<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1997 or
-------------------------------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________________to__________________
Commission file number 0-27888
---------------------------
Wells Real Estate Fund VIII, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2126618
- ------------------------------- ---------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
--------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
Form 10-Q
---------
Wells Real Estate Fund VIII, L.P.
---------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1997
and December 31, 1996 .........................3
Statements of Income for the Three and Nine
Months Ended September 30, 1997
and 1996 ......................................4
Statement of Partners' Capital
for the Year Ended December 31, 1996,
and the Nine Months Ended September 30, 1997...5
Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996..............6
Condensed Notes to Financial Statements.........7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................8
PART II. OTHER INFORMATION................................................18
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets September 30, 1997 December 31, 1996
------ ------------------ -----------------
<S> <C> <C>
Investment in joint ventures (Note 2) $24,738,734 $13,787,531
Cash and cash equivalents 1,861,097 12,716,219
Due from affiliates 478,247
Deferred project costs 103,318 697,301
Organization costs, less accumulated
amortization of $17,187 in 1997
and $12,500 in 1996 14,063 18,750
Prepaid expenses and other assets 9,000 99,000
----------- -----------
Total assets $27,204,459 $27,506,234
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 18 $ 5,500
Partnership distribution payable 496,939 317,453
Due to affiliates 0 152,501
----------- -----------
Total liabilities 496,957 475,454
----------- -----------
Partners' capital:
Limited partners:
Class A - 2,635,328 units outstanding 22,735,686 22,367,784
Class B - 567,941 units outstanding 3,971,716 4,662,896
Original limited partner 100 100
----------- -----------
Total partners' capital 26,707,502 27,030,780
----------- -----------
Total liabilities and partners' capital $27,204,459 $27,506,234
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(a Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30,1996
------------------ ------------------ ------------------ -----------------
Revenues:
<S> <C> <C> <C> <C>
Equity earnings of joint
ventures (Note 2) $ 365,080 $ 54,475 $ 723,257 $ 151,831
Interest income 29,101 207,323 149,399 661,851
------------- -------------- -------------- -------------
394,181 261,798 872,656 813,682
------------- -------------- ------------- -------------
Expenses:
Legal and accounting 1,180 2,342 23,051 26,608
Computer costs 3,069 1,403 7,413 3,413
Partnership administration 6,161 27,221 49,030 60,828
Amortization of
organization costs 1,562 1,562 4,687 4,687
------------- -------------- ------------- -------------
11,972 32,528 84,181 95,536
------------- -------------- ------------- -------------
Net income $ 382,209 $ 229,270 $ 788,475 $ 718,146
============= ============== ============= =============
Net loss allocated to General
Partners $ 0 $ 0 $ 0 $ (297)
Net income allocated to
Class A Limited Partners $ 630,233 $ 293,936 $ 1,381,646 $ 884,671
Net loss allocated to Class
B Limited Partners $ (248,024) $ (64,666) $ (593,171) $ (166,228)
Net income per Class A
Limited Partner Unit $ 0.24 $ 0.11 $ 0.52 $ 0.34
Net loss per Class B Limited
Partner Unit $ (0.44) $ (0.10) $ (1.05) $ (0.28)
Cash distribution per Class A
Limited Partner Unit $ 0.19 $ 0.11 $ 0.42 $ 0.32
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(a Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND NINE MONTHS ENDED
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Limited Partners
--------------------------------------------------
Class A Class B Total
------- ------- General Partners'
Original Units Amounts Units Amounts Partners Capital
-------- ----- ------- ----- ------- -------- -------
BALANCE,
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1995 $ 100 2,456,287 $ 20,902,202 558,167 $ 4,730,099 $ 297 $ 25,632,698
Net income (loss) 0 0 1,207,540 0 (270,653) (297) 936,590
Limited partner
contributions 0 166,349 1,642,845 23,466 255,302 0 1,898,147
Partnership distributions 0 0 (1,152,299) 0 0 0 (1,152,299)
Sales commissions &
discounts 0 0 (154,881) 0 (34,568) 0 (189,449)
Other offering expenses 0 0 (77,623) 0 (17,284) 0 (94,907)
------- --------- ------------ ------- ------------ -------- ------------
BALANCE,
