<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, 2000 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 0-25606
------------------------------------------------------
WELLS REAL ESTATE FUND VII, L.P.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2022629
------------------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6200 The Corners Pkwy., Norcross, Georgia 30092
------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
---------------------------
------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
FORM 10-Q
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets--June 30, 2000 and December 31, 1999 3
Statements of Income for the Three Months and Six Months Ended June 30, 2000 and 1999 4
Statements of Partners' Capital for the Year Ended December 31, 1999
and the Six Months Ended June 30, 2000 5
Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 19
</TABLE>
-2-
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS:
Investment in joint ventures (Note 2) $16,964,270 $17,446,299
Due from affiliates 458,749 465,908
Cash and cash equivalents 100,342 81,697
----------- -----------
Total assets $17,523,361 $17,993,904
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL:
Liabilities:
Accounts payable $ 3,854 $ 1,929
Partnership distributions payable 485,207 458,148
----------- -----------
Total liabilities 489,061 460,077
----------- -----------
Partners' capital:
Limited partners:
Class A--2,042,267 units and 2,036,267 units as of
June 30, 2000 and December 31, 1999, respectively 17,034,300 17,125,194
Class B--375,750 units and 381,750 units as of
June 30, 2000 and December 31, 1999, respectively 0 408,633
----------- -----------
Total partners' capital 17,034,300 17,533,827
----------- -----------
Total liabilities and partners' capital $17,523,361 $17,993,904
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
-3-
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- ---------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Equity in income of joint ventures
(Note 2) $ 238,543 $ 268,409 $ 506,927 $ 509,185
Interest income 593 (1,493) 1,147 146
--------- --------- --------- ---------
239,136 266,916 508,074 509,331
--------- --------- --------- ---------
EXPENSES:
Legal and accounting 2,743 9,720 15,525 15,460
Partnership administration 22,893 14,535 34,984 35,990
Amortization of organization costs 0 1 0 1,563
--------- --------- --------- ---------
25,636 24,256 50,509 53,013
--------- --------- --------- ---------
NET INCOME $ 213,500 $ 242,660 $ 457,565 $ 456,318
========= ========= ========= =========
NET INCOME ALLOCATED
TO CLASS A LIMITED PARTNERS $ 373,078 $ 480,530 $ 860,744 $ 934,923
========= ========= ========= =========
NET LOSS ALLOCATED TO
CLASS B LIMITED PARTNERS $(159,578) $(237,870) $(403,179) $(478,605)
========= ========= ========= =========
NET INCOME PER CLASS A
LIMITED PARTNER UNIT $ 0.18 $ 0.24 $ 0.42 $ 0.47
========= ========= ========= =========
NET LOSS PER CLASS B
LIMITED PARTNER UNIT $ (0.42) $ (0.57) $ (1.07) $ (1.16)
========= ========= ========= =========
CASH DISTRIBUTION PER
CLASS A LIMITED PARTNER UNIT $ 0.22 $ 0.22 $ 0.47 $ 0.42
========= ========= ========= =========
</TABLE>
See accompanying condensed notes to financial statements.
