92,913 $ 92,815 $ 274,056 $269,780
========== ========== ========== ==========
Occupied percentage 100% 100% 100% 100%
========== ========== ========== ==========
Partnership's ownership percentage 8.84% 8.85% 8.84% 8.85%
========== ========== ========== ==========
Cash distribution to the Partnership $ 11,251 $ 11,285 $ 33,462 $ 31,153
========== ========== ========== ==========
Net income allocated to the Partnership $ 8,218 $ 8,240 $ 24,265 $ 22,537
========== ========== ========== ==========
</TABLE>
Rental income, depreciation and management and leasing expenses remained stable
in 2000, as compared to 1999, while other operating expenses were slightly
lower, due primarily to a one-time charge for consulting fees in 1999, which did
not occur in 2000.
The Partnership's percentage ownership interest in the Fund IX-X-XI-REIT Joint
Venture decreased due to additional capital contributions made by Wells Fund IX
and Wells Fund X to the Joint Venture.
-11-
<PAGE>
Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ----------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $256,829 $256,829 $770,486 $770,486
---------- ---------- ---------- ----------
Expenses:
Depreciation 81,576 81,576 244,728 244,728
Management and leasing expenses 12,826 11,618 41,656 35,293
Other operating expenses (7,585) 3,899 73,410 (188)
---------- ---------- ---------- ----------
86,817 97,093 359,794 279,833
---------- ---------- ---------- ----------
Net income $170,012 $159,736 $410,692 $490,653
========== ========== ========== ==========
Occupied percentage 100% 100% 100% 100%
========== ========== ========== ==========
Partnership's ownership percentage 8.84% 8.85% 8.84% 8.85%
========== ========== ========== ==========
Cash distribution to the Partnership $ 21,747 $ 20,921 $ 56,517 $ 60,142
========== ========== ========== ==========
Net income allocated to the Partnership $ 15,036 $ 14,184 $ 36,362 $ 41,079
========== ========== ========== ==========
</TABLE>
Net income decreased in 2000, as compared to 1999, due to an overall increase in
expenses. Operating expenses increased significantly due in part to a
significant rise in real estate taxes, which stemmed from the revaluation of the
property by Boulder County authorities in 1999. A later reduction in taxes
resulting from an appeal in 2000 was offset by a common area maintenance
reimbursement credit to the tenant.
Rental income remained stable for the three and nine months ended September 30,
2000, as compared to the same period in 1999. Total expenses decreased for the
three-month period ended September 30, 2000, as compared to the same period for
1999, due largely to other operating expenses being negative. This was due to an
offset of tenant reimbursements in operating cost, as well as management and
leasing fee reimbursements. Cash distributions and net income allocated to the
Partnership for the three-month period remained relatively stable for the period
ended September 30, 2000 and 1999.
The Partnership's percentage ownership interest in the Fund IX-X-XI-REIT Joint
Venture decreased due to additional capital contributions made by Wells Fund IX
and Fund X to the Joint Venture.
-12-
<PAGE>
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------- ---------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $207,454 $207,791 $635,898 $622,070
---------- ---------- ---------- ----------
Expenses:
Depreciation 71,670 71,670 215,010 215,010
Management and leasing expenses 27,019 18,899 83,736 54,518
Other operating expenses (2,165) (5,291) (54,699) 5,342
---------- ---------- ---------- ----------
96,524 85,278 244,047 274,870
---------- ---------- ---------- ----------
Net income $110,930 $122,513 $391,851 $347,200
========== ========== ========== ==========
Occupied percentage 100% 100% 100% 100%
========== ========== ========== ==========
Partnership's ownership percentage 8.84% 8.85% 8.84% 8.85%
========== ========== ========== ==========
Cash distribution to the Partnership $ 16,197 $ 17,112 $ 54,021 $ 46,852
========== ========== ========== ==========
Net income allocated to the Partnership $ 9,813 $ 10,880 $ 34,697 $ 29,221
========== ========== ========== ==========
</TABLE>
Rental income increased due to a tenant occupying additional space previously
leased to another tenant at a lower rate. Other operating expenses are negative
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 the following
year and the difference billed to the tenants. Due to these CAM reimbursements,
management and leasing fees increased since these fees are charged only on
actual benefits received.
