<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 20, 1999
-----------------------------
Wells Real Estate Fund XII, L.P.
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(Exact name of registrant as specified in its charter)
Georgia
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(State or other jurisdiction of incorporation)
33-66657 58-2438242
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(Commission File Number) (IRS Employer Identification No.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition of Assets
Purchase of the Gartner Building. On September 20, 1999, The Wells Fund XI -
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Fund XII - REIT Joint Venture (the "Joint Venture") acquired a two story office
building with approximately 62,400 rentable square feet located at 12600 Gateway
Blvd. in Fort Myers, Lee County, Florida (the "Gartner Building") from Hogan
Triad Ft. Myers I, Ltd., a Florida limited partnership (the "Seller"), pursuant
to that certain Agreement of Purchase and Sale of Property (the "Contract")
between the Seller and Wells Capital, Inc., an affiliate of Wells Real Estate
Fund XII, L.P. (the "Registrant"). The Seller is not in any way affiliated with
the Registrant or its General Partners.
The Joint Venture is a joint venture partnership among the Registrant, Wells
Real Estate Fund XI, L.P. ("Wells Fund XI"), an affiliated Georgia limited
partnership, and Wells Operating Partnership, L.P. ("Wells OP"), a Delaware
limited partnership formed to acquire, own, lease, operate and manage real
properties on behalf of Wells Real Estate Investment Trust, Inc. (the "Wells
REIT"), an affiliated Maryland corporation. The Joint Venture was formed for
the purpose of the acquisition, ownership, development, leasing, operation, sale
and management of real properties. The investment objectives of Wells Fund XI
and the Wells REIT are substantially identical to those of the Registrant.
The rights under the Contract were assigned by Wells Capital, Inc, the
original purchaser under the Contract, to the Joint Venture at closing. The
purchase price for the Gartner Building was $8,320,000. The Joint Venture also
incurred additional acquisition expenses in connection with the purchase of the
Gartner Building, including attorneys' fees, recording fees and other closing
costs, of approximately $27,600.
The Registrant contributed $2,800,000, Wells Fund XI contributed $106,550 and
Wells OP contributed $5,441,050 to the Joint Venture for their respective share
of the acquisition costs for the Gartner Building. All income, loss, profit,
net cash flow, resale gain and sale proceeds of the Joint Venture are allocated
and distributed between the Registrant, Wells Fund XI and Wells OP based upon
their respective capital contributions to the Joint Venture.
The Registrant has made total capital contributions to the Joint Venture of
$5,300,000 and currently has an equity percentage interest in the Joint Venture
of approximately 17.06%; Wells Fund XI has made total capital contributions to
the Joint Venture of $8,131,351 and currently has an equity percentage interest
in the Joint Venture of approximately 26.17%; and Wells OP has made total
capital contributions to the Joint Venture of $17,634,796 and currently has an
equity percentage interest in the Joint Venture of approximately 56.77%.
Description of the Building and the Site. As set forth above, the Gartner
- ----------------------------------------
Building is a two story office building containing approximately 62,400 rentable
square feet. The Gartner Building, which was completed in 1998, is a reinforced
concrete structure with curtained glass.
1
<PAGE>
An independent appraisal of the Gartner Building was prepared by CB Richard
Ellis, Inc., real estate appraisers, as of September 1, 1999, pursuant to which
the market value of the land and the leased fee interest subject to the Lease
(described below) was estimated to be $8,350,000, in cash or terms equivalent to
cash. This value estimate was based upon a number of assumptions, including
that the Gartner Building will continue operating at a stabilized level with
Gartner Group, Inc. ("Gartner") occupying 100% of the rentable area, and is not
necessarily an accurate reflection of the fair market value of the property or
the net proceeds which would result from an immediate sale of this property.
The Joint Venture also obtained an environmental report prior to closing
evidencing that the environmental condition of the land and the Gartner Building
were satisfactory.
The Gartner Building is located on a 4.9 acre tract of land within the Gateway
development at 12600 Gateway Boulevard in Fort Myers, Florida. Gateway is a
mixed use development with over 3,000 acres planned for residential purposes and
over 800 acres planned for commercial purposes. Sony Electronics and Ford Motor
Credit Company are two of the commercial tenants in this development.
The Lease. The entire 62,400 rentable square feet of the Gartner Building is
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currently under a net lease agreement with Gartner dated July 30, 1997 (the
"Lease"). The landlord's interest in the Lease was assigned to the Joint Venture
at the closing.