-4-
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1999
AND THE SIX MONTHS ENDED June 30, 2000
<TABLE>
<CAPTION>
Limited Partners
---------------------------------------------
Class A Class B Total
---------------------- -------------------- Partners'
Units Amounts Units Amounts Capital
--------- ----------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 2,009,517 $16,935,935 408,500 $1,452,035 $18,387,970
Net income (loss) 0 1,879,410 0 (983,615) 895,795
Partnership distributions 0 (1,749,938) 0 0 (1,749,938)
Class B conversion elections 26,750 59,787 (26,750) (59,787) 0
--------- ----------- ------- ---------- ----------
BALANCE, December 31, 1999 2,036,267 17,125,194 381,750 408,633 17,533,827
Net income (loss) 0 860,744 0 (403,179) 457,565
Partnership distributions 0 (957,092) 0 0 (957,092)
Class B conversion elections 6,000 5,454 (6,000) (5,454) 0
--------- ----------- ------- ---------- -----------
BALANCE, June 30, 2000 2,042,267 $17,034,300 375,750 $ 0 $17,034,300
========= =========== ======= ========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
-5-
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
---------------------
June 30, June 30,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 457,565 $ 456,318
--------- ---------
Adjustments to reconcile net income to net cash used in operating
activities:
Equity in income of joint ventures (506,927) (509,185)
Amortization of organization costs 0 1,563
Changes in assets and liabilities:
Prepaids and other assets 0 1,717
Accounts payable 1,925 (5,173)
--------- ---------
Total adjustments (505,002) (511,078)
--------- ---------
Net cash used in operating activities (47,437) (54,760)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 996,115 857,513
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distributions paid (930,033) (812,392)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,645 (9,639)
CASH AND CASH EQUIVALENTS, beginning of year 81,697 75,740
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 100,342 $ 66,101
========= =========
</TABLE>
See accompanying condensed notes to financial statements.
-6-
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
CONDENSED NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
Wells Real Estate Fund VII, 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 6, 1994, the Partnership commenced an offering of up to $25,000,000
of Class A or Class B limited partnership units ($10 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933.
The Partnership commenced active operations when it received and accepted
subscriptions for a minimum of 125,000 units on April 26, 1994. The
Partnership terminated its offering on January 5, 1995, and received gross
proceeds of $24,180,174 representing subscriptions from 1,910 Limited
Partners.
The Partnership owns equity interests in properties through ownership in the
following joint ventures: (i) Fund V, Fund VI, and Fund VII Associates, a
joint venture between the Partnership, Wells Real Estate Fund V, L.P., and
Wells Real Estate Fund VI, L.P. (the "Fund V-VI-VII Joint Venture"); (ii)
Fund VI and Fund VII Associates, a joint venture between the Partnership and
Wells Real Estate Fund VI, L.P. (the "Fund VI-Fund VII Joint Venture");
(iii) Fund II, III, VI, and VII Associates, a joint venture among the
Partnership, Wells Fund II-III Joint Venture and Wells Real Estate Fund VI,
L.P. (the "Fund II-III-VI-VII Joint Venture"); (iv) Fund VII and Fund VIII
Associates, a joint venture between the Partnership and Wells Real Estate
Fund VIII, L.P. (the "Fund VII-Fund VIII Joint Venture"); (v) Fund VI, Fund
VII, and Fund VIII Associates, a joint venture between the Partnership,
Wells Real Estate Fund VI, L.P., and Wells Real Estate Fund VIII, L.P. (the
"Fund VI-VII-VIII Joint Venture"); and (vi) Fund I, II, II-OW, VI, and VII
Associates, a joint venture between the Partnership, Wells Real Estate Fund
I, the Fund II and Fund II-OW Joint Venture, and Wells Real Estate Fund VI,
L.P. (the "Fund I, II, II-OW, VI, and VII Joint Venture").
As of June 30, 2000, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
three-story office building located in Appleton, Wisconsin (the "Marathon
Building"); (ii) two retail buildings located in Stockbridge, Georgia
("Stockbridge Village III"); (iii) a retail shopping center expansion in
Stockbridge, Georgia ("Stockbridge Village I Expansion"); (iv) an
office/retail center located in Roswell, Georgia ("Holcomb Bridge Road
Property"); (v) a retail center located in Stockbridge, Georgia (the
"Hannover Center"); (vi) a four-story office building located in
Jacksonville, Florida (the "BellSouth Property"); (vii) an office building
located in Gainesville, Florida ("CH2M Hill at Gainesville Property");
(viii) a retail center in Clemmons, North Carolina ("Tanglewood Commons");
and (ix) a retail center located in Cherokee County, Georgia ("Cherokee
Commons").
-7-
<PAGE>
(b) Basis of Presentation
The consolidated financial statements of 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,
1999.
