<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 September 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
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Commission file number 0-23656
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Wells Real Estate Fund VI, L.P.
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(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.
------------------------------
INDEX
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<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1996
and December 31, 1995...............................................3
Statements of Income for the Three Months and
Nine Months Ended September 30, 1996
and 1995............................................................4
Statement of Partners' Capital
for the Year Ended December 31, 1995,
and the Nine Months Ended September 30, 1996........................5
Statements of Cash Flows for the Nine Months
Ended September 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.....................................................................25
</TABLE>
2
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WELLS REAL ESTATE FUND VI, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Assets
------
Investment in joint venture (Note 2) $20,072,965 $20,184,572
Cash and cash equivalents 586,933 967,347
Due from affiliates 264,909 263,587
Deferred project costs 14,157 35,462
Organization costs, less accumulated
amortization of $21,874 in 1996 and
$17,187 in 1995 9,376 14,063
Prepaid expenses and other assets 2,400 11,095
Total assets ----------- -----------
$20,950,740 $21,476,126
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 0 $ 4,000
Partnership distribution payable 261,953 327,865
----------- -----------
Total liabilities 261,953 331,865
----------- -----------
Partners' capital:
General partners 0 0
Class A - 2,104,757 units outstanding
at September 30, 1996 and 2,048,356
units at December 31, 1995 18,078,937 17,637,686
Class B - 395,243 units outstanding
at September 30, 1996 and 451,644 units
at December 31, 1995 2,609,850 3,506,575
----------- -----------
Total partners' capital 20,688,787 21,144,261
----------- -----------
Total liabilities and partners' capital $20,950,740 $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 Nine Months Ended
------------------ -----------------
Sept 30, 1996 Sept 30,1995 Sept 30, 1996 Sept 30,1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues: $ 10,311 $ 4,476 $ 57,173 $ 298,513
Interest income
Equity in income of joint ventures
(Note 2) 150,203 221,860 413,468 506,566
-------- -------- --------- ---------
160,514 226,336 470,641 805,079
-------- -------- --------- ---------
Expenses:
Legal and accounting 763 2,212 20,850 10,918
Computer costs 1,403 431 3,315 5,095
Partnership administration 12,109 15,863 40,213 59,566
Amortization of organization costs 1,562 1,562 4,687 4,687
-------- -------- ------ --------
15,837 20,068 69,065 80,266
-------- -------- --------- ---------
Net income $ 144,677 $206,268 $401,576 $724,813
======== ======== ========= =========
Net loss allocated to General Partners $ 0 $ (619) $ 0 $ (1,612)
Net income allocated to Class A Limited
Partners $ 358,439 $ 268,10 $876,111 $ 885,974
Net loss allocated to Class B Limited
Partners $(213,762) $(61,273) $(474,535) $(159,549)
Net income per Class A Limited Partner
Unit $ 0.17 $ 0.13 $ 0.43 $ 0.43
Net loss per Class B Limited Partner
Unit $ (0.54) $ (0.14) $ (1.16) $ (0.34)
Cash distribution per Class A Limited
Partner Unit $ 0.12 $ 0.16 $ 0.40 $ 0.47
</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 NINE MONTHS ENDED
SEPTEMBER 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) 0 876,111 0 (474,535) 0 401,576
Partnership distributions 0 (857,050) 0 0 0 (857,050)
Class B conversion elections 56,401 422,190 (56,401) (422,190) 0 0
--------- ----------- ------- ---------- ------ -----------
BALANCE, SEPTEMBER 30, 1996 2,104,757 $18,078,937 395,243 $2,609,850 $ 0 $20,688,787
========= =========== ======= ========== ====== ===========
</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>
Nine Months Ended
-----------------
Sept 30, 1996 Sept 30, 1995
------------- -------------
<S> <C> <C>
Cash flow from operating activities:
Net earnings $ 401,576 $ 724,813
Adjustments to reconcile net earnings to net
cash used in operating activities: (413,468) (506,566)
Equity in earnings of joint venture
Distributions received from joint
ventures 779,983 495,484
Partnership distributions paid (922,962) (946,385)
Amortization of organization costs 4,687 4,687
Changes in assets and liabilities:
Decrease in due from affiliates 5,194 0
Decrease in prepaids and
other assets 3,500 56,435
Decrease in accounts payable (4,000) (2,000)
--------- ----------
Net cash used in
operating activities (145,490) (173,532)
Cash flow from investing activities:
Investment in joint ventures (234,924) (10,696,983)
--------- -----------
Net decrease in cash and cash equivalents (380,414) (10,870,515)
Cash and cash equivalents, beginning of year 967,347 11,904,815
--------- ------------
Cash and cash equivalents, end of period $ 586,933 $ 1,034,300
========= ============
Supplemental schedule of noncash investing
activities-deferred project costs
applied to investing activities $ 21,305 $ 78,574
--------- ------------
</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 the 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 September 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.