The initial term of the Lease is ten years which commenced on February 1, 1998
and expires on January 31, 2008. Gartner has the right to extend the Lease for
two additional five year periods of time. Each extension option must be
exercised by giving at least one year's notice to the landlord prior to the
expiration date of the then current lease term.
The base rent payable for the remainder of the Lease term is as follows:
<TABLE>
<CAPTION>
Lease Year Yearly Base Rent Monthly Base Rent
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<S> <C> <C>
2/1999-1/2000 $642,798 $53,566.50
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2/2000-1/2001 $790,642 $65,886.83
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2/2001-1/2002 $810,408 $67,534.00
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2/2002-1/2003 $830,668 $69,222.35
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2/2003-1/2004 $851,435 $70,952.89
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2/2004-1/2005 $872,721 $72,726.74
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2/2005-1/2006 $894,539 $74,544.92
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2/2006-1/2007 $916,902 $76,408.54
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2/2007-1/2008 $939,825 $78,318.71
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</TABLE>
The monthly base rent payable for each extended term of the Lease will be equal
to the lesser of (i) the prior rate increased by 2.5%, or (ii) 95% of the then
current market rate which is calculated as a full-service rental rate less
anticipated annual operating expenses on a rentable square foot basis charged
for space of comparable location, size and conditions in comparable office
buildings in the Fort Myers area.
2
<PAGE>
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.
Gartner also has two expansion options for additional buildings under the
Lease. The two option plans are described in the Lease as the "Small Option
Building" and the "Large Option Building".
The "Small Option Building" expansion option allows Gartner the ability to
expand into a separate, free standing facility on the property containing
between 30,000 and 32,000 rentable square feet to be constructed by the Joint
Venture. Gartner may exercise its expansion right for the Small Option Building
by providing notice in writing to the Joint Venture on or before February 15,
2002. In the event that Gartner exercises its expansion option, the parties
shall enter into a separate lease within 30 days of such notice by Gartner with
a guaranteed ten year lease term and yearly base rent to be determined by mutual
agreement of the parties.
The "Large Option Building" expansion option allows Gartner the ability to
expand into a separate, free standing facility on the property containing
between 60,000 and 75,000 rentable square feet to be constructed by the Joint
Venture. Gartner may exercise its expansion right for the Small Option Building
by providing notice in writing to the Joint Venture on or before February 15,
2002. In the event that Gartner exercises its expansion option, the parties
shall enter into a separate lease within 30 days of such notice by Gartner with
a guaranteed ten year lease term and yearly base rent to be determined by mutual
agreement of the parties.
Property Management Fees. Wells Management Company, Inc. ("Wells Management"),
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an affiliate of the Registrant, has been retained to manage and lease the
Gartner Building. The Joint Venture shall pay management and leasing fees to
Wells Management in the amount of 4.5% of gross revenues from the Gartner
Building.
3
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. The following financial statements relating to
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the real property acquired by the Joint Venture are submitted at the end of this
Current Report and are filed herewith and incorporated herein by reference:
Page
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Report of Independent Public Accountants F-1
Statements of Revenues Over Certain Operating
Expenses for the year ended December 31, 1998 (Audited)
and for the six month period ended June 30, 1999 (Unaudited) F-2
Notes to Statements of Revenues Over Certain
Operating Expenses for the year ended December 31, 1998
(Audited) and for the six month period ended June 30,
1999 (Unaudited) F-3
(b) Pro Forma Financial Information. The following unaudited pro forma
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financial statements of the Registrant relating to the real property acquired
are submitted at the end of this Current Report and are filed herewith and
incorporated herein by reference:
Page
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Summary of Unaudited Pro Forma Financial Statements F-5
Pro Forma Balance Sheet as of June 30, 1999 F-6
Pro Forma Statement of Income for year ended December 31,
1998 F-7
Pro Forma Statement of Income for the six months
ended June 30, 1999 F-8
After reasonable inquiry, the Registrant is not aware of any material factors
relating to the real property described in this Current Report that would cause
the financial information reported herein not to be necessarily indicative of
future operating results.
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WELLS REAL ESTATE FUND XII, L.P.
