<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, 1998 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 0-14463
----------------------------------------------------------
Wells Real Estate Fund I
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1565512
- ------------------------------ ------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
------------------------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
Form 10-Q
---------
Wells Real Estate Fund I
------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets - June 30, 1998
and December 31, 1997................................. 3
Consolidated Statements of Income for Three Months and
Six Months Ended June 30, 1998 and 1997............... 4
Statements of Partners' Capital
for the Six months Ended June 30, 1998
and the Year Ended December 31, 1997.................. 5
Consolidated Statements of Cash Flows for
the Six months Ended June 30, 1998 and 1997........... 6
Condensed Notes to Consolidated Financial Statements.. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................ 8
PART II. OTHER INFORMATION.............................................. 16
2
<PAGE>
WELLS REAL ESTATE FUND I
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1998 DECEMBER 31, 1997
------ ------------- -----------------
<S> <C> <C>
Real Estate, at cost
Land $ 2,894,193 $ 2,894,193
Building and improvements, less
accumulated depreciation of $6,864,916
in 1998 and $6,354,204 in 1997 12,874,266 13,279,260
----------- -----------
Total real estate assets 15,768,459 16,173,453
----------- -----------
Investment in joint ventures (Note 2) 6,679,365 6,833,129
Cash and cash equivalents 473,339 128,199
Due from affiliates 135,423 64,469
Deferred lease acquisition costs 55,210 46,378
Accounts receivable 248,066 293,644
Prepaid expenses and other assets 67,109 54,294
----------- -----------
7,658,512 7,420,113
----------- -----------
Total assets $23,426,971 $23,593,566
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Liabilities:
Accounts payable $ 137,545 $ 138,088
Due to affiliates 1,592,610 1,531,215
Refundable security deposits 57,255 55,808
Partnership distribution payable 4,454 179,270
Minority interest 113,252 117,931
----------- -----------
Total liabilities 1,905,116 2,022,312
----------- -----------
Partners' capital
Limited partners:
Class A - 98,716 Units Outstanding 21,521,855 21,571,254
Class B - 42,568 Units Outstanding 0 0
----------- -----------
Total partners' capital 21,521,855 21,571,254
----------- -----------
Total liabilities and partners' capital $23,426,971 $23,593,566
=========== ===========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND I
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------- --------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- -------------- -------------
Revenues:
<S> <C> <C> <C> <C>
Rental income $371,745 $ 369,203 $759,577 $ 750,047
Interest income 4,839 3,349 7,160 5,740
Equity in income (loss) of Joint
Ventures (Note 2) 52,093 (2,549) 96,208 3,178
-------- --------- -------- ---------
428,677 370,003 862,945 758,965
-------- --------- -------- ---------
Expenses:
Management and leasing fees 37,605 40,190 72,428 70,720
Lease acquisition costs 1,045 4,914 5,087 9,784
Operating costs-rental properties
net of tenant reimbursements 69,051 (16,248) 270,512 167,014
Bad debt recovery 0 (2,697) 0 (3,003)
Depreciation 255,408 254,536 510,412 508,213
Legal and accounting 12,628 (346) 17,507 3,237
Computer expense 1,838 1,650 3,848 4,094
Partnership administration 16,878 12,735 29,456 28,996
Minority interest 868 (764) 3,093 925
-------- --------- -------- ---------
395,321 293,970 912,343 789,980
-------- --------- -------- ---------
Net income (loss) $ 33,356 $ 76,033 $(49,398) $ (31,015)
======== ========= ======== =========
Net income allocated to
General Partners $ 0 $ 0 $ 0 $ 0
Net income (loss) allocated to Class
A Limited Partners $ 33,356 $ 325,324 $(49,398) $ 566,570
Net loss allocated to Class B
Limited Partners $ 0 $(249,293) $ 0 $(597,585)
Net income (loss) per Class A
Limited Partner Unit $ .34 $ 3.30 $ (.50) $ 5.74
Net loss per Class B Limited
Partner Unit $ 0 $ (5.86) $ 0 $ (14.08)
Cash distribution per Class A
Limited Partner Unit $ 0 $ 3.13 $ 0 $ 5.96
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND I
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997 AND SIX MONTHS ENDED
JUNE 30, 1998
<TABLE>
<CAPTION>
LIMITED PARTNERS
-------------------------------------------
CLASS A Class B TOTAL
--------------------- -------------------- PARTNERS'
UNITS AMOUNTS UNITS AMOUNTS CAPITAL
------ ------------- ------ ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 98,716 $21,583,091 42,568 $ 1,364,701 $22,947,792
