<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 0-23656
---------------------------------
Wells Real Estate Fund VI, L.P.
(Exact name of registrant as specified in its charter)
Georgia 58-2022628
- ------------------------------- -----------------
(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
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Form 10-Q
---------
Wells Real Estate Fund VI,L.P.
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INDEX
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Page No.
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PART I. 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,
and 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.......................................... 15
PART II. OTHER INFORMATION............................................ 26
2
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WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets June 30, 1996 December 31, 1995
------ ------------- -----------------
<S> <C> <C>
Investment in joint venture (Note 2) $20,063,048 $20,184,572
Cash and cash equivalents 708,075 967,347
Due from affiliates 267,451 263,587
Deferred project costs 35,462 35,462
Organization costs, less accumulated
amortization of $20,312 in 1996 and
$17,187 in 1995 10,938 14,063
Prepaid expenses and other assets 3,700 11,095
----------- -----------
Total assets $21,088,674 $21,476,126
=========== ===========
Liabilities and Partners' Capital
- ---------------------------------
Liabilities:
Accounts payable $ 0 $ 4,000
Partnership distribution payable 282,013 327,865
----------- -----------
Total liabilities 282,013 331,865
----------- -----------
Partners' capital:
General partners 0 0
Class A - 2,092,381 units outstanding
at June 30, 1996 and 2,048,357 units
at December 31, 1995 17,894,635 17,637,686
Class B - 407,619 units outstanding
at June 30, 1996 and 451,643 units
at December 31, 1995 2,912,026 3,506,575
----------- -----------
Total partners' capital 20,806,661 21,144,261
----------- -----------
Total liabilities and partners' capital $21,088,674 $21,476,126
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
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WELLS REAL ESTATE FUND VI, 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: $ 14,746 $140,294 $ 46,862 $294,037
Interest income
Equity in income of joint ventures
(Note 2) 115,589 147,044 263,265 284,706
--------- -------- --------- --------
130,335 287,338 310,127 578,743
--------- -------- --------- --------
Expenses:
Legal and accounting 17,186 3,432 20,087 8,706
Computer costs 1,006 1,884 1,912 4,664
Partnership administration 14,443 22,508 28,104 43,703
Amortization of organization costs 1,562 1,563 3,125 3,125
--------- -------- --------- --------
34,197 29,387 53,228 60,198
--------- -------- --------- --------
Net income $ 96,138 $257,951 $ 256,899 $518,545
========= ======== ========= ========
Net loss allocated to General Partners $ 0 $ (510) $ 0 $ (993)
Net income allocated to Class A Limited
Partners $ 240,165 $308,877 $ 517,672 $617,814
Net loss allocated to Class B Limited Partners $(144,027) $(50,416) $(260,773) $(98,276)
Net income per Class A Limited Partner Unit $ 0.12 $ 0.15 $ 0.25 $ 0.30
Net loss per Class B Limited Partner Unit $ (0.35) $ (0.11) $ (0.62) $ (0.21)
Cash distribution per Class A Limited Partner Unit $ 0.14 $ 0.16 $ 0.28 $ 0.31
</TABLE>
See accompanying condensed notes to financial statements.
4
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WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED
JUNE 30, 1996
<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, 1994 2,003,010 $17,371,901 496,990 $4,143,449 1,828 $21,517,178
Net income (loss) 0 1,172,944 0 (269,288) (1,828) 901,828
Partnership distributions 0 (1,274,745) 0 0 0 (1,274,745)
Class B conversion elections 45,346 367,586 (45,346) (367,586) 0 0
--------- ----------- ------- ---------- ------- -----------
BALANCE, DECEMBER 31, 1995 2,048,356 17,637,686 451,644 3,506,575 0 21,144,261
Net income (loss) 0 517,672 0 (260,773) 0 256,899
Partnership distributions 0 (594,499) 0 0 0 (594,499)
Class B conversion elections 44,025 333,776 (44,025) (333,776) 0 0
--------- ----------- ------- ---------- ------- -----------
BALANCE, JUNE 30, 1996 2,092,381 $17,894,635 407,619 $2,912,026 $ 0 $20,806,661
========= =========== ======= ========== ======= ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
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WELLS REAL ESTATE FUND VI, 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 flow from operating activities:
$ 256,899 $ 518,545
Net earnings
Adjustments to reconcile net earnings to net
cash used in operating activities:
Equity in earnings of joint venture (263,265) (284,706)
Distributions received from joint ventures 510,926 310,515
Partnership distributions paid (640,351) (628,070)
Amortization of organization costs 3,125 3,125
Changes in assets and liabilities:
Decrease in due from affiliates 5,194 0
Decrease in prepaids and
other assets 2,200 17,846
Decrease in accounts payable (4,000) (2,000)
--------- -----------
Net cash used in
operating activities (129,272) (64,745)
Cash flow from investing activities:
Investment in joint ventures (130,000) (9,134,626)
--------- -----------
Net decrease in cash and cash equivalents (259,272) (9,199,371)
Cash and cash equivalents, beginning of year 967,347 11,904,815
--------- -----------
Cash and cash equivalents, end of period $ 708,075 $ 2,705,444
========= ===========
Supplemental schedule of noncash investing
activities-deferred project costs
applied to investing activities $ 0 $ 26,356
--------- -----------
</TABLE>
See accompanying condensed notes to financial statements.
