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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999 or
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to to
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Commission file number 0-25606
WELLS REAL ESTATE FUND VII, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2022629
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
CLASS A UNITS
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(Title of Class)
CLASS B UNITS
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(Title of Class)
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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Aggregate market value of the voting stock held by nonaffiliates:
Not Applicable
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PART I
ITEM 1. BUSINESS
General
Wells Real Estate Fund VII, L.P. (the "Partnership"), is a Georgia public
limited partnership organized on December 1, 1992, under the laws of the state
of Georgia, having Leo F. Wells, III and Wells Partners, L.P., a Georgia non-
public partnership 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, 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 did not commence active operations until 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 1910 Limited Partners, composed of
two classes of limited partnership interests, Class A and Class B limited
partnership units.
The Partnership owns interests in properties through ownership in the following
joint ventures: (i) Fund V, Fund VI, Fund VII Associates, a joint venture among
the Partnership, Wells Real Estate Fund V, L.P., and Wells Real Estate Fund VI,
L.P. ("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. ("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. ("Fund VII-Fund VIII Joint Venture"), (v) Fund VI, Fund
VII and Fund VIII Associates, a joint venture among 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, VII Associates, a joint
venture among 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, VII Joint Venture").
As of December 31, 1999, 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") and a retail shopping center expansion in Stockbridge, Georgia
("Stockbridge Village I Expansion"), (iii) an office/retail center located in
Roswell, Georgia ("Holcomb Bridge Road"), (iv) a retail center located in
Stockbridge, Georgia ("the Hannover Center"), (v) a four-story office building
located in Jacksonville, Florida ("BellSouth"), (vi) an office building located
in Gainesville, Florida ("CH2M Hill"), (vii) a retail center in Winston-Salem,
North Carolina ("Tanglewood Commons"), and (viii) a retail center located in
Cherokee County, Georgia ("Cherokee Commons").
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc., 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. See Item 11--"Compensation of General
Partners and Affiliates" for a summary of the fees paid to the General Partners
and their affiliates during the fiscal year ended December 31, 1999.
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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,
the properties are adequately insured.
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.
ITEM 2. PROPERTIES
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. As of December 31, 1999, the
properties had an occupancy rate of 97.38%. As of December 31, 1998, the
properties had an occupancy rate of 95.65%. As of December 31, 1997, the seven
properties that were in operation had an occupancy rate of 89.2%.
The following table shows lease expirations during each of the next ten years as
of December 31, 1999, assuming no exercise of renewal options or termination
rights:
<TABLE>
<CAPTION>
Partnership Percentage Percentage
Number Share of of Total of Total
Year of of Square Annualized Annualized Square Annualized
Lease Leases feet Gross Base Gross Base Feet Gross Base
Expiration Expiring Expiring Rent(1) Rent (1) Expiring Rent
- ---------- --------- --------- ------------- ------------ ------------- -----------
<C> <S> <C> <C> <C> <C> <C>
2000 8 13,969 $ 181,719 $ 71,892 3.7% 3.4%
2001 16 52,791 832,245 316,775 13.8 15.5
2002 23 44,933 723,544 321,704 11.8 13.5
2003 10 21,342 306,899 124,365 5.6 5.7
2004 4 16,225 192,698 66,139 4.3 3.6
2005(2) 3 67,079 686,381 271,000 17.6 12.8
2006(3) 5 161,379 2,401,071 916,816 42.3 44.7
2007 1 3,600 44,250 4,739 0.9 0.8
2008 0 0 0 0 0.0 0.0
2009 0 0 0 0 0.0 0.0
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70 381,318 $ 5,368,807 $ 2,093,430 100.0% 100.0%
========= ========= ============= ============ ============= ===========
</TABLE>
(1) Average monthly gross rent over the life of the lease,
annualized.
(2) Primarily expiration of CH2M Hill lease, Gainesville, Florida.
(3) Reflects expirations of Marathon Building, BellSouth, and
Bertucci's.
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The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:
Fund V-VI-VII Joint Venture
On September 8, 1994, the Partnership, Wells Real Estate Fund V, L.P.
("Wells Fund V") and Wells Real Estate Fund VI, L.P. ("Wells Fund VI"),
both of which are 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 investment objectives of Wells Fund V and Wells
Fund VI are substantially identical to those of the Partnership. The
Partnership owns a 42% interest in the following property through the Fund
V-VI-VII Joint Venture:
The Marathon Building
On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a
three-story office building for a purchase price of $8,250,000,
excluding acquisition costs, containing approximately 76,000 rentable
square feet, located on approximately 6.2 acres of land in Appleton,
Wisconsin (the "Marathon Building"). 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 VI totaling $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 including acquisition costs.
The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel
for a period of twelve years, three and one-half months, with options
to renew the lease for two additional five-year periods. The annual
base rent is $910,000. The current lease expires on December 31, 2006.
The lease agreement is a net lease in that the tenant is responsible
for the operational expenses including real estate taxes.
The occupancy rate at the Marathon Building was 100% for 1999, 1998,
and 1997. The average effective annual rental per square foot in the
Marathon Building was $12.78 for 1999 and 1998, $12.74 for 1997, and
$12.78 for 1996 and 1995.
Fund VI-Fund VII Joint Venture
On December 9, 1994, the Partnership and Wells Fund VI entered into a Joint
Venture Agreement known as Fund VI and Fund VII Associates ("Fund VI-Fund
VII Joint Venture"). As of December 31, 1999, the Partnership had
contributed $3,358,633 and Wells Fund VI had contributed $2,604,916,
including its cost to acquire land, to the Fund VI-Fund VII Joint Venture
for the acquisition and development of the Stockbridge Village III and the
Stockbridge Village I Expansion. As of December 31, 1999, the Partnership's
equity interest in the Fund VI-VII Joint Venture was approximately 56.3%,
and Wells Fund VI's equity interest in the Fund VI-VII Joint Venture was
approximately 43.7%. The Partnership owns interests in the following two
properties through the Fund VI-Fund VII Joint Venture:
Stockbridge Village III
In April 1994, Wells Fund VI 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
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Village Shopping Center which was developed and is owned by an
affiliate of the Partnership. On December 9, 1994, Wells Fund VI
contributed the property as a capital contribution to the Fund VI-Fund
VII Joint Venture.
As of December 31, 1999, the Partnership had contributed $1,917,483,
and Wells Fund VI had contributed $1,033,285 to the Fund VI-Fund VII
Joint Venture for the acquisition and development of the Stockbridge
Village III Property.
The first building is a 3,200 square foot restaurant, which was
completed in March 1995, at a cost of approximately $400,000 excluding
land. The space is now being leased by RMS/Fazoli's, which signed a
13-year lease that commenced on December 10, 1998.
Construction began in January 1995, on a second out-parcel building
containing approximately 15,000 square feet for approximately
$1,500,000 excluding land. In October 1995, Damon's Clubhouse occupied
6,732 square feet and the other five tenants occupied 8,268 square
feet. The term of the lease is for nine years and 11 months commencing
October 1995. The initial annual base rent is $102,375 through March
2001 and $115,375 thereafter.
The occupancy rate at year end at the Stockbridge Village III Property
was 100% in 1999, 1998, and 1997. The average effective annual rental
per square foot at the Stockbridge Village III Property was $17.08 for
1999, $13.08 for 1998, $15.67 for 1997, $14.15 for 1996, and $4.85 for
1995, the first year of occupancy.
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
29,200 square feet. Construction was substantially complete in April
1996, with Cici's Pizza occupying a 4,000 square foot restaurant. The
term of the lease is for 9 years and 11 months commencing in April
1996. The initial annual 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. Eleven additional tenants have
occupied 17,600 square feet at the property in 1997, 1998, and 1999.
Negotiations are being conducted to lease the remaining space.
As of December 31, 1999, the Partnership had contributed a total of
$1,441,150, and Wells Fund VI had contributed a total of $1,571,631,
for a total contribution of approximately $3,026,922 toward the
development and construction of the Stockbridge Village I Expansion.
The occupancy rate at the Stockbridge Village I Expansion was 86% at
year end 1999, 81% for 1998, and 74% for 1997. The average effective
annual rental per square foot was $10.74 for 1999, $10.08 for 1998,
$6.82 for 1997, and $2.69 for 1996, the first year of occupancy.
Fund II-III-VI-VII Joint Venture--Holcomb Bridge Road Property
On January 10, 1995, the Partnership, Fund II-Fund III Joint Venture, and
Wells Fund VI entered into a Joint Venture Agreement known as Fund II, III,
VI, and VII Associates ("Fund II-III-VI-
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VII Joint Venture"). The Fund II-Fund III Joint Venture is a joint venture
between Wells Real Estate Fund III, L.P., a Georgia public limited
partnership having Leo F. Wells, III and Wells Capital, Inc. as general
partners, and an existing joint venture (the "Fund II-Fund II-OW Joint
Venture") formed by 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 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 VI are substantially
identical to those of the Partnership.
In January 1995, the Fund II-Fund III Joint Venture contributed to the Fund
II-III-VI-VII Joint Venture 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 Property") including land
improvements for the development and construction on two buildings
containing a total of approximately 49,534 square feet. Fifteen tenants
occupied the Holcomb Bridge Road Property as of December 31, 1999, for an
occupancy rate of 100% in 1999, and 94% in 1998 and 1997. The average
effective annual rental was $19.26 for 1999, $17.63 for 1998, $13.71 for
1997, and $9.87 for 1996, the first year of occupancy.
As of December 31, 1999, Fund II-Fund III Joint Venture had contributed
$1,729,116 in land and improvements for an equity interest of approximately
24.1%, Wells Fund VI had contributed $1,929,541 for an equity interest of
approximately 26.9%, and the Partnership had contributed $3,525,041 for an
equity interest of approximately 49.0%. The total cost to develop the
Holcomb Bridge Road Property is approximately $5,454,582, excluding land.
Fund VII-Fund VIII Joint Venture
On February 10, 1995, the Partnership 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 Fund VII and Fund VIII Associates (the "Fund
VII-Fund VIII Joint Venture"). The investment objectives of Wells Fund
VIII are substantially identical to those of the Partnership. The
Partnership holds an approximate 37% equity interest and Wells Fund VIII
holds an approximate 63% equity interest in the Fund VII-Fund VIII Joint
Venture which owns and operates an office building and a retail/office
building as described below. As of December 31, 1999, the Partnership had
contributed $2,448,923 and Wells Fund VIII had contributed $4,267,721 for a
total cost of $6,742,446 to the Fund VII-Fund VIII Joint Venture for the
acquisition and development of the property.
The Hannover Property
On April 1, 1996, the Partnership contributed 1.01 acres of land
located in Clayton County, Georgia, and improvements thereon, valued
at $512,000, to the Fund VII-Fund VIII Joint Venture for the
development of a 12,080 square foot, single story combination
retail/office building. As of December 31, 1999, the Partnership had
funded approximately $1,437,801 for the development of the Hannover
property, in addition to the cost of the land, and Wells Fund VIII had
contributed $190,311 to the joint venture for the development of the
property.
A nine year, 11-month lease has been signed with Moovies, Inc., a
video sale and rental store, to occupy 6,020 square feet. The annual
base rent for the initial term of 36 months
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is $93,310, for the second term of 36 months, $102,340, for the third
term of 36 months, $111, 370, and the final term of 11 months,
$110,367. The lease provides for two five year extensions at market
rate. The tenant, which provided its own build-out from the existing
shell, moved into the building and opened for business June 22, 1996.
The lease will expire in 2006. Two additional tenants leased the
remaining space at the property.
The average effective annual rental per square foot at the Hannover
Property was $15.97 for 1999, $10.05 for 1998, $8.92 for 1997, and
$8.14 for 1996, the first year of occupancy. The occupancy rate for
the years ended December 31, 1999 and 1998 was 100%, and 50% for 1997.
CH2M Hill at Gainesville
The Partnership made an initial contribution to the Fund VII-Fund VIII
Joint Venture of $677,534, which constituted the total purchase price
and all other acquisition and development costs expended by the Fund
VII-Fund VIII Joint Venture for the purchase of a 5 acre parcel of
land in Gainesville, Alachua County, Florida. Construction of a 62,975
square foot office building, containing 61,468 rentable square feet
was completed in December 1995. The average effective annual rental
per square foot at the Gainesville Property was $9.37 for 1999, $9.19
for 1998, $8.63 for 1997, $8.69 for 1996, and $8.63 for 1995. The
occupancy rate for the years ended December 31, 1999 and 1998 was
100%, and 94% for 1997.
A 9 year, 11-month lease, to occupy 57,457 square feet has been signed
with CH2M Hill, Engineers, Planners, Economists, Scientists, with an
option to extend for an additional five year period. The annual base
rent during the initial term is $530,313 payable in equal monthly
installments of $44,193. The annual rent for the extended term will be
at market rate. Assuming no options or termination rights, the lease
with CH2M Hill will expire in the year 2005.
As of December 31, 1999, the Partnership had contributed $1,036,923,
and Wells Fund VIII had contributed $4,077,310 to the Fund VII-Fund
VIII Joint Venture toward the completion of this project.
Fund VI-VII-VIII Joint Venture
On April 17, 1995, the Partnership, Wells Fund VI and Wells Real Estate
Fund VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership
affiliated with the Partnership through common general partners, formed a
joint venture known as the Fund VI, Fund VII, and Fund VIII Associates (the
"Fund VI-VII-VIII Joint Venture"). The investment objectives of Wells Fund
VI and Wells Fund VIII are substantially identical to those of the
Partnership. As of December 31, 1999, the Partnership had contributed
approximately $5,932,312 for an approximately 33.4% equity interest in the
Fund VI-VII-VIII Joint Venture, which owns an office building in
Jacksonville, Florida and a multi-tenant retail center in Clemmons, North
Carolina. As of December 31, 1999, Wells Fund VIII had contributed
$5,700,000 for an equity interest in the Fund VI-VII-VIII Joint Venture of
approximately 32.3%, and Wells Fund VI had contributed approximately
$6,067,688 for an equity interest in the Fund VI-VII-VIII Joint Venture of
approximately 34.3%. The total cost to complete both properties is
approximately $17,700,000.