Net income (loss) 0 1,059,405 0 (1,364,701) (305,296)
Partnership distributions 0 (1,071,242) 0 0 (1,071,242)
------ ----------- ------ ----------- -----------
BALANCE, DECEMBER 31, 1997 98,716 21,571,254 42,568 0 21,571,254
Net loss 0 (49,398) 0 0 (49,398)
------ ----------- ------ ----------- -----------
BALANCE, JUNE 30, 1998 98,716 $21,521,856 42,568 $ 0 $21,521,856
====== =========== ====== =========== ===========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND I
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------------------------------
JUNE 30, 1998 JUNE 30, 1997
--------------------------- ---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (49,398) $ (31,015)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Equity in income of joint ventures (96,208) (3,178)
Minority interest 3,093 1,271
Depreciation 510,412 508,205
Accrued management and leasing fees 64,156 67,687
Changes in assets and liabilities:
Accounts receivable 45,577 86,107
Prepaids and other assets (559) (6,972)
Deferred income (5,485) 0
Accounts payable and refundable security deposits (6,426) (4,316)
Due to affiliates (12,952) (25,861)
--------- ---------
Total adjustments 501,608 631,575
--------- ---------
Net cash provided by
operating activities 452,210 600,560
--------- ---------
Cash flow from investing activities:
Distributions received from joint ventures 179,019 200,500
Investment in real estate (105,418) (63,337)
--------- ---------
Net cash provided by
investing activities 73,601 137,163
Cash flow from financing activities:
Partnership distributions paid (180,671) (561,216)
--------- ---------
Net increase in cash and cash equivalents 345,140 176,507
Cash and cash equivalents, beginning of year 128,199 204,176
--------- ---------
Cash and cash equivalents, end of period $ 473,339 $ 380,683
========= =========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND I
(A Georgia Public Limited Partnership)
Condensed Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
------------
Wells Real Estate Fund I (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Capital, Inc., a Georgia
corporation, as General Partners. The Partnership was formed on April 26,
1984, for the purpose of acquiring, developing, constructing, owning,
operating, improving, leasing and otherwise managing for investment
purposes income-producing commercial properties.
On September 6, 1984, the Partnership commenced a public offering of its
limited partnership units pursuant to a Registration Statement filed on
Form S-11 under the Securities Act of 1933. The Partnership terminated its
offering on September 5, 1986, and received gross proceeds of $35,321,000
representing subscriptions from 4,895 Limited Partners, composed of two
classes of limited partnership interest, Class A and Class B limited
partnership units.
The Partnership owns an interests in the following joint ventures: (i)
Wells-Baker Associates, a joint venture between Fund I and Wells &
Associates, (ii) Fund I-Fund II Tucker and (iii) Fund I, II, II-OW, VI, VII
Joint Venture.
As of June 30, 1998, the Partnership owned directly or through its
ownership in joint ventures, interests in the following properties: (i)
Paces Pavilion/The Howell Mill Road Property, a medical office building
located in Atlanta, Georgia, owned directly by the Partnership, (ii) The
Crowe's Crossing Property, a shopping center located in DeKalb County,
Georgia, owned by the Partnership, (iii) The Black Oak Plaza Property, a
shopping center located in Knoxville, Tennessee, owned by the Partnership,
(iv) The Peachtree Place Property, two commercial office buildings located
in Atlanta, Georgia, owned by Wells-Baker Associates, (v) The Tucker
Property, a retail shopping and commercial office complex located in
Tucker, Georgia, owned by Fund I-Fund II Tucker and (vi) The Cherokee
Property, a shopping center located in Cherokee County, Georgia, owned by
Fund I, II, II-OW, VI, VII Joint Venture. All of the foregoing properties
were acquired on an all cash basis.
(b) Basis of Presentation
---------------------------
The consolidated 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
7
<PAGE>
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
consolidated financial statements and footnotes included in the
Partnership's Form 10-K for the year ended December 31, 1997.
(2) Investment in Joint Venture
---------------------------
The Partnership owned interests in six properties as of June 30, 1998,
through investment or directly. The Partnership does not have control over
the operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investment in the joint venture is recorded on the
equity method.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS.
