<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, 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 - September 30, 1998
and December 31, 1997........................... 3
Consolidated Statements of Income for Three Months and
Nine Months Ended September 30, 1998 and 1997........... 4
Statements of Partners' Capital
for the Nine months Ended September 30, 1998
and the Year Ended December 31, 1997.................... 5
Consolidated Statements of Cash Flows for
the Nine months Ended September 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 September 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 $ 7,122,095
in 1998 and $6,354,204 in 1997 12,563,883 13,279,260
----------- -----------
Total real estate assets 15,458,076 16,173,453
----------- -----------
Investment in joint ventures (Note 2) 6,585,396 6,833,129
Cash and cash equivalents 836,023 128,199
Due from affiliates 127,855 64,469
Deferred lease acquisition costs 62,374 46,378
Accounts receivable 190,193 293,644
Prepaid expenses and other assets 68,550 54,294
----------- -----------
7,870,391 7,420,113
----------- -----------
Total assets $23,328,467 $23,593,566
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 157,281 $ 138,088
Due to affiliates 1,614,328 1,531,215
Refundable security deposits 62,332 55,808
Partnership distribution payable 4,454 179,270
Minority interest 111,100 117,931
----------- -----------
Total liabilities 1,949,495 2,022,312
----------- -----------
Partners' capital
Limited partners:
Class A - 98,716 Units Outstanding 21,378,972 21,571,254
Class B - 42,568 Units Outstanding 0 0
----------- -----------
Total partners' capital 21,378,972 21,571,254
----------- -----------
Total liabilities and partners'
capital $23,328,467 $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 Nine Months Ended
-------------------------------------- --------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30,1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 375,298 $ 395,118 $1,134,875 $ 1,145,165
Interest income 7,734 1,365 14,894 7,105
Equity in income of
Joint Ventures (Note 2) 35,261 81,989 131,469 85,167
--------- --------- ---------- -----------
418,293 478,472 1,281,238 1,237,437
--------- --------- ---------- -----------
Expenses:
Management and leasing fees 31,742 25,677 104,170 96,397
Leasing acquisition costs 7,331 5,070 12,418 14,854
Operating costs--rental
properties, net of tenant
reimbursements 250,276 257,694 520,788 424,708
Bad debt recovery 0 (2,374) 0 (5,377)
Depreciation 257,479 243,536 767,891 751,749
Legal and accounting 1,097 14,144 18,604 17,381
Computer expense 2,325 3,068 6,173 7,162
Partnership administration 10,596 11,549 40,052 40,545
Minority interest 331 1,233 3,424 2,158
--------- --------- ---------- -----------
561,177 559,597 1,473,520 1,349,577
--------- --------- ---------- -----------
Net loss $(142,884) $ (81,125) $ (192,282) $ (112,140)
========= ========= ========== ===========
Net income allocated to General
Partners $ 0 $ 0 $ 0 $ 0
Net (loss) income allocated to
Class A Limited Partners $(142,884) $ 354,455 $ (192,282) $ 921,025
Net income (loss) allocated to
Class B Limited Partners $ 0 $(435,580) $ 0 $(1,033,165)
Net (loss) income per Class A
Limited Partner Unit $ (1.45) $ 3.59 $ (1.95) $ 9.33
Net income (loss) per Class B
Limited Partner Unit $ 0 $ (10.19) $ 0 $ (24.27)
Cash distribution per Class A
Limited Partner Unit $ 0 $ 3.12 $ 0 $ 9.08
</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 NINE MONTHS ENDED
SEPTEMBER 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 (192,282) 0 0 (192,282)
------ ----------- ------ ----------- -----------
BALANCE, SEPT. 30, 1998 98,716 $21,378,972 42,568 $ 0 $21,378,972
====== =========== ====== =========== ===========
</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>
Nine Months Ended
----------------------------------------
September 30, 1998 September 30, 1997
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(192,282) $(112,140)
--------- ---------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Equity in income of joint ventures (131,469) (85,167)
Minority interest 3,424 2,158
Depreciation 767,891 751,749
Accrued management and leasing fees 79,689 91,894
Changes in assets and liabilities:
Accounts receivable 103,450 54,677
Prepaids and other assets (2,812) (10,361)
Deferred income (5,485) 7,485
Accounts payable and refundable security
deposits 16,948 85,124
Due to affiliates (20,015) (13,187)
--------- ---------
Total adjustments 811,621 884,372
--------- ---------
Net cash provided by operating activities 619,339 772,232
--------- ---------
Cash flow from investing activities:
Distribution received from joint ventures 315,815 290,720
Investment in real estate (52,514) (134,797)
--------- ---------
Net cash provided by investing
activities 263,301 155,923
--------- ---------
Cash flow from financing activities:
Partnership distributions paid (174,816) (939,706)
--------- ---------
Net increase (decrease) in cash and cash
equivalents 707,824 (11,551)
Cash and cash equivalents, beginning of year 128,199 204,176
--------- ---------
Cash and cash equivalents, end of period $ 836,023 $ 192,625
========= =========
</TABLE>
See accompanying condensed notes to 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 September 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 accountants, but in the opinion of
the General Partners, the statements for the unaudited
7
<PAGE>
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 September 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 September 30, 1998, the properties owned by the Partnership were 77.5%
occupied. Revenues of the Partnership were $418,293 for the three-month period
ended September 30, 1998, as compared to $478,472 for the three months ended
September 30, 1997, and $1,281,238 for the nine months ended September 30, 1998,
as compared to $1,237,437 for the same period in 1997. The increase for the
nine-month period for 1998 over 1997 was due primarily to increased income from
the joint ventures and increased interest income. Income from the joint ventures
was increased due to increased occupancy which resulted in increased rental
income at the Tucker property. Income from joint ventures decreased for the
three-month period in 1998 over 1997 due to sewer pump and main water line
repairs at the Tucker property.