6
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WELLS REAL ESTATE FUND VI, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statement
(1) Basis of Presentation
---------------------
The financial statements of Wells Real Estate Fund VI, 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, 1995.
(a) General
-------
Wells Real Estate Fund VI, 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 December 1, 1992, for the purpose of
acquiring, developing, owning, operating, improving, leasing, and otherwise
managing for investment purposes income producing commercial properties.
On April 5, 1993, the Partnership commenced a public offering of its limited
partnership units pursuant to a Registration Statement on Form S-11 filed under
the Securities Act of 1933. The Partnership terminated its offering on April 4,
1994, and received gross proceeds of $25,000,000 representing subscriptions from
2,500,000 Limited Partners units, composed of two classes of limited partnership
interests, Class A and Class B limited partnership units.
As of June 30, 1996, the Partnership owned interests in the following
properties: (i) a four-story office building located in Hartford, Connecticut;
(ii) a three-story office building located in Appleton, Wisconsin; (iii) five
retail buildings located in Stockbridge, Georgia; (iv) an office/retail center
in Roswell, Georgia; (v) a four-story office building in Jacksonville, Florida;
(vi) a retail center under construction in Winston-Salem, North Carolina; and
(vii) a retail center located in Cherokee County, Georgia. All of the foregoing
properties were acquired on an all cash basis and are described in more detail
in Footnote (2) below.
7
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(b) 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.
(c) 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
of the registrant, the properties are adequately insured.
(c) 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 Partnership owns interests in nine properties through its investment in
joint ventures, of which three are office buildings and six are retail
buildings. 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.
The following describes the properties in which the Partnership owns an interest
as of June 30, 1996:
FUND V - FUND VI JOINT VENTURE
- ------------------------------
On December 27, 1993, 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, entered into a Joint Venture Agreement known as
Fund V and Fund VI Associates (the "Fund V - Fund VI Joint Venture"). The
investment objectives of Wells Fund V are substantially identical to those of
the Partnership. The Partnership holds an approximate 52% equity interest, and
Wells Fund V holds an approximate 48% equity interest in the Fund V - Fund VI
Joint Venture. The Partnership owns interests in the following two properties
through the Fund V - Fund VI Joint Venture:
8
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The Hartford Building
- ---------------------
On December 29, 1993, the Fund V - Fund VI Joint Venture purchased the Hartford
Building, a four-story office building containing approximately 71,000 rentable
square feet from Hartford Accident and Indemnity Company for a purchase price of
$6,900,000. The Hartford Building is located on 5.56 acres of land in
Southington, Connecticut. The funds used by the Fund V - Fund VI Joint Venture
to acquire the Hartford Building were derived from capital contributions made by
the Partnership and Wells Fund V totaling $3,432,707 and $3,508,797,
respectively, for total capital contributions to the Fund V - Fund VI Joint
Venture of $6,941,504.
The entire building is leased to Hartford Fire Insurance Company ("Hartford")
for a period of nine years and eleven months commencing December 29, 1993. The
annual base rent during the initial term is $458,400 payable in equal month
installments of $38,200 for the first three months, and $724,200 payable in
equal monthly installments of $60,350 commencing April 1, 1994 and continuing
through the expiration of the initial term of the lease. Hartford also has the
option to extend the initial term of the lease for two consecutive five year
periods at $15.25 per square foot for the 1st five year extension and $18.67 for
the 2nd five year extension. Under the terms of its lease, Hartford is
responsible for property taxes, operating expenses, general repair and
maintenance work and a pro rata share of capital expenditures based upon the
number of years remaining in the lease.
The occupancy rate at the Hartford Building was 100% for 1996, 1995 and 1994.
The average effective annual rental per square foot at the Hartford Building was
$10.11 for 1996, 1995 and 1994, the first year of ownership.
Stockbridge Village II - Stockbridge South Property
- ---------------------------------------------------
On November 12, 1993, Wells Fund V purchased 2.46 acres of real property located
in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells Fund V
contributed the property as a capital contribution to the Fund V - Fund VI
Joint Venture.
Construction of a 5,400 square foot retail building was completed in November
1994. Construction of a second retail building containing approximately 10,550
square feet was completed in June, 1995. The entire first building was leased
by Apple Restaurants, Inc. for nine years and eleven months beginning in
December, 1994. The annual base rent under the lease is $125,982 until December
15, 1999, at which time the annual base rent increases to $137,700.
Glenn's Open Pit Bar-B-Que leased 4,303 square feet of the second retail
building for a six year term beginning July 1, 1995. The annual base rent under
the lease is $64,548 to June 30, 1997, $68,844 from July 1, 1997 to June 30,
1999, and $77,460 from July 1, 1999 until June 30, 2001.
The total cost to complete Stockbridge Village II is currently anticipated to be
approximately $3,030,000. As of June 30, 1996, the Partnership had contributed
$1,678,380 and Wells Fund V had contributed $1,035,804 to the Fund V - Fund VI
9
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Joint Venture for the acquisition and development of Stockbridge Village II. As
of June 30, 1996, the Partnership's equity interest in the Fund V - Fund VI
Joint Venture was approximately 52% and Wells Fund V's equity interest was
approximately 48%.
It is currently anticipated that the remaining cost of approximately $316,000 to
complete the property will be contributed by the Partnership, in which event,
upon completion of the building funding, the Partnership will own an
approximately 66% equity interest in the Fund V - Fund VI Joint Venture. The
Partnership has reserved sufficient funds for this purpose.