Cash distributions and net income allocated to the Partnership for the quarter
ended September 30, 2000 decreased in 2000, as compared to 1999, due to a
decrease in net income. The Partnership's percentage ownership interest in the
Fund IX-X-XI-REIT Joint Venture decreased due to additional capital
contributions made by Wells Fund IX and Fund X to the Joint Venture.
-13-
<PAGE>
The Iomega Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- ------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 168,250 $ 150,009 $ 504,750 $ 397,755
-------------- ------------- -------------- ------------
Expenses:
Depreciation 55,062 48,495 165,186 145,485
Management and leasing expenses 7,319 8,291 21,879 17,629
Other operating expenses 2,253 1,290 12,620 3,815
-------------- ------------- ------------- ------------
64,634 58,076 199,685 166,929
-------------- ------------- ------------- ------------
Net income $ 103,616 $ 91,933 $ 305,065 $ 230,826
============== ============= ============= ============
Occupied percentage 100% 100% 100% 100%
============== ============= ============= ============
Partnership's ownership percentage 8.84% 8.85% 8.84% 8.85%
============== ============= ============= ============
Cash distribution to the Partnership $ 13,608 $ 12,122 $ 40,353 $ 30,592
============== ============= ============= ============
Net income allocated to the Partnership $ 9,165 $ 8,160 $ 27,010 $ 19,382
============== ============= ============= ============
</TABLE>
Rental income increased in 2000, as compared to 1999, due to the completion of
the parking lot complex in the second quarter of 1999. Total expenses increased
in 2000, over 1999, due to an increase in depreciation and real estate tax
expenses relating to the new parking lot. Cash distributions increased in 2000,
over 1999, due primarily to the increase in net income.
The Partnership's percentage ownership interest in the Fund IX-X-XI-REIT Joint
Venture decreased due to additional funding by Wells Fund IX and Wells Fund X to
the Joint Venture.
-14-
<PAGE>
Cort Building/Wells/Orange County Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 198,885 $ 198,885 $ 596,656 $ 596,656
--------------- ------------- ------------- ------------
Expenses:
Depreciation 46,641 46,641 139,923 139,923
Management and leasing expenses 8,701 7,590 23,881 22,770
Other operating expenses 6,445 5,993 10,375 19,446
--------------- ------------- ------------- ------------
61,787 60,224 174,179 182,139
--------------- ------------- ------------- ------------
Net income $ 137,098 $ 138,661 $ 422,477 $ 414,517
=============== ============= ============= ============
Occupied percentage 100% 100% 100% 100%
=============== ============= ============= ============
Partnership's ownership percentage 23.5% 23.5% 23.5% 23.5%
=============== ============= ============= ============
Cash distribution to the Partnership $ 41,088 $ 41,681 $ 125,897 $ 124,697
=============== ============= ============= ============
Net income allocated to the Partnership $ 32,265 $ 32,620 $ 99,087 $ 97,536
=============== ============= ============= ============
</TABLE>
Rental income, depreciation, and management and leasing expenses remained stable
in 2000, as compared to 1999, while other operating expenses were lower in 2000
due to common area maintenance reimbursements billed to the tenants. Tenants are
billed an estimated amount for common area maintenance, which is then reconciled
the following year, and the difference is billed to the tenant.
-15-
<PAGE>
Fairchild Building/Wells/Fremont Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -----------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 225,195 $ 225,210 $ 675,585 $ 675,631
--------------- ------------- ------------- ------------
Expenses:
Depreciation 71,382 71,382 214,146 214,146
Management and leasing expenses 9,175 9,303 27,525 27,970
Other operating expenses 3,244 6,457 9,856 13,772
--------------- ------------- ------------- ------------
83,801 87,142 251,527 255,888
--------------- ------------- ------------- ------------
Net income $ 141,394 $ 138,068 $ 424,058 $ 419,743
=============== ============= ============= ============
Occupied percentage 100% 100% 100% 100%
=============== ============= ============= ============
Partnership's ownership percentage 9.7% 9.7% 9.7% 9.7%
=============== ============= ============= ============
Cash distribution to the Partnership $ 19,869 $ 18,485 $ 59,593 $ 55,978
=============== ============= ============= ============
Net income allocated to the Partnership $ 13,709 $ 13,386 $ 41,116 $ 40,698
=============== ============= ============= ============
</TABLE>
Rental income, net income and cash distributions to the Partnership remained
stable in 2000, as compared to 1999.
