<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 March 31, 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 0-17876
---------------------------------------------------------
WELLS REAL ESTATE FUND II-OW
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1678709
- -------------------------------------------- ----------------------------
(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 II-OW
(A Georgia Public Limited Partnership)
INDEX
<TABLE>
<CAPTION>
Page No.
----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets--March 31, 2000 and December 31, 1999 3
Statements of Income for the Three Months Ended March 31, 2000 and 1999 4
Statements of Partners' Capital for the Year Ended December 31, 1999 and the
Three Months Ended March 31, 2000 5
Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 11
Operations
PART II. OTHER INFORMATION 19
</TABLE>
-2-
<PAGE>
WELLS REAL ESTATE FUND II-OW
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ -------------
<S> <C> <C>
ASSETS:
Investment in joint venture (Note 2) $1,143,360 $1,159,995
Cash and cash equivalents 2,806 3,865
Due from affiliate 25,267 25,335
------------ -------------
Total assets $1,171,433 $1,189,195
============ =============
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Accounts payable $ 405 $ 264
Partnership distributions payable 26,528 26,536
------------ -------------
Total liabilities 26,933 26,800
------------ -------------
Partners' capital:
Limited partners:
Class A--6,062 units 1,144,500 1,162,395
Class B--1,626 units 0 0
------------ -------------
Total partners' capital 1,144,500 1,162,395
------------ -------------
Total liabilities and partners' capital $1,171,433 $1,189,195
============ =============
</TABLE>
See accompanying condensed notes to financial statements.
-3-
<PAGE>
WELLS REAL ESTATE FUND II-OW
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
---------- ----------
<S> <C> <C>
REVENUES:
Equity in income of joint ventures (Note 2) $8,632 $3,551
========== ==========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $8,632 $3,551
========== ==========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ 0.00 $ 0.00
========== ==========
NET INCOME PER CLASS A LIMITED PARTNER UNIT $ 1.42 $ 0.59
========== ==========
NET LOSS PER CLASS B LIMITED PARTNER UNIT $ 0.00 $ 0.00
========== ==========
CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT $ 4.38 $ 3.74
========== ==========
</TABLE>
See accompanying condensed notes to financial statements.
-4-
<PAGE>
WELLS REAL ESTATE FUND II-OW
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1999 AND
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Limited Partners Total
----------------------------------------------------------
Class A Class B Partners'
--------------------------- -------------------------
Units Amounts Units Amounts Capital
--------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 6,062 $1,236,239 1,626 $ 0 $1,236,239
Net income 0 20,918 0 0 20,918
Partnership distributions 0 (94,762) 0 0 (94,762)
--------- ---------- -------- --------- -----------
BALANCE, September 30, 1999 6,062 1,162,395 1,626 0 1,162,395
Net income 0 8,632 0 0 8,632
Partnership distributions 0 (26,527) 0 0 (26,527)
--------- ---------- -------- --------- -----------
BALANCE, March 31, 2000 6,062 $1,144,500 1,626 $ 0 $1,144,500
========= ========== ======== ========= ===========
</TABLE>
See accompanying condensed notes to financial statements.
-5-
<PAGE>
WELLS REAL ESTATE FUND II-OW
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,632 $ 3,551
-------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in income of joint ventures (8,632) (3,551)
Changes in assets and liabilities:
Accounts payable 141 0
-------- --------
Total adjustments (8,491) (3,551)
-------- --------
Net cash provided by operating activities 141 1,190
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 25,335 18,870
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distributions paid (26,535) (20,060)
-------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,059) 0
CASH AND CASH EQUIVALENTS, beginning of year 3,865 669
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 2,806 $ 669
======== ========
</TABLE>
See accompanying condensed notes to financial statements.
-6-
<PAGE>
WELLS REAL ESTATE FUND II-OW
(A Georgia Public Limited Partnership)
CONDENSED NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
Wells Real Estate Fund II-OW (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Capital, Inc. as a
Corporation. The Partnership was formed on October 23, 1987 for the purpose
of acquiring, developing, constructing, owning, operating, improving,
leasing, and otherwise managing for investment purposes income-producing
commercial or industrial properties.
