<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, 1998 or
--------------------------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------------ ----------------------------
Commission file number 0-21580
---------------------------------------------------------
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
-------- ---------
<PAGE>
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, 1998
and December 31, 1997.......................... 3
Statements of Income for the Three
Months Ended March 31, 1998
and 1997....................................... 4
Statement of Partners' Capital
for the Year Ended December 31, 1997,
and the Three Months Ended March 31, 1998...... 5
Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997.................. 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
<PAGE>
WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets March 31, 1998 December 31, 1997
------ -------------- -----------------
<S> <C> <C>
Investment in joint ventures (Note 2) $13,055,965 $13,189,076
Cash and cash equivalents 93,090 91,678
Due from affiliates 301,702 305,710
----------- -----------
Total assets $13,450,757 $13,586,464
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Partnership distributions payable $ 289,040 $ 288,518
----------- -----------
Partners' capital:
Limited partners
Class A - 1,551,416 units outstanding 13,161,717 13,297,946
Class B - 149,186 units outstanding 0 0
----------- -----------
Total partners' capital 13,161,717 13,297,946
----------- -----------
Total liabilities and partners' $13,450,757 $13,586,464
capital =========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Interest income $ 1,287 $ 3,060
Equity in income of joint ventures
(Note 2) 168,590 162,231
------------ -------------
169,877 165,291
------------ --------------
Expenses:
Legal and accounting 4,771 9,261
Computer costs 2,017 2,493
Partnership administration 10,293 11,387
Amortization of organization
costs 0 1,042
------------ -------------
17,081 24,183
------------ -------------
Net income $ 152,796 $ 141,108
============ ============
Net loss allocated to General Partners $ 0 $ 0
Net income allocated to Class A Limited
Partners $ 152,796 $ 141,108
Net loss allocated to Class B Limited
Partners $ 0 $ 0
Net income per Class A Limited
Partner Unit $ 0.10 $ 0.09
Net loss per Class B Limited Partner Unit $ 0 $ 0
Cash distribution per Class A Limited
Partner Unit $ 0.19 $ 0.17
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1998
<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, 1996 1,546,416 $13,840,570 154,186 $0 $0 $13,840,570
Net income (loss) 0 559,801 0 0 0 559,801
Partnership distributions 0 (1,102,425) 0 0 0 (1,102,425)
Class B conversion elections 5,000 0 (5,000) 0 0 0
--------- ----------- ------- -- -- -----------
BALANCE, December 31, 1997 1,551,416 13,297,946 149,186 0 0 13,297,946
Net income 0 152,796 0 0 0 152,796
Partnership distributions 0 (289,025) 0 0 0 (289,025)
--------- ----------- ------- -- -- -----------
BALANCE, March 31, 1998 1,551,416 $13,161,717 149,186 $0 $0 $13,161,717
========= =========== ======= == == ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND V, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 152,796 $ 141,108
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in income of joint venture (168,590) (162,231)
Amortization of organization costs 0 1,042
Changes in assets and liabilities:
Prepaids & other assets 0 250
Accounts payable 0 (4,500)
--------- ---------
Net cash used in operating
activities (15,794) (24,331)
--------- ---------
Cash flow from investing activities:
Distributions received from
joint ventures 305,709 258,760
Investment in joint ventures 0 (87,183)
--------- ---------
Net cash provided by investing
activities 305,709 171,577
--------- ---------
Cash flow from financing activities:
Partnership distributions paid (288,503) (246,996)
--------- ---------
Net increase (decrease) in cash
and cash equivalents 1,412 (99,750)
Cash and cash equivalents, beginning
of year 91,678 252,283
--------- ---------
Cash and cash equivalents, end of
period $ 93,090 $ 152,533
========= =========
Supplemental Schedule of noncash
investing activities - deferred
project costs applied to investing activities $ 0 $ 5,689
========= =========
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND V, L.P
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
-----------
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 interests in 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, 1998, the Partnership owned interests in the following
properties through its ownership in the foregoing joint ventures: (i) a
four-story office building located in Jacksonville, Florida ("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 are 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 ("Stockbridge Village II"), which are
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, 1997.
7
<PAGE>
(b) 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, 1997.