Expenses of the Partnership were $1,473,520 for the nine months ended September
30, 1998, as compared to $1,349,577 for the nine months ended September 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 $772,232 for the nine
months ended September 30, 1997, to $619,339 at September 30, 1998, due
primarily to the decrease in accounts payable, an increase in operating costs,
offset partially by a decrease in accounts receivables. Net cash provided by
investing activities increased from $155,923 in 1997 to $263,301 in 1998 due
primarily to a decrease in capital expenditures for 1998. Partnership
distributions decreased from $939,706 in 1997 to $174,816 in 1998 as discussed
below and is the primary reason for cash and cash equivalents increasing from
$192,625 at September 30, 1997 to $836,023 at September 30, 1998.
There were no cash distributions to the Limited Partners holding Class A Units
for the nine months ended September 30, 1998, as compared to distributions of
$9.08 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 nine months ended September 30, 1998 and 1997.
The Partnership is reserving all operating cash flow generated during the three
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 September 30, 1998, the building is only 12.6%
leased. The Partnership is actively pursuing a lease renewal.
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 September 30, 1998, the Partnership owned interests in the following
properties:
Paces Pavilion/Howell Mill Road Property - Fund I
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 16,418 $ 36,729 $ 62,628 $ 101,183
Expenses:
Depreciation 64,702 53,679 190,571 188,803
Management and leasing
expenses 1,006 7,664 3,794 12,044
Other operating expenses 81,218 133,271 188,078 184,241
--------- --------- --------- ---------
146,926 194,614 382,443 385,088
--------- --------- --------- ---------
Net loss $(130,508) $(157,885) $(319,815) $(283,905)
========= ========= ========= =========
Occupied % 12% 27% 12% 27%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to the
Partnership $ 0 $ 0 $ 0 $ 0
Net loss allocated
to the Partnership $(130,508) $(157,885) $(319,815) $(283,905)
</TABLE>
Rental income decreased for the three-month and nine-month period ended
September 30, 1998, due to a tenant moving out at the end of March 1998. The
decrease in occupancy from 27.8% to 12.56% also caused a decrease in management
and leasing expenses for the three- and nine-month period ended September 30,
1998, as compared to the same period in 1997. Other operating expenses remained
stable for the nine-month period and decreased significantly for the three-month
period ending September 30, 1998, primarily due to accrued common area expenses
of $108,000 for nine months payable to the Paces Pavilion Condominium
Association, which was not billed until the third quarter of 1997.
10
<PAGE>
Crowe's Crossing Property-Fund I
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $178,771 $178,403 $527,230 $525,821
Expenses:
Depreciation 104,413 104,817 313,175 312,445
Management and leasing
expenses 20,557 12,835 58,341 53,261
Other operating expenses 66,959 49,890 28,517 44,225
-------- -------- -------- --------
191,929 167,542 400,033 409,931
-------- -------- -------- --------
Net (loss) income $(13,158) $ 10,861 $127,197 $115,890
======== ======== ======== ========
Occupied % 92% 86% 92% 86%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to the
Partnership $105,496 $117,337 $475,383 $482,205
Net (loss) income allocated
to the Partnership $(13,158) $ 10,861 $127,197 $115,890
</TABLE>
Rental income for the nine-month period ended September 30, 1998 and September
30, 1997 remained relatively stable even though occupancy rates increased as of
September 30, 1998, due to the timing differences of the tenants moving in
and/or out during the three- and nine-month periods of 1998 and 1997. Other
operating expenses decreased for the nine months ended September 30, 1998 as
compared to the same period in 1997 due to painting the center in 1997 and
decreased security coverage in 1998, but increased for the three-month period
in 1998 due to additional HVAC repairs and landscaping supplies.