The occupancy rate at the Stockbridge Village II Property was 61% for 1996 and
1995. The average effective annual rental per square foot at the Stockbridge
Village II is $12.20 for 1996 and $10.41 for 1995, the first year of occupancy.
FUND V - VI - VII JOINT VENTURE
- -------------------------------
On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate Fund
VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships affiliated
with the Partnership through common general partners, entered into a joint
venture agreement known as Fund V, Fund VI and Fund VII Associates (the "Fund V-
VI-VII Joint Venture"). The Partnership owns an interest in the following
property through the Fund V-VI-VII Joint Venture:
The Marathon Building
- ---------------------
On September 16, 1994, Fund V-VI-VII Joint Venture purchased a three-story
office building containing approximately 75,000 rentable square feet, located on
approximately 6.2 acres of land in Appleton, Wisconsin (the "Marathon Building")
for a purchase price of $8,250,000, plus acquisition costs of $29,421.
The funds used by the Fund V-VI-VII Joint Venture to acquire the Marathon
Building were derived from capital contributions made by the Partnership, Wells
Fund V and Wells Fund VII totalling $3,470,958, $1,337,505, and $3,470,958,
respectively, for total contributions to the Fund V-VI-VII Joint Venture of
$8,279,421. The Partnership owns an approximately 42% equity interest in the
Fund V-VI-VII Joint Venture.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a period
of approximately twelve years, three and one-half months, with options to extend
the lease for two additional five-year periods at market rate. The annual base
rent under the lease is $910,000. The current lease expires December 31, 2006.
The lease agreement is a net lease in that the tenant is primarily responsible
for the operating expenses, including real estate taxes.
The occupancy rate at the Marathon Building was 100% for 1996, 1995, and the
last three and a half months of 1994. The average annual rental per square foot
in the Marathon Building was $12.13 for 1996, 1995, and 1994, the first year of
ownership.
10
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FUND VI - FUND VII JOINT VENTURE
- --------------------------------
On December 9, 1994, the Partnership and Wells Fund VII entered into a Joint
Venture Agreement known as Fund VI and Fund VII Associates (the "Fund VI-Fund
VII Joint Venture"). As of June 30, 1996, the Partnership's equity interest in
the Fund VI - Fund VII Joint Venture was approximately 43%, and Wells Fund VII's
equity interest in the Fund VI - Fund VII Joint Venture was approximately 57%.
The Partnership owns interests in the following two properties through the Fund
VI-Fund VII Joint Venture:
Stockbridge Village III
- -----------------------
In April 1994, the Partnership purchased 3.27 acres of real property located on
the north side of Georgia State Route 138 at Mt. Zion Road, Clayton County,
Georgia for a cost of $1,015,673. This tract of land is located directly across
Route 138 from the Stockbridge Village Shopping Center, which was developed and
is owned by an affiliate of the Partnership. On December 9, 1994, the
Partnership contributed the property to the Fund VI-Fund VII Joint Venture as a
capital contribution.
Kenny Rogers Roasters is a 3,200 square foot restaurant building which was
completed in March 1995, at a cost of approximately $400,000, excluding land.
The building is leased to Atlanta Foodquest, LLC for a term of nine years and
eleven months commencing March 1, 1995. The initial base rent payable is
$82,320. In the fifth year, the annual base rent payable increases to $87,600.
Construction began in January, 1995, on a second outparcel building containing
approximately 15,000 square feet at a cost of approximately $1,500,000 excluding
land. Construction was substantially completed in October, 1995. In October
1995, Damon's Clubhouse Restaurant occupied 6,732 square feet. The term of the
lease is for nine years and eleven months commencing October, 1995. The initial
annual base rent is $102,375 through March, 2001 and $115,375 thereafter.
As of June 30, 1996, the Partnership had contributed $1,017,907 and Wells Fund
VII contributed $1,859,839 to the Fund VI - Fund VII Joint Venture for the
acquisition and development of the Stockbridge Village III Property.
The occupancy rate at the Stockbridge Village III Project was 87% in 1996 and
71% in 1995. The average effective annual rental per square foot at the
Stockbridge Village III Project was $13.10 in 1996 and $4.85 for the partial
year of occupancy in 1995.
Stockbridge Village I Expansion
- -------------------------------
On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of
real property located in Clayton County, Georgia for a total price of
approximately $718,000. The Stockbridge Village I Expansion consists of a
multi-tenant shopping center containing approximately 29,000 square feet. The
majority of construction was completed in April, 1996. A lease has been signed
11
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with Cici's Pizza for a 4,000 square feet restaurant. The term of the lease is
for nine years and eleven months commencing April, 1996. The initial base rent
is $48,000. In the third year, the annual base rent increases to $50,000, in
the sixth year to $52,000, and in the ninth year to $56,000. Negotiations are
being conducted to lease the remaining space.
As of June 30, 1996, the Partnership contributed a total of $1,450,000 and Wells
Fund VII contributed a total of $1,450,000 for total contributions of
approximately $2,900,000 for the purpose of funding the development and
construction of the Stockbridge Village I Expansion.
