<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, 1997 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 0-18407
----------------------------------------------------------
Wells Real Estate Fund III, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1800833
- ------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
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 III, L.P.
--------------------------------
INDEX
-----
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1997
and December 31, 1996................................... 3
Statements of Income for the Three Months and Six Months
Ended June 30, 1997 and 1996............................ 4
Statement of Partner's Capital for the
Six Months Ended June 30, 1997
and the Year Ended December 31, 1996.................... 5
Statements of Cash Flows for the Six
Months Ended June 30, 1997 and 1996..................... 6
Condensed Notes to Financial Statements................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................................. 9
PART II. OTHER INFORMATION.................................................. 18
2
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets June 30, 1997 December 31, 1996
- ------------------------------------------------ ------------- ------------------
<S> <C> <C>
Real estate, at cost:
Land $ 576,350 $ 576,350
Building and improvements, less accumulated
depreciation of $696,068 in 1997 and $613,213
in 1996 2,882,533 2,965,388
----------- -----------
Total real estate 3,458,883 3,541,738
----------- -----------
Cash and cash equivalents 68,329 342,318
Investment in joint ventures (Note 2) 13,136,108 12,926,074
Due from affiliates 183,129 212,943
Accounts receivable 75,599 67,790
Prepaid expenses and other assets 22,999 24,100
----------- -----------
Total assets $16,945,047 $17,114,963
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 40,233 $ 35,941
Partnership distributions payable 3,734 324,495
Due to affiliates 18,127 11,396
----------- -----------
Total liabilities 62,094 371,832
----------- -----------
Partners' capital:
General Partners 0 0
Limited Partners:
Class A - 19,635,965 units outstanding 16,882,953 16,743,131
Class B - 2,544,540 units outstanding 0 0
----------- -----------
Total partners' capital 16,882,953 16,743,131
----------- -----------
Total liabilities and partners' capital $16,945,047 $17,114,963
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements
3
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- -------------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income (note 2) $147,935 $146,241 $295,612 $291,983
Equity in earnings of joint
ventures (Note 2) 46,007 180,081 90,880 383,683
Interest income 3,009 3,808 10,168 9,661
-------- -------- -------- --------
196,951 330,130 396,660 685,327
Expenses:
Management & leasing fees 28,507 18,254 37,615 35,822
Operating costs-rental property 25,917 (24,696) 81,111 14,569
Depreciation 41,428 39,577 82,855 79,154
Legal & accounting 11,057 20,801 22,674 22,344
Computer costs 1,651 1,390 4,957 2,717
Partnership administration 12,974 17,066 27,626 37,847
-------- -------- -------- --------
121,534 72,392 256,838 192,453
-------- -------- -------- --------
Net income $ 75,417 $257,738 $139,822 $492,874
======== ======== ======== ========
Net income allocated to
General Partners $ 0 $ 0 $ 0 $ 0
Net income allocated to Class
A Limited Partners $ 75,417 $257,738 $139,822 $492,874
Net loss allocated to Class B
Limited Partners $ 0 $ 0 $ 0 $ 0
Net income per Class A Limited
Partner Unit $ 0.00 $ 0.01 $ 0.01 $ 0.03
Net loss per Class B
Limited Partner Unit $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Cash distribution per Class A
Limited Partner Unit $ 0.00 $ 0.02 $ 0.00 $ 0.04
</TABLE>
See accompanying condensed notes to financial statements
4
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE SIX MONTHS ENDED
JUNE 30, 1997
<TABLE>
<CAPTION>
LIMITED PARTNERS
------------------------------------------------------
CLASS A CLASS B TOTAL
---------------------------- --------------------- PARTNERS'
UNITS AMOUNTS UNITS AMOUNTS CAPITAL
---------- ------------ --------- ------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 19,635,965 $17,430,457 2,544,540 $0 $17,430,457
Net income 0 731,244 0 0 731,244
Partnership distributions 0 (1,418,570) 0 0 (1,418,570)
---------- ----------- --------- -- -----------
BALANCE, DECEMBER 31, 1996 19,635,965 $16,743,131 2,544,540 $0 $16,743,131
Net income 0 $ 139,822 0 0 $ 139,822