-16-
<PAGE>
EYBL CarTex Building/Wells Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months Five Months
--------------------------------- Ended Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 142,207 $ 140,048 $ 422,385 $ 210,173
------------- ------------- ------------- -------------
Expenses:
Depreciation 49,902 49,902 149,702 83,170
Management and leasing expenses 16,197 3,814 27,415 14,663
Other operating expenses 3,416 5,165 16,163 5,165
------------- ------------- ------------- -------------
69,515 58,881 193,280 102,998
------------- ------------- ------------- -------------
Net income $ 72,692 $ 81,167 $ 229,105 $ 107,175
============= ============= ============= =============
Occupied percentage 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership percentage 26.1% 26.1% 26.1% 26.1%
============= ============= ============= =============
Cash distribution to the Partnership $ 31,286 $ 36,361 $ 87,904 $ 51,513
============= ============= ============= =============
Net income allocated to the Partnership $ 20,646 $ 24,974 $ 59,905 $ 32,735
============= ============= ============= =============
</TABLE>
On May 18, 1999, Wells Real Estate, LLC-SC I, a Georgia limited liability
company wholly owned by the Wells Fund XI-REIT Joint Venture (which later
admitted Wells Fund XII on June 21, 1999, and changed its name to the Fund
XI-XII-REIT Joint Venture), acquired a manufacturing and office building
containing 169,510 square feet located in Fountain Inn, unincorporated
Greenville County, South Carolina (the "EYBL CarTex Building"), for a purchase
price of $5,085,000, excluding acquisitions costs.
Since acquisition of the property by Wells Fund XI-XII-REIT Joint Venture, the
property has remained 100% occupied, and no significant changes have occurred to
its operations.
Since the EYBL CarTex Building was purchased in May 1999, comparative income and
expense figures for the prior year period ended September 30, 1999 covered only
five months. Accordingly, the prior year period is not comparable to the nine
month period ended September 30, 2000.
Rental income increased slightly for the three months ended September 30, 2000,
as compared to the same period in 1999. Total expenses increased for the three
month period ended September 30, 2000, as compared to the same period in 2000,
due the leasing commission paid to an outside broker pursuant to the terms of
the purchase agreement. This payment will be made annually for the life of the
lease. Cash distributions and net income allocated to the Partnership decreased
due the decrease in net income.
-17-
<PAGE>
The Sprint Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Nine Months
--------------------------------- Ended
September 30, September 30, September 30,
2000 1999 2000
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues:
Rental income $265,997 $264,654 $797,991
------------ --------------- ---------------
Expenses:
Depreciation 81,779 81,776 245,336
Management and leasing expenses 11,239 7,493 33,718
Operating costs,
net of reimbursements 3,306 1,283 13,964
------------ ------------- ---------------
96,324 90,552 293,018
------------ ------------- ---------------
Net income $169,673 $174,102 $504,973
============ ============= ===============
Occupied percentage 100% 100% 100%
============ ============= ===============
Partnership's ownership percentage 26.1% 26.1% 26.1%
============ ============= ===============
Cash distribution to the Partnership $ 61,505 $ 73,707 $183,456
============ ============= ===============
Net income allocated to the Partnership $ 44,367 $ 53,943 $132,040
============ ============= ===============
</TABLE>
On July 2, 1999, the Fund XI-XII-REIT Joint Venture acquired a three-story
office building with approximately 68,900 rentable square feet located in
Leawood, Johnson County, Kansas (the "Sprint Building"), for the purchase price
of $9,546,210.
Since acquisition of the property by Fund XI-XII-REIT Joint Venture, the
property has remained 100% occupied, and no significant changes have occurred to
its operations.
Since the Sprint Building was purchased in July 1999, comparative income and
expense figures for the prior year period ended September 30, 1999 covered only
three months. Accordingly, the prior year period is not comparable to the nine
month period ended September 30, 2000.
Rental income increased slightly for three months ended September 30, 2000, as
compared the same period in 1999. Total expenses increased for the three-month
period ended September 30, 2000, as compared to the same period in 1999, due
largely to the increase in management and leasing as well as other operating
expenses. Cash distributions and net income allocated to the Partnership for the
three-month period decreased for the period ended September 30, 2000, as
compared to the same period for 1999, due to a decrease in net income.