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BellSouth 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. BellSouth occupied an additional 3,901
square feet in December 1996. The land purchase and construction costs
totaling approximately $9 million were funded by capital contributions of
$3,500,000 by the Partnership, $3,500,000 by Wells Fund VI, and $2,000,000
by Wells Fund VIII.
The BellSouth 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 $1,094,426 during the first
five years and $1,202,034 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.
The average effective annual rental per square foot at the BellSouth
Property was $16.36 for 1999 and 1998, $16.40 for 1997, and $14.15 for
1996, the first year of occupancy. The occupancy rate was 100% for 1999,
1998, and 1997.
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.
The Fund VI-VII-VIII Joint Venture constructed one large strip shopping
center building containing approximately 67,320 gross square feet on a
12.48 acre tract. The remaining 2.2 acre portion of the property consists
of four out-parcels which have been graded and are held for future
development or resale. As of December 31, 1999, the Partnership had
contributed $2,432,312, Wells Fund VI had contributed $2,567,688 and Wells
Fund VIII had contributed $3,700,000 for the development of this project.
Total cost and expenses incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping
center is approximately $8,700,000. Construction of the project was
substantially completed in the first quarter of 1997. As of December 31,
1999, the Joint Venture had $236,000 reserved to complete the remaining
tenant improvement cost.
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.
The average effective annual rental per square foot at Tanglewood commons
was $11.48 for 1999, $10.96 for 1998, and $9.12 for 1997, the first year of
occupancy. The occupancy rate was 91 % for 1999 and 1998 and 86% for 1997.
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Fund I-II-II-OW-VI-VII Joint Venture
On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund
I"), a Georgia public limited partnership, the Fund II-Fund II-0W Joint
Venture and Wells Fund VI, entered into a joint venture agreement known as
Fund I, II, II-OW, VI and VII Associates (the "Fund I-II-II-OW-VI-VII Joint
Venture"), which was formed to own and operate the Cherokee Property
described below. Wells Fund I is a Georgia limited partnership having Leo
F. Wells, III and Wells Capital, Inc., as general partners. The investment
objectives of Wells Fund I, the Fund II-Fund II-OW Joint Venture and Wells
Fund VI are substantially identical to those of the Partnership.
Cherokee Property
The Cherokee Property consists of a retail shopping center known as
"Cherokee Commons Shopping Center" located in metropolitan Atlanta,
Cherokee County, Georgia (the "Cherokee Property"). The Cherokee
Property has been expanded to consist of approximately 103,755 net
leasable square feet. The Cherokee Property was initially developed
through a joint venture between Wells Fund I and the Fund II-Fund II-
OW Joint Venture, which contributed the Cherokee Property 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 December 31, 1999, Wells Fund I had contributed property with a
book value of $2,139,900, the Fund II-Fund II-OW Joint Venture had
contributed property with a book value of $4,860,100, Wells Fund VI
had contributed cash in the amount of $953,798 and the Partnership had
contributed cash in the amount of $953,798 to the Fund I-II-II-OW-VI-
VII Joint Venture. As of December 31, 1999, the equity interests in
the Fund I-II-II-OW-VI-VII Joint Venture were approximately as
follows: Wells Fund I, 24%; Fund II-Fund II-OW Joint Venture, 54%;
Wells Fund VI, 11%; and the Partnership, 11%.
The Cherokee Property is anchored by a 67,115 square foot lease with
Kroger Food/Drug 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 December 31, 1999, the Cherokee Property
was approximately 97% occupied by 21 tenants, including Kroger.
Kroger, a retail grocery chain, is the only tenant occupying ten
percent or more of the rentable square footage. 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 at year end was 97% in
1999, 91% in 1998, 94% in 1997, $8.59 for 1996.
The average effective annual rental per square foot at the Cherokee
Property was $9.11 for 1999, $8.78 for 1998, $8.49 for 1997, $8.59
for 1996, and $7.50 for 1995.
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ITEM 3. LEGAL PROCEEDINGS
There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during
1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Limited Partners for the year of
1999.
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PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS
As of February 28, 2000, the Partnership had 2,036,267 outstanding Class A
Status Units held by a total of 1,666 Limited Partners and 381,750 of Class B
Status held by a total of 250 Limited Partners. There is no established public
trading for the Partnership's limited partnership units, and it is not
anticipated that a public trading market for the units will develop. Under the
Partnership Agreement, the General Partners have the right to prohibit transfers
of units.
The General Partners have estimated the investment value of properties held by
the Partnership as of December 31, 1999 to be $10.91 per A unit and $14.29 per B
unit based on market conditions existing in early December 1999. This value was
confirmed as reasonable by an independent MAI appraiser, David L. Beal Company,
although no actual MAI appraisal was performed due to the inordinate expense
involved with such an undertaking. The valuation does not include any fractional
interest valuation.
Cash distribution from Net Cash from Operations are distributed to the Limited
Partners on a quarterly basis unless Limited Partners elect to have their cash
distributions paid monthly. Net Cash from Operations is defined in the
Partnership Agreement as Cash Flow less adequate cash reserves for other
obligations of the Partnership for which there is no provision, but are
initially allocated none of the depreciation, amortization, cost recovery, and
interest expense. These items are allocated to Class B Unit holders until their
capital account balances have been reduced to zero. Under the Partnership
Agreement, distributions are allocated first to the Limited Partners holding
Class A Units (and limited partners holding Class B Units that have elected a
conversion right that allows them to share in the distribution rights of limited
partners holding Class A Units) until they have received 10% of their adjusted
capital contributions, as defined. Cash available for distribution is then
distributed to the General Partners until they have received an amount equal to
10% of cash distributions. Any remaining cash available for distribution is
split between the Limited Partners holding Class A Units and the General
Partners in a ratio of 90% and 10% respectively. No distributions will be made
to the Limited Partners holding Class B Units. Holders of Class A Units will,
except in limited circumstances, be allocated none of the Partnership's Net
Loss, depreciation, amortization and cost recovery deductions. These deductions
will be allocated to Class B Units until their Capital account balances have
been reduced to zero.
No distributions have been made to the General Partner as of December 31, 1999.
Cash distributions made to Limited Partners holding Class A Units (and Limited
Partners holding Class B Units that have elected a conversion right) during 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
Per Class A Per Class A Per Class B
Distribution Total Unit Unit Unit
for Quarter Cash Investment Return of Return of
Ended Distributed Income Capital Capital
- ----------------------------------------- --------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
March 31, 1998 $407,411 $0.21 $0.00 $0.00
June 30, 1998 417,733 0.21 0.00 0.00
September 30, 1998 406,832 0.20 0.00 0.00
December 31, 1998 397,126 0.20 0.00 0.00
March 31, 1999 415,133 0.21 0.00 0.00
June 30, 1999 433,974 0.22 0.00 0.00
September 30, 1999 442,683 0.22 0.00 0.00
December 31, 1999 458,148 0.22 0.00 0.00
</TABLE>
-11-
<PAGE>
The fourth quarter distribution was accrued for accounting purposes in 1999, and
was not actually paid to Limited Partners holding Class A Units until February
2000. The General Partners anticipate that cash distributions to Limited
Partners holding Class A units will continue in 2000 at a level at least
comparable with 1999 cash distributions on an annual basis.
ITEM 6. SELECTED FINANCIAL DATA
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1999, 1998, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total assets $17,993,904 $18,789,678 $19,666,294 $20,312,730 $20,830,683
Total revenues 982,630 846,306 816,237 543,291 925,246
Net income 895,795 754,334 733,149 452,776 804,043
Net (loss) allocated to general
partners 0 0 0 0 (280)
Net income allocated to Class A
limited partners 1,879,410 1,704,213 1,615,965 1,062,605 950,826
Net loss allocated to Class B limited
partners (983,615) (949,879) (882,816) (609,829) (146,503)
Net income per weighted average Class
A limited partner unit (1) $ 0.93 $ 0.85 $ 0.86 $ 0.62 $ 0.57
Net loss per weighted average Class B
limited partner unit (1) (2.48) (2.24) (1.68) (.98) .20
Cash distributions per weighted
average Class A limited partner
unit: (1)
Investment income 0.87 0.82 0.79 0.50 0.55
Return of capital 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) The weighted average unit is calculated by averaging units over
the period they are outstanding during the time units are still
being purchased or converted by limited partners in the
Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS RESULTS
OF OPERATION
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 the expiration of existing leases, and the potential need to Fund tenant
improvements or other capital expenditures out of operating cash flow.
-12-
<PAGE>
Results of Operations and Changes in Financial Conditions
General
Gross revenue of the Partnership increased to $982,630 in 1999 from $846,306 in
1998 due primarily to increased income from the joint ventures, primarily due to
increased occupancy at the Holcomb Bridge Road Property and Stockbridge
Expansion.
Net income of the Partnership was $895,795 for the fiscal year ended December
31, 1999, compared to $754,334 in 1998 due primarily to the increase in revenues
discussed above.
The Partnership made cash distributions to the Limited Partners holding Class A
Units of $0.87 per unit for the fiscal year ended December 31, 1999, $0.82 per
unit for fiscal year ended December 31, 1998, and $0.79 per Unit for the fiscal
year ended December 31, 1997. No cash distributions were made to the Limited
Partners holding Class B Units for the fiscal years ended December 31, 1999,
December 31, 1998, and December 31, 1997. Distributions were accrued for the
fourth quarter of 1999 and paid in February 2000. No distributions were made to
General Partners.
Property Operations
As of December 31, 1999, the Partnership's percentage ownership in properties
was as follows: 10.7% in the Fund I-II-II-OW-VI-VII Joint Venture, 41.7% in the
Fund V-VI-VII Joint Venture, 56.3% in the Fund VI-Fund VII Joint Venture, 36.7%
in the Fund VII-Fund VIII Joint Venture, 49.1% in the Fund II-III-VI-VII Joint
Venture, and 33.4% in the Fund VI-VII-VIII Joint Venture.
As of December 31, 1999, the Partnership owned interests in the following
operational properties through its ownership of the foregoing joint ventures:
-13-
<PAGE>
The Marathon Building/Fund V-VI-VII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
-----------------------------------------
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Revenues:
Rental income $971,051 $971,447 $968,219
-------- -------- --------
Expenses:
Depreciation 350,585 350,585 350,585
Management and leasing expenses 39,659 34,632 39,671
Other operating expenses 19,441 12,261 11,905
-------- -------- --------
409,685 397,478 402,161
-------- -------- --------
Net income $561,366 $573,969 $566,058
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Partnership ownership percentage 41.7% 41.7% 41.7%
======== ======== ========
Cash distributed to the Partnership $383,958 $388,835 $387,442
======== ======== ========
Net income allocated to the Partnership $234,146 $239,403 $236,103
======== ======== ========
</TABLE>
Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.
Rental income remained relatively stable in 1999, 1998 and 1997. Management and
leasing fees increased, as compared to 1998, due to an under-accrual of fees in
1998. Operating expenses increased slightly due primarily to increases in
accounting and administrative fees.
Cash distribution to the Partnership and net income allocated to Partnership
remained relatively stable for 1999.
For comments on the general competitive conditions to which the property may be
subject, See Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-14-
<PAGE>
Stockbridge Village III/Fund VI - Fund VII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
------------------------------------------
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
Revenues:
Rental income $310,887 $238,098 $285,256
-------- -------- --------
Expenses:
Depreciation 86,459 91,053 86,626
Management and leasing expenses 36,146 32,844 30,722
Other operating expenses 26,158 145,402 22,501
-------- -------- --------
148,763 269,299 139,849
-------- -------- --------
Net income (loss) $162,124 $(31,206) $145,407
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Partnership ownership percentage 56.3% 56.3% 57.5%
======== ======== ========
Cash distribution to the Partnership $139,292 $ 36,772 $133,729
======== ======== ========
Net income (loss) allocated to the Partnership $ 91,273 $(17,686) $ 83,256
======== ======== ========
</TABLE>
Rental income increased in 1999 as compared to 1998 and 1997 due primarily to
100% occupancy for the whole year 1999 at the property. A tenant vacated its
space in early 1998 and the space was released late in 1998. Management and
leasing expenses increased as the rental income increased. Other operating
expenses were higher in 1998 due to bed debt expense recorded in 1998.
The Stockbridge Village III Project incurred property taxes of $26,211 for 1999,
$25,248 for 1998, and $25,009 for 1997.
The Partnership's ownership percentage in the Fund VI-Fund VII Joint Venture
decreased to 56.3% for 1999 and 1998, as compared to 57.5% in 1997, due to
additional funding by Wells Fund VI, which decreased the Partnership's ownership
in the Fund VI-Fund VII Joint Venture.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc. see Item 2, Properties, page 3.
-15-
<PAGE>
Stockbridge Village I Expansion--Fund VI-Fund VII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------
1999 1998 1997
-------- ------------ ----------
<S> <C> <C> <C>
Revenues:
Rental income $313,566 $294,318 $199,090
Expenses: -------- -------- --------
Depreciation 149,132 141,843 111,990
Management and leasing expenses 43,918 44,398 25,268
Other operating expenses 12,461 18,181 38,757
-------- -------- --------
205,511 204,422 176,015
-------- -------- --------
Net income $108,055 $ 89,896 $ 23,075
======== ======== ========
Occupied percentage 86% 81% 74%
======== ======== ========
Partnership ownership percentage 56.3% 56.3% 57.5%
======== ======== ========
Cash distribution to the Partnership $157,919 $127,292 $ 65,574
======== ======== ========
Net income allocated to the Partnership $ 60,833 $ 51,067 $ 13,243
======== ======== ========
</TABLE>
Rental income, net income, and cash distributions have increased due primarily
to increased occupancy. Other operating expenses were higher in 1997 due
primarily to common area maintenance billings to tenant that were underestimated
in 1997. Tenants are billed as estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference
billed to the tenant.
The Stockbridge Village I Expansion incurred property taxes of $23,085 for 1999,
$22,565 for 1998, and $25,608 for 1997.
The Partnership's ownership percentage in the Fund VI-Fund VII Joint Venture
decreased to 56.3% for 1999 and 1998, as compared to 57.5% in 1997, due to
additional funding by Wells Fund VI, which decreased the Partnership's ownership
in the Fund VI-Fund VII Joint Venture.