As of June 30, 1996, the Partnership contributed $2,467,907, and Wells Fund VII
contributed $3,309,839, including its cost to acquire land, to the Fund VI -
Fund VII Joint Venture for the acquisition and development of the Stockbridge
Village III Project and the Stockbridge Village I Expansion. As of June 30,
1996, the Partnership's equity interest in Fund VI - VII Joint Venture was
approximately 43%, and Wells Fund VII's equity interest in the Fund VI - VII
Joint Venture was approximately 57%. It is anticipated that Wells Fund VII will
contribute the remaining approximately $23,000 needed to complete Stockbridge
Village III, in which event it is estimated that the Partnership's equity
interest in the Fund VI - VII Joint Venture will be approximately 43% and Wells
Fund VII's equity interest will be approximately 57% upon completion of the
project. Wells Fund VII has reserved sufficient funds for this purpose.
Fund II, III, VI and VII Associates/Holcomb Bridge Road Project
- ---------------------------------------------------------------
On January 10, 1995, the Partnership, the Fund II - Fund III Joint Venture and
Wells Fund VII entered into a joint venture agreement known as Fund II, III, VI
and VII Associates (the "Fund II, III, VI and VII Joint Venture"). The Fund II
- - Fund III Joint Venture is a joint venture between Wells Real Estate Fund III,
L.P. ("Wells Fund III"), a Georgia public limited partnership having Leo F.
Wells, III and Wells Capital, Inc., as general partners, and a joint venture
(the "Fund II-II-OW Joint Venture"), between Wells Real Estate Fund II ("Wells
Fund II"), a Georgia public limited partnership having Leo F. Wells, III and
Wells Capital, Inc., as general partners, and Wells Real Estate Fund II-OW
("Wells Fund II-OW"), a Georgia public limited partnership also having Leo F.
Wells., III and Wells Capital, Inc., as general partners. The investment
objectives of Wells Fund II, Wells Fund II-OW, Wells Fund III and Wells Fund VII
are substantially identical to those of the Partnership.
In January 1995, the Fund II - Fund III Joint Venture contributed approximately
4.3 acres of land at the intersection of Warsaw Road and Holcomb Bridge Road in
Roswell, Fulton County, Georgia (the "Holcomb Bridge Road Project"), including
land improvements with a value of $1,729,116 to the Fund II, III, VI and VII
Joint Venture. Development is substantially completed on two buildings
containing a total of approximately 49,500 square feet. As of June 30, 1996,
leases have been signed with Bertucci's Restaurant Corporation for 5,935 square
feet, Air Touch Cellular for 3,046 square feet and Townsend Tax for 1,389 square
feet and Coldwell Banker for 4,801 square feet. These three tenants occupied
the property as of June 30, 1996 for an occupancy rate of 21%. The average
effective annual rental was $0.81 per square foot for the second quarter of
1996.
12
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As of June 30, 1996, Fund II - Fund III Joint Venture had contributed $1,729,116
in land and improvements for an approximate 30.7% equity interest in the Fund
II, III, VI and VII Joint Venture, the Partnership had contributed $1,112,691 to
the joint venture for an approximate 20.6% equity interest, and Wells Fund VII
had contributed $2,630,000 to the joint venture for an approximate 48.7% equity
interest. The total cost to develop the Holcomb Bridge Road Project is
currently estimated to be approximately $4,000,000, excluding land, and it is
anticipated that the remaining approximate $257,000 will be contributed $131,300
by the Partnership and $125,700 by Wells Fund VII for an anticipated equity
interest of 48% by Wells Fund VII, 30% by the Fund II - Fund III Joint Venture
and 22% by the Partnership. The Partnership has reserved sufficient funds for
this purpose.
FUND VI - VII - VIII JOINT VENTURE
- ----------------------------------
On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund
VIII, L.P. (Wells Fund VIII"), a Georgia public limited partnership affiliated
with the Partnership through common general partners, entered into a joint
venture agreement known as the Fund VI, Fund VII and Fund VIII Associates (the
"Fund VI-VII-VIII Joint Venture"). The investment objectives of Wells Fund VIII
are substantially identical to those of the Partnership. As of June 30, 1996,
the Partnership contributed approximately $6,567,688 for an approximate 44%
equity interest in the Fund VI-VII-VIII Joint Venture, which owns an office
building in Jacksonville, Florida and a multi-tenant retail center under
development in Clemmons, North Carolina. As of June 30, 1996, Wells Fund VIII
contributed $2,000,000 for an equity interest in the Fund VI-VII-VIII Joint
Venture of approximately 13%, and Wells Fund VII contributed approximately
$6,432,312 for an equity interest in the Fund VI-VII-VIII Joint Venture of
approximately 43%. The total cost to complete both properties is anticipated to
be approximately $17,700,000. Although the ultimate percentages of equity
interest in the Fund VI-VII-VIII Joint Venture have not yet been finally
determined, it is anticipated that Wells Fund VIII will contribute the remaining
cost of approximately $2,700,000 needed to complete construction of both
projects, in which event the ultimate equity interests in the Fund VI- VII-VIII
Joint Venture of the Partnership, Wells Fund VII and Wells Fund VIII would be
approximately 37%, 36%, and 27%, respectively.
Bell South Property
- -------------------
On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55 acre
parcel of land in Jacksonville, Florida for a total of $1,245,059 including
closing costs. The land purchase and construction costs, totalling
approximately $9,000,000, were funded by capital contributions of $3,500,000 by
the Partnership, $3,500,000 by Wells Fund VII and $2,000,000 by the Wells Fund
VIII.
In May 1996, the 92,964 square foot office building was completed with BellSouth
Advertising and Publishing Corporation, a subsidiary of BellSouth Company,
occupying approximately 66,333 square feet and American Express Travel Related
Services Company, Inc. occupying approximately 22,607 square feet.
