<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, 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 0-21580
---------------------------------------------------------
Wells Real Estate Fund V, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1936904
- ------------------------------- -----------------
(State of 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
---- -----
1
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Form 10-Q
---------
Wells Real Estate Fund V, L.P.
------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1997
and December 31, 1996......................................3
Statements of Income for the Three
Months Ended March 31, 1997
and 1996...................................................4
Statement of Partners' Capital
for the Year Ended December 31, 1996,
and the Three Months Ended March 31, 1997..................5
Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996..............................6
Condensed Notes to Financial Statements....................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................8
PART II. OTHER INFORMATION...............................................15
2
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WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
Assets March 31, 1997 December 31, 1996
------ --------------- -----------------
Investment in joint ventures (Note 2) $13,537,859 $13,573,803
Cash and cash equivalents 152,533 252,283
Due from affiliates 291,047 258,760
Deferred project costs 154 5,843
Organization costs, less accumulated
amortization of $31,250 in 1997 and
$30,208 in 1996 0 1,042
Prepaid expenses and other assets 100 350
----------- -----------
Total assets $13,981,693 $14,092,081
=========== ===========
Liabilities and Partners' Capital
- ---------------------------------
Liabilities:
Accounts payable $ 0 $ 4,500
Partnership distribution payable 262,980 247,011
----------- -----------
Total liabilities 262,980 251,511
----------- -----------
Partners' capital:
Limited partners
Class A - 1,551,416 units
outstanding 13,718,713 13,840,570
Class B - 149,186 units outstanding 0 0
----------- -----------
Total partners' capital 13,718,713 13,840,570
----------- -----------
Total liabilities and
partners' capital $13,981,693 $14,092,081
=========== ===========
See accompanying condensed notes to financial statements.
3
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WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
Three Months Ended
------------------
March 31, 1997 March 31, 1996
-------------- ---------------
Revenues:
Interest income $ 3,060 $ 3,632
Equity in income of joint ventures
(Note 2) 162,231 145,244
-------- ---------
165,291 148,876
-------- ---------
Expenses:
Legal and accounting 9,261 1,131
Computer costs 2,493 1,061
Partnership administration 11,387 15,745
Amortization of organization costs 1,042 1,563
-------- ---------
24,183 19,500
-------- ---------
Net income $141,108 $ 129,376
======== =========
Net loss allocated to General Partners
$ 0 $ 0
Net income allocated to Class A Limited
Partners $141,108 $ 281,245
Net loss allocated to Class B Limited
Partners $ 0 $(151,869)
Net income per Class A Limited Partner
Unit $.09 $ .18
Net loss per Class B Limited Partner $ 0 $ (.95)
Unit
Cash distribution per Class A Limited
Partner Unit $.17 $ .17
See accompanying condensed notes to financial statements.
4
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WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
LIMITED PARTNERS
-----------------
CLASS A CLASS B TOTAL
----------------- ------------- GENERAL PARTNERS'
UNITS AMOUNT UNITS AMOUNT PARTNERS CAPITAL
----------------- ------------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31,
1995 1,541,017 $13,736,181 159,585 $ 604,978 $0 $14,341,159
Net income (loss) 0 1,095,296 0 (589,646) 0 505,650
Partnership distributions 0 (1,006,239) 0 0 0 (1,006,239)
Class B conversion
elections 5,399 15,332 (5,399) (15,332) 0 0
BALANCE, DECEMBER 31, --------- ----------- ------- --------- -- -----------
1996 1,546,416 13,840,570 154,186 0 0 13,840,570
Net income (loss) 0 141,108 0 0 0 141,108
Partnership distributions 0 (262,965) 0 0 0 (262,965)
Class B conversion
elections 5,000 0 (5,000) 0 0 0
--------- ----------- ------- --------- -- -----------
BALANCE, MARCH 31, 1997 1,551,416 $13,718,713 149,186 $ 0 $0 $13,718,713
========= =========== ======= ========= == ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
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WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
Cash flow from operating activities:
Net income $ 141,108 $ 129,376
Adjustments to reconcile net
income to net
cash used in operating
activities:
Equity in income of joint
ventures (162,231) (145,244)
Distributions received from
joint ventures 258,760 260,128
Partnership distributions paid (246,996) (251,548)
Amortization of organization
costs 1,042 1,563
Changes in assets and
liabilities:
Prepaid and other assets 250 0
Accounts payable (4,500) (5,000)
--------- ---------
Net cash used in
operating
activities (12,567) (10,725)
--------- ---------
Cash flow from investing
activities -
Investment in joint ventures (87,183) (225)
--------- ---------
Net decrease in cash
and cash
equivalents (99,750) (10,950)
Cash and cash equivalents,
beginning of year 252,283 256,180
--------- ---------
Cash and cash equivalents, end of
period $ 152,533 $ 245,230
========= =========
Supplemental Schedule of noncash
investing activities - deferred
project costs applied to
investing activities $ 5,689 $ 0
========= =========
See accompanying condensed notes to financial statements.