(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.
7
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(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 September 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:
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.
8
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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 September 30, 1996, the Partnership
had contributed $1,696,150 and Wells Fund V had contributed $1,035,804 to
the Fund V - Fund VI Joint Venture for the acquisition and development of
Stockbridge Village II. It is currently anticipated that the remaining cost
of approximately $300,000 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 54% 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 $12.35 for 1996 and $10.41 for 1995, the first
year of occupancy.
9
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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 76,000 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.
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 September 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
10
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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. Four additional tenants have occupied
the second building.
As of September 30, 1996, the Partnership had contributed $1,017,907 and
Wells Fund VII contributed $1,866,278 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% at December 31, 1995. The average effective annual rental per square
foot at the Stockbridge Village III Project was $13.76 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 with Cici's Pizza for 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, 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 September 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 September 30, 1996, the Partnership contributed $2,467,907, and Wells
Fund VII contributed $3,316,278, 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 September 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
11
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Venture was approximately 57%. It is anticipated that Wells Fund VII will
contribute the remaining approximately $16,500 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. Six tenants occupied the property as of September 30, 1996 for an
occupancy rate of 54%. The average effective annual rental was $6.83 per
square foot for the third quarter of 1996.
As of September 30, 1996, Fund II - Fund III Joint Venture had contributed
$1,729,116 in land and improvements for an approximate 25.2% equity interest
in the Fund II, III, VI and VII Joint Venture, the Partnership had
contributed $1,699,846 to the joint venture for an approximate 26% equity
interest, and Wells Fund VII had contributed $3,217,154 to the joint venture
for an approximate 48.8% equity interest. The total cost to develop the
Holcomb Bridge Road Project is currently estimated to be approximately
$5,000,000, excluding land, and it is anticipated that the remaining
approximate $83,000 will be contributed $16,000 by the Partnership and
$67,000 by Wells Fund VII for an anticipated equity interest of 49% by Wells
Fund VII, 26% by the Fund II - Fund III Joint Venture and 25% 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
12
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VIII are substantially identical to those of the Partnership.
As of September 30, 1996, the Partnership contributed approximately
$6,067,688 for an approximate 39% 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 September 30, 1996, Wells Fund VIII contributed $3,500,000 for an equity
interest in the Fund VI-VII-VIII Joint Venture of approximately 23%, and
Wells Fund VII contributed approximately $5,932,312 for an equity interest
in the Fund VI-VII-VIII Joint Venture of approximately 38%. 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
$2,200,000 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 34%,
34%, and 32%, 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. 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. 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.
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 September 30, 1996, the Partnership had contributed $2,567,688, Wells
Fund VII had contributed $2,432,312 and Wells Fund VIII had contributed
$1,500,000 for the development of this project.
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.
13
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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.