2. INVESTMENT IN JOINT VENTURES
The Partnership owns interests in nine properties through its ownership in
joint ventures of which three are office buildings and six are retail
centers. The Partnership does not have control over the operations of the
joint ventures; however, it does exercise significant influence.
Accordingly, investment in joint ventures is recorded on the equity method.
For a description of the joint ventures and properties owned by the
Partnership, please refer to the Partnership's Form 10-K for the year ended
December 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
accompanying financial statements of the Partnership and notes thereto. This
Report contains forward-looking statements, within the meaning of Section
27A of the Securities Act of 1933 and Section 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 the expiration of existing leases, and the potential need
to fund tenant improvements or other capital expenditures out of operating
cash flow.
1. RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITIONS
General
As of June 30, 2000, the developed properties owned by the Partnership were
96.9% occupied, as compared to 96.0% occupied as of June 30, 1999.
Gross revenues of the Partnership decreased for the six months ended June
30, 2000, as compared to the same period in 1999, due to a decrease in
occupancy at the Hannover Center offset partially by increases in common
area maintenance billings to tenants in CH2M Hill Property and Tanglewood
Commons. Total expenses decreased slightly for the six months period due to
decreases in administrative salary, but increased for the three months
period due to increases in printing fees and office expense.
Cash distributions per weighted average Unit for Class A Limited Partners
was $.22 for the three months ended June 30, 2000 and 1999. No cash
distributions were made by the Partnership to the Limited
-8-
<PAGE>
Partners holding Class B Units or to the General Partner. The Partnership
anticipates that distributions will continue to be paid on a quarterly basis
on a level at least consistent with 1999.
The Partnership's net cash provided by investing activities and net cash
used in financing activities increased in 2000, compared to 1999, due to
increases in distributions from joint ventures as occupancy increased.
The Partnership expects to continue to meet its short-term liquidity
requirements and budget demands generally through net cash provided by
operations which the Partnership believes will continue to be adequate to
meet both operating requirements and distributions to limited partners. At
this time, given the nature of the joint ventures in which the Partnership
has invested, there are no known improvements and renovations to the
properties expected to be funded from cash flow from operations.
-9-
<PAGE>
2. PROPERTY OPERATIONS
As of June 30, 2000, the Partnership owned interest in the following
operational properties:
The Marathon Building/Fund V-VI-VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------------------- --------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $242,762 $242,754 $485,525 $485,508
-------- -------- -------- --------
Expenses:
Depreciation 87,647 87,647 175,293 175,293
Management and leasing expenses 2,360 6,443 4,721 22,687
Other operating expenses 6,463 2,865 11,429 10,411
-------- -------- -------- --------
96,470 96,955 191,443 208,391
-------- -------- -------- --------
Net income $146,292 $145,799 $294,082 $277,117
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage in the
Fund V-VI-VII Joint Venture 41.7% 41.7% 41.7% 41.7%
======== ======== ======== ========
Cash distributed to the Partnership $ 98,472 $ 98,270 $197,568 $190,499
======== ======== ======== ========
Net income allocated to the Partnership $ 61,032 $ 60,813 $122,662 $115,586
======== ======== ======== ========
</TABLE>
Rental income remained stable for the six months ended June 30, 2000 as compared
to the six months ended June 30, 1999.
Management and leasing fees decreased for the six months ended June 30, 2000 as
compared to the same period last year due to a lower rate charged starting in
October 1999. The management and leasing agreement reduces fees to 1% after
five years on triple-net leases of ten years or more. Operating expenses
increased due primarily to increases in administrative salary.