Registrant
By: /s/ Leo F. Wells, III
-----------------------------------------
Leo F. Wells, III, as General Partner and
as President and sole Director of Wells
Capital, Inc., the General Partner of
Wells Partners, L.P., General Partner
Date: September 29, 1999
5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Investment Trust, Inc.,
and Wells Real Estate Fund XII, L.P.:
We have audited the accompanying statement of revenues over certain operating
expenses for the GARTNER BUILDING for the year ended December 31, 1998. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues over certain operating
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues over certain operating expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Gartner
Building after acquisition by the Wells Fund XI-Fund XII-REIT Joint Venture (a
joint venture between the Wells Operating Partnership, L.P. [on behalf of Wells
Real Estate Investment Trust, Inc.], Wells Real Estate Fund XI, L.P., and Wells
Real Estate Fund XII, L.P.). The accompanying statement of revenues over
certain operating expenses was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Gartner Building's revenues and
expenses.
In our opinion, the statement of revenues over certain operating expenses
presents fairly, in all material respects, the revenues over certain operating
expenses of the Gartner Building for the year ended December 31, 1998 in
conformity with generally accepted accounting principles.
/S/ Arthur Andersen LLP
Atlanta, Georgia
September 24, 1999
F-1
<PAGE>
GARTNER BUILDING
STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
1998 1999
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(Unaudited)
<S> <C> <C>
RENTAL REVENUES $738,074 $402,590
OPERATING EXPENSES, net of reimbursements 8,505 75
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REVENUES OVER CERTAIN OPERATING EXPENSES $729,569 $402,515
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
GARTNER BUILDING
NOTES TO STATEMENTS OF REVENUES
OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Real Estate Property Acquired
On September 20, 1999, the Wells Fund XI-Fund XII-REIT Joint Venture (the
"Joint Venture") acquired a two story office building with approximately
62,400 rentable square feet located in Fort Myers, Lee County, Florida (the
"Gartner Building").
The Joint Venture is a partnership between Wells Real Estate Fund XII, L.P.
("Wells Fund XII"), Wells Real Estate Fund XI, L.P. ("Wells Fund XI"), and
Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited
partnership formed to acquire, own, lease, operate, and manage real
properties on behalf of Wells Real Estate Investment Trust, Inc.
The purchase price for the Gartner Building was $8,320,000. The Joint
Venture also incurred additional acquisition expenses in connection with the
purchase of the Gartner Building, including attorneys' fees, recording fees
and other closing costs, of $27,600.
The Wells Fund XII contributed $2,800,000, Wells Fund XI contributed
$106,550, and Wells OP contributed $5,441,050 to the Joint Venture for their
respective share of the acquisition costs for the Gartner Building.
The entire 62,400 rentable square feet of the Gartner Building is currently
under a net lease agreement with Gartner dated July 30, 1997 (the "Lease").
The Lease was assigned to the Joint Venture at the closing.
The initial term of the Lease is ten years which commenced on February 1,
1998 and expires on January 31, 2008. Gartner has the right to extend the
Lease for two additional five year periods of time. Each extension option
must be exercised by giving at least one year's notice to the landlord prior
to the expiration date of the then current lease term.
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
F-3
<PAGE>
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.
Rental Revenues
Rental income from the lease is recognized on a straight-line basis over the
life of the lease.
2. BASIS OF ACCOUNTING
The accompanying statements of revenues over certain operating expenses are
presented on the accrual basis. These statements have been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired. Accordingly, the
statements exclude certain historical expenses, such as depreciation and
management and leasing fees, not comparable to the operations of the Gartner
Building after acquisition by the Joint Venture.
F-4
<PAGE>
WELLS REAL ESTATE FUND XII, L.P.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma balance sheet as of June 30, 1999 and the pro
forma statements of income (loss) for the period from inception (September 15,
1998) to December 31, 1998 and the six-month period ending June 30, 1999 have
been prepared to give effect to the acquisition of the Gartner Building by the
Wells Fund XI-Fund XII-REIT Joint Venture (a joint venture between the Wells
Operating Partnership, L.P., Wells Real Estate Fund XI, L.P., and Wells Real
Estate Fund XII, L.P.) as if the acquisition had occurred as of June 30, 1999
with respect to the balance sheet and on September 15, 1998 with respect to the
statements of income (loss).
These unaudited pro forma financial statements are prepared for informational
purposes only and are not necessarily indicative of future results or of actual
results that would have been achieved had the acquisition been consummated at
the beginning of the period presented.
F-5
<PAGE>
WELLS REAL ESTATE FUND XII, L.P.