---------- ----------- --------- -- -----------
BALANCE, JUNE 30, 1997 19,635,965 $16,882,953 2,544,540 $0 $16,882,953
========== =========== ========= == ===========
</TABLE>
See accompanying condensed notes to financial statements
5
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
June 30, 1997 June 30, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 139,822 $ 492,874
Adjustments to reconcile net earnings to
net cash used by operating activities:
Equity in income of joint ventures (90,880) (383,683)
Depreciation 82,855 79,154
Changes in assets and liabilities:
Accounts receivable (7,809) 1,993
Prepaids and other assets 1,101 1,521
Accounts payable 4,292 18,219
Due to affiliates 6,731 3,745
--------- -----------
Net cash provided by
operating activities 136,112 213,823
--------- -----------
Cash flow from investing activities:
Investment in joint ventures (532,855) 0
Distributions received from joint ventures 443,515 700,604
--------- -----------
Net cash (used in) provided by
investing activities (89,340) 700,604
Cash flow from financing activities:
Partnership distribution paid (320,761) (1,006,350)
--------- -----------
Net decrease in cash and cash equivalents (273,989) (91,923)
Cash and cash equivalents, beginning of year 342,318 500,327
--------- -----------
Cash and cash equivalents, end of period $ 68,329 $ 408,404
========= ===========
</TABLE>
See accompanying condensed notes to financial statements
6
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
------------
Wells Real Estate Fund III, L.P. (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
July 31, 1988, for the purpose of acquiring, developing, constructing,
owning, operating, improving, leasing and otherwise managing for investment
purposes income-producing commercial properties.
On October 24, 1988, 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 October 23, 1990, and received gross proceeds of $22,206,319
representing subscriptions from 2,700 Limited Partners, composed of two
classes of limited partnership interests, Class A and Class B limited
partnership units.
The Partnership owns interests in properties directly and through equity
ownership in the following joint ventures: (i) The Fund II - Fund III
Joint Venture, (ii) The Fund II, III, VI and VII Joint Venture, and (iii)
The Fund III - Fund IV Joint Venture.
As of June 30, 1997, the Partnership owned interest in the following
properties: (i) the Greenville Property, an office building in Greenville,
North Carolina, owned by Fund III, (ii) the Atrium, an office building in
Houston, Texas, owned by Fund II - Fund III Joint Venture, (iii) the
Brookwood Grill, a restaurant located in Roswell, Georgia, owned by The
Fund II - Fund III Joint Venture, (iv) the Stockbridge Village Shopping
Center, a retail shopping center located in Stockbridge, Georgia, southeast
of Atlanta, owned by Fund III - Fund IV Joint Venture, (v) the G.E. Office
Building located in Richmond, Virginia, owned by Fund III - Fund IV Joint
Venture, and (vi) an office/retail center in Roswell, Georgia, owned by
Fund II, III, VI and VII Joint Venture. All of the foregoing properties
were acquired on an all cash basis.
(b) Basis of Presentation
--------------------------
The financial statements of Wells Real Estate Fund III, L.P. (the
"Partnership") have been prepared in accordance with instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These quarterly statements have not been examined by independent
accountants, but in the opinion of the General Partners, the statements for
the unaudited interim periods presented include all adjustments, which are
7
<PAGE>
of a normal and recurring nature, necessary to present a fair presentation
of the results for such periods. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1996.
(2) Investment in Joint Ventures
----------------------------
The Partnership does not have control over the operations of the joint
ventures; however, it does exercise significant influence. Accordingly,
investment in joint ventures is recorded on the equity method.
Boeing at the Atrium/Fund II - Fund III Joint Venture
-----------------------------------------------------
On April 3, 1989, the Partnership formed a joint venture (the "Fund II -
Fund III Joint Venture") with an existing joint venture (the "Fund II -
Fund II-OW Joint Venture") previously formed between Wells Real Estate Fund
II ("Wells Fund II") and Wells Real Estate Fund II-OW ("Wells Fund II-OW").