-10-
<PAGE>
Stockbridge Village III/Fund VI-Fund VII Joint Venture
<TABLE><CAPTION>
Three Months Ended Six Months Ended
------------------- ------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $76,895 $76,001 $153,733 $156,602
------- ------- -------- --------
Expenses:
Depreciation 21,408 22,457 42,816 45,043
Management and leasing expenses 9,201 13,183 18,778 18,739
Other operating expenses 3,587 6,611 2,608 9,578
------- ------- -------- --------
34,196 42,251 64,202 73,360
------- ------- -------- --------
Net income $42,699 $33,750 $ 89,531 $ 83,242
======= ======= ======== ========
Occupied percentage 100% 100% 100% 100%
======= ======= ======== ========
Partnership's ownership percentage in the
Fund VI-Fund VII Joint Venture 56.3% 56.3% 56.3% 56.3%
======= ======= ======== ========
Cash distributed to the Partnership $37,197 $31,497 $ 76,771 $ 68,969
======= ======= ======== ========
Net income allocated to the Partnership $24,029 $19,001 $ 50,395 $ 46,865
======= ======= ======== ========
</TABLE>
Rental income remained relatively stable for the three months and six months
ended June 30, 2000, as compared to the same period in 1999.
Net income and cash distribution to the Partnership increased for the three
months and six months ended June 31, 2000 due to a decrease in administrative
salary.
-11-
<PAGE>
Stockbridge Village I Expansion/Fund VI-Fund VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $83,061 $66,480 $165,808 $144,626
------- ------- -------- --------
Expenses:
Depreciation 37,151 32,648 74,302 74,203
Management and leasing expenses 11,360 8,437 22,720 17,727
Other operating expenses 15,608 (3,805) 19,787 986
-------- -------- --------- ---------
64,119 37,280 116,809 92,916
------- ------- -------- --------
Net income $18,942 $29,200 $ 48,999 $ 51,710
======= ======= ======== ========
Occupied percentage 86% 86% 86% 86%
======= ======= ======== ========
Partnership's ownership percentage 56.3% 56.3% 56.3% 56.3%
======= ======= ======== ========
Cash distributed to the Partnership $36,848 $43,474 $ 77,175 $ 83,598
======= ======= ======== ========
Net income allocated to the Partnership $10,660 $16,439 $ 27,582 $ 29,112
======= ======= ======== ========
</TABLE>
Rental income increased for the three months and six months ended June 30, 2000,
as compared to the same period in 1999, due to increased rental renewal rates
this year.
Management and leasing fees increased due to increased rental income. Other
operating expenses increased due to decreases in common area maintenance billing
to tenants. In 1999, monthly common area maintenance billing to tenants were
increased to offset 1998 underpayment. Tenants are billed an estimated amount
for the current year common area maintenance which is then reconciled the
following year and the difference billed to the tenant. As a result of
increased expenses, net income decreased for both the three months and six
months ended June 30, 2000 as compared to the same periods of 1999.
-12-
<PAGE>
880 Holcomb Bridge Road Property/Fund II-III-VI-VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $222,699 $227,761 $444,856 $457,824
-------- -------- -------- --------
Expenses:
Depreciation 104,130 94,128 208,260 188,257
Management and leasing expenses 26,480 42,063 57,066 80,937
Other operating expenses 23,890 387 41,108 24,781
-------- -------- --------- --------
154,500 136,578 306,434 293,975
-------- -------- -------- --------
Net income $ 68,199 $ 91,183 $138,422 $163,849
======== ========= ======== ========
Occupied percentage 100% 94% 100% 94%
======== ========= ======== ========
Partnership's ownership percentage 49.1% 49.1% 49.1% 49.1%
======== ========= ======== ========
Cash distributed to the Partnership $ 92,676 $ 94,147 $186,344 $166,352
======== ========= ======== ========
Net income allocated to the Partnership $ 33,466 $ 44,744 $ 67,924 $ 80,401
======== ========= ======== ========
</TABLE>
Rental income remained relatively stable for the three months ended June 30,
2000 as compared to the same period in 1999. Management and leasing fees
decreased in 2000, as compared to 1999, due to a catch-up of 1998 management
fees in 1999. Other operating expenses increased for the three months and six
months period as compared to the same period last year due to appraisal fees for
this property which is currently being marketed for sale and monthly common area
maintenance billings were increased in 1999 to offset 1998 underpayment.
Tenants are billed an estimated amount for the current year common area
maintenance which is ten reconciled the following year and the difference billed
to the tenant.