13
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The Bell South lease is for a term of nine years and eleven months with an
option to extend for an additional five year period at market rate. The annual
base rent during the initial term is $1,048,061 during the first five years and
$1,150,878 for the balance of the initial lease term. The American Express
lease is for a term of five years at an annual base rent of $369,851. BellSouth
and American Express are required to pay additional rent equal to their shares
of operating expenses during their respective lease terms.
Tanglewood Commons Shopping Center
- ----------------------------------
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre
tract of real property located in Clemmons, Forsyth County, North Carolina. As
of June 30, 1996, the Partnership had contributed $3,067,688 and Wells Fund VII
had contributed $2,932,312 to the development of this project. Wells Fund VIII
had not made contributions.
The Fund VI-VII-VIII Joint Venture will develop and construct one large strip
shopping center building containing approximately 81,000 gross square feet on a
12.48 acre tract. The remaining 2.2 acre portion of the property consists of
four outparcels which have been graded and will be held for future development.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping center
are anticipated to be approximately $8,700,000. An agreement was signed with
Norcom Development, Inc. to supervise, manage and coordinate the planning,
design and construction of the property. Shook Design Group, Inc. has been
signed as the architect, and John S. Clark and Company as the general
contractor. Construction of the project began in March, 1996 and is scheduled
to be substantially completed in the first quarter of 1997.
Harris Teeter, Inc., a regional supermarket chain, executed a lease for a
minimum of 45,000 square feet with an initial term of 20 years with extension
options of four successive five year periods with the same terms as the initial
lease. The annual base rent during the initial term is $488,250. In addition,
Harris Teeter has agreed to pay percentage rents equal to one percent of the
amount by which Harris Teeter's gross sales exceed $35,000,000 for any lease
year.
FUND I, II, II-OW, VI, VII ASSOCIATES
- -------------------------------------
On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund I"), a
Georgia public limited partnership, the Fund II-Fund II-OW Joint Venture and
Wells Fund VII, entered into a joint venture agreement known as Fund I, II, II-
OW, VI, VII Associates (the "Fund I, II, II-OW,VI,VII Joint Venture"), which was
formed to own and operate the Cherokee Project described below. Wells Fund I is
a Georgia limited partnership having Leo F. Wells, III and Wells Capital, Inc.,
as general partners. The investment objective of Wells Fund I are substantially
identical to those of the Partnership.
14
<PAGE>
The Cherokee Property
- ---------------------
The Cherokee Property consists of a retail shopping center known as the
"Cherokee Commons Shopping Center" located in metropolitan Atlanta, Cherokee
County, Georgia (The "Cherokee Project"). The Cherokee Project has been
expanded to consist of approximately 103,755 net leasable square feet. The
Cherokee Project was initially developed through a joint venture between Wells
Fund I and the Fund II - Fund II-OW Joint Venture which contributed the Cherokee
Project to the Fund I, II, II-OW, VI, VII Joint Venture on August 1, 1995 to
complete the required funding for the expansion.
As of June 30, 1996, Wells Fund I contributed property with a book value of
$2,139,900, the Fund II-Fund II-OW Joint Venture contributed property with a
book value of $4,860,100, the Partnership contributed cash in the amount of
$953,798, and Wells Fund VII contributed cash in the amount of $953,798 to the
Fund I,II,II-OW,VI,VII Joint Venture. As of June 30, 1996, approximate equity
interests in the Cherokee Project were as follows: Wells Fund I-24%, Fund II-
Fund II-OW Joint Venture-54%, Wells Fund VII-11% and the Partnership-11%.
The Cherokee Project is anchored by a 67,115 square foot lease with Kroger
Food/Drug ("Kroger") which expires in 2011. Kroger's original lease was for
45,528 square feet. In 1994, Kroger expanded to the current 67,115 square feet
which is approximately 65% of the total rentable square feet in the property.
As of June 30, 1996, the Cherokee Project was approximately 95% occupied by 20
tenants, including Kroger. Kroger is the only tenant occupying 10% or more of
the rentable square footage. Kroger is a retail grocery chain. The other
tenants in the shopping center provide typical retail shopping services.
The Kroger lease provides for an annual rent of $392,915 which increased to
$589,102 on August 16, 1995 due to the expansion from 45,528 square feet to
67,115 square feet. The lease expires March 31, 2011, with Kroger entitled to
five successive renewals each for a term of five years at the same rental rate
as the original lease.
The occupancy rate at the Cherokee Property for the quarters ended June 30,
1996, was 95% in 1996 and 1995, 86% in 1994, 88% in 1993, and 87% in 1992. The
average effective annual rental per square foot at the Cherokee Property was
$8.61 for 1996, $7.50 for 1995, $5.33 for 1994, $6.47 for 1993 and $6.46 for
1992.
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
selected financial data and 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
15
<PAGE>
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statement
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon 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
- ---------------------------------------------------------
(a) General
- -----------
During its offering, which terminated on April 4, 1994, the Partnership raised a
total of $25,000,000 in capital through the sale of 2,500,000 units. No
additional units will be sold by the Partnership. As of June 30, 1996, the
Partnership had incurred $4,619,157 in sales commissions, acquisition fees,
organizational and offering costs; had invested $19,554,132 in properties; had
reserved $250,000 as working capital reserves; and is currently holding net
offering proceeds of approximately $446,000 available for investment in
properties. As set forth above, it is currently anticipated that approximately
$316,000 will be contributed to the Fund V - Fund VI Joint Venture for the
completion of the Stockbridge Village II project, and that approximately
$130,000 will be contributed to the Fund II, III, VI, and VII Joint Venture for
the completion of the Holcomb Bridge Road Project.