6
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WELLS REAL ESTATE FUND V, L.P
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
(1) Basis of Presentation
---------------------
The financial statements of Wells Real Estate Fund V, 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 year ended December 31, 1996.
(a) General
-----------
Wells Real Estate Fund V, 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, owning, operating, improving, leasing,
and otherwise managing for investment purposes income producing commercial
or industrial properties.
On March 6, 1992, 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 filed under the
Securities Act of 1933. The Partnership did not commence active operations
until it received and accepted subscriptions for a minimum of 125,000 units
on April 27, 1992. The offering was terminated on March 3, 1993, at which
time the Partnership had sold 1,520,967 Class A Units and 179,635 Class B
Units representing $17,006,020 of capital contributions by investors who
were admitted to the Partnership as Limited Partners.
The Partnership owns an interest in the following properties through its
equity ownership in the following joint ventures; (I) Fund IV and Fund V
Associates, a joint venture between the Partnership and Wells Real Estate
Fund IV, L.P. (the "Fund IV - Fund V Joint Venture"); (ii) Fund V and Fund
VI Associates, a joint venture between the Partnership and Wells Real
Estate Fund VI, L.P. (the "Fund V - Fund VI Joint Venture"); and (iii) Fund
V, Fund VI, and Fund VII Associates, a joint venture between the
Partnership, Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund
VII, L.P. (the "Fund V-VI-VII Joint Venture").
As of March 31, 1997, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (I) a
four-story office building
7
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located in Jacksonville, Florida (the "IBM Jacksonville"), which is owned
by the Fund IV - Fund V Joint Venture; (ii) two substantially identical
two-story office buildings located in Clayton County, Georgia (the "Medical
Center"), which is owned by the Fund IV -Fund V Joint Venture; (iii) a
four-story office building located in metropolitan Hartford, Connecticut
(the "Hartford Building"), which is owned by the Fund V - Fund VI Joint
Venture; (iv) two retail buildings located in Clayton County, Georgia (the
"Stockbridge Village II"), which is owned by the Fund V - Fund VI Joint
Venture; and (v) a three-story office building located in Appleton,
Wisconsin (the "Marathon Building"), which is owned by the Fund V-VI-VII
Joint Venture. 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, 1996.
(2) Investment in Joint Ventures
----------------------------
The Partnership owns interest in five properties through its investment in
joint ventures of which four are office buildings and one is a retail
building. 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.
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.
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 form 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 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 Partnerships were $165,291 for the three months ended
March 31, 1997, as compared to $148,876 for the three months ended March
31, 1996. Gross revenues and net income have increased for the three
months ended March 31, 1997,
8
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over 1996 levels due chiefly to increased income from joint ventures offset
partially by increased expenses.
Expenses of the Partnership increased from $19,500 for the three months
March 31, 1996, to $24,183 for the same period in 1997, due primarily to
increased accounting and other professional fees.