For comments on the general competitive condition to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-16-
<PAGE>
Holcomb Bridge Road Property/Fund II-III-VI-VII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
-------------------------------------------
1999 1998 1997
---------- --------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $953,952 $872,978 $679,268
Other income 23,843 36,000 0
-------- -------- --------
977,795 908,978 679,268
-------- -------- --------
Expenses:
Depreciation 415,165 376,290 325,974
Management and leasing expenses 129,797 97,701 48,962
Other operating expenses 93,535 107,418 195,567
-------- -------- --------
638,497 581,409 570,503
-------- -------- --------
Net income $339,298 $327,569 $108,765
======== ======== ========
Occupied percentage 100% 94% 94%
======== ======== ========
Partnership ownership percentage 49.1% 49.0% 48.9%
======== ======== ========
Cash distribution to the Partnership $372,838 $365,964 $214,414
======== ======== ========
Net income allocated to the Partnership $166,494 $160,864 $ 53,143
======== ======== ========
</TABLE>
Rental income increased in 1999 as compared to 1998 due primarily to increased
tenant occupancy. The lower rental income in 1997 is due to the 94% occupancy
starting in late 1997. Depreciation expense increased as occupancy rate
increased due to tenant improvements taking place when tenants moved in.
Management and leasing expenses increased due primarily to increased management
fees that are charged based on rental income. Other operating expenses decreased
in 1999 as compared to 1998 due primarily to an over accrual of property tax in
1998. Other operating expenses were higher in 1997 due primarily to water/sewer
reimbursement paid by Fulton County Water which did not begin until 1998.
Real estate taxes were $53, 896 for 1999, $52,162 for 1998, and $85,230 for
1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-17-
<PAGE>
The Hannover Center/Fund VII - Fund VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
----------------------------------------------
1999 1998 1997
--------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental income $192,913 $121,056 $107,379
-------- -------- --------
Expenses:
Depreciation 84,403 43,925 43,925
Management and leasing expenses 20,489 11,487 11,237
Other operating expenses 20,290 20,482 25,813
-------- -------- --------
125,182 75,894 80,975
-------- -------- --------
Net income $ 67,731 $ 45,162 $ 26,404
======== ======== ========
Occupied percentage 100% 100% 50%
======== ======== ========
Partnership ownership percentage 36.7% 36.7% 38.0%
======== ======== ========
Cash distribution to the Partnership $ 53,227 $ 16,607 $ 23,178
======== ======== ========
Net income allocated to the Partnership $ 24,823 $ 6,962 $ 10,022
======== ======== ========
</TABLE>
Moovies, Inc., a video sales and rental store, signed a nine year, eleven month
lease for 6,020 square feet and occupied the space and opened for business on
June 22, 1996. As of September 30, 1998, the remaining 6,060 square feet was
leased to Norwest Financial and Prudential Realty, which commenced in October
1998.
Rental income, net income and cash distributions have increased as compared to
1998 due to 100% occupancy starting in late 1998. Depreciation expense increased
due to tenant improvement built out at the end of 1998.
Distributions decreased in 1998 due to $44,000 in construction being funded by
operating cash flow in 1998.
Real estate taxes were $12,995 for 1999, 12,668 for 1998, and $12,219 for 1997.
For comments on the general competitive condition to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-18-
<PAGE>
CH2M Hill at Gainesville/Fund VII-Fund VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $576,139 $564,683 $530,493
-------- -------- --------
Expenses:
Depreciation 263,243 251,783 218,181
Management and leasing expenses 103,551 82,031 8,850
Other operating expenses (5,810) 49,250 (66,963)
-------- -------- --------
360,984 383,064 230,068
-------- -------- --------
Net income $215,155 $181,619 $300,425
======== ======== ========
Occupied percentage 100% 100% 94%
======== ======== ========
Partnership ownership percentage 36.7% 36.7% 38.0%
======== ======== ========
Cash distributed to the Partnership $176,609 $161,604 $198,523
======== ======== ========
Net income allocated to the Partnership $ 78,854 $ 67,105 $114,023
======== ======== ========
</TABLE>
Rental income, net income, depreciation and management and leasing expenses
increased due primarily to a full year occupancy of Affiliated Engineers in 1999
as compared to 1998. Other operating expenses decreased due primarily to common
area maintenance billings to tenant that were under estimated in 1998. Tenants
are billed an estimated amount for the current year common area maintenance
which is then reconciled the following year and the difference is billed to the
tenant.
Real estate taxes were $81,703 for 1999, $79,407 for 1998, and $79,428 for 1997.
For comments on the general competitive condition to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-19-
<PAGE>
BellSouth Property/Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
-----------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $1,521,109 $1,521,109 $1,524,708
Interest income 4,763 7,086 8,188
Other income 360 9,373 360
---------- ---------- ----------
1,526,232 1,538,288 1,533,256
---------- ---------- ----------
Expenses:
Depreciation 446,429 444,448 443,544
Management and leasing expenses 192,716 190,025 191,176
Other operating expenses 415,562 436,403 415,114
---------- ---------- ----------
1,054,707 1,070,876 1,049,834
---------- ---------- ----------
Net income $ 471,525 $ 467,412 $ 483,422
========== ========== ==========
Occupied percentage 100% 100% 100%
========== ========== ==========
Partnership ownership percentage in the Fund 33.4% 33.4% 33.4%
VI-VII-VIII Joint Venture
========== ========== ==========
Cash distribution to the Partnership $ 317,821 $ 315,661 $ 327,460
========== ========== ==========
Net income allocated to the Partnership $ 157,467 $ 156,093 $ 166,136
========== ========== ==========
</TABLE>
Rental income, depreciation, and management and leasing expenses have remained
relatively stable. While other operating expenses have fluctuated from $415,114
for 1997, to $436,403 for 1998, and $415,114 for 1999. HVAC and various other
operating expenses were higher in 1998. This created a greater common area
maintenance billing to the tenants in 1999. 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.
Net income has decreased in 1999 and 1998 as compared to 1997 due primarily to
increased costs for HVAC repairs and various other building expenses. Cash
distributions and net income allocated to the partnership decreased in 1999 and
1998 over 1997 levels due primarily to additional funding by Wells Fund VIII in
early 1997, which decreased the partnership ownership in the Fund VI-VII-VIII
Joint Venture.
The BellSouth Property incurred property taxes of $166,706 for 1999, $171,629
for 1998 and $164,400 for 1997.
For comments on the general competitive condition to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc., see Item 2, Properties, page 3.
-20-
<PAGE>
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
Eleven
Months
For the Year Ended Ended
December 31, December 31,
--------------------------
1999 1998 1997
-------- ---------- ------------
<S> <C> <C> <C>
Revenues:
Rental income $772,907 $ 737,862 $ 562,880
Interest income 10,174 17,610 11,276
-------- ---------- ----------
783,081 1,538,288 1,523,896
-------- ---------- ----------
Expenses:
Depreciation 255,456 244,311 191,155
Management and leasing expenses 66,637 61,562 41,589
Other operating expenses 67,726 49,338 88,873
-------- ---------- ----------
389,819 355,211 321,617
-------- ---------- ----------
Net income $393,262 $ 400,261 $ 252,539
======== ========== ==========
Occupied percentage 91% 91% 86%
======== ========== ==========
Partnership ownership percentage 33.4% 33.4% 33.4%
======== ========== ==========
Cash distribution to the Partnership $218,381 $ 212,954 $ 129,340
======== ========== ==========
Net income allocated to the Partnership $131,330 $ 133,667 $ 85,540
======== ========== ==========
</TABLE>
Rental income has increased in 1999 as compared to 1998 due to an increase in
occupancy in late 1998. Depreciation, management, and leasing expense and other
operating expenses have also increased due to the increased occupancy creating a
slight decrease in net income. Common area maintenance billings to tenants were
lower in 1999 as compared to 1998 by approximately $9,000. 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. Since
this property commenced operations in February 1997, comparable income and
expense figures for 1997 are not available.
Tanglewood Commons incurred property taxes of $53,259 in 1999, $52,229 for 1998
and $58,466 for 1997, the first year of occupancy.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on the
property, tenants, etc. see Item 2, Properties, page 3.
-21-
<PAGE>
Cherokee Commons Shopping Center/Fund I-II-II-OW-VI and VII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $945,222 $909,831 $880,652
Interest income 68 84 67
-------- -------- --------
945,290 909,915 880,719
-------- -------- --------
Expenses:
Depreciation 447,969 444,660 440,882
Management and leasing expenses 94,149 82,517 78,046
Other operating expenses 68,090 84,676 138,294
-------- -------- --------
610,208 611,853 657,222
-------- -------- --------
Net income $335,082 $298,062 $223,497
======== ======== ========
Occupied percentage 97% 91% 94%
======== ======== ========
Partnership ownership percentage 10.7% 10.7% 10.7%
======== ======== ========
Cash distribution to the Partnership $ 83,485 $ 79,238 $ 65,047
======== ======== ========
Net income allocated to the Partnership $ 35,881 $ 31,916 $ 23,932
======== ======== ========
</TABLE>
Rental income increased from $909,821 in 1998 to $945,222 in 1999 due to an
increase in occupancy from 91% in 1998 to 97% in 1999. Rental income increased
in 1998 over 1997 due primarily to a one time adjustment made to the straight
line rent schedule in 1997. Management and leasing expenses increased from
$82,517 in 1998 to $94,149 in 1999 due to an increase in occupancy and rental
renewal rates. Operating expenses of the property decreased to $68,090 in 1999,
from $84,676 in 1998 due to increased CAM billings to tenants that were under-
accrued in 1998 offset by increased expenditures for tenant improvements, HVAC
repairs and a partial demolition of a tenant suit in 1999, and decreased from
$138,294 in 1997 to $84,676 in 1998 due to decreased expenditures for tenant
improvements, common area expenses and legal fees. Tenants are billed an
estimate amount for the current year common area maintenance which is then
reconciled to the following year and the difference billed to the tenant. Net
income of the property increased to $335,082 in 1999, from $298,062 in 1998, and
$223,497 in 1997 due to the reasons discussed above.
Real estate taxes were $87,411 for 1999, $ 77,311 for 1998, and $67,259 for
1997.
For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.
Liquidity and Capital Resources
On April 5, 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
offering was terminated on January 5, 1995, at which time the Partnership had
sold 1,678,810 Class A Units and 739,208 Class B Units, held by a total of 1,591
and 319 Limited Partners respectively, for total Limited Partner capital
contributions of $24,180,174. After
-22-
<PAGE>
payment of $846,306 in acquisition and expense fees, payment of $3,627,026 in
selling commissions and organization and offering expenses and the investment of
the Partnership of $3,358,633 in the Fund VI-Fund VII Joint Venture, $3,470,958
in the Fund V-VI-VII Joint Venture, $2,448,923 in the Fund VII-Fund VIII Joint
Venture, 5,932,312 in the Fund VI-VII-VIII Joint Venture, $953,798 in the Fund
I-II-II-OW-VI-VII Joint Venture, $3,525,041 in the Fund II-III-VI-VII Joint
Venture, $2,547 in other acquisition expenses, the Partnership is holding a
balance of $14,630 as working reserves.
Pursuant to the terms of the Partnership Agreement, the Partnership is required
to maintain working capital reserves in an amount equal to the cash operating
expenses required to operate the Partnership for a six-month period not to be
reduced below 1% of Limited Partners' capital contributions. As set forth
above, in order to fund a portion of Holcomb Bridge Road Property and
Stockbridge Village III Project, the General Partners have used a portion of the
Partnership's working capital reserves to reduce the balance below this minimum
amount, rather than funding the tenant improvements out of operating cash flow,
which would have the effect of reducing cash flow distributions to Limited
Partners.
Net cash used in operating activities increased from $72,194 in 1998 to $82,763
in 1999 due primarily to the decrease in interest income which resulted from
expending remaining funds on joint ventures as discussed above.
Net cash provided by investing activities increased in 1999 compared to 1998 due
primarily to the increase in the distributions from joint ventures coupled with
the decrease in investments in joint ventures. The increase in net cash used in
financing activities in 1999 compared to 1998 is the result of the increase in
distributions to partners. Cash and cash equivalents have increased from
$75,740 in 1998 to $81,697 in 1999, and decreased from $194,420 in 1997 to
$75,740 in 1998 due primarily to investments made in joint ventures in 1998.
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.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
Cash distributions of $0.87 per weighted average Unit were made to Class A
Limited Partners for the year ended December 31, 1999. The Partnership's
distributions for the fourth quarter of 1999 will be paid in February 2000 from
Net Cash from Operations. The Partnership anticipates that distributions will
continue to be paid on a quarterly basis from such sources on a level at least
consistent with 1999.
The Partnership is unaware of any known demands, commitments, events or capital
expenditures other than that which is required for the normal operations of its
properties that will result in the Partnership's liquidity increasing or
decreasing in any material way. The Partnership intends to fund any cash
requirements through operating cash flow.
Inflation
Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. Most leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, or in some
-23-
<PAGE>
cases, annual reimbursement of operating expenses above a certain per square
foot allowance. These provisions should reduce the Partnership's exposure to
increases in costs and operating expenses resulting from inflation. In addition,
a number of the Partnership's leases are for terms of less than five years which
may permit the Partnership to replace existing leases with new leases at higher
base rental rates if the existing leases are below market rate. There is no
assurance, however, that the Partnership would be able to replace existing
leases with new leases at higher base rentals.
Year 2000
The Partnership made the transaction into the year 2000 without any information
systems, business operations or facilities related system problems. Management
believes that there are no other Y2K related issues that may require disclosure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements of the Registrant and supplementary data are detailed
under Item 14(a) and filed as part of the report on the pages indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with the Partnership's accountants or other
reportable events during 1999.
-24-
<PAGE>
PART III
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP
Wells Partners, L.P.
Wells Partners, L.P. is a private Georgia limited partnership formed on October
25, 1990. The sole General Partner of Wells Partners, L.P. is Wells Capital,
Inc., ("Capital") a Georgia corporation. The executive offices of Wells
Capital, Inc. are located at 6200 The Corners Parkway, Norcross, Georgia 30092.
Leo F. Wells, III.
Mr. Wells is a resident of Atlanta, Georgia, is 56 years of age and holds a
Bachelor of Business Administration Degree in Economics from the University of
Georgia. Mr. Wells is the President and sole Director of Wells Capital. Mr.
