<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, 1996 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 0-20103
------------------------------------------------------
Wells Real Estate Fund IV, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1915128
- ------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 IV, L.P.
-------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<C> <S> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1996
and December 31, 1995 ............................... 3
Statements of Income for the Three Months and
Six Months Ended June 30, 1996 and 1995 ............. 4
Statement of Partners' Capital for the Year Ended
December 31, 1995 the Six Months Ended
June 30, 1996 ....................................... 5
Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995 ................. 6
Condensed Notes to Financial Statements ............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ......................................... 12
PART II. OTHER INFORMATION ............................................ 17
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND IV, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Investment in joint ventures (Note 2) $10,851,649 $11,047,207
Cash and cash equivalents 142,358 148,494
Due from affiliates 205,039 211,281
Other assets 0 1,042
----------- -----------
Total assets $11,199,046 $11,408,024
=========== ===========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
LIABILITIES:
Accounts payable and accrued expenses $ 0 $ 0
Partnership distributions payable 210,753 223,131
----------- -----------
Total liabilities 210,753 223,131
=========== ===========
PARTNERS' CAPITAL:
Limited partners;
Class A - 1,322,909 units outstanding 10,988,293 11,184,893
Class B - 38,551 units outstanding 0 0
----------- -----------
Total partners' capital 10,988,293 11,184,893
----------- -----------
Total liabilities and partners' capital $11,199,046 $11,408,024
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND IV, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Equity in income of joint ventures (Note 2) $148,202 210,898 $281,657 $393,592
Interest income 2,252 2,498 4,811 5,587
-------- -------- -------- --------
150,454 213,396 286,468 399,179
-------- -------- -------- --------
Expenses:
Legal and accounting 17,500 591 20,892 6,880
Computer costs 1,045 1,872 1,832 4,839
Partnership administration 12,921 11,125 28,067 23,149
Amortization 0 1,562 1,042 3,125
-------- -------- -------- --------
31,467 15,150 51,833 37,993
-------- -------- -------- --------
Net income $118,987 $198,246 $234,635 $361,186
======== ======== ======== ========
Net income allocated to Class A
Limited Partners $118,987 $198,246 $234,635 $361,186
Net loss allocated to Class B
Limited Partners $ 0 $ 0 $ 0 $ 0
Net income per Class A
Limited Partner unit $ 0.09 $ 0.15 $ 0.18 $ 0.27
Net loss per Class B
Limited Partner unit $ 0 $ 0 $ 0 $ 0
Cash distribution per Class A
Limited Partner unit $ 0.16 $ 0.18 $ 0.33 $ 0.35
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND IV, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1995
AND SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Limited Partners
----------------
Class A Class B Total
------- -------
Partners'
Units Amounts Units Amounts Capital
----- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 1,322,909 $ 11,497,678 38,551 $ 0 $ 11,497,678
Net Income 0 623,867 0 0 623,867
Partnership distributions 0 (936,652) 0 0 (936,652)
------------- ------------- ------------- ------------- -------------
BALANCE, December 31, 1995 1,332,909 11,184,893 38,551 0 11,184,893
Net Income 0 234,635 0 0 234,635
Partnership distributions 0 (431,235) 0 0 (431,235)
------------- ------------- ------------- ------------- -------------
BALANCE, June 30, 1996 1,322,909 $ 10,988,293 38,551 0 $ 10,988,293
============= ============= ============= ============= =============
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND IV, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
----------------
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 234,635 $ 361,186
--------- ---------
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in income of joint ventures (281,657) (393,592)
Distributions received from joint ventures 483,456 467,294
Distributions to partners from accumulated
Earnings (443,613) (436,438)
Amortization 1,042 3,125
Changes in assets and liabilities:
Accounts Payable 0 (3,000)
--------- ---------
Total Adjustments (240,772) (362,611)
--------- ---------
Net cash used in
operating activities (6,137) (1,425)
--------- ---------
Cash flows from investing activities:
Investment in joint ventures 0 (13,541)
--------- ---------
Net decrease in cash and cash equivalents (6,137) (14,966)
--------- ---------
Cash and cash equivalents, beginning of year 148,494 165,648
--------- ---------
Cash and cash equivalents, end of period $ 142,357 $ 150,682
========= =========
Supplemental disclosure of noncash
investing activities: $ 0 $ 1,068
========= =========
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND IV, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
-------
Wells Real Estate Fund IV, L.P. (the "Partnership") is a Georgia
public limited partnership having Leo F. Wells, III and Wells
Partners, L.P., as General Partners. The Partnership was formed on
October 25, 1990, for the purpose of acquiring, developing,
constructing, owning, operating, improving, leasing and otherwise
managing for investment purposes income-producing commercial
properties.