-18-
<PAGE>
The Johnson Matthey Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Two Months Ended Nine Months Ended
September 30, September 30, September 30,
2000 1999 2000
------------------ ---------------- -----------------
<S> <C> <C> <C>
Revenues:
Rental income $ 219,349 $ 123,566 $648,297
---------- ---------- ----------
Expenses:
Depreciation 63,869 42,567 191,606
Management and leasing experiences 9,230 0 27,089
Operating costs, net of reimbursements (1,535) 470 8,594
---------- ---------- ----------
71,564 43,037 227,289
---------- ---------- ----------
Net income $ 147,785 $ 80,529 $421,008
========== ========== ==========
Occupied percentage 100% 100% 100%
========== ========== ==========
Partnership's ownership percentage 26.1% 26.1% 26.1%
========== ========== ==========
Cash distribution to the Partnership $ 50,865 $ 36,459 $146,822
========== ========== ==========
Net income allocated to the Partnership $ 38,619 $ 24,900 $110,084
========== ========== ==========
</TABLE>
On August 17, 1999, the Fund XI-XII-REIT Joint Venture acquired a research and
development office and warehouse building containing approximately 130,000
rentable square feet on a ten-acre tract of land located in the Tredyffrin
Township, Chester County, Pennsylvania (the "Johnson Matthey Building"), for a
purchase price of $8,000,000, excluding acquisition costs. The entire Johnson
Matthey Building is currently under a net lease with Johnson Matthey, which was
assigned to the Fund XI-XII-REIT Joint Venture at closing. Other operating
expenses are negative for the three months ending September 30, 2000 due to the
receipt of the reimbursement for insurance expense in this quarter.
Since acquisition of the property by Fund XI-XII-REIT Joint Venture, the
property has remained 100% occupied, and no significant changes have occurred to
its operations.
Since the Johnson Matthey Building was purchased in August 1999, comparative
income and expense figures for the prior year period ended September 30, 1999
covered only two months. Accordingly, the prior year period is not comparable to
the nine month period ended September 30, 2000
-19-
<PAGE>
The Gartner Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months One Month Nine Months
Ended Ended Ended
September 30, September 30, September 30,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental income $ 216,567 $ 32,502 $637,375
------------ ------------ ------------
Expenses:
Depreciation 77,623 25,874 232,868
Management and leasing expenses 9,970 0 29,218
Other operating expenses (7,603) 0 (27,396)
------------ ------------ ------------
79,990 25,874 234,690
------------ ------------ ------------
Net income $ 136,577 $ 6,628 $402,685
============ ============ ============
Occupied percentage 100% 100% 100%
============ ============ ============
Partnership's ownership percentage 26.1% 26.1% 26.1%
============ ============ ============
Cash distribution to the Partnership $ 51,068 $ 4,779 $151,356
============ ============ ============
Net income allocated to the Partnership $ 35,712 $ 1,733 $105,293
============ ============ ============
</TABLE>
On September 20, 1999, the Fund XI-XII-REIT Joint Venture acquired a two-story
office building containing approximately 62,400 rentable square feet located on
a 4.9-acre tract of land in Ft. Myers, Florida (the "Gartner Building"), for a
purchase price of $8,320,000, excluding acquisition costs.
The entire 62,400 rentable square feet of the Gartner Building is currently
under a net lease agreement with Gartner which was assigned to the Fund
XI-XII-REIT Joint Venture at closing.
Other operating expenses are negative due to an offset of tenant reimbursements
in operating costs both for the first quarter of 2000 as well as the fourth
quarter of 1999. Since the building was purchased in September of 1999, the
Partnership could not estimate the amount to be billed for 1999 until the first
quarter of 2000.
Since the acquisition of the property by the Fund XI-XII-REIT Joint Venture, the
property has remained 100% occupied and no significant changes have occurred to
its operations.
Since the Gartner Building was purchased in September 1999, comparative income
and expense figures for the prior year period covered only one month.
Accordingly, the prior year period is not comparable to the nine month period
ended September 30, 2000.
-20-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) No reports on Form 8-K were filed during the third quarter of 2000.
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 XI, L.P.
(Registrant)
Dated: November 10, 2000 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.
-21-