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 September 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 September 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
14
<PAGE>
feet in the property. As of September 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 September
30, 1996 was 95% in 1996 and 1995, 92% in 1994, 82% in 1993, and 87% in
1992. The average effective annual rental per square foot at the Cherokee
Property was $8.57 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 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 September
30, 1996, the Partnership had incurred $4,619,157 in sales commissions,
acquisition fees, organizational and offering costs; had invested
$19,789,055 in properties; had reserved $250,000 as working capital
reserves; and is currently holding net offering proceeds of approximately
$341,000 available for investment in properties. As set forth above, it is
currently anticipated that approximately $300,000 will be contributed to the
Fund V - Fund VI Joint Venture for the completion of the Stockbridge Village
II project, and that approximately $16,000 will be contributed to the Fund
II, III, VI, and VII Joint Venture for the completion of the Holcomb Bridge
Road Project, leaving approximately $25,000 available to invest.
15
<PAGE>
Gross revenues of the Partnerships were $470,641 for the nine months ended
September 30, 1996, as compared to $805,079 for the nine months ended
September 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 all buildings and improvements in
which the Partnership owns an interest from 40 years to 25 years, which
became effective December 31, 1995.
Expenses of the Partnership were $69,065 for 1996, as compared to $80,266
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 $401,576 for the nine months ended
September 30, 1996, as compared to $724,813 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 decreased from $173,532 in 1995 to
$145,490 in 1996. This decrease was due primarily to increased distributions
received from joint ventures and decreased distributions to the limited
partners offset by decreased interest income. Net cash used in investing
activities decreased for the nine months ended September 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 $10,870,515 and $380,414 at September 30, 1995 and 1996, respectively.
The Partnership made cash distributions of investment income to the Limited
Partners holding Class A Units of $.12 for the three months ended September
30, 1996, as compared to $.16 per Class A Unit for the three months ended
September 30, 1995. No cash distributions were made to the Limited Partners
holding Class B Units.
16
<PAGE>
PROPERTY OPERATIONS
- -------------------
As of September 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 Nine Months Ended
------------------ -----------------
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $179,374 $179,374 $538,124 $538,124
Expenses:
Depreciation 73,008 42,516 219,024 127,548
Management & leasing expenses 7,175 7,175 21,525 21,525
Other operating expenses 3,380 3,715 11,204 14,939
-------- -------- -------- --------
83,563 53,406 251,753 164,012
-------- -------- -------- --------
Net income $ 95,811 $125,968 $286,371 $374,112
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund V - Fund VI Joint Venture 52.5% 52.4% 52.5% 52.4%
Cash Distribution to Partnership $ 89,478 $ 88,861 $267,670 $258,582
Net Income Allocated to the
Partnership $ 50,302 $ 65,809 $150,235 $191,007
</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 54.2% in 1995, to 52.5% in 1996, due to
additional fundings by the Partnership in 1996.
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.
17
<PAGE>
Stockbridge Village II/Fund V - Fund VI Joint Venture
-----------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $50,056 $50,056 $146,573 $115,977
Expenses:
Depreciation 19,811 14,269 59,333 25,507
Management & leasing expenses 4,549 5,515 14,528 13,494
Other operating expenses 24,862 14,249 63,660 37,458
------- ------- -------- --------
49,222 34,033 137,521 76,459
-------- ------- -------- --------
Net income $ 834 $16,023 $ 9,052 $ 39,518
======= ======= ======== ========
Occupied % 61% 61% 61% 61%
Partnership's Ownership % in the
Fund V - Fund VI Joint Venture 52.5% 52.4% 52.5% 52.4%
Cash Distribution to Partnership $10,026 $10,276 $31,920 $19,951
Net Income Allocated to the
Partnership $ 433 $ 8,374 $ 4,743 $20,230
</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. The second building containing
10,400 square feet opened in June, 1995. Glenn's Open Pit Bar-B-Que leased
4,303 square feet beginning in July, 1995. A lease has been signed for 4,969
square feet in the second building with occupancy anticipated to commence in
early 1997.
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 52.5% for 1996, as compared to 52.4% in 1995, due to additional
fundings by the Partnership which increased the Partnership's ownership
interest in the Fund V - Fund VI Joint Venture.