On March 4, 1991, the Partnership commenced an offering of up to
$25,000,000 of Class A or Class B limited partnership units ($10.00
per unit) pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933. The Partnership did not commence active
operations until it received and accepted subscriptions for 125,000
units which occurred on May 13, 1991. The offering was terminated on
February 29, 1992, at which time the Partnership had obtained total
contributions of $13,614,652 representing subscriptions from 1,285
Limited Partners.
As of June 30, 1996, the Partnership owned interests in the following
properties: (i) the Stockbridge Village Shopping Center, a retail
shopping center located in Stockbridge, Georgia, southeast of Atlanta;
(ii) the G.E. Office Building, a two-story office building located in
Richmond, Virginia; (iii) The Medical Center Project, two
substantially identical two-story office buildings located in Clayton
County, Georgia; and (iv) The Jacksonville Project, a four-story
office building located in Jacksonville, Florida. All of the foregoing
properties were acquired on an all cash basis.
(b) Basis of Presentation
---------------------
The financial statements of Wells Real Estate Fund IV, 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 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, 1995.
7
<PAGE>
(c) Employees
---------
The Partnership has no direct employees. The employees of Wells
Capital, Inc., the sole general partner of Wells Partners, L.P., a
General Partner of the Partnership, perform a full range of real
estate services including leasing and property management, accounting,
asset management and investor relations for the Partnership.
(d) Insurance
---------
Wells Management Company, Inc., an affiliate of the General Partners,
carries comprehensive liability and extended coverage with respect to
all the properties owned directly or indirectly by the Partnership. In
the opinion of management, the properties are adequately insured.
(e) Competition
-----------
The Partnership will experience competition for tenants from owners
and managers of competing projects which may include the General
Partners and their affiliates. As a result, the Partnership may be
required to provide free rent, reduced charges for tenant improvements
and other inducements, all of which may have an adverse impact on
results of operations. At the time the Partnership elects to dispose
of its properties, the Partnership will also be in competition with
sellers of similar properties to locate suitable purchasers for its
properties.
(2) Investment in Joint Ventures
----------------------------
The following describes the properties in which the Partnership owns an
interest as of June 30, 1996. 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.
Fund III - Fund IV Joint Ventures
- ---------------------------------
On March 27, 1991, the Partnership and Wells Real Estate Fund III, L.P. ("Wells
Fund III"), a Georgia public limited partnership having Leo F. Wells, III and
Wells Capital, Inc., a Georgia corporation, as General Partners, formed a joint
venture known as Fund III and Fund IV Associates (the "Fund III-Fund IV Joint
Venture"). The investment objectives of Wells Fund III are substantially
identical to those of the Partnership. The Partnership holds an approximate
42.7% of equity interest in the Fund III-Fund IV Joint Venture which owns and
operates a multi-tenant retail center and an office building. As of June 30,
1996, the Partnership had contributed $6,131,677 and Wells Fund III had
contributed $8,119,603 for total contributions of $14,251,280 to the Fund III-
Fund IV Joint Venture. The Partnership owns interests in the following two
properties through the Fund III-Fund IV Joint Venture:
8
<PAGE>
The Stockbridge Property
- ------------------------
On April 4, 1991, the Fund III-Fund IV Joint Venture purchased 13.62 acres of
real property located in Clayton County, Georgia for the purchase price of
$3,057,729, including acquisition costs, for the purpose of developing,
constructing and operating a shopping center known as the Stockbridge Village
Shopping Center (the "Stockbridge Property"). The Stockbridge Property consists
of a multi-tenant shopping center containing approximately 113,011 square feet
of which approximately 64,097 square feet is occupied by the Kroger Company, a
retail grocery chain. This is the only tenant which occupies more than ten
percent of the rentable square feet. The lease with Kroger Company is for an
initial term of 20 years commencing November 14, 1991, with an option to extend
for four consecutive five year periods at the same rental rate as the original
lease. The annual base rent payable under the Kroger lease during the initial
term is $492,692. The remaining 48,914 square feet is comprised of 12 separate
retail spaces and a 3 free standing retail buildings. As of June 30, 1996, the
Partnership had contributed a total of $5,067,132 and Wells Fund III had
contributed a total of $4,515,042 to fund the total costs of approximately
$9,562,000 to fund the acquisition and development of the Stockbridge Property.