Net cash used in operating activities remained relatively stable for three
months ended March 31, 1997 and 1996. The change in cash and cash
equivalents from $(10,950) for the three months ended March 31, 1996 to
$(99,750) for the three months ended March 31, 1997 was due primarily to
the increase in investments in joint ventures.
The Partnership made cash distributions of investment income to the Limited
Partners holding Class A Units of $.17 per Class A Unit for the three
months ended March 31, 1997 and 1996. No cash distributions of investment
income were made to the Limited Partners holding Class B Units.
9
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PROPERTY OPERATIONS
-------------------
As of March 31, 1997, the Partnership owned interests in the following
operational properties:
The Marathon Building/Fund V-VI-VII Joint Venture
-------------------------------------------------
Three Months Ended March 31
-----------------------------
1997 1996
-------------- -------------
Revenues:
Rental Income $ 239,956 $ 242,754
Expenses:
Depreciation 87,646 87,646
Management & leasing expenses 10,002 9,710
Other operating expenses 1,128 3,698
------- -------
98,776 101,054
------- -------
Net income $ 141,180 $ 141,700
======= =======
Occupied % 100% 100%
Partnership's Ownership % in the
Fund V - VI - VII 16.5% 16.5%
Cash Distribution to Partnership $ 38,528 $ 35,340
Net Income Allocated to the
Partnership $ 23,238 $ 23,324
Rental income decreased for the three months ended March 31, 1997, compared
to the same period of 1996, due to a one-time adjustment of straight-line
rent for the partial month of September, 1994. A small increase in
management and leasing fees in first quarter 1997, over the first quarter
1996, was offset by a decrease in operating expense, primarily accounting
and administrative fees. Cash distributions to the Partnership increased
for the three months ended March 31, 1997, compared to 1996, due to the
scheduled increase in rent which became effective January 1, 1997.
10
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IBM Jacksonville /Fund IV - Fund V Joint Venture
------------------------------------------------
Three Months Ended March 31
-----------------------------
1997 1996
-------------- -------------
Revenues:
Rental Income $ 366,121 $ 365,992
Expenses:
Depreciation 79,494 79,296
Management & leasing expenses 43,365 43,976
Other operating expenses 105,483 120,280
------- -------
228,342 243,552
------- -------
Net income $ 137,779 $ 122,440
======= =======
Occupied % 100% 100%
Partnership's Ownership % in the
Fund IV - Fund V Joint Venture 62.2% 61.9%
Cash Distribution to Partnership $ 127,081 $ 119,024
Net Income Allocated to the
Partnership $ 85,496 $ 75,760
Rental income for the Jacksonville Project remained steady in 1997 as
compared to 1996 figures. Operating expenses decreased in 1997 primarily
due to common area maintenance reimbursements collected from existing
tenants. These collections resulted in a 12.5% increase in net income for
the project. Cash distributions increased for 1997 over 1996 due primarily
to decreased expenses and increased ownership in the Fund IV - Fund V Joint
Venture. Cash fundings to the Joint Venture for construction were
contributed by the Partnership which increased the Partnership's ownership
interest and decreased Wells Fund IV's ownership interest in the Fund IV-
Fund V Joint Venture.
11
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The Medical Center /Fund IV - Fund V Joint Venture
--------------------------------------------------
Three Months Ended March 31
-----------------------------
1997 1996
-------------- -------------
Revenues:
Rental Income $88,568 $105,186
Interest Income 2,639 3,076
------- --------
91,207 108,262
------- --------
Expenses:
Depreciation 39,822 39,882
Management & leasing expenses 11,665 11,042
Other operating expenses 45,416 58,787
------- --------
96,903 109,711
------- --------
Net loss $(5,696) $ (1,449)
======= ========
Occupied % 61 % 68 %
Partnership's Ownership % in the
Fund IV - Fund V Joint Venture 62.2% 61.9%
Cash Distribution to Partnership $24,268 $ 24,105
Net loss Allocated to the
Partnership $(3,536) $ (897)
Rental income for the Medical Center Project decreased in 1997 over 1996
due primarily to a decrease in the occupancy level of the project and an
adjustment in the straight-line rent. The reduction of expenses in 1997
over 1996 levels was primarily a result of the decrease in occupancy. Cash
distributions remained relatively stable for 1996 and 1997. Cash fundings
to the Joint Venture for construction were contributed by the Partnership
which increased its ownership interest and decreased Wells Fund IV's
ownership interest in the Fund IV - Fund V Joint Venture.