18
<PAGE>
The Marathon Building/Fund V-VI-VII Joint Venture
-------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -------------------------------
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $242,755 $242,754 $728,263 $728,262
Expenses
Depreciation 87,647 52,299 262,939 156,898
Management & leasing expenses 9,710 9,710 29,130 29,130
Other operating expenses 1,531 2,374 10,381 16,283
-------- -------- -------- --------
98,888 64,383 302,450 202,311
-------- -------- -------- --------
Net income $143,867 $178,371 $425,813 $525,951
======== ======== ======== ========
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 $ 90,716 $ 90,364 $269,728 $267,259
Net Income Allocated to the
Partnership $ 60,180 $ 74,612 $178,117 $220,005
</TABLE>
Net income decreased for the three and nine month periods ended September
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.
19
<PAGE>
Stockbridge Village III / Fund VI - Fund VII Joint Venture
----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Five Months Ended
------------------------------ ----------------- ----------------
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $68,558 $21,235 $187,790 $35,391
Expenses:
Depreciation 21,400 2,803 63,078 5,607
Management & leasing expenses 16,387 2,575 37,273 3,793
Other operating expenses 8,696 6,262 44,551 12,346
------- ------- -------- -------
46,483 11,640 144,902 21,746
------- ------- -------- -------
Net income $22,075 $ 9,595 $ 42,888 $13,645
======= ======= ======== =======
Occupied % 87% 18% 87% 18%
Partnership's Ownership % in the
Fund VI - Fund VII Joint Venture 42.8% 47.1% 42.8% 47.1%
Cash Distribution to Partnership $23,122 $ 2,659 $ 45,004 $ 2,659
Net Income Allocated to the
Partnership $ 9,443 $ 4,650 $ 18,392 $ 6,768
</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 September 30, 1996.
20
<PAGE>
Cherokee Property / Fund I, II, II-OW, VI, VII Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ ------------------------------
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30,1995
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Rental Income $219,956 $253,387 $666,564 $546,904
Interest Income 18 69 55 164
-------- -------- -------- --------
219,974 253,456 666,619 547,068
Expenses:
Depreciation 107,607 72,989 322,251 164,233
Management & leasing expenses 12,101 9,354 38,011 23,823
Other operating expenses 38,084 36,728 133,588 118,548
-------- -------- -------- --------
157,792 119,071 493,850 306,604
-------- -------- -------- --------
Net income $ 62,182 $134,385 $172,769 $240,464
======== ======== ======== ========
Occupied % 95% 95% 95% 95%
Partnership's Ownership % 10.7% 11.1% 10.7% 11.1%
Cash Distribution to Partnership $ 18,722 $ 7,387 $ 53,585 $ 7,387
Net Income Allocated to the
Partnership $ 6,658 $ 5,603 $ 18,500 $ 5,603
</TABLE>
Rental income decreased for the three months ended September 30, 1996, as
compared to the same period for 1995, due to the receipt in September 1995 of
certain excess rents relating to the Kroger expansion which, although completed
in November 1994, was billed retroactively and paid in September 1995. The
increase in depreciation expenses for 1996 as compared to 1995 is 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
increased in 1996 as compared to 1995 due to increased repairs and maintenance
costs. Net income of the property decreased for the nine month period ended
September 30, 1996 as compared to the same period for 1995, due primarily to
the increase in depreciation expenses offset partially by the increase in rental
income.
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, the Fund II-Fund II-OW Joint Venture $805,092, the Partnership $953,798
and Wells Fund VII $953,798. The Partnership and Wells Fund VII did not make
their respective capital contributions until August, 1995.
21
<PAGE>
880 Holcomb Bridge Road Property / Fund II, III, VI,VII Joint Venture
---------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -----------------
Sept 30, 1996 Sept 30, 1996
------------------- -----------------
<S> <C> <C>
Revenues:
Rental Income $82,869 $136,044
Expenses:
Depreciation 54,939 138,881
Management & leasing expenses 8,530 14,610
Other operating expenses 22,279 70,012
------- --------
85,748 223,503
------- --------
Net loss $(2,879) $(87,459)
======= ========
Occupied % 53.6% 53.6%
Partnership's Ownership % in the Fund II, III, VI,
VII Joint Venture 26.0% 26.0%
Cash Distribution to Partnership $ 6,426 $ 6,426
Net Loss Allocated to the
Partnership $ (898) $(18,075)
</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. The project opened in April, 1996.