The occupancy rates at the Stockbridge Property for the quarters ended June 30
were 93% in 1996, 100% in 1995, 99% in 1994 and 1993, and 94% in 1992. The
average effective annual rental per square foot at the Stockbridge Property was
$9.54 for 1996, $10.16 for 1995, $10.26 for 1994, $9.13 for 1993, and $7.34 for
1992.
The G.E. Building/Richmond
- --------------------------
The G.E. Building is a two-story office building containing approximately 43,000
square feet located in Richmond, Virginia which was acquired by the Fund III-
Fund IV Joint Venture on July 1, 1992, for a purchase price of $4,687,600. As of
June 30, 1996, a total of $4,689,106 had been incurred for the acquisition of
the G.E. Building. Of this amount, the Partnership contributed $1,084,545 and
Wells Fund III contributed $3,604,561 to the Fund III-Fund IV Joint Venture.
The entire G.E. Building is currently under a net lease to General Electric
("G.E."), a corporate office for the lighting division. The annual base rent
payable is currently $530,742 with annual base increases of 2%. The G.E. lease
expires March 31, 2000, with an option to extend the lease for one additional
five-year period at the same rental rate as the original lease.
The occupancy rate at the G.E. Building for the quarters ended June 30 was 100%
for 1996, 1995, 1994, 1993 and 1992. The average effective annual rental per
square foot at the G.E. Building is $12.27 for 1996, 1995, 1994, 1993, and 1992.
9
<PAGE>
Fund IV-Fund V Joint Venture
- ----------------------------
On April 14, 1992, the Partnership and Wells Real Estate Fund V, L.P. ("Wells
Fund V"), a Georgia public limited partnership affiliated with the Partnership
through common general partners, formed a joint venture known as Fund IV and
Fund V Associates (the "Fund IV-Fund V Joint Venture"). The investment
objectives of Wells Fund V are substantially identical to those of the
Partnership. The Partnership holds an approximate 38% equity interest in the
Fund IV-Fund V Joint Venture which owns and operates the two office buildings
described below. As of June 30, 1996, the Partnership had contributed $4,736,173
and Wells Fund V had contributed $7,719,249 for total contributions of
$12,455,422 to the Fund IV-Fund V Joint Venture. The Partnership owns interests
in the following two properties through the Fund IV-Fund V Joint Venture:
The Jacksonville Property
- -------------------------
On June 8, 1992, the Fund IV-Fund V Joint Venture acquired 5.676 acres of real
property located in Jacksonville, Florida for a purchase price of $1,360,000 for
development of the Jacksonville Property. The Jacksonville Property consists of
a four-story office building containing approximately 88,600 rentable square
feet leased primarily by International Business Machines Corporation ("IBM"), a
computer sales and service corporation, and Customized Transportation, Inc.
("CTI"), a division of CSX Railroad, a transportation corporation.
The initial term of the IBM lease for 68,100 square feet is 9 years and 11
months and commenced upon completion of the building in June 1993. IBM has the
option to extend the initial lease for two consecutive five-year periods at 90%
of the prevailing market values and rates for those periods. The annual base
rent payable under the IBM lease during the initial term is $1,122,478 payable
in equal monthly installments of $93,540. IBM is also required to pay additional
rent equal to its share of operating expenses during the lease term.
The term of the CTI lease for 11,780 square feet is five years and commenced in
March, 1994. The annual base rent payable under the CTI lease is $325,965.
The occupancy rates at the Jacksonville Property were 100% in 1996, 1995 and
1994, and 85% in 1993, the first year of occupancy. The average effective annual
rental per square foot at the Jacksonville Property was $16.71 for 1996, $16.53
for 1995, $16.22 for 1994 and $16.38 for 1993.
10
<PAGE>
The Medical Center Property
- ---------------------------
On September 14, 1992, the Fund IV-Fund V Joint Venture acquired 2.655 acres of
real property in Stockbridge, Georgia for $440,000 for the purpose of
constructing two substantially identical two-story office buildings containing
approximately 17,847 rentable square feet each (the "Medical Center Property").
As of June 30, 1996, the Partnership had contributed $1,296,226 and Wells Fund V
had contributed $2,757,540 to the Fund IV-Fund V Joint Venture for the
acquisition and development of the Medical Center Property. It is currently
anticipated that an additional approximately $146,000 will be required for the
completion of the Medical Center Property. Wells Fund V has reserve funds for
this purpose, with any excess costs which may be required to be funded out of
operating cash flow.