Cash distributions to the Fund II-Fund III Joint Venture were increased for the
six months period as compared to the same period in 1999 even though there is a
decrease in net income this year due to lease acquisition fees and procurement
fees paid in 1999.
-13-
<PAGE>
The Hannover Center/Fund VII-Fund VIII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 26,698 $56,346 $ 53,342 $112,493
---------- -------- --------- --------
Expenses:
Depreciation 21,654 10,982 42,858 21,963
Management and leasing expenses 4,282 5,583 8,642 13,042
Other operating expenses 13,564 (499) 23,961 2,918
---------- -------- --------- --------
39,500 16,066 75,461 37,923
---------- -------- --------- --------
Net (loss) income $(12,802) $40,280 $(22,119) $ 74,570
========= ======= ======== ========
Occupied percentage 50% 100% 50% 100%
========= ======= ======== ========
Partnership's ownership percentage in the
Fund VII-Fund VIII Joint Venture 36.6% 36.6% 36.6% 36.6%
========= ======= ======== ========
Cash distributed to the Partnership $ 4,475 $16,766 $ 4,475 $ 31,643
========= ======= ======== ========
Net (loss) income allocated to the Partnership $ (4,692) $14,763 $ (8,107) $ 27,330
========= ======= ======== ========
</TABLE>
Rental income and net income decreased for the three months and six months ended
June 30, 2000, as compared to the same period in 1999, due to one tenant who
defaulted on the lease and moved out at the end of 1999. The management team is
currently taking legal action against that tenant.
Depreciation expense increased for both the three months and six months ended
June 30, 2000 due to additional capitalized tenant improvements. Management and
leasing fees decreased due to decreases in rental income. Management and
leasing fees are charges based on rental income received. Operating expenses
increased due to increases in legal fees.
-14-
<PAGE>
CH2M Hill at Gainesville/Fund VII-Fund VIII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $144,035 $143,856 $288,070 $287,712
-------- -------- -------- --------
Expenses:
Depreciation 65,940 67,879 131,881 136,825
Management and leasing expenses 22,915 21,115 46,902 47,996
Other operating expenses (8,262) (27,771) (29,683) (10,419)
-------- -------- -------- --------
80,593 61,223 149,100 174,402
-------- -------- -------- --------
Net income $ 63,442 $ 82,633 $138,970 $113,310
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage in the
Fund VII-Fund VIII Joint Venture 36.6% 36.6% 36.6% 36.6%
======== ======== ======== ========
Cash distributed to the Partnership $ 48,181 $ 55,954 $100,789 $ 91,541
======== ======== ======== ========
Net income allocated to the Partnership $ 23,251 $ 30,285 $ 50,932 $ 41,528
======== ======== ======== ========
</TABLE>
Rental income remained relatively stable for the three months and six months
ended June 30, 2000, as compared to the same period last year. Net income and
cash distributions to the Partnership increased for the six months period, as
compared to 1999, due to an increase in common area maintenance reimbursements
billed in 2000 to the tenants. Management and leasing fees reimbursement were
included in other operating expenses. Tenants are billed an estimated amount
for the current year common area maintenance which is then reconciled the
following year and the difference billed to the tenant.
-15-
<PAGE>
BellSouth Building/Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $380,277 $380,277 $760,554 $760,554
Interest income 215 1,160 1,505 2,302
-------- -------- -------- --------
380,492 381,437 762,059 762,856
-------- -------- -------- --------
Expenses:
Depreciation 111,606 111,606 223,212 223,212
Management and leasing expenses 48,974 49,041 97,140 96,933
Other operating expenses 121,277 106,051 225,610 209,835
-------- -------- -------- --------
281,857 266,698 545,962 529,980
-------- -------- -------- --------
Net income $ 98,635 $114,739 $216,097 $232,876
======== ======== ======== ========
Occupied percentage 100% 100% 100% 100%
======== ======== ======== ========
Partnership's ownership percentage in the
Fund VI-VII-VIII Joint Venture 33.4% 33.4% 33.4% 33.4%
======== ======== ======== ========
Cash distributed to the Partnership $ 72,985 $ 78,374 $152,280 $157,883
======== ======== ======== ========
Net income allocated to the Partnership $ 32,934 $ 38,317 $ 72,166 $ 77,769
======== ======== ======== ========
</TABLE>
Net income has decreased slightly for the three months and six months ended June
30, 2000, as compared to the same period in 1999, due primarily to increased
expenditures in water/sewer, landscaping supplies, janitorial contract, and
janitorial supplies.