Wells Fund II and Wells Fund II-OW are public limited partnerships
affiliated with the Partnership through common general partners with
investment objectives substantially identical to those of the Partnership.
In April 1989, the Fund II-Fund III Joint Venture acquired a four-story
office building located on a 5.6 acre tract of land adjacent to the Johnson
Space Center in metropolitan Houston, in the City of Nassau Bay, Harris
County, Texas, known as "The Atrium at Nassau Bay" (the "Atrium").
The Atrium was first occupied in 1987 and contains approximately 119,000
net leasable square feet. On March 3, 1997 a lease was signed with The
Boeing Company for the entire Atrium Building. The lease is for a period
of five years with an option to renew for an additional five year term.
The rental rate for the first three years of the lease term is $12.25 per
square foot and $12.50 per square foot for the final two years of initial
lease term. The rate for the optional five year term will be determined
based upon the current market rates. Upon 150 day prior written notice,
Boeing has the right to cancel its lease in the event that NASA or another
prime contractor were to cancel or substantially reduce its contract. In
addition, there is a no-cause cancellation provision at the end of the
first three year period. If this no-cause cancellation is exercised,
Boeing would be required to pay unamortized, up-front tenant improvement
costs. The lease also provides that tenant will pay certain operating
expenses in excess of $5.50 per square foot on an annual basis.
Boeing began the move-in phase of its occupancy on April 15, 1997, and
began paying rent on May 15, 1997. The total cost of completing the
required tenant improvements and outside broker commissions of
approximately $1.4 million is being funded out of reserves and cash flows
of the Partnership, Wells Fund II and Wells Fund II-OW.
8
<PAGE>
As of June 30, 1996, the Partnership had contributed approximately
$532,855, Wells Fund II had contributed approximately $197,461, and Wells
Fund II-OW had contributed approximately $11,073 to the tenant improvements
and outside broker commissions required. The ownership percentages in the
Atrium have been adjusted as a result of these additional capital
contributions, and as of June 30, 1997, the Fund II - Fund II-OW Joint
Venture holds an equity interest of approximately 61%, and Wells Fund III
holds an equity interest of approximately 39%.
For a description of other joint ventures and properties owned by the
Partnership, please refer to the Partnership's Form 10-K for the year ended
December 31, 1996.
(3) Legal Proceedings
-----------------
Litigation was instituted in the Superior Court of Gwinnett County, Georgia
on January 13, 1997 against the Partnership, Wells Fund II, Wells Capital,
Inc. and Leo F. Wells, III, who are the general partners of the Partnership
and Wells Fund II, in connection with a request by a limited partner in the
Partnership and Wells Fund II for a list of the names, addresses and
ownership interests of the limited partners which to date the defendants
have refused to furnish to the plaintiff. The case was styled Gramercy
--------
Park Investments L.P. v. Wells Real Estate Fund II, Wells Real Estate Fund
--------------------------------------------------------------------------
III, L.P., Wells Capital, Inc. and Leo F. Wells, III. The plaintiff, which
-----------------------------------------------------
is a limited partner in both the Partnership and Wells Fund II, alleged
that it was entitled to copies of the limited partner lists under
applicable provisions of Georgia partnership law and the partnership
agreements of the Partnership and Wells Fund II so that plaintiff could
make an offer to purchase up to 4.9% of the partnership units in each fund.
The plaintiff sought an order directing the defendants to furnish to the
plaintiff a current list of the names, addresses and ownership interests of
the limited partners in the Partnership and Wells Fund II, as well as an
award of certain damages, including its costs and attorneys' fees and such
other relief as the court would deem just and proper. On February 26,
1997, the Court denied the plaintiff's request for an immediate order
requiring defendants to furnish the lists to the plaintiff and instead
ordered expedited discovery to be completed by March 31, 1997. Ultimately,
the Court secured an agreement between the plaintiff and defendant, which
detailed the conditions and circumstances under which copies of limited
partner lists would be made available for use by the plaintiff (via a
third-party mailing service, as specified by the agreement) and conditions
under which an offer would be made by the plaintiff to the limited
partners. The agreement detailed time deadlines for actions by both the
defendant and the plaintiff. The time deadline for the actual making of
offers to the limited partners was not met by the plaintiff. As a result,
the agreement appears to have been violated and is null and void. The list
of investor names has been returned to the defendant by the third-party
mailing service, and this legal attempt appears to be terminated at this
time.
