<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, 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 (I.R.S. Employer
incorporation 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--June 30, 2000 and December 31, 1999 3
Statement of Income for the Three and Six Months ended June 30, 2000
and 1999 4
Statements of Partners' Capital for the Year Ended December 31, 1999
and the Six Months Ended June 30, 2000 5
Statements of Cash Flows for the Six Months Ended June 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>
June 30, December 31,
2000 1999
----------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 35,798 $ 22,351
Investment in joint ventures (Note 2) 13,898,605 14,093,790
Due from affiliates 340,845 314,099
Prepaid expenses and other assets 18,988 10,560
----------- -----------
Total assets $14,294,236 $14,440,800
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Due to affiliates $ 65,000 $ 65,000
Partnership distributions payable 310,422 275,737
----------- -----------
Total liabilities 375,422 340,737
----------- -----------
Partners' capital:
Limited partners:
Class A--1,341,356 units outstanding at June 30, 2000 and
1,336,906 units at December 31, 1999 11,933,415 11,804,940
Class B--311,924 units outstanding at June 30, 2000 and
316,374 units at December 31, 1999 1,985,399 2,295,123
----------- -----------
Total partners' capital 13,918,814 14,100,063
----------- -----------
Total liabilities and partners' capital $14,294,236 $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 Six Months Ended
---------------------------- --------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Equity in income of joint ventures $ 241,195 $ 98,117 $ 478,642 $ 186,795
Interest income 0 74,364 0 146,186
--------- -------- --------- ---------
241,195 172,481 478,642 332,981
--------- -------- --------- ---------
EXPENSES:
Computer costs 3,026 1,477 6,093 3,141
Partnership administration 16,533 14,131 25,882 33,508
Legal and accounting 4,142 19,298 16,924 31,199
Amortization of organization costs 0 1,562 0 3,125
--------- -------- --------- ---------
23,701 36,468 48,899 70,973
--------- -------- --------- ---------
NET INCOME $ 217,494 $136,013 $ 429,743 $ 262,008
========= ======== ========= =========
NET INCOME ALLOCATED TO CLASS A LIMITED
PARTNERS $ 340,881 $199,995 $ 675,450 $ 374,368
========= ======== ========= =========
NET LOSS ALLOCATED TO CLASS B LIMITED
PARTNERS $(123,387) $(63,983) $(245,707) $(112,360)
========= ======== ========= =========
NET INCOME PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ .25 $ .15 $ .50 $ .20
========= ======== ========= =========
NET LOSS PER WEIGHTED AVERAGE CLASS B
LIMITED PARTNER UNIT $ (.40) $ (.19) $ (.79) $ (.33)
========= ======== ========= =========
CASH DISTRIBUTION PER CLASS A LIMITED
PARTNER UNIT $ .23 $ .15 $ .46 $ .30
========= ======== ========= =========
</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 SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
Limited Partners
--------------------------------------------------
Class A Class B
------------------------ ---------------------
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 0 675,450 0 (245,707) 429,743
Partnership distributions 0 0 (610,992) 0 0 (610,992)
Class B conversions 0 4,450 64,017 (4,450) (64,017) 0
------- --------- ----------- ------- ---------- -----------
BALANCE, June 30, 2000 $ 0 1,341,356 $11,933,415 311,924 $1,985,399 $13,918,814
======= ========= =========== ======= ========== ===========
</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>
Six Months Ended
---------------------------
June 30, June 30,
2000 1999
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 429,743 $ 262,008
Adjustments to reconcile net income to net cash used in operating
activities:
Equity in earnings of joint venture (478,642) (186,795)
Changes in assets and liabilities:
Amortization of organization costs 0 3,125
Decrease in account payable 0 (1,125)
Increase in prepaid expenses and other assets (8,428) (60,000)
(Decrease) increase due to affiliates 0 (87,944)
--------- -----------
Net cash used in operating activities (57,327) (70,731)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint venture 0 (2,381,000)
Distributions received from joint ventures 647,081 256,126
--------- -----------
Net cash provided by (used in) investing activities 647,081 (2,124,874)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales commissions 0 (214,609)
Distribution to partners from accumulated earnings (576,306) (336,447)
--------- -----------
Net cash used in financing activities (576,306) (551,056)
--------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,447 (2,746,662)
CASH AND CASH EQUIVALENTS, beginning of year 22,351 9,292,800
--------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 35,798 $ 6,546,138
========= ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs applied to joint venture property $ 0 $ 99,167
========= ===========
</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
JUNE 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 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, 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 offer 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 June 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 June 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 "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
"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 "Iomega Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture;
-7-
<PAGE>
(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 June 30, 2000
through its ownership in joint ventures. The Partnership does not have
control over the operations of the joint venture; 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 June 30, 2000, the properties owned by the Partnership were 100%
occupied as compared to 99.8% occupied at June 30, 1999. Gross revenues of
the Partnership increased to $478,642 from $332,981 for the six months
ended June 30, 2000 and 1999, respectively. The increase 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 joint ventures. Expenses of the
Partnership were $48,899 for the six months ended June 30, 2000, as
compared to $70,973 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 operating activities was $57,327 for
2000, as compared to $70,731 for 1999 which is due primarily to changes in
liabilities. Net cash provided by (used in) investing activities increased
to $647,081 from $(2,124,874) as investing in joint ventures decreased. Net
cash used in financing activities increased from $551,056 to $576,306 due
to increased distributions to partners from accumulated earnings. Cash and
cash equivalents decreased from $6,546,138 as of June 30, 1999 to $35,798
for the same period in 2000.