Development is being completed on two buildings with a total of 49,500
square feet. As of September 30, 1996, six tenants are occupying
approximately 26,549 square feet of space in the retail building under
leases of varying lengths. Since the property was not developed as of
September 30, 1995, no comparative figures are available for the quarter.
As of September 30, 1996, the Fund II - Fund III Joint Venture contributed
$1,729,116 in land and land improvements for an equity interest of
approximately 25.2%, Wells Fund VII contributed $3,217,154 for an equity
interest of approximately 48.8%, and the Partnership contributed $1,699,846
for an equity interest of approximately 26.0%. The total cost to develop the
Holcomb Bridge Road Project is currently estimated to be approximately
$5,000,000, excluding land. It is anticipated that of the remaining cost of
approximately $83,000, $67,000 will be contributed by Wells Fund VII and
$16,000 by the Partnership, after which the equity interests in the property
will be 25.5% for the Partnership, 48.8% for Wells Fund VII and 25.7% for
the Fund II - Fund III Joint Venture. The Partnership has reserved
sufficient funds for this purpose.
22
<PAGE>
Stockbridge Village I Expansion / Fund VI - Fund VII Joint Venture
------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sept 30, 1996 Sept 30, 1996
------------------ ----------------
<S> <C> <C>
Revenues:
Rental Income $ 5,994 $ 7,003
Expenses:
Depreciation 19,107 31,845
Management & leasing expenses 822 977
Other operating expenses 9,037 15,713
-------- --------
28,972 48,535
-------- --------
Net loss $(22,972) $(41,532)
-------- --------
Occupied % 19% 19%
Partnership's Ownership % in the Fund VI -
Fund VII Joint Venture 42.8% 42.8%
Cash Distribution to Partnership $ 0 $ 0
Net Loss Allocated to the
Partnership $ (9,829) $(17,790)
</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 in the ninth year to $56,000. One additional
tenant has occupied 1,600 square feet at the property as of September 30, 1996.
Three additional leases have been signed for a total of 4,800 square feet with
occupancy expected to commence in late 1996. Negotiations are being conducted
to lease the remaining space.
23
<PAGE>
Bell South Property / Fund VI - Fund VII - Fund VIII Joint Venture
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Five Months
Ended June 30, 1996 Ended Sept 30, 1996
-------------------- --------------------
<S> <C> <C>
Revenues:
Rental income $364,732 $511,472
Interest income 1,366 58,000
-------- --------
366,098 569,472
-------- --------
Expenses:
Depreciation 109,116 186,092
Management & leasing expenses 39,597 57,525
Other operating expenses 147,446 213,407
-------- --------
296,159 457,024
-------- --------
Net income $ 69,939 $112,448
======== ========
Occupied % 96.0% 96.0%
Partnership's Ownership % in the
Fund VI - Fund VII - Fund VIII
Joint Venture 39.2% 39.2%
Cash Distribution to Partnership $ 25,820 $ 79,971
Net Income Allocated to $ 28,857 $ 47,500
Partnership
</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. An additional approximate
2,900 square feet will be occupied by BellSouth commencing in December 1996.
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.
Interest income was generated from construction dollars, not as yet funded on
construction, being invested in interest bearing accounts.
24
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the third 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: November 11, 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.
25
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 586,933
<SECURITIES> 20,072,965
<RECEIVABLES> 264,909
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,400
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,950,740
<CURRENT-LIABILITIES> 261,953
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,688,787
<TOTAL-LIABILITY-AND-EQUITY> 20,950,740
<SALES> 0
<TOTAL-REVENUES> 470,641
<CGS> 0
<TOTAL-COSTS> 69,065
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 401,576
<INCOME-TAX> 401,576
<INCOME-CONTINUING> 401,576
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 401,576
<EPS-PRIMARY> .42
<EPS-DILUTED> 0
</TABLE>