PRO FORMA BALANCE SHEET
JUNE 30, 1999
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
Wells Real
Estate Pro Forma Pro Forma
Fund XII, L.P. Adjustments Total
-------------- ------------- ---------
<S> <C> <C> <C>
CASH AND CASH EQUIVALENTS $2,457,166 $(2,457,166)(a) $ 0
INVESTMENT IN JOINT VENTURE 0 2,916,676 (b) 2,916,676
DEFERRED PROJECT COSTS 94,370 (94,370)(c) 0
DEFERRED OFFERING COSTS 117,543 0 117,543
---------- ----------- ----------
Total assets $2,669,079 $ 365,140 $3,034,219
========== =========== ==========
LIABILITIES AND PARTNERS' CAPITAL
SALE COMMISSIONS PAYABLE $ 147,259 $ 0 $ 147,259
DUE TO AFFILIATES 164,579 342,834 (a) 507,413
22,306 (c) 22,306
---------- ----------- ----------
Total liabilities 311,838 365,140 676,978
---------- ----------- ----------
PARTNERS' CAPITAL:
General partners 474 0 474
Original limited partner 100 0 100
Limited partners:
Class A--164,341 units outstanding 1,437,987 0 1,437,987
Class B--105,288 units outstanding 918,680 0 918,680
---------- ----------- ----------
Total partners' capital 2,357,241 0 2,357,241
---------- ----------- ----------
Total liabilities and partners' capital $2,669,079 $ 365,140 $3,034,219
========== =========== ==========
</TABLE>
(a) Reflects Wells Real Estate Fund XII, L.P.'s portion of the
purchase price.
(b) Reflects Wells Real Estate Fund XII, L.P.'s contribution to the
Wells Fund XI-Fund XII-REIT Joint Venture.
(c) Reflects deferred project costs contributed to the Wells Fund
XI-Fund XII-REIT Joint Venture.
F-6
<PAGE>
WELLS REAL ESTATE FUND XII, L.P.
PRO FORMA STATEMENT OF INCOME
FOR THE PERIOD FROM INCEPTION
(SEPTEMBER 15, 1998) TO DECEMBER 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Wells Real Pro
Estate Pro Forma Forma
Fund XII, L.P. Adjustment Total
-------------- ---------- --------
<S> <C> <C> <C>
REVENUES:
Equity in income of joint venture $0 $ 19,759(a) $ 19,759
EXPENSES 0 0 0
-- -------- --------
NET INCOME $0 $ 19,759 $ 19,759
== ======== ========
NET LOSS ALLOCATED TO GENERAL PARTNERS $0 $ (154) $ (154)
== ======== ========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $0 $ 35,200 $ 35,200
== ======== ========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $0 $(15,287) $(15,287)
== ======== ========
</TABLE>
(a) Reflects Wells Real Estate Fund XII, L.P.'s equity in income of the
Wells Fund XI-Fund XII-REIT Joint Venture related to the Gartner
Building. The pro forma adjustment results from rental revenues less
operating expenses, management and leasing fees, and depreciation.
F-7
<PAGE>
WELLS REAL ESTATE FUND XII, L.P.
PRO FORMA STATEMENT OF INCOME (LOSS)
FOR THE SIX-MONTH PERIOD ENDING JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Wells Real Pro
Estate Pro Forma Forma
Fund XII, L.P. Adjustment Total
-------------- ---------- ---------
<S> <C> <C> <C>
REVENUES:
Equity in income of joint venture $ 0 $ 40,139(a) $ 40,139
EXPENSES 2,615 0 2,615
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NET (LOSS) INCOME $(2,615) $ 40,139 $ 37,524
======= ======== ========
NET LOSS ALLOCATED TO GENERAL PARTNERS $ (26) $ (265) $ (291)
======= ======== ========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 0 $ 66,609 $ 66,609
======= ======== ========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $(2,589) $(26,205) $(28,794)
======= ======== ========
NET INCOME PER CLASS A WEIGHTED AVERAGE LIMITED PARTNER UNIT $ 0.00 $ 0.86 $ 0.86
======= ======== ========
NET LOSS PER CLASS B WEIGHTED AVERAGE LIMITED PARTNER UNIT $ (0.02) $ (0.35) $ (0.37)
======= ======== ========
</TABLE>
(a) Reflects Wells Real Estate Fund XII, L.P.'s equity in income of the
Wells Fund XI-Fund XII-REIT Joint Venture related to the Gartner
Building. The pro forma adjustment results from rental revenues less
operating expenses, management and leasing fees, and depreciation.
F-8