Net income per unit for Class A Limited Partners was $.50 and $.20 for the
six months ended June 30, 2000 and 1999, respectively. Net loss per unit
for Class B Limited Partners was $.79 for the six months ended June 30,
2000 as compared to $.33 for the same period in 1999. The Partnership's
distributions to Class A unit holders for the second quarter of 2000 was
$.23 per weighted average unit, as compared to $.15 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 1999
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 June 30, 2000, the Partnership 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, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $291,417 $261,987 $606,582 $522,079
Interest income 15,976 16,681 33,704 31,741
-------- -------- -------- --------
307,393 278,668 640,286 553,820
-------- -------- -------- --------
Expenses:
Depreciation 98,454 134,100 196,908 268,200
Management and leasing expenses 23,395 29,504 75,955 61,406
Other operating expenses (9,264) 25,829 (42,634) 3,707
-------- -------- -------- --------
112,585 189,433 230,229 333,313
-------- -------- -------- --------
Net income $194,808 $ 89,235 $410,057 $220,507
======== ======== ======== ========
Occupied percentage 100% 98% 100% 98.28%
======== ======== ======== ========
Partnership's ownership percentage 8.85% 8.84% 8.85% 8.84%
======== ======== ======== ========
Cash distribution to the Partnership $ 25,975 $ 19,909 $ 53,450 $ 39,415
======== ======== ======== ========
Net income allocated to the Partnership $ 17,250 $ 7,888 $ 36,327 $ 17,611
======== ======== ======== ========
</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 ownership interest in the Fund IX-X-XI-REIT Joint Venture
increased due to additional capital contributions made by the Partnership
to the Joint Venture in the third quarter of 1999.
-10-
<PAGE>
The Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $145,752 $145,752 $291,504 $291,504
-------- -------- -------- --------
Expenses:
Depreciation 45,801 45,801 91,602 91,602
Management and leasing expenses 5,370 5,370 10,740 10,739
Other operating expenses 4,538 9,184 8,019 12,198
-------- -------- -------- --------
55,709 60,355 110,361 114,539
-------- -------- -------- --------
Net income $ 90,043 $ 85,397 $181,143 $176,965
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 8.85% 8.84% 8.85% 8.84%
======== ======== ======== ========
Cash distributed to the Partnership $ 11,010 $ 10,581 $ 22,211 $ 19,867
======== ======== ======== ========
Net income allocated to the Partnership $ 7,973 $ 7,549 $ 16,047 $ 14,298
======== ======== ======== ========
</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 ownership interest in the Fund IX-X-XI-REIT Joint Venture
increased due to additional capital contributions made by the Partnership to the
Joint Venture.
-11-
<PAGE>
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $256,828 $256,829 $513,657 $513,657
-------- -------- -------- --------
Expenses:
Depreciation 81,576 81,576 163,152 163,152
Management and leasing expenses 11,829 12,058 28,830 23,675
Other operating expenses 53,401 (4,450) 80,995 (4,087)
-------- -------- -------- --------
146,806 89,184 272,977 182,740
-------- -------- -------- --------
Net income $110,022 $167,645 $240,680 $330,917
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 8.85% 8.84% 8.85% 8.84%
======== ======== ======== ========
Cash distribution to the Partnership $ 16,465 $ 21,528 $ 34,770 $ 39,218
======== ======== ======== ========
Net income allocated to the Partnership $ 9,746 $ 14,820 $ 21,326 $ 26,894
======== ======== ======== ========
</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 due
to an appeal in 2000 was offset by a common area maintenance reimbursement
credit to the tenant.
Cash distributions have increased largely because of the decrease in net income.