(2) Investment in Joint Ventures
----------------------------
The Partnership owns interests in five properties through its investment in
joint ventures of which four are office building properties and one is a
retail property. 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,
1997.
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 Partnership were $169,877 for the three months ended
March 31, 1998, as compared to $165,291 for the three months ended March
31, 1997. Gross revenues and net income have increased for the three
months ended March 31, 1998, over 1997 levels due chiefly to increased
income from joint ventures and a decrease in legal and accounting expenses.
8
<PAGE>
Net cash used in operating activities remained relatively stable for the
three months ended March 31, 1998 and 1997. The increase in cash and cash
equivalents from $(99,750) for the three months ended March 31, 1997, to
$1,412 for the three months ended March 31, 1998, was due primarily to a
decrease in investments in joint ventures.
The Partnership made cash distributions to the Limited Partners holding
Class A Units of $.19 per Class A Unit for the three months ended March 31,
1998, as compared to distributions of $.17 per Class A Unit for the three
months ended March 31, 1997. No cash distributions were made to the
Limited Partners holding Class B Units or to the General Partners.
Recent Accounting Pronouncements
--------------------------------
Statement of Financial Accounting Standards (SFAF) No. 130, "Reporting
Comprehensive Income", requires certain transactions (e.g., unrealized
gains/losses on available for sale securities) that are not reflected in
net income to be displayed as other comprehensive income. The Statement
also requires an entity to report total comprehensive income (i.e., net
income plus other comprehensive income) for every period in which an income
statement is presented. SFAS No. 130 is effective for annual and interim
periods beginning after December 13, 1997. None of the transactions
required to be reported in other comprehensive income pertain to the
Partnership; consequently, adoption of this statement had no impact on the
partnership's disclosures.
The General Partners have verified that all operational computer systems
are year 2000 compliant. This includes systems supporting accounting,
property management and investor services. Also, as part of this review,
all building control systems have been verified as compliant. The current
line of business applications are based on compliant operating systems and
database servers. All of these products are scheduled for additional
upgrades before the year 2000. Therefore, it is not anticipated that the
year 2000 will have significant impact on operations.
9
<PAGE>
PROPERTY OPERATIONS
-------------------
As of March 31, 1998, the Partnership owned interests in the following
operational properties:
The Marathon Building/Fund V-VI-VII Joint Venture
-------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income $242,754 $239,956
Expenses:
Depreciation 87,646 87,646
Management & leasing expenses 9,890 10,002
Other operating expenses 3,642 1,128
-------- --------
101,178 98,776
-------- --------
Net income $141,576 $141,180
======== ========
Occupied % 100% 100%
Partnership Ownership % 16.5% 16.5%
Cash Distribution to Partnership $ 38,114 $ 38,528
Net Income Allocated to the
Partnership $ 23,304 $ 23,238
</TABLE>
Rental income increased for the three months ended March 31, 1998, compared
to the same period of 1997, due to a correction of straight-line rent in
the first quarter of 1997. A small decrease in management and leasing fees
in first quarter 1998, over first quarter 1997, was offset by an increase
in operating expenses, primarily accounting and administrative fees. Cash
distributions to the Partnership and net income allocated to the
Partnership remained relatively stable for the three months ended March 31,
1998 and 1997.