On November 6, 1987, 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 7, 1988 and received gross proceeds of $1,922,000
representing subscriptions from 219 Limited Partners, composed of two
classes of limited partnership interests, Class A and Class B limited
partnership units.
The Partnership owns equity interests in properties through its ownership
in the following joint ventures: (i) Fund II-Fund II-OW Joint Venture, a
joint venture between the Partnership and Wells Real Estate Fund II (the
"Fund II-Fund II-OW Joint Venture"); (ii) Fund II-Fund III Joint Venture, a
joint venture among the Fund II-Fund II-OW Joint Venture and Wells Real
Estate Fund III, L.P. ("Fund II-Fund III Associates"); (iii) Fund II-III-
VI-VII Joint Venture, a joint venture among the Fund II-Fund III Joint
Venture, Wells Real Estate Fund VI, L.P., and Wells Real Estate Fund VII,
L.P. ("Fund II, III, VI, VII Associates"); (iv) Fund I-Fund II Joint
Venture, a joint venture among the Fund II-Fund II-OW Joint Venture and
Wells Real Estate Fund I ("the Tucker Joint Venture"); and (v) Fund I, II,
II-OW, VI, VII Joint Venture, a joint venture among Wells Real Estate Fund
I, the Fund II-Fund II-OW Joint Venture, Wells Real Estate Fund VI, L.P.,
and Wells Real Estate Fund VII, L.P. ("Fund I, II, II-OW, VI, VII Joint
Venture").
As of March 31, 2000, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
two-story office building located in Charlotte, North Carolina ("First
Union at Charlotte"); (ii) a four-story office building located in
metropolitan Houston, Texas (the "Atrium"); (iii) a restaurant located in
Fulton County, Georgia (the "Brookwood Grill"); (iv) an office/retail
center in Fulton County, Georgia ("Holcomb Bridge Road"); (v) a retail
shopping and commercial office complex located in Tucker, Georgia (the
"Heritage Place at Tucker"); and (vi) a shopping center located in Cherokee
County, Georgia (the "Cherokee Commons"). All of the foregoing properties
were acquired on an all cash basis. For further information regarding these
joint ventures and properties, refer to the Partnership's Form 10-K for the
year ended December 31, 1999.
(b) Basis of Presentation
The financial statements of Wells Real Estate Fund II-OW (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
-7-
<PAGE>
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.
2. INVESTMENTS IN JOINT VENTURES
The Partnership owned interests in six properties as of March 31, 2000
through its interest in the Fund II-Fund II-OW Joint Venture. The
Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investment in joint ventures are recorded on the equity method
Fund II-Fund II-OW Joint Venture
The Partnership owns all of its properties through a joint venture (the
"Fund II-Fund II-OW Joint Venture") formed on March 1, 1988 between the
Partnership and Wells Real Estate Fund II ("Wells Fund II"). Wells Fund II
is a Georgia public limited partnership affiliated with the Partnership
through common general partners. The investment objectives of Wells Fund II
are substantially identical to those of the Partnership. As of March 31,
2000, the Partnership's equity interest in the Fund II-Fund II-OW Joint
Venture was approximately 5%, and the equity interest of Wells Fund II was
approximately 95%.
-8-
<PAGE>
Following are the financial statements for Fund II-Fund II-OW:
FUND II-FUND II-OW
(A Georgia Joint Venture)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
------------ -------------
2000 1999
------------ -------------
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land $ 1,367,856 $ 1,367,856
Building and improvements, less accumulated depreciation of
$3,083,367 in 2000 and $2,991,452 in 1999 4,687,751 4,779,666
------------ -------------
Total real estate assets 6,055,607 6,147,522
------------ -------------
Investments in joint ventures 15,437,646 15,654,420
Cash and cash equivalents 155,115 162,241
Due from affiliates 319,817 312,901
Accounts receivable 0 2,149
Prepaid expenses and other assets 20,969 24,473
------------ -------------
Total assets $21,989,154 $22,303,706
============ =============
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Partnership distributions payable $ 475,847 $ 477,122
------------ -------------
Total liabilities 475,847 477,122
------------ -------------
Partners' capital:
Wells Real Estate Fund II 20,369,947 20,666,589
Wells Real Estate Fund II-OW 1,143,360 1,159,995
------------ -------------
Total partners' capital 21,513,307 21,826,584
------------ -------------
Total liabilities and partners' capital $21,989,154 $22,303,706
============ =============
</TABLE>
See accompanying condensed notes to financial statements.