11
<PAGE>
Black Oak Plaza Property - Fund I
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $107,347 $111,817 $ 333,122 $332,933
Interest income 0 0 0 15
-------- -------- --------- --------
107,347 111,817 333,122 332,948
-------- -------- --------- --------
Expenses:
Depreciation 66,829 63,284 200,037 188,958
Management and leasing
expenses 10,708 8,461 36,581 28,406
Other operating expenses 62,842 56,468 210,969 106,264
-------- -------- --------- --------
140,379 128,213 447,587 323,628
-------- -------- --------- --------
Net (loss) income $(33,032) $(16,396) $(114,465) $ 9,320
======== ======== ========= ========
Occupied % 73% 77% 73% 77%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to the
Partnership $ 49,449 $ 0 $ 119,240 $144,547
Net (loss) income allocated
to the Partnership $(33,032) $(16,396) $(114,465) $ 9,320
</TABLE>
Depreciation increased for 1998, as compared to 1997, due to tenant improvements
which were capitalized in December 1997 and are being depreciated over the lease
term. The increase in management and leasing expenses in the first nine 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 to changes in the 1996 estimated CAM
reimbursements which were reflected in 1997 at the time these changes in
estimates were identified, 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. The increase in cash generated for the three
months ended September 30, 1998, compared to 1997, was due to capital
expenditures that occurred in the third quarter of 1997.
12
<PAGE>
Peachtree Place Property - Fund I and Wells & Associates Joint Venture
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $72,763 $68,171 $211,895 $185,229
Interest income 0 7 16 22
------- ------- -------- --------
72,763 68,178 211,911 185,251
------- ------- -------- --------
Expenses:
Depreciation 22,510 21,764 65,084 61,543
Management and leasing
expenses 5,826 5,645 16,896 17,539
Other operating expenses 41,134 28,414 95,860 84,612
------- ------- -------- --------
69,470 55,823 177,840 163,694
------- ------- -------- --------
Net income $ 3,293 $12,355 $ 34,071 $ 21,557
======= ======= ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 89.95% 89.95% 89.95% 89.95%
Cash generated to the
Partnership $22,220 $39,349 $ 91,784 $ 88,574
Net income allocated
to the Partnership $ 2,962 $11,113 $ 30,647 $ 19,391
</TABLE>
Rental income increased for both the three months and nine months ending
September 30, 1998, as compared to the same periods for 1997, due to increased
rental rates. Operating expenses increased from $28,414 for the three months
ended September 30, 1997 to $41,134 for the same period in 1998; and from
$84,612 for the nine-month period ended September 30, 1997, to $95,860 for the
same period in 1998 due to increased HVAC repairs and roof repairs.
13
<PAGE>
Heritage Place at Tucker Property/Fund I Fund II Joint Venture
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $301,785 $267,363 $913,672 $796,694
Interest income 95 762 367 1,024
Other income 27,319 83,027 27,319 83,027
-------- -------- -------- --------
329,199 351,152 941,358 880,745
-------- -------- -------- --------
Expenses:
Depreciation 113,129 106,541 327,705 308,306
Management and leasing
expenses 41,688 22,723 118,921 87,055
Other operating expenses 152,927 98,732 378,901 400,520
-------- -------- -------- --------
307,744 227,996 825,527 795,881
-------- -------- -------- --------
Net income $ 21,455 $123,156 $115,831 $ 84,864
======== ======== ======== ========
Occupied % 82% 77% 82% 77%
Partnership's Ownership % 55.1% 55.1% 55.1% 55.1%
Cash distribution to the
Partnership $ 78,591 $ 93,122 $225,855 $189,875
Net income allocated to the
Partnership $ 10,166 $ 67,847 $ 62,158 $ 46,752
</TABLE>
Rental income increased in 1998 from 1997 due primarily to the increase in
occupancy from 77% to 82%. Management and leasing expenses increased due to
increased occupancy and revenues. Other operating expenses for the nine months
ended September 30, 1998, decreased to $378,901 as compared to $400,520 due to a
significant decrease in landscaping expenses and plumbing and roofing repairs
incurred in 1997. Other expenses increased to $152,927 as compared to $98,732
for the three-month period ended September 30, 1998 due to a sewer pump and main
water line repair.
14
<PAGE>
Cherokee Property - Fund I, II, II-OW, VI, VII Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $226,733 $215,367 $681,415 $648,779
Interest income 2 10 43 47
-------- -------- -------- --------
226,735 215,377 681,458 648,826
Expenses:
Depreciation 111,285 110,037 332,412 327,259
Management and leasing
expenses 18,478 7,017 62,966 57,881
Other operating expenses 20,630 39,455 25,680 103,777
-------- -------- -------- --------
150,393 156,509 421,058 488,917
-------- -------- -------- --------
Net income $ 76,342 $ 58,868 $260,400 $159,909
======== ======== ======== ========
Occupied % 91% 93% 91% 93%
Partnership's Ownership % 24.0% 24.0% 24.0% 24.0%
Cash distribution to the
Partnership $104,083 $ 29,145 $153,348 $111,561
Net income allocated to the
Partnership $ 18,340 $ 14,142 $ 62,556 $ 38,415
</TABLE>
Rental income increased in 1998 over 1997, due primarily to the one-time
adjustment made in 1997 to the straight line rent schedule. The decrease in
operating expenses in 1998, as compared to 1997, is due to decreased
expenditures for tenant improvements, plumbing, 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 third 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: November 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 836,023
<SECURITIES> 6,585,396
<RECEIVABLES> 318,048
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,550
<PP&E> 22,580,171
<DEPRECIATION> 7,122,095
<TOTAL-ASSETS> 23,328,467
<CURRENT-LIABILITIES> 1,949,495
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 21,378,972
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</TABLE>