The Partnership's ownership interest in the Fund IX-X-XI-REIT Joint Venture
increased due to additional capital contributions made by the Partnership to the
Fund IX-X-XI-REIT Joint Venture in the third quarter of 1999.
-12-
<PAGE>
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $222,255 $207,758 $428,444 $414,279
-------- -------- -------- --------
Expenses:
Depreciation 71,670 71,670 143,340 143,340
Management and leasing expenses 35,810 17,755 56,717 35,619
Other operating expenses (35,614) 12,844 (52,534) 10,633
-------- -------- -------- --------
71,866 102,309 147,523 189,592
-------- -------- -------- --------
Net income $150,389 $105,449 $280,921 $224,687
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 8.85% 8.84% 8.85% 8.84%
======== ======== ======== ========
Cash distribution to the Partnership $ 19,784 $ 15,526 $ 37,824 $ 29,738
======== ======== ======== ========
Net income allocated to the Partnership $ 13,319 $ 9,322 $ 24,885 $ 18,340
======== ======== ======== ========
</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 June 30, 2000 increased in 2000, over 1999, due to an increase in net
income. The Partnership's ownership interest in the Fund IX-X-XI-REIT Joint
Venture increased due to additional capital contributions made by the
Partnership to the Joint Venture in the second quarter of 1999.
-13-
<PAGE>
The Iomega Building/Fund IX-X-XI-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $168,250 $123,873 $336,500 $247,746
-------- -------- -------- --------
Expenses:
Depreciation 55,062 48,495 110,124 96,990
Management and leasing expenses 7,280 3,735 14,560 9,338
Other operating expenses 5,219 4,238 10,367 2,525
-------- -------- -------- --------
67,561 56,468 135,051 108,853
-------- -------- -------- --------
Net income $100,689 $ 67,405 $201,449 $138,893
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 8.85% 8.84% 8.85% 8.84%
======== ======== ======== ========
Cash distributed to the Partnership $ 13,364 $ 9,904 $ 26,745 $ 18,470
======== ======== ======== ========
Net income allocated to the Partnership $ 8,916 $ 5,959 $ 17,846 $ 11,222
======== ======== ======== ========
</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 ownership interest in the Fund IX-X-XI-REIT Joint Venture
increased due to additional funding by the Partnership to the Joint Venture
-14-
<PAGE>
Cort Building/Wells/Orange County Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $198,886 $198,886 $397,771 $397,771
-------- -------- -------- --------
Expenses:
Depreciation 46,641 46,641 93,282 93,282
Management and leasing expenses 7,590 7,590 15,180 15,180
Other operating expenses (7,241) 5,281 3,930 13,453
-------- -------- -------- --------
46,990 59,512 112,392 121,915
-------- -------- -------- --------
Net income $151,896 $139,374 $285,379 $275,856
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 23.5% 23.5% 23.5% 23.5%
======== ======== ======== ========
Cash distributed to the Partnership $ 44,571 $ 41,624 $ 84,809 $ 82,452
======== ======== ======== ========
Net income allocated to the Partnership $ 35,550 $ 32,798 $ 66,822 $ 64,916
======== ======== ======== ========
</TABLE>
Rental income, depreciation, and management and leasing expenses remained stable
in 2000, as compared to 1999, while other operating expenses were lower due to
CAM reimbursements billed in 2000 to the tenants. No CAM billing was changed to
the tenant in 1999. 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 Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $225,195 $225,211 $450,390 $450,421
-------- -------- -------- --------
Expenses:
Depreciation 71,382 71,382 142,764 142,764
Management and leasing expenses 9,175 9,343 18,350 18,667
Other operating expenses 2,842 6,315 6,612 7,315
-------- -------- -------- --------
83,399 87,040 167,726 168,746
-------- -------- -------- --------
Net income $141,796 $138,171 $282,664 $281,675
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage 9.7% 9.7% 9.7% 9.7%
======== ======== ======== ========
Cash distributed to the Partnership $ 19,907 $ 18,979 $ 39,724 $ 38,475
======== ======== ======== ========
Net income allocated to the Partnership $ 13,749 $ 13,398 $ 27,407 $ 27,312
======== ======== ======== ========
</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 Two Months Six Months
Ended Ended Ended
June 30, 2000 June 30, 1999 June 30, 2000
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental income $140,089 $70,126 $280,178
-------- ------- --------
Expenses:
Depreciation 49,900 33,268 99,801
Management and leasing expenses 5,496 10,849 11,217
Other operating expenses 9,174 0 19,014
-------- ------- --------
64,570 44,117 130,032
-------- ------- --------
Net income $ 75,519 $26,009 $150,146
======== ======= ========
Occupied percentage 100% 100% 100%
======== ======= ========
Partnership's ownership percentage 26.1% 29.9% 26.1%
======== ======= ========
Cash distributed to the Partnership $ 30,393 $15,152 $ 56,618
======== ======= ========
Net income allocated to the Partnership $ 19,746 $ 7,761 $ 39,260
======== ======= ========
</TABLE>
On May 18, 1999, Wells Real Estate, LLC-SC I ("Wells LLC"), a Georgia limited
liability company wholly owned by the Wells Fund XI-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.