Wells is the President of Wells & Associates, Inc., a real estate brokerage and
investment company formed in 1976 and incorporated in 1978, for which he serves
as principal broker. Mr. Wells is also currently the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983. In addition, Mr. Wells is the President and Chairman of the
Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells
Management Company, Inc. which are affiliates of the General Partners. From
1980 to February 1985, Mr. Wells served as Vice-President of Hill-Johnson, Inc.,
a Georgia corporation engaged in the construction business. From 1973 to 1976,
he was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he
was a real estate salesman and property manager for Roy D. Warren & Company, an
Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999:
<TABLE>
<CAPTION>
(A) (B) (C)
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
- ------------------------------------ ------------------------------------- ----------------------
<S> <C> <C>
Leo F. Wells, III General Partner $ 0
Wells Management Company, Inc. Property Manager--Management $199,571(1)
And Leasing Fees
</TABLE>
(1) The majority of these fees are not paid directly by the Partnership but are
paid by the joint venture entities which own properties to which the
property management and leasing services relate and include management and
leasing fees.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
-25-
<PAGE>
Set forth below is the security ownership of management as of December 31, 1999.
<TABLE>
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- --------------------------- ---------------------------- ----------------------
<S> <C> <C> <C>
Class A units Leo F. Wells, III 69.180 Units Less than 1%
</TABLE>
No arrangements exist which would, upon implementation, result in a change in
control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are compensation and fees paid or to be paid by the Partnership to
the General Partners and their affiliates in connection with the operation of
the Partnership.
Interest in Partnership Cash Flow and Net Sale Proceeds
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow from operations after the Limited
Partners holding Class A Units have received preferential distributions equal to
10% of their adjusted capital contribution. The General Partners will also
receive a subordinated participation in net sale proceeds and net financing
proceeds equal to 20% of residual proceeds available for distribution after the
Limited Partners holding Class B Units have received a return of their adjusted
capital contribution plus a 15% cumulative return on their adjusted capital
contribution; however, that in no event shall the General Partners receive in
the aggregate in excess of 15% of net sale proceeds and net financing proceeds
remaining after payments to Limited Partners from such proceeds of amounts equal
to the sum of their adjusted capital contributions plus a 6% cumulative return
on their adjusted capital contributions. The General Partners did not receive
any distributions from net cash flow from operations or net sale proceeds for
the year ended December 31, 1999.
Property Management and Leasing Fees
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to the lesser of: (A)(i) % of the gross revenues for leasing
(aggregate maximum of 6%) plus a separate one-time fee for initial lease-up of
newly constructed properties in an amount not to exceed the fee customarily
charged in arm's-length transactions by others rendering similar services in the
same geographic area for similar properties; and (ii) n the cash of industrial
and commercial properties which are leased on a long-term basis (ten or more
years), 1% of the gross revenues except for initial leasing fees equal to 3% of
the gross revenues over the first five years of the lease term; or (B) the
amounts charged by unaffiliated persons rendering comparable services in the
same geographic area. Wells Management Company, Inc. received $199,571 in
property management and leasing fees relating to the Partnership in 1999.
Real Estate Commissions
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be
-26-
<PAGE>
made only after Limited Partners have received prior distributions totaling 100%
of their capital contributions plus a 6% cumulative return on their adjusted
capital contributions. During 1999, no real estate commissions were paid to the
General Partners or their affiliates.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
-27-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-35 of this
Annual Report on Form 10-K, and the list of the financial statements
contained herein is set forth on page F-1, which is hereby incorporated
by reference.
(a)2. Financial statement Schedule III
Information with respect to this item begins on page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the commission during the year of
1999.
(c) The exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(d) See (a) 2 above.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-28-
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 27th day of March
2000.
Wells Real Estate Fund VII
(Registrant)
By: /s/ Leo F. Wells, III
------------------------------------------
Leo F. Wells, III
Individual General Partner and as President and
Chief Financial Officer of Wells Capital, Inc.,
the General Partner of Wells Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
<TABLE>
<CAPTION>
Signature TITLE Date
- ----------------------------- -------------------------------- -----------------------
<S> <C> <C>
/s/ Leo F. Wells, III
- -----------------------------
Leo F. Wells, III Individual General Partner, March 27, 2000
President and Sole Director of
Wells Capital, Inc., the General
Partner of Wells Partners, L.P.
</TABLE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
-29-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Financial Statements Page
- --------------------------------------------------------------------------------------- ------------
<S> <C>
Independent Auditors' Report F2
Balance Sheets as of December 31, 1999 and 1998 F3
Statements of Income for the Years ended December 31, 1999, 1998, and 1997 F4
Statements of Partners' Capital for the Years Ended December 31, 1999, 1998, and 1997 F5
Statements of Cash Flows for the Years Ended December 31, 1999, 1998, and 1997 F6
Notes to Financial Statements for December 31, 1999, 1998, and 1997 F7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VII, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VII,
L.P. (a Georgia public limited partnership) as of December 31, 1999 and 1998 and
the related statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements and the schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund VII,
L.P. as of December 31, 1999 and 1998 and the results of its operations and its
cash flows each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments and
Accumulated Depreciation as of December 31, 1999 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 20, 2000
F-2
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENT IN JOINT VENTURES $17,446,299 $18,368,726
CASH AND CASH EQUIVALENTS 81,697 75,740
DUE FROM AFFILIATES 465,908 339,387
ORGANIZATIONAL COSTS, less accumulated amortization of
$31,250 in 1999 and $29,688 in 1998 0 1,562
PREPAID EXPENSES AND OTHER ASSETS 0 4,263
----------- -----------
Total assets $17,993,904 $18,789,678
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 1,929 $ 5,208
Partnership distributions payable 458,148 396,500
----------- -----------
Total liabilities 460,077 401,708
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--2,036,267 units and 2,009,517 units as of December 31,
1999 and 1998, respectively 17,125,194 16,935,935
Class B--381,750 units and 408,500 units as of December 31, 1999
and 1998, respectively 408,633 1,452,035
----------- -----------
Total partners' capital 17,533,827 18,387,970
----------- -----------
Total liabilities and partners' capital $17,993,904 $18,789,678
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES:
Equity in income of joint ventures $ 981,104 $ 839,037 $ 785,398
Interest income 1,526 7,269 30,839
---------- ---------- ----------
982,630 846,306 816,237
---------- ---------- ----------
EXPENSES:
Partnership administration 65,049 66,168 54,435
Legal and accounting 20,224 19,554 22,403
Amortization of organization costs 1,562 6,250 6,250
---------- ---------- ----------
86,835 91,972 83,088
---------- ---------- ----------
NET INCOME $ 895,795 $ 754,334 $ 733,149
========== ========== ==========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $1,879,410 $1,704,213 $1,615,965
========== ========== ==========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ (983,615) $ (949,879) $ (882,816)
========== ========== ==========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.93 $ 0.85 $ 0.86
========== ========== ==========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ (2.48) $ (2.24) $ (1.68)
========== ========== ==========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.87 $ 0.82 $ 0.79
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
Limited Partners Total
-----------------------------------------------------
Class A Class B Partners'
------------------------- -----------------------
Units Amount Units Amount Capital
--------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 1,826,830 $15,698,900 591,187 $4,317,124 $20,016,024
Net income (loss) 0 1,615,965 0 (882,816) 733,149
Partnership distributions 0 (1,487,008) 0 0 (1,487,008)
Class B conversion elections 144,569 873,336 (144,569) (873,336) 0
--------- ----------- -------- ---------- -----------
BALANCE, December 31, 1997 1,971,399 16,701,193 446,618 2,560,972 19,262,165
Net income (loss) 0 1,704,213 0 (949,879) 754,334
Partnership distributions 0 (1,628,529) 0 0 (1,628,529)
Class B conversion elections 38,118 159,058 (38,118) (159,058) 0
--------- ----------- -------- ---------- -----------
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
========= =========== ======== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 895,795 $ 754,334 $ 733,149
----------- ----------- -----------
Adjustments to reconcile net income to net cash used in
operating activities:
Equity in income of joint ventures (981,104) (839,037) (785,398)
Amortization of organization costs 1,562 6,250 6,250
Changes in assets and liabilities:
Prepaid expenses and other assets 4,263 1,051 2,749
Accounts payable and accrued expenses (3,279) 5,208 0
----------- ----------- -----------
Total adjustments (978,558) (826,528) (776,399)
----------- ----------- -----------
Net cash used in operating activities (82,763) (72,194) (43,250)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 1,777,010 1,770,742 1,420,126
Investment in joint ventures 0 (181,070) (169,172)
----------- ----------- -----------
Net cash provided by investing activities 1,777,010 1,589,672 1,250,954
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (1,688,290) (1,636,158) (1,379,585)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,957 (118,680) (171,881)
CASH AND CASH EQUIVALENTS, beginning of year 75,740 194,420 366,301
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 81,697 $ 75,740 $ 194,420
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 0 $ 4,070 $ 4,932
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VII, L.P. (the "Partnership") is a public limited
partnership organized on December 1, 1992 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners,
L.P. ("Wells Partners"), a Georgia nonpublic limited partnership. The
Partnership has two classes of limited partnership interests, Class A and
Class B units. Limited partners shall have the right to change their prior
elections to have some or all of their units treated as Class A units or
Class B units one time during each quarterly accounting period. Limited
partners may vote to, among other things, (a) amend the partnership
agreement, subject to certain limitations, (b) change the business purpose
or investment objectives of the Partnership, and (c) remove a general
partner. A majority vote on any of the above described matters will bind
the Partnership, without the concurrence of the general partners. Each
limited partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed,
currently under development or construction, newly constructed, or have
operating histories. The Partnership owns an interest in the following
properties through joint ventures between the Partnership and other Wells
Real Estate Funds: (i) a shopping center located in Cherokee County,
Georgia, the Cherokee Commons Shopping Center ("Cherokee Commons"); (ii) an
office/retail center in Roswell, Georgia; (iii) the Marathon Building, a
three-story office building located in Appleton, Wisconsin; (iv) the
Stockbridge Village III Retail Center, two retail buildings located in
Stockbridge, Georgia; (v) a retail center expansion in Stockbridge,
Georgia; (vi) a four-story office building located in Jacksonville, Florida
("the BellSouth property"); (vii) a retail shopping center in Clemmon,
Forsyth County, North Carolina; (viii) an office building located in
Gainesville, Florida; and (ix) a retail office building in Stockbridge,
Georgia.
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The carrying values of real estate are based on management's current intent
to hold the real estate assets as long-term investments. The success of the
Partnership's future operations and the ability to realize the investment
in its assets will be dependent on the Partnership's ability to maintain
rental rates, occupancy,
F-7
<PAGE>
and an appropriate level of operating expenses in future years. Management
believes that the steps that it is taking will enable the Partnership to
realize its investment in its assets.
Income Taxes
The Partnership is not subject to federal or state income taxes, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
Distribution of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement,
is distributed to the limited partners quarterly. In accordance with the
partnership agreement, distributions are paid first to limited partners
holding Class A units until they have received a 10% per annum return on
their adjusted capital contributions, as defined. Cash available for
distribution is then paid to the general partners until they have received
an amount equal to 10% of distributions. Any remaining cash available for
distribution is split between the limited partners holding Class A units
and the general partners on a basis of 90% and 10%, respectively. No
distributions will be made to the limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners, on a per unit basis, until all limited
partners have received 100% of their adjusted capital
contributions, as defined
. To limited partners holding Class B units until they receive an
amount equal to the net cash available for distribution received
by the limited partners holding Class A units
. To all limited partners until they receive a cumulative 10% per
annum return on their adjusted capital contributions, as defined
. To all limited partners until they receive an amount equal to
their respective cumulative distributions, as defined
. To the general partners until they have received 100% of their
capital contributions, as defined
. Thereafter, 80% to the limited partners and 20% to the general
partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners holding
Class A units and 1% to the general partners.
Net loss, depreciation, and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the limited partners holding
Class B units and 1% to the general partners until their capital
F-8
<PAGE>
accounts are reduced to zero, (b) then to any partner having a positive
balance in his capital account in an amount not to exceed such positive
balance, and (c) thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to a qualified income offset
provision in the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero, (c) allocations to Class B limited partners in amounts
equal to deductions for depreciation and amortization previously allocated
to them with respect to the specific partnership property sold, but not in
excess of the amount of gain on sale recognized by the Partnership with
respect to the sale of such property, and (d) allocations to Class A
limited partners and general partners in amounts equal to the deductions
for depreciation and amortization previously allocated to them with respect
to the specific partnership property sold, but not in excess of the amount
of gain on sale recognized by the Partnership with respect to the sale of
such property.
Investment in Joint Ventures
Basis of Presentation. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investments in joint ventures are recorded using
the equity method of accounting.
Real Estate Assets. Real estate assets held by the joint ventures are
stated at cost less accumulated depreciation. Major improvements and
betterments are capitalized when they extend the useful life of the related
asset. All repairs and maintenance are expensed as incurred.
Management continually monitors events and changes in circumstances which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present which
indicate that the carrying amounts of real estate assets may not be
recoverable, management assesses the recoverability of real estate assets
by determining whether the carrying value of such real estate assets will
be recovered through the future cash flows expected from the use of the
asset and its eventual disposition. Management has determined that there
has been no impairment in the carrying value of real estate assets held by
the Partnership or its affiliated joint ventures as of December 31, 1999.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years.
Revenue Recognition. All leases on real estate assets held by the joint
ventures are classified as operating leases, and the related rental income
is recognized on a straight-line basis over the terms of the respective
leases.
Partners' Distributions and Allocations of Profit and Loss. Cash available
for distribution and allocations of profit and loss to the Partnership by
the joint ventures are made in accordance with the terms of the individual
joint venture agreements. Generally, these items are allocated in
proportion to the partners' respective ownership interests. Cash is paid
from the joint ventures to the Partnership quarterly.
Deferred Lease Acquisition Costs. Costs incurred to procure operating
leases are capitalized and amortized on a straight-line basis over the
terms of the related leases.
F-9
<PAGE>
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market
accounts.
Per Unit Data
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 1999, 1998, and 1997 is computed based on the weighted
average number of units outstanding during the period.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
current year financial statement presentation.
2. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 1999 and 1998 represents the
Partnership's share of cash to be distributed from its joint venture
investments for the fourth quarters of 1999 and 1998, respectively, as
follows:
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
Fund I, II, II-OW, VI, and VII Associates--Cherokee $ 20,175 $ (6,707)
Fund II, III, VI, VII Associates 122,712 102,908
Fund V, VI, and VII Associates 99,145 98,432
Fund VI and VII Associates 73,394 38,270
Fund VI, VII, and VIII Associates 101,617 90,130
Fund VII and VIII Associates 48,865 16,354
----------- -----------
$ 465,908 $ 339,387
=========== ===========
</TABLE>
The Partnership entered into a property management agreement with Wells
Management Company, Inc. ("Wells Management"), an affiliate of the general
partners. In consideration for supervising the management of the
Partnership's properties, the Partnership will generally pay Wells
Management management and leasing fees equal to (a) 3% of the gross
revenues for management and 3% of the gross revenues for leasing (aggregate
maximum of 6%) plus a separate fee for the one-time initial lease-up of
newly constructed properties in an amount not to exceed the fee customarily
charged in arm's-length transactions by others rendering similar services
in the same geographic area for similar properties or (b) in the case of
commercial properties, which are leased on a long-term net basis (ten or
more years), 1% of the gross revenues except for initial leasing fees equal
to 3% of the gross revenues over the first five years of the lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $199,571, $144,379, and $211,201 for
the years ended December 31, 1999, 1998, and 1997, respectively, which were
paid to Wells Management.
Wells Capital, Inc. (the "Company") performs certain administrative
services for the Partnership, such as accounting and other partnership
administration, and incurs the related expenses. Such expenses are
F-10
<PAGE>
allocated among the various Wells Real Estate Funds based on time spent on
each fund by individual administrative personnel. In the opinion of
management, such allocation is a reasonable estimation of such expenses.
The general partners are also general partners in other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners for other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
3. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- --------------------------
Amount Percent Amount Percent
--------------- ------- ------------- -------
<S> <C> <C> <C> <C>
Fund I, II, II-OW, VI, and VII $ 793,858 11% $ 841,460 11%
Fund II, III, VI, and VII Associates 2,995,463 49 3,201,805 49
Fund V, VI, and VII Associates 2,955,059 42 3,104,872 42
Fund VI and VII Associates 3,089,767 56 3,234,873 56
Fund VI, VII, and VIII Associates 5,420,549 33 5,667,955 33
Fund VII and VIII Associates 2,191,603 37 2,317,761 37
--------------- -------------
$ 17,446,299 $18,368,726
=============== =============
</TABLE>
The following is a rollforward of the Partnership's investment in joint
ventures for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Investment in joint ventures, beginning of year $18,368,726 $19,039,835
Equity in income of joint ventures 981,104 839,037
Contributions to joint ventures 0 185,140
Distributions from joint ventures (1,903,531) (1,695,286)
----------- -----------
Investment in joint ventures, end of year $17,446,299 $18,368,726
=========== ===========
</TABLE>
Fund I, II, II-OW, VI, and VII Associates--Cherokee
In August 1995, the Partnership entered into a joint venture agreement with
Wells Real Estate Fund I, Fund II and II-OW (a joint venture between Wells
Real Estate Fund II and Wells Real Estate Fund II-OW), and Wells Real
Estate Fund VI, L.P. ("Fund VI"). The joint venture, Fund I, II, II-OW, VI,
and VII Associates--Cherokee, was formed for the purpose of owning and
operating Cherokee Commons, a retail shopping center containing
approximately 103,755 square feet located in Cherokee County, Georgia.
Until the formation of this joint venture, Cherokee Commons was part of the
Fund I and II Tucker--Cherokee joint venture. Concurrent with the formation
of the Fund I, II, II-OW, VI, and VII Associates--Cherokee joint venture,
Cherokee Commons was transferred from the Fund I and II Tucker--Cherokee
joint venture. Percentage ownership interests in Fund I, II, II-OW, VI, and
VII Associates--Cherokee were determined at the time of formation based on
contributions. Under the terms of the joint venture agreement, Fund VI and
Fund VII each contributed approximately $1 million to the
F-11
<PAGE>
new joint venture in return for a 10.7% ownership interest. Fund I's
ownership interest in the Cherokee joint venture changed from 30.6% to 24%,
and Fund II and II-OW joint venture's ownership interest changed from 69.4%
to 54.6%. The $2 million in cash contributed to Cherokee was used to fund
an expansion of the property for an existing tenant.
F-12
<PAGE>
Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:
Fund I, II, II-OW, VI, and VII Associates--Cherokee
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
---------- ----------
<S> <C> <C>
Real estate assets, at cost:
Land $1,219,704 $1,219,704
Building and improvements, less accumulated depreciation of $3,165,778 6,067,174 6,500,995
---------- ----------
Total real estate assets 7,286,878 7,720,699
Cash and cash equivalents 206,540 222,814
Accounts receivable 27,703 35,517
Prepaid expenses and other assets 89,846 90,979
---------- ----------
Total assets $7,610,967 $8,070,009
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 34,857 $ 107,129
Partnership distributions payable 192,184 130,838
Due to affiliates 122,272 109,267
---------- ----------
Total liabilities 349,313 347,234
---------- ----------
Partners' capital:
Wells Real Estate Fund I 1,618,133 1,741,492
Fund II and II-OW 4,053,105 4,295,663
Wells Real Estate Fund VI 796,558 844,160
Wells Real Estate Fund VII 793,858 841,460
---------- ----------
Total partners' capital 7,261,654 7,722,775
---------- ----------
Total liabilities and partners' capital $7,610,967 $8,070,009
========== ==========
</TABLE>
F-13
<PAGE>
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $ 945,222 $909,831 $880,652
Interest income 68 84 67
--------- -------- --------
945,290 909,915 880,719
--------- -------- --------
Expenses:
Depreciation 447,969 444,660 440,882
Operating costs, net of reimbursements 37,583 35,715 70,017
Partnership administration 24,882 22,934 26,260
Management and leasing fees 94,149 82,517 78,046
Legal and accounting 5,624 7,363 9,385
Bad debt expense 0 18,664 0
Loss on real estate assets 0 0 32,632
--------- -------- --------
610,207 611,853 657,222
--------- -------- --------
Net income $ 335,083 $298,062 $223,497
========= ======== ========
Net income allocated to Wells Real Estate Fund I $ 80,496 $ 71,604 $ 53,691
========= ======== ========
Net income allocated to Fund II and II-OW $ 182,825 $162,626 $121,942
========= ======== ========
Net income allocated to Wells Real Estate Fund VI $ 35,881 $ 31,916 $ 23,932
========= ======== ========
Net income allocated to Wells Real Estate Fund VII $ 35,881 $ 31,916 $ 23,932
========= ======== ========
</TABLE>
Fund I, II, II-OW, VI and VII Associates--Cherokee
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Fund II Wells Real Wells Real Total
Estate and Estate Estate Partners'
Fund I II-OW Fund VI Fund VII Capital
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 1,970,363 $4,746,274 $ 932,597 $ 929,897 $8,579,131
Net income 53,691 121,942 23,932 23,932 223,497
Partnership distributions (160,881) (331,435) (65,047) (65,047) (622,410)
----------- ---------- ---------- ---------- ----------
Balance, December 31, 1997 1,863,173 4,536,781 891,482 888,782 8,180,218
Net income 71,604 162,626 31,916 31,916 298,062
Partnership distributions (193,285) (403,744) (79,238) (79,238) (755,505)
----------- ---------- ---------- ---------- ----------
Balance, December 31, 1998 1,741,492 4,295,663 844,160 841,460 7,722,775
Net income 80,496 182,825 35,881 35,881 335,083
Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204)
----------- ---------- ---------- ---------- ----------
Balance, December 31, 1999 $ 1,618,133 $4,053,105 $ 796,558 $ 793,858 $7,261,654
=========== ========== ========== ========== ==========
</TABLE>
F-14
<PAGE>
Fund I, II, II-OW, VI, and VII
Associates--Cherokee (A
Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $335,083 $ 298,062 $ 223,497
-------- --------- ---------
Adjustments to reconcile net income to net cash provided by
Depreciation 447,969 444,660 440,882
Loss on real estate assets 0 0 32,632
Changes in assets and liabilities:
Accounts receivable 7,814 56,999 1,386
Prepaid expenses and other assets 1,133 8,890 (21,342)
Accounts payable and accrued expenses (72,272) 70,278 13,721
Due to affiliates 13,005 15,327 15,565
-------- --------- ---------
Total adjustments 397,649 596,154 482,844
-------- --------- ---------
Net cash provided by operating activities 732,732 894,216 706,341
-------- --------- ---------
Cash flows from investing activities:
Investment in real estate (14,148) (5,771) (83,424)
-------- --------- ---------
Cash flows from financing activities:
Distributions to joint venture partners (734,858) (818,790) (541,104)
-------- --------- ---------
Net (decrease) increase in cash and cash equivalents (16,274) 69,655 81,813
Cash and cash equivalents, beginning of year 222,814 153,159 71,346
-------- --------- ---------
Cash and cash equivalents, end of year $206,540 $ 222,814 $ 153,159
======== ========= =========
</TABLE>
Fund II, III, VI, and VII Associates
On January 1, 1995, the Partnership entered into a joint venture agreement with
Fund II and III Associates and Fund VI. The joint venture, Fund II, III, VI, and
VII Associates, was formed for the purpose of acquiring, developing, operating,
and selling real properties. During 1995, Fund II and III Associates contributed
a 4.3-acre tract of land from its 880 Property--Brookwood Grill to the Fund II,
III, VI, and VII Associates joint venture. During 1998, 1997, and 1996, the
Partnership and Fund VI made contributions to the joint venture. Ownership
percentage interests were recomputed accordingly. Development was substantially
completed in 1996 on two buildings containing a total of approximately 49,500
square feet. The following are the financial statements for Fund II, III, VI,
and VII Associates:
F-15
<PAGE>
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
---------- ----------
<S> <C> <C>
Real estate assets, at cost:
Land $1,325,242 $1,325,242
Building and improvements, less accumulated depreciation of $1,299,227 4,418,932 4,773,062
Construction in progress 0 41,263
---------- ----------
Total real estate assets 5,744,174 6,139,567
Cash and cash equivalents 189,404 308,788
Accounts receivable 162,464 111,460
Prepaid expenses and other assets 213,443 233,965
---------- ----------
Total assets $6,309,485 $6,793,780
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 87,926 $ 192,072
Partnership distributions payable 250,075 209,716
---------- ----------
338,001 401,788
---------- ----------
Partners' capital:
Fund II and III Associates 1,406,591 1,507,807
Wells Real Estate Fund VI 1,569,430 1,682,380
Wells Real Estate Fund VII 2,995,463 3,201,805
---------- ----------
Total partners' capital 5,971,484 6,391,992
---------- ----------
Total liabilities and partners' capital $6,309,485 $6,793,780
========== ==========
</TABLE>
F-16
<PAGE>
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
Revenues:
Rental income $ 953,952 $ 872,978 $679,268
Other income 23,843 36,000 0
--------- --------- --------
977,795 908,978 679,268
--------- --------- --------
Expenses:
Depreciation 415,165 376,290 325,974
Operating costs, net of reimbursements 68,691 85,983 122,261
Management and leasing fees 129,798 97,701 99,834
Legal and accounting 4,952 6,509 4,885
Partnership administration 19,891 14,926 17,321
Computer costs 0 0 228
--------- --------- --------
638,497 581,409 570,503
--------- --------- --------
Net income $339,298 $ 327,569 $108,765
========= ========= ========
Net income allocated to Fund II and III Associates $ 81,669 $ 78,791 $ 27,213
========= ========= ========
Net income allocated to Wells Real Estate Fund VI $ 91,135 $ 87,914 $ 28,409
========= ========= ========
Net income allocated to Wells Real Estate Fund VII $ 166,494 $ 160,864 $ 53,143
========= ========= ========
</TABLE>
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Fund II Wells Wells Real Total
and III Real Estate Estate Partners'
Associates Fund VI Fund VII Capital
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $ 1,690,244 $ 1,759,947 $ 3,292,551 $ 6,742,742
Partnership contributions 0 116,675 121,576 238,251
Partnership distributions (109,242) (115,220) (214,414) (438,876)
----------- ------------ ----------- -----------
Net income 27,213 28,409 53,143 108,765
Balance, December 31, 1997 1,608,215 1,789,811 3,252,856 6,650,882
Partnership contributions 0 4,600 154,049 158,649
Partnership distributions (179,199) (199,945) (365,964) (745,108)
Net income 78,791 87,914 160,864 327,569
----------- ------------ ----------- -----------
Balance, December 31, 1998 1,507,807 1,682,380 3,201,805 6,391,992
Partnership distributions (182,885) (204,085) (372,836) (759,806)
Net income 81,669 91,135 166,494 339,298
----------- ------------ ----------- -----------
Balance, December 31, 1999 $ 1,406,591 $ 1,569,430 $ 2,995,463 $ 5,971,484
=========== ============ =========== ===========
</TABLE>
F-17
<PAGE>
Fund II, III, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 339,298 $ 327,569 $ 108,765
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
Depreciation 415,165 376,290 325,974
Changes in assets and liabilities:
Accounts receivable (51,004) (56,936) 12,810
Prepaid expenses and other assets 20,522 35,603 (123,748)
Accounts payable and accrued expenses (104,146) 21,296 (34,194)
--------- --------- ---------
Total adjustments 280,537 376,253 180,842
--------- --------- ---------
Net cash provided by operating activities 619,835 703,822 289,607
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (19,772) (102,122) (620,059)
--------- --------- ---------
Cash flows from financing activities:
Contributions from joint venture partners 0 154,996 230,699
Distributions to joint venture partners (719,447) (667,299) (356,559)
--------- --------- ---------
Net cash used in financing activities (719,447) (512,303) (125,860)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (119,384) 89,397 (456,312)
Cash and cash equivalents, beginning of year 308,788 219,391 675,703
--------- --------- ---------
Cash and cash equivalents, end of year $ 189,404 $ 308,788 $ 219,391
========= ========= =========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 3,653 $ 7,552
========= ========= =========
</TABLE>
Fund V, VI, and VII Associates
On September 8, 1994, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund V, L.P. ("Fund V") and Fund VI. The joint venture,
Fund V, VI, and VII Associates, was formed for the purpose of investing in
commercial real properties. In September 1994, Fund V, VI, and VII Associates
purchased a 75,000-square-foot, three-story office building known as the
Marathon Building in Appleton, Wisconsin.