- --------------
The following discussion and analysis should be read in conjunction with the
accompanying financial statements of the Partnership and notes thereto. This
Report contains forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934,
including discussion and analysis of the financial condition of the Partnership,
anticipated capital expenditures required to complete certain projects, amounts
of cash distributions anticipated to be distributed to Limited Partners in the
future and certain other matters. Readers of this Report should be aware that
there are various factors that could cause actual results to differ materially
from any forward-looking statement made in the 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.
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
- -------
As of June 30, 1998, the properties owned by the Partnership were 76.2%
occupied. Revenues of the Partnership were $428,677 for the period ended June
30, 1998, as compared to $370,003 for the three months ended June 30, 1997, and
$862,945 for the six months ended June 30, 1998, as compared to $758,965 for the
same period in 1997. The increase for 1998 over 1997 was due primarily to
increased income from the joint ventures and increased rental income. Income
from the joint ventures was increased due to increased occupancy which resulted
in increased rental income at the Tucker and Peachtree Place properties, and a
one time adjustment made to the straight line rent schedule at the Cherokee
Property.
Expenses of the Partnership were $912,343 for the period ending June 30, 1998,
as compared to $789,980 for the six months ended June 30, 1997. The increase in
expenses for 1998 over 1997 was due primarily to increased operating costs of
the Partnership's properties primarily Paces Pavilion building.
8
<PAGE>
Net cash provided by operating activities decreased from $600,560 for the six
months ended June 30, 1997, to $452,210 at June 30, 1998, due primarily to the
decrease in accounts payable and increase in due from affiliates, which were
partly offset by the decrease in net income. Net cash provided by investing
activities decreased from $137,163 in 1997 to $73,601 in 1998 due to a increase
in capital expenditures for 1998. As a result, cash and cash equivalents
increased from $380,683 in 1997 to $473,339 in 1998.
There were no cash distribution to the Limited Partners holding Class A Units
for the six months ended June 30, 1998, as compared to distributions of $5.96
per Class A Unit for the same period in 1997. No cash distributions were made
to the Limited Partners holding Class B units or to the General Partners for the
six months ended June 30, 1998 and 1997.
The Partnership is reserving all operating cash flow generated during the first
and second quarters of 1998 which would otherwise be available for distribution
to Limited Partners to fund the proposed reconfiguration of the interior of the
Paces Pavilion Building. The lease with Hospital Corporation of America (HCA)
expired December 31, 1996 and as of June 30, 1998, the building is only 12.6%
leased. The Partnership is in final negotiations with a primary care physicians
practice management company to lease 29,000 square feet of the 32,000 square
foot building for the next ten years and hopes to enter into a lease for this
space in the near future. It is anticipated that the cost to refit the interior
of the building will be approximately $1.2 million. Therefore, to meet these
requirements, the Partnership expects to reserve all distributions for 1998 and
1999 and apply such amounts to fund the reconfiguration of the interior of this
property.
The General Partners have verified that all operational computer systems are
year 2000 compliant. This includes systems supporting accounting, property
management and investor services. Also, as part of this review, all building
control systems have been verified as compliant. The current line of business
applications are based on compliant operating systems and database servers. All
of these products are scheduled for additional upgrades before the year 2000.
Therefore, it is not anticipated that the year 2000 will have significant impact
on operations.
RECENT ACCOUNTING PRONOUNCEMENTS
- --------------------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", requires certain transactions (e.g., unrealized
gains/losses on available for sale securities) that are not reflected in net
income to be displayed as other comprehensive income. The Statement also
requires an entity to report total comprehensive income (i.e., net income plus
other comprehensive income) for every period in which an income statement is
presented. SFAS No. 130 is effective for annual and interim periods beginning
after December 15, 1997. None of the transactions required to be reported in
other comprehensive income pertain to the Partnership; consequently, adoption of
this Statement had no impact on the partnership's disclosures.