-16-
<PAGE>
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $210,402 $193,288 $415,891 $386,319
Interest income 0 2,353 1,988 5,289
-------- -------- -------- --------
210,402 195,641 417,879 391,608
-------- -------- -------- --------
Expenses:
Depreciation 67,554 64,677 132,650 126,102
Management and leasing expenses 23,302 17,537 41,077 32,642
Other operating expenses (20,542) 10,367 (46,252) 29,448
-------- -------- -------- --------
70,314 92,581 127,475 188,192
-------- -------- -------- --------
Net income $140,088 $103,060 $290,404 $203,416
======== ======== ======== ========
Occupied percentage 97% 91% 97% 91%
======== ======== ======== ========
Partnership's ownership percentage in the
Fund VI-VII-VIII Joint Venture 33.4% 33.4% 33.4% 33.4%
======== ======== ======== ========
Cash distributed to the Partnership $ 69,327 $ 56,418 $142,641 $110,742
======== ======== ======== ========
Net income allocated to the Partnership $ 46,775 $ 34,417 $ 96,981 $ 67,931
======== ======== ======== ========
</TABLE>
Rental income, net income, depreciation expenses, and management and leasing
fees have increased in 2000, as compared to 1999, due to increased occupancy at
the property.
Other operating expenses decreased due to monthly common area maintenance
billings to the tenants were increased in 2000 to offset 1999 underpayment.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference
billed to the tenant.
-17-
<PAGE>
Cherokee Commons/Fund I, II, II-OW, VI, and VII Joint Venture
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- -------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income $240,192 $237,232 $483,053 $464,615
Interest income 40 19 47 39
-------- -------- -------- --------
240,232 237,251 483,100 464,654
-------- -------- -------- --------
Expenses:
Depreciation 110,563 111,415 221,125 221,527
Management and leasing expenses 19,938 26,135 36,293 51,129
Other operating expenses 6,183 9,772 (20,785) (19,643)
-------- -------- -------- --------
136,684 147,322 236,633 253,013
-------- -------- -------- --------
Net income $103,548 $ 89,929 $246,467 $211,641
======== ======== ======== ========
Occupied percentage 97% 96% 97% 96%
======== ======== ======== ========
Partnership's ownership percentage 10.7% 10.7% 10.7% 10.7%
======== ======== ======== ========
Cash distributed to the Partnership $ 23,296 $ 20,320 $ 50,843 $ 44,680
======== ======== ======== ========
Net income allocated to the Partnership $ 11,088 $ 9,630 $ 26,392 $ 22,663
======== ======== ======== ========
</TABLE>
Rental income increased in 2000, as compared to 1999, due to increased occupancy
and increased rental renewal rates. Management and leasing expenses decreased
in 2000, as compared to 1999, due to increased leasing commissions for 1999 and
a catch-up of 1998 management fees in 1999. Other operating expenses remain
negative for the six months ended June 30, 2000 and 1999 due to the billing of
common area maintenance to tenants. Tenants are billed an estimate amount for
the current year common area maintenance which is then reconciled in the
following year and the difference billed to the tenant.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) No reports on Form 8-K were filed during the second quarter of
2000.
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 VII, L.P.
(Registrant)
Dated: August 11, 2000 By: /s/ Leo F. Wells, III
---------------------
Leo F. Wells, III, as Individual
General Partner, and as President,
and Chief Financial Officer of
Wells Capital, Inc., the General
Partner of Wells Partners, L.P.
-19-