12
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The Hartford Building/Fund V - Fund VI Joint Venture
----------------------------------------------------
Three Months Ended March 31
-----------------------------
1997 1996
-------------- -------------
Revenues:
Rental Income $ 179,375 $ 179,375
Expenses:
Depreciation 73,008 73,008
Management & leasing expenses 8,067 7,175
Other operating expenses (17,255) 3,175
------- -------
63,820 83,358
------- -------
Net income $ 115,555 $ 96,017
======= =======
Occupied % 100% 100%
Partnership's Ownership % in the Fund V
- Fund VI Joint Venture 47.0% 47.6%
Cash Distribution to Partnership $ 89,776 $ 81,151
Net Income Allocated to the
Partnership $ 54,578 $ 45,664
Net income increased and expenses decreased in 1997, as compared to 1996,
due primarily to an insurance reimbursement from the tenant for prior
year's expenses.
The Partnership's ownership in the Fund V - Fund VI Joint Venture decreased
from 47.6% in 1996, to 47.0% in 1997, due to additional fundings by Wells
Fund VI in 1997, which decreased the Partnership's ownership interest in
the Joint Venture.
13
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Stockbridge Village II/Fund V - Fund VI Joint Venture
-----------------------------------------------------
Three Months Ended March 31
-----------------------------
1997 1996
-------------- -------------
Revenues:
Rental Income $ 63,336 $ 46,461
Expenses:
Depreciation 20,865 19,761
Management & leasing expenses 4,914 4,597
Other operating expenses 32,356 19,175
------ ------
58,135 43,533
------ ------
Net income $ 5,201 $ 2,928
====== ======
Occupied % 66% 61%
Partnership's Ownership % in the Fund
V - Fund VI Joint Venture 47.0% 47.6%
Cash Distribution to Partnership $ 11,393 $ 10,385
Net Income Allocated to the
Partnership $ 2,454 $ 1,392
Rental income, expenses and net income are greater in the first quarter of
1997, as compared to the same period in 1996, due primarily to a new tenant
occupying 4,969 square feet in February that increased rental revenue. The
increase in expenses was due primarily to a bad debt reserve for Glenn's
Open Pit Bar-B-Que which has vacated 4,303 square feet as of April 1, 1997,
and the receivable from this tenant has been turned over to lawyers for
collection. Efforts are being made to re-lease the space.
The Partnership's ownership percentage in the Fund V - Fund VI Joint
Venture decreased to 47.0% for 1997, as compared to 47.6% in 1996, due to
additional fundings by Wells Fund VI which increased Wells Fund VI's and
decreased the Partnership's ownership interest in the Fund V - Fund VI
Joint Venture.
14
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PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the first 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 V, L.P.
Dated: May 12, 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., the
General Partner of Wells Partners, L.P.
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 152,533
<SECURITIES> 13,537,859
<RECEIVABLES> 291,047
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 100
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,981,693
<CURRENT-LIABILITIES> 262,980
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,718,713
<TOTAL-LIABILITY-AND-EQUITY> 13,981,693
<SALES> 0
<TOTAL-REVENUES> 165,291
<CGS> 0
<TOTAL-COSTS> 24,183
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 141,108
<INCOME-TAX> 141,108
<INCOME-CONTINUING> 141,108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,108
<EPS-PRIMARY> .09
<EPS-DILUTED> 0
</TABLE>