9
<PAGE>
PROPERTY OPERATIONS
- -------------------
As of June 30, 1998, the Partnership owned interests in the following
properties:
Paces Pavilion/Howell Mill Road Property - Fund I
- ---------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 16,426 $ 35,480 $ 46,210 $ 64,454
Expenses:
Depreciation 62,935 67,562 125,869 135,124
Management & leasing expenses 1,007 2,190 2,788 4,380
Other operating expenses 55,876 25,829 106,860 50,970
--------- -------- --------- ---------
119,818 95,581 235,517 190,474
--------- -------- --------- ---------
Net loss $(103,392) $(60,101) $(189,307) $(126,020)
========= ======== ========= =========
Occupied % 12.56% 28% 12.56% 28%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to Partnership $ 0 $ (4,453) $ 0 $ 538
Net income (loss) generated to the
Partnership $(103,392) $(60,101) $(189,307) $(126,020)
</TABLE>
Rental rates remained relatively stable for the six months ended June 30, 1998,
as compared to the six months ended June 30, 1997. Occupancy decreased to 12.6%
in 1998, due to a tenant that moved out at the end of March 1998. Operating
expenses increased significantly, due to property taxes, insurance, and common
area maintenance expenses previously paid for by a major tenant that is no
longer leasing space. The Partnership is actively pursuing a renewal lease for
29,000 square feet of space.
Currently, there are four tenants occupying the premises. Management is
currently in final negotiations with a primary care physician practice
management company for 29,000 square feet of the 32,000 square foot building and
hopes to enter into a lease for this space in the near future.
10
<PAGE>
Crowe's Crossing Property- Fund I
- ---------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $173,573 $ 175,781 $348,459 $347,418
Expenses:
Depreciation 104,414 104,015 208,762 207,628
Management & leasing expenses 19,815 24,815 37,784 40,426
Other operating expenses (74,209) (131,844) (38,442) (5,665)
-------- --------- -------- --------
50,020 (3,014) 208,104 242,389
-------- --------- -------- --------
Net income $123,553 $ 178,795 $140,355 $105,029
======== ========= ======== ========
Occupied % 90.5% 88.0% 90.5% 88.0%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to Partnership $242,432 $ 312,642 $369,887 $364,868
Net income generated to the
Partnership $123,553 $ 178,795 $140,355 $105,029
</TABLE>
Rental income for the six month period ended June 30, 1998 and June 30, 1997,
remained relatively stable, due to stable occupancy rates. Other operating
expenses increased significantly, due primarily to the receipt in 1997 of
reimbursements for multiple years. The 6 months ended June 30, 1998 expenses
decreased, due to painting the center in 1997, decreasing security coverage in
1998, and a large bad debt write-off in 1997 that was partially recovered in
1998.
11
<PAGE>
Black Oak Plaza Property - Fund I
- ---------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $110,662 $109,901 $225,775 $221,116
Interest income 0 3 0 15
-------- -------- -------- --------
110,662 109,904 225,775 221,131
Expenses:
Depreciation 66,773 63,061 133,208 125,674
Management & leasing expenses 12,257 9,930 25,873 19,945
Other operating expenses 52,549 43,560 148,127 49,796
-------- -------- -------- --------
131,579 116,551 307,208 195,415
-------- -------- -------- --------
Net (loss) income $(20,917) $ (6,647) $(81,433) $ 25,716
======== ======== ======== ========
Occupied % 70% 74% 70% 74%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to Partnership $ 68,547 $ 52,367 $ 69,791 $149,416
Net (loss) income generated to the
Partnership $(20,917) $ (6,647) $(81,433) $ 25,716
</TABLE>
Depreciation increased for 1998, as compared to 1997, due to the expensing of
tenant improvements which were capitalized in December 1997 and are being
depreciated over the lease term. The increase in management and leasing
expenses in first six months of 1998, compared to the same period of 1997, is
due to the payment of lease acquisition fees for new tenants in February 1998.
Other operating expenses increased in 1998, as compared to 1997, due primarily
to timing differences in billing of CAM reimbursements and increases in parking
lot repairs and legal fees. Cash generated to the Partnership decreased in
1998, as compared to 1997, due primarily to increased capital expenditures of
approximately $15,700 and the increase in expenses noted above.