Gross revenues of the Partnerships were $310,127 for the six months ended June
30, 1996, as compared to $578,743 for the six months ended June 30, 1995. The
decrease in revenues is attributed to funds invested in joint ventures, which
increased the income generated from the joint ventures but decreased the funds
available to earn interest. Depreciation expenses increased for the joint
ventures in 1996 as compared to 1995 due to a change in the estimated useful
lives of buildings and improvements from 40 years to 25 years which became
effective December 31, 1995.
Expenses of the Partnership were $53,228 for 1996, as compared to $60,198 for
1995 . The decrease in expenses for 1996 as compared to 1995 was primarily due
to decreased partnership administration offset partially by increased accounting
costs.
Net income of the Partnership was $256,899 for the six months ended June 30,
1996, as compared to $518,545 for the same period in 1995. The decrease in net
income for 1996 from 1995 is due primarily to decreased revenues, which, as set
forth above, was primarily caused by the increase in depreciation expenses,
partially offset by decreased expenses as noted in the prior paragraphs.
Net cash used in operating activities increased from $64,745 in 1995 to $129,272
in 1996. This increased was due primarily to increased distributions received
from joint ventures offset by decreased interest income and increased
distributions to the limited partners. Net cash used in investing activities
decreased for the six months ended June 30, 1996 as compared to the same period
in 1995 due to a decrease in investments in joint ventures. These changes
produced decreased cash and cash equivalents of $(9,199,371) and $(259,272) at
June 30, 1995 and 1996, respectively.
16
<PAGE>
The Partnership made cash distributions of investment income to the limited
partners holding Class A Units of $.14 for the three months ended June 30, 1996
as compared to $.16 per Class A unit for the three months ended June 30, 1995.
No cash distributions of investment income were made to the Limited Partners
holding Class B Units.
[ Remainder of page intentionally left blank]
17
<PAGE>
PROPERTY OPERATIONS
- -------------------
As of June 30, 1996, the Partnership owned interests in the following
operational properties:
The Hartford Building/Fund V - Fund VI Joint Venture
----------------------------------------------------
<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 $179,375 $179,375 $358,750 $358,750
Expenses:
Depreciation 73,008 42,516 146,016 85,032
Management & leasing expenses 7,175 7,175 14,350 14,350
Other operating expenses 4,649 5,277 7,824 11,224
-------- -------- -------- --------
84,832 54,968 168,190 110,606
-------- -------- -------- --------
Net income $ 94,543 $124,407 $190,560 $248,144
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund V - Fund VI Joint Venture 52.4% 51.5% 52.4% 51.5%
Cash Distribution to Partnership $ 88,709 $ 86,296 $178,192 $169,720
Net Income Allocated to the
Partnership $ 49,579 $ 63,703 $ 99,933 $125,198
</TABLE>
Net income decreased and expenses increased in 1996 as compared to 1995 due
primarily to an increase in depreciation expenses, caused by the change in
estimated useful lives of buildings and improvements previously discussed
under the "General" section of "Results of Operations and Changes in
Financial Conditions".
The Partnership's ownership interest in the Fund V - Fund VI Joint Venture
increased from 51.5% in 1995, to 52.4% in 1996, due to additional fundings
by the Partnership in 1995.
Cash distributions increased in 1996 over 1995 due primarily to the
Partnership's increased percentage ownership interest in the Joint Venture.
Net income allocated to the Partnership decreased in 1996 as compared to
1995 due primarily to the increased depreciation expenses discussed above.
18
<PAGE>
Stockbridge Village II/Fund V - Fund VI Joint Venture
-----------------------------------------------------
<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 $50,056 $32,961 $96,517 $65,921
Expenses:
Depreciation 19,761 5,619 39,522 11,238
Management & leasing expenses 5,382 4,052 9,979 7,979
Other operating expenses 19,623 10,253 38,798 23,209
------- ------- ------- -------
44,766 19,924 88,299 42,426
------- ------- ------- -------
Net income $ 5,290 $13,037 $ 8,218 $23,495
======= ======= ======= =======
Occupied % 61% 100% 61% 100%
Partnership's Ownership % in the
Fund V - Fund VI Joint Venture 52.4% 51.5% 52.4% 51.5%
Cash Distribution to Partnership $12,691 $ 9,367 $24,142 $ 9,668
Net Income Allocated to the
Partnership $ 2,774 $ 6,690 $ 4,310 $11,856
</TABLE>
The Stockbridge Village II Project consists of two retail buildings which
contain a total of approximately 15,950 square feet. The first building
containing 5,400 square feet was completed in November, 1994, and occupied
by Apple Restaurants, Inc. in December 1994, resulting in 100% occupancy
since December 1994. The second building containing 10,550 square feet
opened in June, 1995. Glenn's Open Pit Bar-B-Que leased 4,303 square feet
beginning in July, 1995. 6,247 square feet are available to lease in the
second building which equates to a 61% occupancy for both buildings as of
June 30, 1996.
Depreciation expenses increased in 1996 over 1995 due to the change in
estimated useful lives of buildings and improvements as previously
discussed under the "General" section of "Results of Operations and Changes
in Financial Conditions".