The Partnership's ownership interest decreased due to the admittance of Fund XII
to the XI-REIT Joint Venture on June 21, 1999 which changed its name to the Fund
XI-XII-REIT Joint Venture. Since the 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 of 1999, comparable income
and expense figures for the prior year are available for only two months.
-17-
<PAGE>
The Sprint Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
------------- -------------
<S> <C> <C>
Revenues:
Rental income $265,997 $531,994
-------- --------
Expenses:
Depreciation 81,778 163,557
Management and leasing expenses 11,240 22,479
Operating costs, net of reimbursements 4,334 10,658
-------- --------
97,352 196,694
-------- --------
Net income $168,645 $335,300
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage 26.1% 26.1%
======== ========
Cash distributed to the Partnership $ 61,236 $121,951
======== ========
Net income allocated to the Partnership $ 44,097 $ 87,674
======== ========
</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.
The entire Sprint Building is currently under a net lease with Sprint
Communications, Inc. and expires on May 18, 2007. Sprint has the option under
its lease to extend the initial term for two consecutive five-year periods.
Under the lease, Sprint is responsible for all routine maintenance and repairs.
The Fund XI-XII-REIT Joint Venture, as landlord, is responsible for repair and
replacement of the exterior, roof, foundation, and structure.
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 are not available for the prior year.
-18-
<PAGE>
The Johnson Matthey Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
------------- -------------
<S> <C> <C>
Revenues:
Rental income $214,474 $428,948
-------- --------
Expenses:
Depreciation 63,868 127,737
Management and leasing experiences 8,884 17,769
Operating costs, net of reimbursements 5,252 10,129
-------- --------
78,004 155,635
-------- --------
Net income $136,470 $273,313
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage 26.1% 26.1%
======== ========
Cash distributed to the Partnership $ 47,930 $ 95,957
======== ========
Net income allocated to the Partnership $ 35,684 $ 71,466
======== ========
</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, and was
assigned to the Fund XI-XII-REIT Joint Venture at closing. The lease currently
expires in June 2007, and Johnson Matthey has the right to extend the lease for
two additional three-year periods of time. Under the lease, Johnson Matthey is
required to pay as additional rent all real estate taxes, special assessments,
utilities, taxes, insurance, and other operating costs with respect to the
Johnson Matthey Building during the term of the lease. In addition, Johnson
Matthey is responsible for all routine maintenance and repairs to the Johnson
Matthey Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
responsible for maintenance of the footings and foundations and the structural
steel columns and girders associated with the building.
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 are not available for the prior year.
-19-
<PAGE>
The Gartner Building/Fund XI-XII-REIT Joint Venture
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
------------- -------------
<S> <C> <C>
Revenues:
Rental income $216,567 $420,808
-------- --------
Expenses:
Depreciation 77,622 155,245
Management and leasing expenses 9,086 19,248
Other operating expenses (4,482) (19,793)
-------- --------
82,226 154,700
-------- --------
Net income $134,341 $266,108
======== ========
Occupied percentage 100% 100%
======== ========
Partnership's ownership percentage 26.1% 26.1%
======== ========
Cash distributed to the Partnership $ 50,477 $100,288
======== ========
Net income allocated to the Partnership $ 35,127 $ 69,582
======== ========
</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 and was assigned to the Fund XI-XII-
REIT Joint Venture at closing. The lease currently expires on January 31, 2008.
Gartner has the right to extend its lease for two additional five-year periods
of time.
Under the lease, Gartner is required to pay as additional rent all real estate
taxes, special assessments, utilities, taxes, insurance, and other operating
costs with respect to the Gartner Building during the term of the lease. In
addition, Gartner is responsible for all routine maintenance and repairs to the
Gartner Building. The Joint Venture, as landlord, is responsible for repair and
replacement of the roof, structure, and paved parking areas.
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
tenant was not billed for CAM reimbursements for 1999 until the first quarter of
2000.
Since the 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 Gartner Building was purchased in September 1999, comparative income
and expense figures are not available for the prior year.
-20-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) No reports on Form 8-K were filed during the second 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: August 11, 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-