12
<PAGE>
Peachtree Place Property - Fund I and Wells & Associates Joint Venture
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $71,083 $65,335 $139,132 $117,058
Interest income 8 8 16 15
------- ------- -------- --------
71,091 65,343 139,148 117,073
Expenses:
Depreciation 21,287 19,889 42,574 39,779
Management & leasing expenses 5,571 6,240 11,070 11,894
Other operating expenses 35,596 46,821 54,726 56,198
------- ------- -------- --------
62,454 72,950 108,370 107,871
------- ------- -------- --------
Net income (loss) $ 8,637 $(7,607) $ 30,778 $ 9,202
======= ======= ======== ========
Occupied % 100% 95% 100% 95%
Partnership's Ownership % 89.95% 89.95% 89.95% 89.95%
Cash distribution to the Partnership $28,049 $11,374 $ 69,564 $ 49,225
Net income (loss) allocated to the
Partnership $ 7,770 $(6,842) $ 27,685 $ 8,278
</TABLE>
Rental income increased for the quarter ending June 30, 1998, as compared to the
same period for 1997, due to increased occupancy. Operating expenses decreased
from $46,821 in 1997 to $35,596 in 1998, due to lower repairs and maintenance
expenses. Cash distributions increased in 1998, as compared to 1997, due to
decreased operating expenses and increased rental income.
13
<PAGE>
Heritage Place at Tucker Property/Fund I - Fund II Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $311,526 $267,465 $611,887 $529,331
Interest income 135 133 272 262
-------- -------- -------- --------
311,661 267,598 612,159 529,593
Expenses:
Depreciation 107,288 104,097 214,576 201,765
Management & leasing expenses 34,645 44,142 77,233 64,332
Other operating expenses 116,379 144,379 225,974 301,787
-------- -------- -------- --------
258,312 292,618 517,783 567,884
-------- -------- -------- --------
Net income (loss) $ 53,349 $(25,020) $ 94,376 $(38,291)
======== ======== ======== ========
Occupied % 82.0% 75.0% 82.0% 75.0%
Partnership Ownership % 55.09% 55.09% 55.09% 55.09%
Cash distributed to the Partnership $ 81,824 $ 52,736 $147,264 $ 96,753
Net income (loss) allocated to the
Partnership $ 29,390 $(13,783) $ 51,992 $(21,094)
</TABLE>
Rental income increased in 1998 from 1997, due primarily to the increase in
occupancy from 75% to 82%. Management and leasing expenses increased over prior
year to date, due to increased occupancy and revenues. Other operating expenses
decreased, due to a significant decrease in landscaping expenses and plumbing
and roofing repairs.
14
<PAGE>
Cherokee Property - Fund I, II, II-OW, VI, VII Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------------- ------------------------------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998 JUNE 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $225,705 $215,973 $454,682 $433,412
Interest income 19 19 41 37
-------- -------- -------- --------
225,724 215,992 454,723 433,449
Expenses:
Depreciation 110,564 109,697 221,127 217,222
Management & leasing expenses 18,737 19,323 44,488 50,864
Other operating expenses 1,919 40,203 5,050 64,322
-------- -------- -------- --------
131,220 169,223 270,665 332,408
-------- -------- -------- --------
Net income $ 94,504 $ 46,769 $184,058 $101,041
======== ======== ======== ========
Occupied % 91.0% 92.0% 91.0% 92.0%
Partnership Ownership % 24.0% 24.0% 24.0% 24.0%
Cash distributed to the Partnership $ 54,972 $ 37,485 $104,083 $ 82,416
Net income allocated to the
Partnership $ 22,703 $ 11,236 $ 44,216 $ 24,273
</TABLE>
Rental income increased in 1998 over 1997, due primarily to the one time
adjustment made in 1997 to the straight line rent schedule. Management and
leasing expenses decreased in 1998, as compared to 1997, due to decreased
leasing commissions. The decrease in operating expenses in 1998, as compared to
1997, are due to decreased expenditures for tenant improvements, common area
expenses, and legal fees.
15
<PAGE>
PART II - OTHER INFORMATION
----------------------------
Item 6(b). No reports on Form 8-K were filed during the second quarter of 1998.
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 I
(Registrant)
Dated: August 10, 1998 By: /s/Leo F. Wells, III
------------------------------
Leo F. Wells, III, as Individual
General Partner and as President,
Sole Director and Chief Financial
Officer of Wells Capital, Inc.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 473,339
<SECURITIES> 6,679,365
<RECEIVABLES> 383,489
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 122,319
<PP&E> 22,633,375
<DEPRECIATION> 6,864,916
<TOTAL-ASSETS> 23,426,971
<CURRENT-LIABILITIES> 1,905,116
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,521,855
<TOTAL-LIABILITY-AND-EQUITY> 23,426,971
<SALES> 0
<TOTAL-REVENUES> 862,945
<CGS> 0
<TOTAL-COSTS> 912,343
<OTHER-EXPENSES> 0
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