9
<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, with the meaning of
Section 27A of the Securities Act of 1993 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 in Operations and Changes in Financial Conditions
---------------------------------------------------------
General
-------
Gross revenues of the Partnership were $396,660 for the six months ended
June 30, 1997, as compared to $685,327 for the six months ended June 30,
1996. The decrease for 1997 as compared to 1996 was due to decreased
income from joint ventures, primarily due to the vacancy at The Atrium.
Expenses of the Partnership increased for 1997 compared to 1996, from
$192,453 for the six months ended June 30, 1996, to $256,838 for the six
months ended June 30, 1997. The increase in expenses was due primarily to
increased operating costs during the second quarter of 1997 as compared to
the same time period for 1996. This increase was offset partially by
savings in Partnership administration expenses.
Net cash provided by operating activities decreased from $213,823 in 1996
to $136,112 in 1997. The decrease was due primarily to increased expenses
as discussed above. Cash and cash equivalents decreased from $(91,923) in
1996 to $(273,989). While the Partnership generally distributes cash
available less reserves to the Limited Partners, as discussed previously,
the total cost to complete the required tenant improvements and outside
brokerage commissions relating to the new lease for The Atrium is estimated
to be approximately $1,400,000, which is being funded out of cash which
would otherwise be available for distribution to Limited Partners, along
with reserves of the Partnership, Wells Fund II and Wells Fund II-OW.
10
<PAGE>
There were no cash distributions to Limited Partners holding Class A Units
for the second quarter of 1997, as compared to distributions of $0.02 per
Unit for the second quarter of 1996. No cash distributions were made to
Limited Partners holding Class B Units or the General Partners for the six
months ended June 30, 1997 and 1996. As set forth above, substantially all
cash generated from the operations of properties owned by the Partnership
in the first and second quarters of 1997 is being used to fund the required
tenant improvements and outside brokerage commissions relating to the new
lease at The Atrium. Limited Partners holding Class A Units should not
expect cash distributions from the Partnership to commence again until at
least the end of the third quarter ending September 30, 1997.
11
<PAGE>
PROPERTY OPERATIONS
- -------------------
As of June 30, 1997, the Partnership owned interests in the following
properties:
The Greenville Property- Fund III
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $147,935 $146,241 $295,612 $291,983
Expenses:
Depreciation 28,507 39,577 82,855 79,154
Management & leasing expenses 41,428 18,254 37,615 35,822
Other operating expenses 25,917 (23,795) 81,111 16,010
-------- -------- -------- --------
95,852 34,036 201,581 130,986
-------- -------- -------- --------
Net income $ 52,083 $112,205 $ 94,031 $160,997
======== ======== ======== ========
Occupied % 100.0% 98.0% 100.0% 98.0%
Partnership Ownership % 100.0% 100.0% 100.0% 100.0%
Cash generated to the Partnership $ 95,477 $154,201 $180,940 $244,989
Net income allocated to the Partnership $ 52,083 $112,205 $ 94,031 $160,997
</TABLE>
Rental income remained relatively stable from 1996 to 1997. Operating expenses
increased due to timing differences in the billing of the IBM tenant
reimbursement. Prior year expenses were reimbursed in the second quarter of
1996, while IBM is making monthly estimated payments toward current year
expenses.