December 31, 1996 100 2,622,636 22,367,784 581,633 4,662,896 0 27,030,780
Net income (loss) 0 0 1,381,646 0 (593,171) 0 788,475
Partnership distributions 0 0 (1,103,253) 0 0 0 (1,103,253)
Class B conversion
elections 0 13,692 98,009 (13,692) (98,009) 0 0
Repurchase of limited
partners units 0 (1,000) (8,500) 0 0 0 (8,500)
------- --------- ------------ ------- ------------ -------- ------------
BALANCE,
September 30, 1997 $ 100 2,635,328 $ 22,735,686 567,941 $ 3,971,716 $ 0 $ 26,707,502
======= ========= ============ ======= ============ ======== ============
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(a Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 788,475 $ 718,146
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of joint ventures (723,257) (151,831)
Amortization of organization costs 4,687 4,687
Changes in assets and liabilities:
Prepaids and other assets 90,000 (2,000)
Accounts payable (5,482) (3,000)
Due to affiliates (152,501) (42,803)
--------------- ---------------
Net cash provided by operating
activities 1,922 523,199
-------------- --------------
Cash flows from investing activities:
Distributions received from joint ventures 751,034 182,496
Investment in joint ventures (10,675,811) (3,426,962)
Deferred project costs paid 0 (66,435)
-------------- ---------------
Net cash used in investing activities (9,924,777) (3,310,901)
-------------- --------------
Cash flows from financing activities:
Limited partners' contributions 0 1,898,147
Sales commissions paid 0 (369,851)
Offering costs paid 0 (94,907)
Distributions to partners from accumulated
earnings (923,767) (849,211)
Return of original limited partner investment (8,500) 0
-------------- --------------
Net cash used in financing activities (932,267) 584,178
-------------- --------------
Net decrease in cash and cash equivalents (10,855,122) (2,203,524)
Cash and cash equivalents, beginning of year 12,716,219 19,441,918
-------------- --------------
Cash and cash equivalents, end of period $ 1,861,097 $ 17,238,394
============== ==============
Supplemental disclosure of noncash investing
activities:
Deferred project costs applied to joint venture
property $ 593,983 $ 147,178
============== ==============
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statement
September 30, 1997
(1) Summary of Significant Accounting Policies
(a) General
-----------
Wells Real Estate Fund VIII, L.P. (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Partners, L.P., as
General Partners. The Partnership was formed on August 15, 1994, for the
purpose of acquiring, developing, owning, operating, improving, leasing,
and otherwise managing for investment purposes income producing commercial
properties.
On January 6, 1995, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933.
The Partnership commenced active operations on February 24, 1996, when it
received and accepted subscriptions for 125,000 units. The offering was
terminated on January 4, 1996, at which time the Partnership had sold
2,613,534 Class A Status Units, and 590,735 Class B Status Units, held by a
total of 1,939 and 302 Class A and Class B Limited Partners respectively,
for total Limited Partner capital contributions of $32,042,689.
The Partnership owns interests in properties through the following joint
ventures: (i) Fund VII and Fund VIII Associates, a joint venture between
the Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VII-Fund
VIII Joint Venture"); (ii) 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 VII, L.P. (the "Fund VI-VII-VIII Joint Venture");
and (iii) Fund VIII and Fund IX Associates, a joint venture between the
Partnership and Wells Real Estate Fund IX, L.P. (the "Fund VIII-Fund IX
Joint Venture").
As of September 30, 1997, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
single-story retail/office building located in Clayton County, Georgia (the
"Hannover Center") and (ii) a two-story office building located in
Gainesville, Florida (the "CH2M Hill") which are owned by the Fund VII-Fund
VIII Joint Venture; (iii) a four-story office building located in
Jacksonville, Florida (the "BellSouth Property") and (iv) a retail shopping
center located in Clemmons, North Carolina (the "Tanglewood Commons") which
are owned by the Fund VI-VII-VIII Joint Venture; and (v) a four-story
office building in Madison, Wisconsin (the "Cellular One"), (vi) a
one-story office building located in Farmers Branch, Texas (the "TCI
Building"), (vii) a two-story office building located in Orange County,
California (the "Matsushita Building"), and (viii) a two-story office
building located in Boulder County, Colorado (the "Cirrus Logic Building")
which are owned by the Fund VIII-Fund IX Joint Venture.