Construction on the first building was completed in March, 1993, and the
building shell of the second building was completed in April, 1994. Georgia
Baptist, a medical health care and urgent care facility, has leased
approximately 14,669 square feet in the first building for a term of six years
and has the option to extend the initial term of the lease for one five-year
period beginning at $18.50 per square foot with $.50 per square foot annual
increases. The base rent payable per square foot ranges from $16.00 per month
during the first year to $18.50 during the sixth year. In addition, Georgia
Baptist has leased approximately 3,376 square feet in the second building for a
term of five years commencing in December, 1994 at an annual rental rate of
$55,704, increasing to $57,392 in the fourth year and $59,080 in the fifth year.
The occupancy rate at the Medical Center Property for the quarters ended June 30
was 69% in 1996 and 1995, 58% in 1994 and 69% in 1993, the first year of
occupancy. The average effective annual rental per square foot at the Medical
Center Property was $11.88 for 1996, $10.43 for 1995, $7.59 for 1994 and $11.25
for 1993.
11
<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 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 of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
- -------
Gross revenues of the Partnership were $150,454 for the three months ended June
30, 1996, as compared to $213,396 for the three months ended June 30, 1995, and
$286,468 for the six months ended June 30, 1996, as compared to $399,179 for the
six months ended June 30, 1995. This decrease in gross revenues was due to
decreased equity in income of joint ventures, which was primarily due to the
increased depreciation expenses described below. The decrease in income from
1995 to 1996 was due primarily to increased depreciation expenses for the joint
ventures from 1995 to 1996 due to a change in the estimated useful lives of
buildings and improvements, as of December 31, 1995, from 40 years to 25 years
and increased legal and accounting expenses.
Expenses of the Partnership increased for the quarters ended June 30, 1996 over
1995 due to an increase in legal and accounting expenses.
The Partnership's net cash used in operating activities remained relatively
stable for 1996 and 1995. Net cash used in investing activities decreased to
zero in 1996 due to the fact that all funds available for investment in
properties have now been invested. Cash and cash equivalents remained relatively
stable for the periods ending June 30, 1996 and 1995. The Partnership
distributes cash available less reserves, and as a result, the level of cash
remains stable.
The Partnership made cash distributions to the Limited Partners holding Class A
Units of $.33 per unit for the six months ended June 30, 1996 of which $.18 was
from investment income and $.15 was a return of capital, and $.35 for the six
months ended June 30, 1995 of which $.27 was from investment income and $.08 was
a return of capital. No cash distributions were made to the Limited Partners
holding Class B Units or to the General Partners.
12
<PAGE>
Property Operations
- -------------------
As of June 30, 1996, the Partnership owned interests in the following properties
through joint ventures:
The Stockbridge Property
- ------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $269,887 299,736 $538,342 $596,271
Interest Income 3,079 4,062 6,692 8,542
-------- -------- -------- --------
272,966 303,798 545,034 604,813
Expenses:
Depreciation 84,748 55,296 169,496 110,592
Management and leasing expenses 24,166 30,445 51,320 59,266
Other expenses 2,970 19,188 48,362 30,567
-------- -------- -------- --------
131,884 104,929 269,178 200,425
-------- -------- -------- --------
Net income $141,082 $198,869 $275,856 $404,388
======== ======== ======== ========
Occupied % 93% 100% 93% 100%
Partnership's Ownership % 42.7% 42.7% 42.7% 42.7%
Cash Distributed to the Partnership $101,403 $112,795 $200,108 $227,938
Net Income Allocated to the Partnership $ 60,219 $ 84,884 $117,745 $172,606
</TABLE>
Rental income decreased for the three and the six months ended June 30, 1996, as
compared to the same period in 1995, due to the decreased occupancy resulting
from the early termination of a lease for 8,025 square feet. Although no leases
have been signed, every effort is being made to re-lease this space. Expenses of
the property increased from $200,425 in 1995 to $269,856 in 1996 due primarily
to the increase in depreciation expenses as a result of the change in the
estimated useful lives of buildings and improvements as previously discussed
under the "General" section of "Results of Operations and Changes in Financial
Condition" and timing differences in billing tenant expense reimbursement and an
extraordinary painting expenditure.