-9-
<PAGE>
FUND II-FUND II-OW JOINT VENTURE
(A Georgia Joint Venture)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
March 31, March 31,
2000 1999
---------- ---------
<S> <C> <C>
REVENUES:
Rental income $211,018 $114,717
Equity in income of joint ventures 103,045 90,697
Interest income 138 105
---------- ---------
314,201 205,519
---------- ---------
EXPENSES:
Management and leasing fees 12,790 6,883
Lease acquisition costs 4,589 4,589
Operating costs--rental property 3,766 6,892
Depreciation 91,917 91,917
Legal and accounting 22,607 3,684
Computer costs 3,067 1,664
Partnership administration 12,895 23,012
---------- ---------
151,631 138,641
---------- ---------
NET INCOME $162,570 $ 66,878
========== =========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND II $153,938 $ 63,327
========== =========
NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND II-OW $ 8,632 $ 3,551
========== =========
</TABLE>
See accompanying condensed notes to financial statements.
-10-
<PAGE>
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 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 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 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.
1. RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITIONS
General
As of March 31, 2000, the developed properties owned by the Fund II-Fund
II-OW Joint Venture were 97.4% occupied as compared to 97.5% occupied as of
March 31, 1999.
Gross revenues of the Partnership increased to $8,632 for the three months
ended March 31, 2000 from $3,551 for the three months ended March 31, 1999
due to increased rental renewal rates at the Charlotte Property. Total
administrative expenses of the Partnership which are incurred at the joint
venture level increased slightly due to increased management and leasing
fees which are charges based on rental income.
The Partnership's net cash provided by investing activities and net cash
used in financing activities increased in 2000, compared to 1999, due to
the increases in distributions from joint ventures as net income increased
at the Charlotte property.
Fund II-Fund II-OW Joint Venture distributions accrued to the Partnership
for the three-month periods ended March 31, 2000 and December 31, 1999 were
$25,268 and $25,335, respectively.
The Partnership made cash distributions to the Limited Partners holding
Class A Units for the first quarter of 2000 in the amount of $4.38 per Unit
as compared to $3.74 for the first quarter of 1999. No cash distributions
were made by the Partnership to the Limited Partners holding Class B Units
or to the General Partner.
As of March 31, 2000, the Fund II-Fund II-OW Joint Venture had used all of
the remaining funds available for investment in properties.
The Partnership is unaware of any known demands, commitments, events, or
capital expenditures other than that which is required from the normal
operations of its properties that will result in the Partnership's
liquidity increasing or decreasing in any material way. The Partnership
expects to meet liquidity requirements and demands through cash flow from
operations.
The Partnership has recently made the decision to begin selling its
properties. At this time, two properties have been identified that will be
offered for sale within the next several months. The Partnership's goal is
to have all Fund II-OW properties sold by the end of 2002. As the
properties are sold, all proceeds will be returned to limited partners in
accordance with the Partnership's prospectus.
-11-
<PAGE>
Management estimates that the fair market value of each of the properties
exceeds the carrying value of the corresponding real estate assets;
consequently, no impairment loss has been recorded. In the event that the
net sales proceeds are less than the carrying value of the property sold,
the Partnership would recognize a loss on the sale. Management is not
contractually or financially obligated to sell any of its properties, and
it is management's current intent to fully realize the Partnership's
investment in real estate. The success of the Partnership's future
operations and the ability to realize the investment in its assets will be
dependent on the Partnership's ability to maintain rental rates, occupancy
and an appropriate level of operating expenses in future years. Management
believes that the steps that it is taking will enable the Partnership to
realize its investment in its assets.