12
<PAGE>
Boeing at the Atrium/Fund II and Fund III Joint Venture
- -------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 189,696 $519,837 $ 189,696 $1,039,673
Interest income 100 7,632 2,617 15,318
--------- -------- --------- ----------
189,796 527,649 192,313 1,054,991
--------- -------- --------- ----------
Expenses:
Depreciation 168,643 168,619 337,285 337,097
Management & leasing expenses 29,010 35,690 29,010 71,380
Other operating expenses 191,232 147,609 289,199 233,551
--------- -------- --------- ----------
388,885 351,918 655,494 642,028
--------- -------- --------- ----------
Net (loss) income $(199,089) $175,551 $(463,181) $ 412,963
========= ======== ========= ==========
Occupied % 100.0% 100.0% 100.0% 100.0%
Partnership Ownership % 38.72% 34.4% 38.72% 34.4%
Cash generated to the Partnership $ 0 $140,164 $ 0 $ 294,141
Net (loss) income allocated to the
Partnership $ (77,047) $ 60,389 $(167,895) $ 142,059
</TABLE>
Rental and interest income decreased for the three and six month periods ended
June 30, 1997, compared to the three and six months ended June 30, 1996, due to
the lower rental rate being paid by Boeing, the new tenant, and the vacancy of
the building for the first four and one-half months of 1997. Operating expenses
increased for the three and six months ended June 30, 1997, compared to the
three and six months ended June 30, 1996, due to increased utility, repair, and
maintenance expenses being paid with the leasing of the building to Boeing.
For details related to the recent leasing of the Atrium, please refer to the
Condensed Notes to Financial Statements, (2) Investment in Joint Ventures.
13
<PAGE>
The Brookwood Grill Property/Fund II and Fund III Joint Venture
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $56,187 $56,187 $112,731 $112,375
Equity in income (loss) of joint
venture 7,498 (20,990) 18,355 (26,423)
------- ------- -------- --------
63,685 35,197 131,086 85,952
Expenses:
Depreciation 13,503 13,503 27,006 27,006
Management & leasing expenses 7,284 5,727 14,045 12,695
Other operating expenses 13,872 17,387 16,131 35,276
------- ------- -------- --------
34,659 36,617 57,182 74,977
------- ------- -------- --------
Net income (loss) $29,026 $(1,420) $ 73,904 $ 10,975
======= ======= ======== ========
Occupied % 100.0% 100.0% 100.0% 100.0%
Partnership Ownership % 37.65% 59.04% 37.65% 59.04%
Cash distributed to the Partnership $26,215 $21,982 $ 54,675 $ 39,118
Net income (loss) allocated to the
Partnership $10,928 $ (885) $ 27,825 $ 6,843
</TABLE>
Although rental income remained stable, total revenues increased for the three
and six month periods ended June 30, 1997, as compared to the same periods in
1996, due to the increased equity in income from the Fund II, III, VI, and VII
Joint Venture. Operating expenses decreased in 1997 compared to 1996 due
primarily to the decrease in property tax reimbursements in 1996.
14
<PAGE>
Holcomb Bridge Road Property/Fund II, III, VI, VII Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $135,912 $ 43,754 $296,097 $ 53,175
Expenses:
Depreciation 69,982 77,822 136,112 83,942
Management & leasing expenses 22,483 5,029 43,063 6,080
Other operating expenses 13,633 28,894 43,940 47,733
-------- -------- -------- --------
106,098 111,745 223,115 137,755
-------- -------- -------- --------
Net income (loss) $ 29,814 $(67,991) $ 72,982 $(84,580)
======== ======== ======== ========
Occupied % 72.7% 20.9% 72.7% 20.9%
Partnership Ownership % 9.50% 11.57% 9.50% 11.57%
Cash distributed to the Fund II-
Fund II-OW Joint Venture* $ 25,828 $ 0 $ 53,324 $ 0
Net income (loss) allocated to the
Fund II-Fund II-OW Joint Venture* $ 7,498 $(20,990) $ 18,355 $(26,423)
</TABLE>
*The Partnership holds a 37.65% ownership in the Fund II-Fund III Joint Venture.