The Partnership's ownership percentage in the Fund V - Fund VI Joint
Venture increased to 52.4% for 1996, as compared to 51.5% in 1995, due to
additional fundings by the Partnership which increased the Partnership's
ownership interest in the Fund V - Fund VI Joint Venture.
19
<PAGE>
The Marathon Building/Fund V-VI-VII Joint Venture
-------------------------------------------------
<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 $242,754 $242,754 $485,508 $485,508
Expenses:
Depreciation 87,647 52,300 175,292 104,599
Management & leasing expenses 9,710 9,710 19,420 19,420
Other operating expenses 5,152 2,902 8,850 13,909
-------- -------- -------- --------
102,509 64,912 203,562 137,928
-------- -------- -------- --------
Net income $140,245 $177,842 $281,946 $347,580
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund V - VI - VII Joint Venture 41.8% 41.8% 41.8% 41.8%
Cash Distribution to Partnership $ 89,202 $ 90,143 $179,012 $176,895
Net Income Allocated to the
Partnership $ 58,665 $ 74,392 $117,937 $145,393
</TABLE>
Net income decreased for the three and six month periods ended June 30,
1996 as compared to 1995 due primarily to the increase in depreciation
expenses which resulted from the change, as of December 31, 1995, in
estimated useful lives of buildings and improvements.
20
<PAGE>
Stockbridge Village III / Fund VI - Fund VII Joint Venture
----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Two Months Ended
------------------------------ ----------------- -----------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
-------------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $62,308 $14,156 $119,232 $14,156
Expenses:
Depreciation 21,301 8,625 41,678 8,625
Management & leasing expenses 16,909 1,218 20,886 1,218
Other operating expenses 17,865 263 35,855 263
------- ------- -------- -------
56,075 10,106 98,419 10,106
------- ------- -------- -------
Net income $ 6,233 $ 4,050 $ 20,813 $ 4,050
======= ======= ======== =======
Occupied % 87% 19% 87% 19%
Partnership's Ownership % in the
Fund VI - Fund VII Joint Venture 42.8% 52.3% 42.8% 52.3%
Cash Distribution to Partnership $ 9,468 $ 0 $ 21,882 $ 0
Net Income Allocated to the
Partnership $ 2,674 $ 2,118 $ 8,949 $ 2,118
</TABLE>
In April 1994, the Partnership purchased 3.27 acres of land located in Clayton
County, Georgia. On December 9, 1994, the Partnership contributed the
Stockbridge Village III property ("Stockbridge Village III") as a capital
contribution to the Fund VI - Fund VII Joint Venture.
Construction was completed on a 3,200 square foot restaurant in March, 1995.
This retail building is leased to Kenny Rogers Roasters, a restaurant, for a
term of nine years and eleven months. The initial base rent is $82,320 with an
increase in the fifth year to $87,600 annually.
The second multi-tenant retail building containing approximately 15,000 square
feet was completed in October, 1995. Damon's Clubhouse, a restaurant, occupied
approximately 6,732 square feet in October. The Damon's lease is for a term of
nine years and eleven months with initial base rent of $102,375 for five years
and increasing to $115,375 for the remainder of the lease. Four additional
tenants have occupied approximately 5,850 square feet as of June 30, 1996.
21
<PAGE>
Cherokee Commons Shopping Center / Fund I, II, II-OW, VI, VII Joint Venture
---------------------------------------------------------------------------
<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 $ 223,987 $ 147,679 $ 446,608 $ 293,517
Interest Income 18 70 37 95
------- ------- ------- -------
224,005 147,749 446,645 293,612
Expenses:
Depreciation 107,461 45,717 214,644 91,244
Management & leasing expenses 13,276 7,401 25,910 14,469
Other operating expenses 46,632 36,597 95,504 81,820
------- ------- ------- -------
167,369 89,715 336,058 187,533
------- ------- ------- -------
Net income $ 56,636 $ 58,034 $ 110,587 $ 106,079
======= ======= ======= =======
Occupied % 95% 95% 95% 95%
Partnership's Ownership % 11% 0% 11% 0%
Cash Distribution to Partnership $ 18,376 $ 0 $ 34,863 $ 0
Net Income Allocated to the
Partnership $ 6,065 $ 0 $ 11,842 $ 0
</TABLE>
Rental income increased in 1996 over 1995 due to the Kroger expansion which was
completed in November, 1994, however, the additional rent was billed
retroactively and paid in September, 1995. The increase in depreciation
expenses for 1996 as compared to 1995 are the 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". Management and leasing expenses increased in 1996 as compared to
1995 due to increased revenue. Other operating expenses increase in 1996 as
compared to 1995 due to increased repairs and maintenance costs. Net income of
the property remained relatively stable due to the increase in revenue which was
offset by the increase in expenses.
A lease amendment executed with Kroger in 1994 provided for an expansion of its
existing store at the Cherokee Commons Shopping Center from 45,528 square feet
to 66,918 square feet. In November, 1994, construction was completed on the
Kroger expansion and remodeling of the Center at a total cost of $2,807,367.
The costs of this expansion were funded in the following amounts: Wells Fund I
$94,679 and the Fund II-Fund II-OW Joint Venture $805,092 as of December 31,
1994 and Wells Fund VII $953,798, and the Partnership $953,798. The Partnership
and Wells Fund VII did not make their respective capital contributions until
August, 1995.