F-18
<PAGE>
Following are the financial statements for Fund V, VI, and VII Associates:
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
----------- -----------
<S> <C> <C>
Real estate assets, at cost:
Land $ 314,591 $ 314,591
Building and improvements, less accumulated depreciation of $1,706,784 6,661,120 7,011,705
----------- -----------
Total real estate assets 6,975,711 7,326,296
Cash and cash equivalents 235,250 235,991
Due from affiliates 2,450 0
Accounts receivable 112,645 121,594
----------- -----------
Total assets $ 7,326,056 $ 7,683,881
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 237,700 $ 235,990
Due to affiliates 4,506 4,864
----------- -----------
Total liabilities 242,206 240,854
----------- -----------
Partners' capital:
Wells Real Estate Fund V 1,165,776 1,224,896
Wells Real Estate Fund VI 2,963,015 3,113,259
Wells Real Estate Fund VII 2,955,059 3,104,872
----------- -----------
Total partners' capital 7,083,850 7,443,027
----------- -----------
Total liabilities and partners' capital $ 7,326,056 $ 7,683,881
=========== ===========
</TABLE>
F-19
<PAGE>
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $971,051 $971,447 $968,219
-------- -------- --------
Expenses:
Depreciation 350,585 350,585 350,585
Management and leasing fees 39,659 34,632 39,671
Legal and accounting 5,750 3,450 5,690
Partnership administration 12,302 7,439 3,878
Computer costs 0 0 107
Operating costs 1,389 1,372 2,230
-------- -------- --------
409,685 397,478 402,161
-------- -------- --------
Net income $561,366 $573,969 $566,058
======== ======== ========
Net income allocated to Wells Real Estate Fund V $ 92,401 $ 94,475 $ 93,173
======== ======== ========
Net income allocated to Wells Real Estate fund VI $234,819 $240,091 $236,782
======== ======== ========
Net income allocated to Wells Real Estate fund VII $234,146 $239,403 $236,103
======== ======== ========
</TABLE>
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund V Fund VI Fund VII Capital
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $1,343,590 $3,414,896 $3,405,643 $8,164,129
Net income 93,173 236,782 236,103 566,058
Partnership distributions (152,896) (388,557) (387,442) (928,895)
----------- ----------- ----------- -----------
Balance, December 31, 1997 1,283,867 3,263,121 3,254,304 7,801,292
Net income 94,475 240,091 239,403 573,969
Partnership distributions (153,446) (389,953) (388,835) (932,234)
----------- ----------- ----------- -----------
Balance, December 31, 1998 1,224,896 3,113,259 3,104,872 7,443,027
Net income 92,401 234,819 234,146 561,366
Partnership distributions (151,521) (385,063) (383,959) (920,543)
----------- ----------- ----------- -----------
Balance, December 31, 1999 $1,165,776 $2,963,015 $2,955,059 $7,083,850
=========== =========== =========== ===========
</TABLE>
F-20
<PAGE>
Fund V, VI, and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 561,366 $ 573,969 $ 566,058
---------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 350,585 350,585 350,585
Changes in assets and liabilities:
Accounts receivable 8,949 8,983 11,781
Due from affiliates (2,450) 0 0
Due to affiliates (358) (1,302) 471
---------- ---------- ----------
Total adjustments 356,726 358,266 362,837
---------- ---------- ----------
Net cash provided by operating activities 918,092 932,235 928,895
Cash flows from financing activities:
Distributions to joint venture partners (918,833) (927,476) (911,808)
---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents (741) 4,759 17,087
Cash and cash equivalents, beginning of year 235,991 231,232 214,145
---------- ---------- ----------
Cash and cash equivalents, end of year $ 235,250 $ 235,991 $ 231,232
========== ========== ==========
</TABLE>
Fund VI and VII Associates
On December 9, 1994, the Partnership entered into a joint venture agreement with
Fund VI. The joint venture, Fund VI and VII Associates, was formed for the
purpose of investing in commercial properties. In December 1994, the Partnership
contributed its interest in a parcel of land, the Stockbridge Village III Retail
Center property, located in Stockbridge, Georgia, to the joint venture. The
Stockbridge Village III Retail Center property is comprised of two separate
outparcel buildings totaling approximately 18,500 square feet. One of the
outparcel buildings began operations during 1995. The other outparcel began
operations during 1996. On June 7, 1995, Fund VI and VII Associates purchased
3.38 acres of real property located in Stockbridge, Georgia. The retail center
expansion consists of a multi-tenant shopping center containing approximately
29,000 square feet.
During 1997 and 1998, both the Partnership and Fund VI made contributions to
Fund VI and VII Associates, and during 1996, the Partnership made additional
contributions to the joint venture. Ownership percentage interests were
recomputed accordingly.
F-21
<PAGE>
Following are the financial statements for Fund VI and VII Associates:
Fund VI and VII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
---------- ----------
<S> <C> <C>
Real estate assets, at cost:
Land $1,812,447 $1,812,447
Building and improvements, less accumulated depreciation of
$832,798 in 1999 and $597,207 in 1998 3,485,011 3,720,105
---------- ----------
Total real estate assets 5,297,458 5,532,552
Cash and cash equivalents 113,621 60,259
Accounts receivable 126,982 133,134
Prepaid expenses and other assets 115,743 130,683
---------- ----------
Total assets $5,653,804 $5,856,628
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 35,235 $ 37,400
Partnership distributions payable 130,366 67,943
Due to affiliates 0 5,338
---------- ----------
Total liabilities 165,601 110,681
---------- ----------
Partners' capital:
Wells Real Estate Fund VI 2,398,436 2,511,074
Wells Real Estate Fund VII 3,089,767 3,234,873
---------- ----------
Total partners' capital 5,488,203 5,745,947
---------- ----------
Total liabilities and partners' capital $5,653,804 $5,856,628
========== ==========
</TABLE>
F-22
<PAGE>
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $624,453 $532,410 $485,346
-------- -------- --------
Expenses:
Depreciation 235,591 232,896 198,616
Operating costs, net of reimbursements (9,718) 36,099 19,833
Management and leasing fees 80,064 77,242 55,990
Partnership administration 33,090 22,119 20,803
Legal and accounting 15,247 26,676 21,622
Bad debt expense 0 78,689 0
-------- -------- --------
354,274 473,721 316,864
-------- -------- --------
Net income $270,179 $ 58,689 $168,482
======== ======== ========
Net income allocated to Wells Real Estate Fund VI $118,073 $ 25,308 $ 71,983
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $152,106 $ 33,381 $ 96,499
======== ======== ========
</TABLE>
Fund VI and VII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Total
Estate Estate Partners'
Fund VI Fund VII Capital
---------- ---------- ----------
<S> <C> <C> <C>
Balance, December 31, 1996 $2,548,699 $3,410,542 $5,959,241
Net income 71,983 96,499 168,482
Partnership contributions 15,378 52,528 67,906
Partnership distributions (148,617) (199,304) (347,921)
----------- ----------- -----------
Balance, December 31, 1997 2,487,443 3,360,265 5,847,708
Net income 25,308 33,381 58,689
Partnership contributions 123,018 5,291 128,309
Partnership distributions (124,695) (164,064) (288,759)
----------- ----------- -----------
Balance, December 31, 1998 2,511,074 3,234,873 5,745,947
Net income 118,073 152,106 270,179
Partnership distributions (230,711) (297,212) (527,923)
----------- ----------- -----------
Balance, December 31, 1999 $2,398,436 $3,089,767 $5,488,203
=========== =========== ===========
</TABLE>
F-23
<PAGE>
Funds VI and VII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 270,179 $ 58,689 $ 168,482
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating actitivies:
Depreciation 235,591 232,896 198,616
Changes in assets and liabilities:
Accounts receivable 6,152 58,720 (98,688)
Prepaid expenses and other assets 14,940 844 (48,821)
Accounts payable (2,165) (27,644) 26,509
Due to affiliates (5,338) 732 2,194
--------- --------- ---------
Total adjustments 249,180 265,548 79,810
--------- --------- ---------
Net cash provided by operating activities 519,359 324,237 248,292
--------- --------- ---------
Cash flows from investing activities:
Decrease in construction payables 0 (30,000) (35,000)
Investment in real estate (497) (83,957) (455,042)
--------- --------- ---------
Net cash used in investing activities (497) (113,957) (490,042)
--------- --------- ---------
Cash flows from financing activities:
Contributions from joint venture partners 0 128,309 67,906
Distributions to joint venture partners (465,500) (312,251) (297,959)
--------- --------- ---------
Net cash used in financing activities (465,500) (183,942) (230,053)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 53,362 26,338 (471,803)
Cash and cash equivalents, beginning of year 60,259 33,921 505,724
--------- --------- ---------
Cash and cash equivalents, end of year $ 113,621 $ 60,259 $ 33,921
========= ========= =========
</TABLE>
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Fund VI and
Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI,
VII, and VIII Associates, was formed to acquire, develop, operate, and sell real
properties. On April 25, 1995, the joint venture purchased a 5.55-acre parcel of
land in Jacksonville, Florida. A 92,964-square-foot office building, known as
the BellSouth property, was completed and commenced operations in 1996. On May
31, 1995, the joint venture purchased a 14.683-acre parcel of land located in
Clemmons, Forsyth County, North Carolina. A retail shopping center was developed
and was substantially complete at December 31, 1997.
During 1996, Fund VI and the Partnership each withdrew $500,000 from the joint
venture in order to contribute needed funds to Fund II, III, VI, and VII
Associates. In addition, deferred project costs related to Fund VI and the
Partnership of $23,160 and $21,739, respectively, were unapplied when the
contributions were withdrawn. During 1996, Fund VIII made an additional
contribution of $2,815,965, which included $115,965 of deferred project costs
that were applied. Ownership percentage interests were recomputed accordingly.
F-24
<PAGE>
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
------------ ------------
<S> <C> <C>
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated depreciation of
$2,315,750 in 1999 and $1,613,865 in 1998 10,657,052 11,276,322
Construction in progress 0 17,866
------------ ------------
Total real estate assets 15,118,871 15,756,007
Cash and cash equivalents 736,202 800,321
Accounts receivable 255,221 183,952
Prepaid expenses and other assets 545,816 633,589
------------ ------------
Total assets $ 16,656,110 $ 17,373,869
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 84,159 $ 52,026
Partnership distributions payable 324,100 339,696
Due to affiliates 16,281 9,735
------------ ------------
Total liabilities 424,540 401,457
------------ ------------
Partners' capital:
Wells Real Estate Fund VI 5,559,369 5,813,110
Wells Real Estate Fund VII 5,420,549 5,667,955
Wells Real Estate Fund VIII 5,251,652 5,491,347
------------ ------------
Total partners' capital 16,231,570 16,972,412
------------ ------------
Total liabilities and partners' capital $ 16,656,110 $ 17,373,869
============ ============
</TABLE>
F-25
<PAGE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $ 2,294,016 $ 2,258,971 $2,087,588
Interest income 14,937 25,416 19,464
Other income 360 9,373 360
----------- ----------- ----------
2,309,313 2,293,760 2,107,412
----------- ----------- ----------
Expenses:
Depreciation 701,885 688,759 634,699
Operating costs, net of reimbursements 444,156 451,299 460,873
Management and leasing fees 259,352 251,587 232,765
Legal and accounting 10,286 9,205 15,934
Partnership administration 27,804 25,109 27,180
Computer costs 1,043 128 0
----------- ----------- ----------
1,444,526 1,426,087 1,371,451
----------- ----------- ----------
Net income $ 864,787 $ 867,673 $ 735,961
=========== =========== ==========
Net income allocated to Wells Real Estate Fund VI $ 296,193 $ 297,181 $ 258,122
=========== =========== ==========
Net income allocated to Wells Real Estate Fund VII $ 288,796 $ 289,760 $ 251,676
=========== =========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 279,798 $ 280,732 $ 226,163
=========== =========== ==========
</TABLE>
F-26
<PAGE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $ 6,268,458 $ 6,111,934 $4,849,380 $17,229,772
Net income 258,122 251,676 226,163 735,961
Partnership contributions 0 0 1,055,900 1,055,900
Partnership distributions (468,498) (456,800) (408,682) (1,333,980)
----------- ----------- ---------- -----------
Balance, December 31, 1997 6,058,082 5,906,810 5,722,761 17,687,653
Net income 297,181 289,760 280,732 867,673
Partnership distributions (542,153) (528,615) (512,146) (1,582,914)
----------- ----------- ---------- -----------
Balance, December 31, 1998 5,813,110 5,667,955 5,491,347 16,972,412
Net income 296,193 288,796 279,798 864,787
Partnership distributions (549,934) (536,202) (519,493) (1,605,629)
----------- ----------- ---------- -----------
Balance, December 31, 1999 $ 5,559,369 $ 5,420,549 $5,251,652 $16,231,570
=========== =========== ========== ===========
</TABLE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 864,787 $ 867,673 $ 735,961
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 701,885 688,759 634,699
Changes in assets and liabilities:
Accounts receivable (71,269) (79,931) (76,170)
Prepaid expenses and other assets 87,773 79,225 (21,073)
Accounts payable 32,133 6,234 8,312
Due to affiliates 6,546 4,558 3,622
----------- ----------- -----------
Total adjustments 757,068 698,845 549,390
----------- ----------- -----------
Net cash provided by operating activities 1,621,855 1,566,518 1,285,351
----------- ----------- -----------
Cash flows from investing activities:
Decrease in construction payables 0 (55,000) (110,795)
Investment in real estate (64,749) (140,590) (828,992)
----------- ----------- -----------
Net cash used in investing activities (64,749) (195,590) (939,787)
----------- ----------- -----------
Cash flows from financing activities:
Contributions received from joint venture partners 0 0 1,000,000
Distributions to joint venture partners (1,621,225) (1,629,608) (1,216,246)
----------- ----------- -----------
Net cash used in financing activities (1,621,225) (1,629,608) (216,246)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (64,119) (258,680) 129,318
Cash and cash equivalents, beginning of year 800,321 1,059,001 929,683
----------- ----------- -----------
Cash and cash equivalents, end of year $ 736,202 $ 800,321 $ 1,059,001
=========== =========== ===========
Supplemental disclosure of noncash items:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 55,900
=========== =========== ===========
</TABLE>
F-27
<PAGE>
Fund VII and VIII Associates
On February 10, 1995, the Partnership entered into a joint venture agreement
with Fund VIII. The joint venture, Fund VII and VIII Associates, was formed to
acquire, develop, operate, and sell real properties. During 1995, the joint
venture purchased a five-acre parcel of land in Gainesville, Alachua County,
Florida. A 62,975-square-foot office building was constructed and began
operations during 1995. In April 1996, the Partnership contributed 1.01 acres of
land located in Stockbridge, Georgia, and improvements thereon to the joint
venture for the development of a 12,000-square-foot, single-story combination
retail/office building. The building was completed and commenced operations in
1996.