In January 1995, the Fund II-Fund III Joint Venture contributed 4.3 acres of
land and land improvements at 880 Holcomb Bridge Road (the "Holcomb Bridge Road
Property") to the Fund II, III, VI, and VII Joint Venture. Development is being
completed on two buildings containing a total of approximately 49,500 square
feet. Approximately 4,100 square feet is currently under construction for which
leases have been signed. Efforts are continuing to lease the remaining space of
approximately 9,300 square feet.
As of June 30, 1997, ten tenants are occupying approximately 36,100 square feet
of space in the retail and office building under leases of varying lengths.
Operating expenses decreased for the three month period ended June 30, 1997, as
compared to June 30, 1996, due to the billing of CAM reimbursements for prior
periods in 1997. Increases in revenues, expenses and net income for the six
months ended June 30, 1997, compared to the six months ended June 30, 1996, are
due to increased occupancy at the property.
15
<PAGE>
The G.E. Building/Richmond-Fund III-Fund IV Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $131,856 $131,856 $263,712 $263,712
Expenses:
Depreciation 49,056 49,053 98,112 98,106
Management & leasing expenses 9,965 9,965 19,930 19,930
Other operating expenses 289 4,162 3,692 7,182
-------- -------- -------- --------
59,310 63,180 121,734 125,218
-------- -------- -------- --------
Net income (loss) $ 72,546 $ 68,676 $141,978 $138,494
======== ======== ======== ========
Occupied % 100.0% 100.0% 100.0% 100.0%
Partnership Ownership % 57.30% 57.30% 57.30% 57.30%
Cash distributed to the Partnership $ 71,941 $ 68,307 $140,684 $135,826
Net income allocated to the
Partnership $ 41,581 $ 39,362 $ 81,377 $ 79,380
</TABLE>
Rental income remained constant for 1997 and 1996. Total expenses decreased in
1997 as compared to 1996, and accordingly, net income increased in 1997, as
compared to 1996, due primarily to a decrease in the cost of property insurance.
16
<PAGE>
The Stockbridge Village Shopping Center Property/Fund III-Fund IV Joint Venture
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $274,300 $269,887 $548,037 $538,342
Interest income 2,474 3,079 6,117 6,692
-------- -------- -------- --------
276,774 272,966 554,154 545,034
-------- -------- -------- --------
Expenses:
Depreciation 84,747 84,748 169,494 169,496
Management & leasing expenses 25,101 24,166 55,437 51,320
Other operating expenses 43,845 2,970 68,263 48,362
-------- -------- -------- --------
153,693 131,884 293,194 269,178
-------- -------- -------- --------
Net (loss) income $123,081 $141,082 $260,960 $275,856
======== ======== ======== ========
Occupied % 93.0% 93.0% 93.0% 93.0%
Partnership Ownership % 57.30% 57.30% 57.30% 57.30%
Cash generated to the Partnership $122,863 $136,168 $256,230 $268,712
Net income allocated to the Partnership $ 70,545 $ 80,863 $149,573 $158,111
</TABLE>
Rental income increased for the three and six months ended June 30, 1997, as
compared to the same periods in 1996, due to rental rate increases. Expenses of
the property increased from $269,178 in 1996 to $293,194 in 1997 due primarily
to timing differences in billing tenant expense reimbursements.
17
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6(b). No reports on Form 8-K were filed during the second quarter of 1997.
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 III, L.P.
(Registrant)
Dated: August 8, 1997 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.
18
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 68,329
<SECURITIES> 13,136,108
<RECEIVABLES> 75,599
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,999
<PP&E> 4,154,951
<DEPRECIATION> 696,068
<TOTAL-ASSETS> 16,945,047
<CURRENT-LIABILITIES> 62,094
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,882,953
<TOTAL-LIABILITY-AND-EQUITY> 16,945,047
<SALES> 0
<TOTAL-REVENUES> 396,660
<CGS> 0
<TOTAL-COSTS> 256,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 139,822
<INCOME-TAX> 139,822
<INCOME-CONTINUING> 139,822
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,822
<EPS-PRIMARY> .00
<EPS-DILUTED> 0
</TABLE>