22
<PAGE>
880 Holcomb Bridge Road Project / Fund II, III, VI,VII Joint Venture
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -----------------
June 30, 1996 June 30, 1996
------------------- -----------------
<S> <C> <C>
Revenues:
Rental Income $ 43,754 $ 53,175
Expenses:
Depreciation 77,822 83,942
Management & leasing expenses 5,029 6,080
Other operating expenses 28,894 47,733
-------- --------
111,745 137,755
-------- --------
Net loss $(67,991) $(84,580)
======== ========
Occupied % 20.9% 20.9%
Partnership's Ownership % in the Fund IV - Fund
V Joint Venture 20.6% 20.6%
Cash Distribution to Partnership $ 0 $ 0
Net (Loss) Allocated to the
Partnership $(13,946) $(17,178)
</TABLE>
In January 1995, the Fund II - Fund III Joint Venture contributed 4.3 acres of
land and land improvements at 880 Holcomb Bridge Road to the Fund II, III, VI
and VII Joint Venture. Development is being completed on two buildings with a
total of 49,500 square feet. As of June 30, 1996, three tenants are occupying
approximately 10,370 square feet of space in the retail building under leases of
varying lengths. Since the property was not developed as of June 30, 1995, no
comparative figures are available for the quarter.
As of June 30, 1996, Fund II - Fund III Joint Venture contributed $1,729,116 in
land and land improvements for an approximate 30.7% equity interest, the
Partnership contributed $982,691 for an approximate 20.6% equity interest, and
Well Fund VII contributed $2,500,000 for an approximate 48.7% equity interest.
The total cost to develop the Holcomb Bridge Road Project is currently estimated
to be approximately $4,000,000, excluding land. It is anticipated that of the
remaining cost of approximately $257,000. $125,700 will be contributed by Wells
Fund VII and $131,300 by the Partnership for an anticipated equity interest of
20.6% by the Partnership, 30.7% by the Fund II - Fund III Joint Venture and
48.7% by Wells Fund VII. The Partnership and Wells Fund VII have reserved
sufficient funds for this purpose.
23
<PAGE>
Stockbridge Village I Expansion / Fund VI - Fund VII Joint Venture
------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
June 30, 1996
-------------------
Revenues:
<S> <C>
Rental Income $ 1,009
Expenses:
Depreciation 12,738
Management & leasing expenses 155
Other operating expenses 6,676
--------
19,569
--------
Net loss $(18,560)
========
Occupied % 19%
Partnership's Ownership % in the Fund VI -
Fund VII Joint Venture 42.8%
Cash Distribution to Partnership $ 0
Net Loss Allocated to the
Partnership $ (7,961)
</TABLE>
On June 7, 1995, the Fund VI - Fund VII Joint Venture purchased 3.38 acres of
real property located in Clayton County, Georgia. The Stockbridge Village I
Expansion consists of a multi-tenant shopping center containing approximately
29,000 square feet. The majority of construction was completed in April, 1996.
Cici's Pizza has occupied a 4,000 square foot restaurant. The term of the lease
is for nine years and eleven months commencing April, 1996. The initial base
rent is $48,000. In the third year, annual base rent will increase to $50,000,
in the sixth year to $52,000, and the ninth year to $56,000. One additional
tenant has occupied 1,600 square feet at the property as of June 30, 1996.
Negotiations are being conducted to lease the remaining space.
24
<PAGE>
Bell South Property / Fund VI - Fund VII - Fund VIII Joint Venture
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Two Months
Ended June 30, 1996
--------------------
Revenues:
<S> <C>
Rental income $146,740
Interest income 56,634
--------
203,374
--------
Expenses:
Depreciation 76,976
Management & leasing expenses 17,928
Other operating expenses 65,960
--------
160,864
--------
Net income $ 42,510
========
Occupied % 96.0%
Partnership's Ownership % in the
Fund VI - Fund VII - Fund VIII
Joint Venture 43.9%
Cash Distribution to Partnership $ 54,151
Net Income Allocated to Partnership $ 18,643
</TABLE>
On April 25, 1995, the Fund VI - Fund VII - Fund VIII Joint Venture purchased
5.55 acres of land located in Jacksonville, Florida. In May 1996, the 92,964
square foot office building was completed, with BellSouth Advertising and
Publishing Corporation occupying approximately 66,333 square feet and American
Express occupying approximately 22,607 square feet.
The initial term of the BellSouth lease is nine years and eleven months. The
annual base rent during the initial term is $1,048,061 during the first five
years and $1,150,878 for the balance of the initial lease term. The American
Express lease is for a term of five years at an annual base rent of $369,851.
BellSouth and American Express are required to pay additional rent equal to
their share of operating expenses during their respective lease terms.
During 1996, interest income was generated from construction dollars, not as yet
funded on construction, being invested in interest bearing accounts.
25
<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 VI, 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.
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 708,075
<SECURITIES> 20,063,048
<RECEIVABLES> 267,451
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,700
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,088,674
<CURRENT-LIABILITIES> 282,013
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,806,661
<TOTAL-LIABILITY-AND-EQUITY> 21,088,674
<SALES> 0
<TOTAL-REVENUES> 310,127
<CGS> 0
<TOTAL-COSTS> 53,228
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 256,899
<INCOME-TAX> 256,899
<INCOME-CONTINUING> 256,899
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 256,899
<EPS-PRIMARY> .25
<EPS-DILUTED> 0
</TABLE>