The following are the financial statements for Fund VII and VIII Associates:
Fund VII and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
----------- -----------
<S> <C> <C>
Real estate assets, at cost:
Land $ 822,320 $ 882,320
Building and improvements, less accumulated depreciation of $1,056,143
in 1999 and $735,803 in 1998 4,864,790 5,119,836
Personal property, less accumulated depreciation of $116,671 in 1999
in 1999 and $89,365 in 1998 181,212 208,518
----------- -----------
Total real estate assets 5,868,322 6,210,674
Cash and cash equivalents 68,008 124,696
Accounts receivable 111,285 48,581
Prepaid expenses and other assets 90,350 104,269
----------- -----------
Total assets $ 6,137,965 $ 6,488,220
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 20,761 $ 24,468
Due to affiliates 2,227 1,500
Partnership distributions payable 133,324 136,377
----------- -----------
Total liabilities 156,312 162,345
----------- -----------
Partners' capital:
Wells Real Estate Fund VII 2,191,603 2,317,761
Wells Real Estate Fund VIII 3,790,050 4,008,114
----------- -----------
Total partners' capital 5,981,653 6,325,875
----------- -----------
Total liabilities and partners' capital $ 6,137,965 $ 6,488,220
=========== ===========
</TABLE>
F-28
<PAGE>
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $ 769,052 $ 685,637 $ 637,692
Other income 300 0 180
---------- ---------- ----------
769,352 685,637 637,872
---------- ---------- ----------
Expenses:
Depreciation 347,646 295,708 262,106
Management and leasing fees 124,040 93,519 90,087
Legal and accounting 13,952 9,450 9,973
Partnership administration 29,182 26,095 24,830
Computer costs 0 0 107
Operating costs, net of reimbursements (28,354) 34,084 (76,060)
---------- ---------- ----------
486,466 458,856 311,043
---------- ---------- ----------
Net income $ 282,886 $ 226,781 $ 326,829
========== ========== ==========
Net income allocated to Wells Real Estate Fund VII $ 103,681 $ 83,713 $ 124,045
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 179,205 $ 143,068 $ 202,784
========== ========== ==========
</TABLE>
Fund VII And VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Total
Estate Estate Partners'
Fund VII Fund VIII Capital
------------ ------------ ------------
<S> <C> <C> <C>
Balance, December 31, 1996 $2,474,474 $4,032,669 $6,507,143
Net income 124,045 202,784 326,829
Partnership distributions (221,701) (362,431) (584,132)
------------ ------------ ------------
Balance, December 31, 1997 2,376,818 3,873,022 6,249,840
Net income 83,713 143,068 226,781
Partnership contributions 25,800 279,626 305,426
Partnership distributions (168,570) (287,602) (456,172)
------------ ------------ ------------
Balance, December 31, 1998 2,317,761 4,008,114 6,325,875
Net income 103,681 179,205 282,886
Partnership distributions (229,839) (397,269) (627,108)
------------ ------------ ------------
Balance, December 31, 1999 $2,191,603 $3,790,050 $5,981,653
============ ============ ============
</TABLE>
F-29
<PAGE>
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 282,886 $ 226,781 $ 326,829
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 347,646 295,708 262,106
Changes in assets and liabilities:
Accounts receivable (62,704) (34,183) (14,398)
Prepaid expenses and other assets 13,919 (26,375) (5,931)
Accounts payable (3,707) (2,485) (24,340)
Due to affiliates 727 656 844
--------- --------- ---------
Total adjustments 295,881 233,321 218,281
--------- --------- ---------
Net cash provided by operating activities 578,767 460,102 545,110
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (5,294) (406,380) (6,016)
--------- --------- ---------
Cash flows from financing activities:
Contributions from partners 0 293,511 0
Distributions to joint venture partners (630,161) (460,759) (549,304)
--------- --------- ---------
Net cash used in financing activities (630,161) (167,248) (549,304)
--------- --------- ---------
Net decrease in cash and cash equivalents (56,688) (113,526) (10,210)
Cash and cash equivalents, beginning of year 124,696 238,222 248,432
--------- --------- ---------
Cash and cash equivalents, end of year $ 68,008 $ 124,696 $ 238,222
========= ========= =========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 11,915 $ 0
========= ========= =========
</TABLE>
F-30
<PAGE>
4. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended December
31, 1999, 1998, and 1997 is calculated as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement net income $ 895,795 $ 754,334 $ 733,149
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting
purposes in excess of amounts for income
tax purposes 406,751 394,084 338,997
Expenses deducted for financial reporting
purposes, capitalized for income tax
purposes 2,865 3,315 4,018
Rental income accrued for financial reporting
purposes in excess of amounts for income
tax purposes (49,745) (42,637) (67,796)
----------- ----------- -----------
Income tax basis net income $ 1,255,666 $ 1,109,096 $ 1,008,368
=========== =========== ===========
</TABLE>
The Partnership's income tax basis partners' capital at December 31, 1999 is
computed as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement partners' capital $17,533,827 $18,387,970 $19,262,165
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 1,394,382 987,631 593,547
Joint venture change in ownership 7,814 7,814 7,814
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of capital for
financial reporting purposes 3,595,776 3,595,776 3,595,776
Accumulated rental income accrued for financial reporting
purposes in excess of amounts for income tax purposes (233,897) (184,152) (141,515)
Accumulated expenses deducted for financial reporting
purposes, capitalized for income tax purposes 26,384 23,519 20,204
Partnership's distributions payable 458,148 396,500 404,129
----------- ----------- -----------
Income tax basis partners' capital $22,782,434 $23,215,058 $23,742,120
=========== =========== ===========
</TABLE>
F-31
<PAGE>
5. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases
at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 2,255,072
2001 2,160,557
2002 1,870,787
2003 1,646,160
2004 1,546,337
Thereafter 4,803,048
--------------
$ 14,281,961
==============
</TABLE>
Two tenants contributed approximately 24% and 13% of rental income. In
addition, three tenants will contribute approximately 22%, 20%, and 17% of
future minimum rental income.
The future minimum rental income due Fund I, II, II-OW, VI, and VII
Associates--Cherokee under noncancelable operating leases at December 31,
1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 914,317
2001 828,960
2002 762,564
2003 692,708
2004 771,053
Thereafter 3,847,339
------------
$7,816,941
============
</TABLE>
One tenant contributed approximately 62% of rental income for the year ended
December 31, 1999 and will contribute approximately 85% of future minimum
rental income.
The future minimum rental income due Fund II, III, VI, and VII Associates
under noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 901,595
2001 847,296
2002 469,628
2003 197,540
2004 175,331
Thereafter 149,157
------------
$2,740,547
============
</TABLE>
Three tenants contributed approximately 13%, 13%, and 11% of rental income
for the year ended December 31, 1999. In addition, four tenants will
contribute approximately 29%, 14%, 14%, and 11% of future minimum rental
income.
F-32
<PAGE>
The future minimum rental income due Fund V, VI, and VII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 980,000
2001 980,000
2002 990,000
2003 990,000
2004 990,000
Thereafter 1,980,000
------------
$6,910,000
============
</TABLE>
One tenant contributed 100% of rental income for the year ended December 31,
1999 and will contribute 100% of future minimum rental income.
The future minimum rental income due Fund VI and VII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 462,265
2001 423,279
2002 337,097
2003 259,812
2004 243,388
Thereafter 936,787
------------
$2,662,628
============
</TABLE>
Two tenants contributed approximately 16% and 11% of rental income for the year
ended December 31, 1999. In addition, three tenants will contribute
approximately 40%, 25%, and 13% of future minimum rental income.
The future minimum rental income due Fund VI, VII, and VIII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 2,239,045
2001 2,126,978
2002 1,972,479
2003 1,912,574
2004 1,763,419
Thereafter 8,130,020
-------------
$18,144,515
=============
</TABLE>
Three tenants contributed approximately 46%, 23%, and 16% of rental income for
the year ended December 31, 1999. In addition, two tenants will contribute
approximately 51% and 39% of future minimum rental income.
F-33
<PAGE>
The future minimum rental income due Fund VII and VIII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
2000 $ 780,472
2001 784,375
2002 792,225
2003 745,862
2004 641,683
Thereafter 652,172
------------
$4,396,789
============
</TABLE>
Two tenants contributed approximately 69% and 13% of rental income for the
year ended December 31, 1999. In addition, two tenants will contribute
approximately 71% and 16% of future minimum rental income.
6. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 Quarters Ended
--------------------------------------------------------------
March 31 June 30 September 30 December 31
------------ ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 242,414 $ 266,916 $ 236,372 $ 236,928
Net income 213,658 242,660 221,802 217,675
Net income allocated to Class A limited
partners 454,393 480,530 468,238 476,249
Net loss allocated to Class B limited partners (240,735) (237,870) (246,436) (258,574)
Net income per weighted average Class A
limited partner unit $ 0.23 $ 0.24 $ 0.23 $ 0.23
Net loss per weighted average Class B limited
partner unit (a) (0.60) (0.57) (0.62) (0.68)
Cash distribution per weighted average
Class A limited partner unit 0.21 0.22 0.22 0.22
</TABLE>
(a) The totals of the four quarterly amounts for the year ended
December 31, 1999 do not equal the totals for the year. This
difference results from the use of a weighted average to
compute the number of units outstanding for each quarter and
the year.
F-34
<PAGE>
<TABLE>
<CAPTION>
1998 Quarters Ended
--------------------------------------------------------------
March 31 June 30 September 30 December 31
------------ ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 201,183 $ 221,017 $ 208,604 $ 215,502
Net income 183,649 197,072 188,219 185,394
Net income allocated to Class A limited
partners 431,890 432,142 426,322 413,859
Net loss allocated to Class B limited partners (248,241) (235,069) (238,103) (228,466)
Net income per weighted average Class A
limited partner unit (a) $ 0.22 $ 0.22 $ 0.22 $ 0.21
Net loss per weighted average Class B limited
partner unit (0.56) (0.56) (0.56) (0.56)
Cash distribution per weighted average Class A
limited partner unit 0.21 0.21 0.20 0.20
</TABLE>
(a) The totals of the four quarterly amounts for the year ended
December 31, 1998 do not equal the totals for the year. This
difference results from the use of a weighted average to
compute the number of units outstanding for each quarter and
the year.
7. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
F-35
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Initial Cost Costs of
-----------------------------
Buildings and Capitalized
Description Ownership Encumbrances Land Improvements Improvements
- ------------------------------------- ------------- --------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
MARATHON BUILDING (a) 42% None $ 314,591 $ 8,367,904 $ 0
STOCKBRIDGE VILLAGE III (b) 56 None 1,015,674 0 1,994,829
STOCKBRIDGE VILLAGE I EXPANSION (c) 56 None 712,234 0 2,407,022
880 PROPERTY (d) 49 None 1,325,242 0 5,718,159
BELLSOUTH PROPERTY (e) 34 None 1,244,256 0 7,425,154
TANGLEWOOD COMMONS (f) 34 None 3,020,040 0 5,745,172
CHEROKEE COMMONS (g) 11 None 1,142,663 6,462,837 2,847,156
HANNOVER PROPERTY (h) 37 None 512,001 869,037 337,752
GAINESVILLE PROPERTY (i) 37 None 222,627 0 5,094,425
------------ ------------ --------------
Total $ 9,509,328 $ 15,699,778 $ 31,569,669
============ ============ ==============
<CAPTION>
Gross Amount at Which Carried at December 31, 1999
-----------------------------------------------------------------
Buildings and Construction Accumulated
Description Land Improvements in Progress Total Depreciation
- ------------------------------------ -------------- ------------------ ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
MARATHON BUILDING (a) $ 314,591 $ 8,367,904 $0 $ 8,682,495 $ 1,706,784
STOCKBRIDGE VILLAGE III (b) 1,062,720 1,947,783 0 3,010,503 376,556
STOCKBRIDGE VILLAGE I EXPANSION (c) 749,727 2,369,529 0 3,119,256 455,745
880 PROPERTY (d) 1,325,242 5,718,159 0 7,043,401 1,299,227
BELLSOUTH PROPERTY (e) 1,301,890 7,367,520 0 8,669,410 1,624,828
TANGLEWOOD COMMONS (f) 3,159,928 5,605,284 0 8,765,212 690,922
CHEROKEE COMMONS (g) 1,219,704 9,232,952 0 10,450,707 3,163,831
HANNOVER PROPERTY (h) 534,262 1,184,528 0 1,718,790 203,159
GAINESVILLE PROPERTY (i) 288,058 5,028,994 0 5,317,052 968,910
----------- ------------ -- ------------ ------------
Total $ 9,956,122 $ 46,822,653 $0 $ 56,776,826 $ 10,489,962
=========== ============ == ============ ============
<CAPTION>
Life on Which
Date of Date Depreciation
Description Construction Acquired Is Computed (j)
- -------------------------------- ------------------ ------------ ----------------
<S> <C> <C> <C>
MARATHON BUILDING (a) 1991 09/16/94 20 to 25 years
STOCKBRIDGE VILLAGE III (b) 1995 04/07/94 20 to 25 years
STOCKBRIDGE VILLAGE I EXPANSION (c) 1996 06/07/95 20 to 25 years
880 PROPERTY (d) 1996 01/31/90 20 to 25 years
BELLSOUTH PROPERTY (e) 1996 04/25/95 20 to 25 years
TANGLEWOOD COMMONS (f) 1997 05/31/95 20 to 25 years
CHEROKEE COMMONS (g) 1986 06/09/87 20 to 25 years
HANNOVER PROPERTY (h) 1996 01/16/95 20 to 25 years
GAINESVILLE PROPERTY (i) 1995 01/20/95 20 to 25 years
Total
</TABLE>
(a) The Marathon Building is a three-story, 75,000-square-foot
building located in Appleton, Wisconsin. It is owned by Fund
V, VI, and VII Associates.