-12-
<PAGE>
2. PROPERTY OPERATIONS
As of March 31, 2000, the Partnership owned interests in the following
properties through the Fund II-Fund II-OW Joint Venture:
First Union at Charlotte/Fund II and Fund II-OW
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 211,018 $ 114,717
----------- -----------
Expenses:
Depreciation 91,917 91,917
Management and leasing expenses 17,379 11,472
Other operating expenses 3,627 6,787
----------- -----------
112,923 110,176
----------- -----------
Net income $ 98,095 $ 4,541
=========== ===========
Occupied percentage 100% 100%
=========== ===========
Partnership's ownership percentage 5.3% 5.3%
=========== ===========
Cash distributions to the Fund II-Fund II-OW Joint Venture* $ 194,600 $ 116,499
=========== ===========
Net income generated to the Fund II-Fund II-OW Joint Venture* $ 98,095 $ 4,541
=========== ===========
</TABLE>
*The Partnership holds a 5% ownership in the Fund II-Fund II-OW Joint
Venture.
Rental income, net income, and cash distributions increased for the three
months ended March 31, 2000 as compared to the three months ended March 31,
1999 due to an increased renewed rental rate beginning in May 1999.
Expenses increased as compared to the same periods in 1999 due primarily to
increased management fees which are charges based on rental income.
-13-
<PAGE>
Boeing at the Atrium/Fund II and Fund III Joint Venture
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 367,536 $ 367,536
----------- -----------
Expenses:
Depreciation 216,930 214,105
Management and leasing expenses 45,060 44,774
Other operating expenses 150,182 196,170
----------- -----------
412,172 455,049
----------- -----------
Net loss $ (44,636) $ (87,513)
=========== ===========
Occupied percentage 100% 100%
=========== ===========
Partnership's ownership percentage 3.3% 3.3%
=========== ===========
Cash distributions to the Fund II-Fund II-OW Joint Venture* $ 86,980 $ 89,632
=========== ===========
Net loss allocated to Fund II-Fund II-OW Joint Venture* $ (27,356) $ (53,646)
=========== ===========
</TABLE>
*The Partnership holds a 5% ownership in the Fund II-Fund II-OW Joint Venture.
Rental income remained stable for the three months ended March 31, 2000 as
compared to the three months ended March 31, 1999. Other operating expenses
decreased due to an increase in common area maintenance reimbursements billed to
tenants. 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.
Cash distributions to the Fund II-Fund II-OW Joint Venture decreased even though
net loss decreased by $42,877 due primarily to capital expenditures on the
property's exterior caulking and coating during the first quarter of 2000 for
approximately $50,000.
-14-
<PAGE>
Brookwood Grill/Fund II and Fund III Joint Venture
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 56,187 $ 56,188
Equity in income of joint venture 16,903 17,491
----------- -----------
73,090 73,679
----------- -----------
Expenses:
Depreciation 13,503 13,503
Management and leasing expenses 6,704 8,728
Other operating expenses 10,092 5,525
----------- -----------
30,299 27,756
----------- -----------
Net income $ 42,791 $ 45,923
=========== ===========
Occupied percentage 100% 100%
=========== ===========
Partnership's ownership percentage 3.3% 3.3%
=========== ===========
Cash distributions to the Fund II-Fund II-OW Joint Venture* $ 57,710 $ 55,427
=========== ===========
Net income allocated to the Fund II-Fund II-OW Joint Venture* $ 26,680 $ 28,633
=========== ===========
</TABLE>
* The Partnership holds a 5% ownership in the Fund II-Fund II-OW Joint Venture.
Rental income, net income, and cash distributions to the Fund II-Fund II-OW
Joint Venture remained relatively stable for the three months ended March 31,
2000, as compared to 1999, due to the stable occupancy rate.
-15-
<PAGE>
Holcomb Bridge Road/Fund II, III, VI, VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 222,157 $ 230,063
----------- -----------
Expenses:
Depreciation 104,130 94,129
Management and leasing expenses 30,586 38,874
Other operating expenses 17,218 24,394
----------- -----------
151,934 157,397
----------- -----------
Net income $ 70,223 $ 72,666
=========== ===========
Occupied percentage 100% 100%
=========== ===========
Partnership's ownership percentage 0.8% 0.8%
=========== ===========
Cash distributions to the Fund II-Fund III Joint Venture* $ 45,947 $ 35,418
=========== ===========
Net income allocated to the Fund II-Fund III Joint Venture* $ 16,903 $ 17,491
=========== ===========
</TABLE>
*The Partnership holds a 3.3% ownership in the Fund II-Fund III Joint Venture.