13
<PAGE>
The G.E. Building/Richmond
- --------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $131,856 131,856 $263,712 $263,712
Expenses:
Depreciation 49,053 28,160 98,106 56,320
Management and leasing expenses 9,965 9,926 19,930 19,891
Other expenses 4,162 1,898 7,182 4,905
-------- -------- -------- --------
63,180 39,984 125,218 81,116
-------- -------- -------- --------
Net income $ 68,676 $ 91,872 $138,494 $182,596
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 42.7% 42.7% 42.7% 42.7%
Cash Distributed to the Partnership $ 50,868 $ 50,819 $101,149 $100,136
Net Income Allocated to the Partnership $ 29,314 $ 39,214 $ 59,114 $ 77,938
</TABLE>
Rental income remained constant for 1996 and 1995. Total expenses increased in
1996 over 1995, and accordingly, net income decreased in 1996, as compared to
1995, due primarily to the increase in depreciation expenses as a result of the
change in the estimate useful lives of buildings and improvements as previously
discussed under the "General" section of "Results of Operations and Changes in
Financial Condition".
14
<PAGE>
The Jacksonville Property
- -------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $365,993 $360,041 $731,985 $738,848
Expenses:
Depreciation 79,296 47,484 158,592 94,968
Management and leasing expenses 46,778 45,386 93,754 90,772
Other expenses 66,121 81,906 186,401 216,743
-------- -------- -------- --------
195,195 174,776 438,747 402,483
-------- -------- -------- --------
Net income $170,798 $185,265 $293,238 $336,365
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 38.1% 38.3 38.1% 38.3%
Cash Distributed to the Partnership $ 77,286 $ 88,244 $150,624 $163,594
Net Income Allocated to the Partnership $ 65,116 $ 70,973 $111,796 $129,009
</TABLE>
Rental income has decreased slightly in 1996 as compared to 1995 due to an
overstatement of rental income in 1995 which was corrected in the third quarter
of 1995. Expenses increased in 1996 as compared to 1995 due primarily to
increased depreciation caused by the change in the estimated useful lives of
buildings and improvements as previously discussed under the "General" section
of "Results of Operations and Changes in Financial Condition". The increase in
depreciation was partially offset by savings in various operating expenses. Cash
fundings to the Joint Venture for construction were contributed by Wells Fund V
which resulted in a decrease in the Partnership's ownership interest and an
increase in Wells Fund V's ownership interest in the Fund IV-Fund V Joint
Venture.
15
<PAGE>
The Medical Center Property
- ---------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $105,394 $100,596 $210,580 $186,444
Interest income 2,665 3,017 5,741 6,410
--------- -------- --------- --------
108,059 103,613 216,321 192,854
Expenses:
Depreciation 39,882 25,114 79,764 49,591
Management and leasing expenses 13,839 12,361 24,881 23,245
Other expenses 71,245 24,843 130,032 83,372
--------- -------- --------- --------
124,966 62,318 234,677 156,208
--------- -------- --------- --------
Net income loss ($16,907) $ 41,295 ($18,356) $ 36,646
========= ======== ========= ========
Occupied % 69% 69% 69% 69%
Partnership's Ownership % 38.1% 38.3 38.1% 38.3%
Cash Distributed to the Partnership $ 10,481 $ 23,801 $ 25,333 $ 29,562
Net Income (loss) Allocated to the Partnership ($6,446) $ 15,827 ($6,998) $ 14,039
</TABLE>
Rental income increased in 1996 over 1995 due to increased lease up at the
Medical Center Property. Leases are being actively pursued on the remaining
11,000 rentable square feet of vacant space with strong interest in an
approximate 2,000 square feet. Expenses have increased in 1996 over 1995 levels
due primarily to increased operating expenses of the buildings, the increase in
depreciation expenses caused by the change in the estimated useful lives of
buildings and improvements as previously discussed under the "General" section
of "Results of Operations and Changes in Financial Condition" and a timing
difference in operating expense billings to tenants.
Cash distributions allocated to the Partnership have decreased over prior year
levels due primarily to increased operating expenditures of the property which
were partly offset by the increase in rental income. Cash fundings to the Joint
Venture for construction were contributed by Wells Fund V which resulted in an
increase in its ownership interest and a decrease in the Partnership's ownership
interest in the Fund IV - Fund V Joint Venture.
16
<PAGE>
PART II - OTHER INFORMATION
Item 6(b). No reports on Form 8-K were filed during the second quarter of 1996.
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 IV, L.P.
(Registrant)
Dated: August 13, 1996 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., the General Partner of Wells Partners, L.P.
17
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