(b) Stockbridge Village III consists of two retail buildings
located in Stockbridge, Georgia. It is owned by Fund VI and
VII Associates.
(c) Stockbridge Village I Expansion is a 3.38-acre tract of real
property under development located in Clayton County,
Georgia. It is owned by Fund VI and VII Associates.
(d) The 880 Property is an office-retail shopping center located
in Roswell, Georgia. It is owned by Fund II, III, VI, and
VII Associates.
(e) The BellSouth Property is a four story, 92,964 square foot
building located in Jacksonville, Florida. It is owned by
Fund VI, VII, and VIII Associates.
(f) Tanglewood Commons is a retail shopping center located in
Clemmons, Forsyth County, North Carolina. It is owned by
Fund VI, VII, and VIII Associates.
(g) Cherokee Commons is a retail shopping center located in
Cherokee County, Georgia. It is owned by Fund I, II, II-OW,
VI, and VII Associates--Cherokee.
(h) The Hannover Property consists of a one-story building
located in Stockbridge, Georgia. It is owned by Fund VII and
VIII Associates.
(i) The Gainesville Property consists of a two-story building
located in Gainesville, Florida. It is owned by Fund VII and
VIII Associates.
(j) Depreciation lives used for buildings were 40 years through
September 30, 1995, changed to 25 years thereafter.
Depreciation lives used for land improvements are 20 years.
S-1
<PAGE>
WELLS REAL ESTATE FUND VII, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Accumulated
Cost Depreciation
------------ --------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1996 $53,916,571 $ 3,407,758
1997 additions 2,056,986 2,212,812
1997 deductions (47,840) (15,208)
----------- ------------
BALANCE AT DECEMBER 31, 1997 55,925,717 5,605,362
1998 additions 752,498 2,307,942
----------- ------------
BALANCE AT DECEMBER 31, 1998 56,678,215 7,913,304
1999 additions 98,611 2,576,658
----------- ------------
BALANCE AT DECEMBER 31, 1999 $56,776,826 $ 10,489,962
=========== ============
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VII, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below the
description of the previous filing. Exhibits which are not required for this
report are omitted.
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*3(a) Certificate of Limited Partnership of Wells Real Estate N/A
Fund VII,L.P. (Exhibit 3(d) to Form S-11 Registration
Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*4(a) Agreement of Limited Partnership of Wells Real Estate N/A
Fund VII, L.P. dated April 5, 1994 (Exhibit to Form 10-K
of Wells Real Estate Fund VII, L.P. for the fiscal year
ended December 31, 1994, File No. 0-25606)
*4(b) First Amendment to Agreement of Limited Partnership of N/A
Wells Real Estate Fund VII, L.P. dated April 5, 1994
(Exhibit to Form 10-K of Wells Real Estate Fund VII,
L.P. for the fiscal year ended December 31, 1994, File
No. 0-25606)
*10(a) Management Agreement dated April 5, 1994, between Wells N/A
Real Estate Fund VII, L.P. and Wells Management Company,
Inc. (Exhibit to Form 10-K of Wells Real Estate Fund
VII, L.P. for the fiscal year ended December 31, 1994,
File No. 0-25606)
*10(b) Leasing and Tenant Coordinating Agreement dated April 5, N/A
1994, between Wells Real Estate Fund VII, L.P. and Wells
Management Company, Inc. (Exhibit to Form 10-K of Wells
Real Estate Fund VII, L.P. for the fiscal year ended
December 31, 1994, File No. 0-25606)
*10(c) Custodial Agency Agreement dated April 1, 1994, between N/A
Wells Real Estate Fund VII, L.P. and NationsBank of
Georgia, N.A. (Exhibit 10(f) to Post-Effective Amendment
No. 5 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII,
L.P., File No. 33-55908)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(d) Joint Venture Agreement of Fund V, Fund VI and Fund VII N/A
Associates dated September 8, 1994, among Wells Real
Estate Fund V, L.P., Wells Real Estate Fund VI, L.P. and
Wells Real Estate Fund VII, L.P. (Exhibit 10(j) to
Post-Effective Amendment No. 6 to Form S-11 Registration
Statement of Wells Real Estate Fund VI, L.P. and Wells
Real Estate Fund VII, L.P., File No. 33-55908)
*10(e) Agreement for the Purchase and Sale of Property dated N/A
August 24, 1994, between Interglobia Inc. - Appleton and
NationsBank of Georgia, N.A., as Agent for Fund V and Fund
VI Associates (Exhibit 10(k) to Post-Effective Amendment
No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P.,
File No. 33-55908)
*10(f) Assignment and Assumption of Agreement for the Purchase N/A
and Sale of Real Property dated September 9, 1994, between
NationsBank of Georgia, N.A., as Agent for Fund V and Fund
VI Associates, and NationsBank of Georgia, N.A., as Agent
for Fund V, Fund VI and Fund VII Associates (Exhibit 10(l)
to Post-Effective Amendment No. 6 to Form S-11
Registration Statement of Wells Real Estate Fund VI, L.P.
and Wells Real Estate Fund VII, L.P., File No. 33-55908)
*10(g) Building Lease dated February 14, 1991, between N/A
Interglobia Inc. - Appleton and Marathon
Engineers/Architects/Planners, Inc. (included as part of
Exhibit D to Exhibit 10(k) to Post-Effective Amendment No.
6 to Form S-11 Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(h) Limited Guaranty of Lease dated January 1, 1993, by J. N/A
P. Finance OY and Fluor Daniel, Inc. for the benefit of
Interglobia Inc. - Appleton (included as Exhibit B to
Assignment, Assumption and Amendment of Lease referred to
as Exhibit 10(i) below, which is included as part of
Exhibit D to Exhibit 10(k) to Post-Effective Amendment No.
6 to Form S-11 Registration Statement of Wells Real Estate
Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File
No. 33-55908)
*10(i) Assignment, Assumption and Amendment of Lease dated N/A
January 1, 1993, among Interglobia Inc. - Appleton,
Marathon Engineers/Architects/Planners, Inc. and Jaakko
Poyry Fluor Daniel (included as part of Exhibit D to
Exhibit 10(k) to Post-Effective Amendment No. 6 to Form S-
11 Registration Statement of Wells Real Estate Fund VI,
L.P. and Wells Real Estate Fund VII, L.P., File No. 33-
55908)
*10(j) Second Amendment to Building lease dated August 15, N/A
1994, between Interglobia Inc. - Appleton and Jaakko Poyry
Fluor Daniel (successor-in-interest to Marathon
Engineers/Architects/Planners, Inc.) (included as Exhibit
D-1 to Exhibit 10(k) to Post-Effective Amendment No. 6 to
Form S-11 Registration Statement of Wells Real Estate Fund
VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-
55908)
*10(k) Assignment and Assumption of Lease dated September 6, N/A
1994, between Interglobia Inc. - Appleton and NationsBank
of Georgia, N.A., as Agent for Fund V, Fund VI and Fund
VII Associates (Exhibit 10(q) to Post-Effective Amendment
No. 6 to Form S-11 Registration Statement of Wells Real
Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P.,
File No. 33-55908)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(l) Agreement for the Purchase and Sale of Real Property N/A
dated April 7, 1994, between 138 Industrial Ltd. and
NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VI, L.P. (Exhibit 10(s) to Form 10-K of Wells
Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1994, File No. 0-23656)
*10(m) Land and Building Lease Agreement dated August 22, 1994, N/A
between KRR Stockbridge, Inc. d/b/a Kenny Rogers Roasters
and NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VI, L.P. (Exhibit 10(t) to Form 10-K of Wells
Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1994, File No. 0-23656)
*10(n) Joint Venture Agreement of Fund VI and Fund VII N/A
Associates dated December 9, 1994 (Exhibit 10(u) to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal
year ended December 31, 1994, File No. 0-23656)
*10(o) Building Lease Agreement dated December 19, 1994, N/A
between Damon's of Stockbridge, LLC d/b/a Damon's
Clubhouse and NationsBank of Georgia, N.A., as Agent for
Fund VI and Fund VII Associates, (Exhibit 10(v) to Form 10-
K of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1994, File No. 0-23656)
*10(p) Joint Venture Agreement of Fund II, III, VI and VII N/A
Associates dated January 10, 1995 (Exhibit 10(w) to Form
10-K of Wells Real Estate Fund VI, L.P. for the fiscal
year ended December 31, 1995, File No. 0-23606)
*10(q) Fund VII and Fund VIII Associates Joint Venture N/A
Agreement dated February 10, 1995 (Exhibit 10(g) to Post-
Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(r) Agreement for the Purchase and Sale of Real Property N/A
dated March 31, 1994 (Exhibit 10(h) to Post-Effective
Amendment No. 1 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(s) Letter Agreement amending Agreement for the Purchase and N/A
Sale of Real Property dated July 27, 1994 (Exhibit 10(i)
to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(t) Letter Agreement amending Agreement for the Purchase and N/A
Sale of Real Property dated October 27, 1994 (Exhibit
10(j) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(u) Letter Agreement between NationsBank of Georgia, N.A., N/A
as Agent for Wells Real Estate Fund VII, L.P., as
Landlord, and CH2M Hill, Inc., as Tenant (Exhibit 10(k) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(v) First Amendment to Lease Agreement between NationsBank N/A
of Georgia, N.A., as Agent for Wells Real Estate Fund VII,
L.P., as Landlord, and CH2M Hill, Inc., as Tenant (Exhibit
10(l) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(w) Second Amendment to Lease Agreement between NationsBank N/A
N/A of Georgia, N.A., as Agent for Wells Real Estate Fund
VII, L.P., as Landlord, and CH2M Hill, Inc, as Tenant
(Exhibit 10(m) to Post-Effective Amendment No. 1 to Form S-
11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(x) Development Agreement between Wells Real Estate Fund N/A
VII, L.P. and ADEVCO Corporation (Exhibit 10(n) to Post-
Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(y) Owner-Contractor Agreement between Wells Real Estate N/A
Fund VII, L.P., as Owner, and Integra Construction, Inc.,
as Contractor (Exhibit 10(o) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(z) Architect's Agreement between Wells Real Estate Fund N/A
VII, L.P., as Owner, and Smallwood, Reynolds, Stewart,
Stewart & Associates, Inc., as Architect (Exhibit 10(p) to
Post-Effective Amendment No. 1 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(aa) Joint Venture Agreement of Fund VI, Fund VII and Fund N/A
VIII Associates dated April 17, 1995 (Exhibit 10(q) to
Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(bb) Agreement for the Purchase and Sale of Real Property N/A
dated February 13, 1995, between G.L. National, Inc. and
Wells Capital, Inc. (Exhibit 10(r) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(cc) Agreement to Lease dated February 15, 1995, between N/A
NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VII, L.P., and BellSouth Advertising &
Publishing Corporation (Exhibit 10(s) to Post-Effective
Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(dd) Development Agreement dated April 25, 1995, between Fund N/A
VI, Fund VII and Fund VIII Associates and ADEVCO
Corporation (Exhibit 10(t) to Post-Effective Amendment No.
3 to Form S-11 Registration Statement of Wells Real Estate
Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(ee) Owner-Contractor Agreement dated April 24, 1995, between N/A
Fund VI, Fund VII and Fund VIII Associates, as Owner, and
McDevitt Street Bovis, Inc., as Contractor (Exhibit 10(u)
to Post-Effective Amendment No. 3 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(ff) Architect's Agreement dated February 15, 1995, between N/A
Wells Real Estate Fund VII, L.P., as Owner, and Mayes,
Suddereth & Etheredge, Inc., as Architect (Exhibit 10(v)
to Post-Effective Amendment No. 3 to Form S-11
Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(gg) First Amendment to Joint Venture Agreement of Fund VI N/A
and Fund VII Associates (Exhibit 10(dd) to Form 10-K of
Wells Real Estate Fund VI, L.P. for the fiscal year ended
December 31, 1995, File No. 0-23656)
*10(hh) First Amendment to Joint Venture Agreement of Fund VI, N/A
Fund VII and Fund VIII Associates dated May 30, 1995
(Exhibit 10(w) to Post-Effective Amendment No. 4 to Form S-
11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
*10(ii) Real Estate Purchase Agreement dated April 13, 1995 N/A
(Exhibit 10(x) to Post-Effective Amendment No. 4 to Form S-
11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-
83852)
<PAGE>
Exhibit Sequential
Number Description of Document Page Number
- ------- ----------------------- -----------
*10(jj) Lease Agreement dated February 27, 1995, between N/A
NationsBank of Georgia, N.A., as Agent for Wells Real
Estate Fund VII, L.P., and Harris Teeter, Inc. (Exhibit
10(y) to Post-Effective Amendment No. 4 to Form S-11
Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(kk) Development Agreement dated May 31, 1995, between Fund N/A
VI, Fund VII and Fund VIII Associates and Norcom
Development, Inc. (Exhibit 10(z) to Post- Effective
Amendment No. 4 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(ll) Joint Venture Agreement of Fund I, II, II-OW, VI and VII N/A
Associates dated August 1, 1995 (Exhibit 10(ii) to Form 10-
K of Wells Real Estate Fund VI, L.P. for the fiscal year
ended December 31, 1995, File No. 0-23656 )
*10(mm) Lease Modification Agreement No. 3 with The Kroger Co. N/A
dated December 31, 1993 (Exhibit 10(k) to Form 10-K of
Wells Real Estate Fund I for the fiscal year ended
December 31, 1993, File No. 0-14463)
*10(nn) First Amendment to Joint Venture Agreement of Fund VII N/A
and Fund VIII Associates dated April 1, 1996, (Exhibit 10
(nn) to form 10-K of Wells Real Estate Fund VII, L.P. for
the fiscal year ended December 31, 1996, File No. 0-25606)
*10(oo) Lease Agreement with Moovies, Inc. dated May 20, 1996, N/A
(Exhibit 10 (oo) to Form 10-K of Wells Real Estate Fund
VII, L.P. for the fiscal year ended December 31, 1996,
File No. 0-25606)
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