Rental income and net income has decreased for the three months ended March 31,
2000 as compared to the three months ended March 31, 1999 due to straight line
rent adjustment during the first quarter of 1999.
Cash distributions to the Fund II-Fund III Joint Venture increased even though
net income decreased slightly due to lease acquisition fees paid of
approximately $20,000 in 1999.
-16-
<PAGE>
Heritage Place at Tucker Property/FUND I-Fund II Joint Venture
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 337,144 $ 336,859
Interest income 142 136
----------- -----------
337,286 336,995
----------- -----------
Expenses:
Depreciation 122,336 108,796
Management and leasing expenses 28,578 44,484
Other operating expenses 129,039 95,544
----------- -----------
279,953 248,824
----------- -----------
Net income $ 57,333 $ 88,171
=========== ===========
Occupied percentage 88% 91%
=========== ===========
Partnership's ownership percentage 2.4% 2.4%
=========== ===========
Cash distributions to the Fund II-Fund II-OW Joint Venture* $ 34,763 $ 59,448
=========== ===========
Net income allocated to the Fund II-Fund II-OW Joint Venture* $ 25,743 $ 39,598
=========== ===========
</TABLE>
*The Partnership holds a 5% ownership in the Fund II-Fund II-OW Joint Venture.
Rental income remained relatively stable even though there was a decrease in the
occupancy level of the property. This was due to an adjustment in straight line
rent. Total expenses increased in 2000 as compared to 1999, due primarily to
increased depreciation expense, property taxes, and repairs to the air condition
system. Cash distribution decreased in 2000 as compared to 1999 due to capital
improvements of approximately $100,000 for air conditioning systems funded from
cash flow.
-17-
<PAGE>
Cherokee Commons/Fund I, II, II-OW, VI, and VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
=========== ===========
<S> <C> <C>
Revenues:
Rental income $ 242,861 $ 227,383
Interest income 7 20
----------- -----------
242,868 227,403
----------- -----------
Expenses:
Depreciation 110,562 110,112
Management and leasing expenses 16,355 26,135
Other operating expenses (26,968) (30,556)
----------- -----------
99,949 105,691
----------- -----------
Net income $ 142,919 $ 121,712
=========== ===========
Occupied percentage 97% 96%
=========== ===========
Partnership's ownership percentage 2.9% 2.9%
=========== ===========
Cash distributions to the Fund II-Fund II-OW Joint Venture* $ 140,365 $ 124,124
=========== ===========
Net income allocated to the Fund II-Fund II-OW Joint Venture* $ 77,978 $ 66,407
=========== ===========
</TABLE>
*The Partnership holds a 5% ownership in the Fund II-Fund II-OW Joint Venture.
Rental income increased in 2000 as compared to 1999 due to increased occupancy
and increased rental revenue rates. Management and leasing expenses decreased in
2000, as compared to 1999, due to increased leasing commissions for 1999 and a
catch-up of 1998 management fees in 1999. Other operating expenses remain
negative for 2000 and 1999 due to timing differences in the billing of common
area maintenance to tenants. Tenants are billed an estimate amount for the
current year common area maintenance which is then reconciled in the following
year and the difference billed to the tenant.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) No reports on Form 8-K were filed during the first 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 II-OW
(Registrant)
Dated: May 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 Corporate General Partner
-19-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,806
<SECURITIES> 1,143,360
<RECEIVABLES> 25,267
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,171,433
<CURRENT-LIABILITIES> 26,933
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,144,500
<TOTAL-LIABILITY-AND-EQUITY> 1,171,433
<SALES> 0
<TOTAL-REVENUES> 8,632
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,632
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,632
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,632
<EPS-BASIC> 1.42
<EPS-DILUTED> 0
</TABLE>