10
<PAGE>
Jacksonville /Fund IV - Fund V Joint Venture
--------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income $365,992 $366,121
Expenses:
Depreciation 79,524 79,494
Management & leasing expenses 46,676 43,365
Other operating expenses 105,360 105,483
-------- --------
231,560 228,342
-------- --------
Net income $134,432 $137,779
======== ========
Occupied % 100% 100%
Partnership Ownership % 62.4% 62.2%
Cash Distribution to Partnership $124,633 $127,081
Net Income Allocated to the
Partnership $ 83,838 $ 85,496
</TABLE>
Rental income for the Jacksonville Project remained relatively stable in
1998, as compared to 1997 figures. Operating expenses increased slightly
in 1998 due to increased management and leasing expenses. Cash
distributions remained relatively stable for 1998 and 1997. The
Partnership contributed cash fundings to the Joint Venture for
construction, which increased the Partnership's ownership interest and
decreased Wells Fund IV's ownership interest in the Fund IV - Fund V Joint
Venture
11
<PAGE>
The Medical Center Property/Fund IV - Fund V Joint Venture
----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income $117,327 $ 88,568
Interest Income 1,947 2,639
-------- --------
119,274 91,207
-------- --------
Expenses:
Depreciation 44,524 39,822
Management & leasing expenses 14,796 11,665
Other operating expenses 47,676 45,416
-------- --------
106,996 96,903
-------- --------
Net income (loss) $ 12,278 $(5,696)
======== ========
Occupied % 81% 61%
Partnership Ownership % 62.4% 62.2%
Cash Distribution to Partnership $ 40,005 $ 24,268
Net Income Allocated to the
Partnership $ 7,657 $(3,536)
</TABLE>
Rental income, expenses and cash distributions increased in 1998, over 1997,
due primarily to an increase in the occupancy level of the project and a
correction in the straight-line rent in 1997. The Partnership contributed
cash fundings to the Joint Venture for construction, which increased the
Partnership's ownership interest in the Fund IV - Fund V Joint Venture.
12
<PAGE>
The Hartford Building/Fund V - Fund VI Joint Venture
----------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income $179,375 $179,375
Expenses:
Depreciation 73,005 73,008
Management & leasing expenses 5,656 8,067
Other operating expenses 5,222 (17,255)
-------- --------
83,883 63,820
-------- --------
Net income $ 95,492 $115,555
======== ========
Occupied % 100% 100%
Partnership Ownership % 46.5% 47.0%
Cash Distribution to Partnership $ 78,443 $ 89,776
Net Income Allocated to the
Partnership $ 44,432 $ 54,578
</TABLE>
Net income decreased and expenses increased in 1998, as compared to 1997,
due primarily to an insurance reimbursement from the tenant in 1997, which
was recorded in 1997, in other operating expenses.
The Partnership's ownership interest in the Fund V - Fund VI Joint Venture
decreased from 47.0% in 1997, to 46.5% in 1998, due to additional fundings
by Wells Fund VI in 1997, which caused a decrease in the Partnership's
ownership interest in the Fund V - Fund VI Joint Venture.
13
<PAGE>
Stockbridge Village II/Fund V - Fund VI Joint Venture
-----------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
March 31, 1998 March 31, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Rental Income $58,944 $63,336
Expenses:
Depreciation 25,703 20,865
Management & leasing expenses 8,602 4,914
Other operating expenses 4,524 32,356
------- -------
38,829 58,135
------- -------
Net income $20,115 $ 5,201
======= =======
Occupied % 72% 66%
Partnership Ownership % 46.5% 47.0%
Cash Distribution to Partnership $20,506 $11,393
Net Income Allocated to the
Partnership $ 9,359 $ 2,454
</TABLE>
Other operating expenses decreased and net income increased in 1998, as
compared to 1997, due primarily to a bad debt reserve recorded in the first
quarter of 1997, for Glenn's Open Pit Bar-B-Que which had vacated 4,303
square feet of space as of April 1, 1997. Efforts are being made to re-lease
the space.
The Partnership's ownership percentage in the Fund V - Fund VI Joint Venture
decreased to 46.5% for 1998, as compared to 47.0% in 1997, due to additional
fundings by Wells Fund VI which increased Wells Fund VI's and caused a
decrease in the Partnership's ownership interest in the Fund V - Fund VI
Joint Venture.
14
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the first quarter of
1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLS REAL ESTATE FUND V, L.P.
Dated: May 11, 1998 By: /s/ Leo F. Wells, III
----------------------------------
Leo F. Wells, III, as Individual
General Partner and as President,
Sole Director and Chief Financial
Officer of Wells Capital, Inc., 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 93,090
<SECURITIES> 13,055,965
<RECEIVABLES> 301,702
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,450,757
<CURRENT-LIABILITIES> 289,040
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 13,161,717
<TOTAL-LIABILITY-AND-EQUITY> 13,450,757
<SALES> 0
<TOTAL-REVENUES> 169,877
<CGS> 0
<TOTAL-COSTS> 17,081
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 152,796
<INCOME-TAX> 152,796
<INCOME-CONTINUING> 152,796
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,796
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0
</TABLE>