7
<PAGE>
All of the foregoing properties were acquired on an all cash basis. For
further information regarding these joint ventures and properties, refer to
the Partnership's Form 10-K for the year ended December 31, 1996.
(b) Basis of Presentation
-------------------------
The financial statements of Wells Real Estate Fund VIII, L.P. (the
"Partnership") have been prepared in accordance with instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These quarterly statements have not been examined by independent
accountants, but in the opinion of the General Partners, the statements for
the unaudited interim periods presented include all adjustments, which are
of a normal and recurring nature, necessary to present a fair presentation
of the results for such periods. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1996.
2) Investment in Joint Ventures
----------------------------
The Partnership owns interests in six office buildings and two retail
centers through its ownership in joint ventures. The Partnership does not
have control over the operations of the joint ventures; however, it does
exercise significant influence. Accordingly, investment in joint ventures
is recorded on the equity method. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
------------------------------------------------------------------------
RESULTS OF OPERATION.
---------------------
The following discussion and analysis should be read in conjunction with
the accompanying financial statements of the Partnership and notes thereto.
This Report contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and 21E of the Securities
Exchange Act of 1934, including discussion and analysis of the financial
condition of the Partnership, anticipated capital expenditures required to
complete certain projects, amounts of cash distributions anticipated to be
distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that
could cause actual results to differ materially form any forward-looking
statement made in this Report, which include construction costs which may
exceed estimates. Construction delays, lease-up risks, inability to obtain
new tenants upon expiration of existing leases, and the potential need to
fund tenant improvements or other capital expenditures out of operating
cash flow.
8
<PAGE>
Results of Operations and Changes in Financial Conditions
---------------------------------------------------------
(a) General
-----------
As of September 30, 1997, the developed properties owned by the Partnership
were 90% occupied, as compared to 89% occupied as of September 30, 1996.
Gross revenues of the Partnership were $872,656 for the nine months ended
September 30, 1997, as compared to $813,682 for the nine months ended
September 30, 1996. The increase was attributable primarily to increased
income from joint ventures, partially offset by decreased interest income
earned on funds held by the Partnership prior to the investment in
properties. Expenses of the Partnership decreased to $84,181 for the nine
months ended September 30, 1997, as compared to $95,536 for the same period
in 1996, due primarily to decreased partnership administrative costs. As
result of the foregoing, income of the Partnership increased to $788,475
for the nine months ended September 30, 1997, as compared to $718,146 for
the same period in 1996.
The Partnership's net cash provided by operating activities decreased to
$1,922 for 1997 as compared to $523,199 for 1996. The decrease is due
primarily to decreased interest earned on funds held by the Partnership
prior to investment in properties and payments to affiliates. Net cash used
in investing activities increased to $9,924,777 for 1997 from $3,310,901 in
1996 due primarily to additional investments in joint ventures offset by
increased distributions received from joint ventures. Net cash provided by
financing activities decreased from 1996 due to the termination of the
offering on January 4, 1996. Cash and cash equivalents decreased from
$17,238,394 at September 30, 1996 to $1,861,097 for the same period in
1997.
The Partnership's distributions from Net Cash From Operations accrued to
Class A Unit holders for the third quarter of 1997 was $0.19 per weighted
average unit as compared to $.11 for the third quarter of 1996.
The Partnership expects to continue to meet its short-term liquidity
requirements 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 or renovations to the properties expected to be
funded from cash flow from operations.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures, from Limited Partners' capital
contributions and, as of September 30, 1997, has reserved approximately
$204,000 for final tenant buildout of CH2M Hill Property and the Hannover
Property owned by the Fund VII-Fund VIII Joint Venture, approximately
$200,000 needed to complete both the BellSouth and Tanglewood Commons
Properties owned by the Fund VI-VII-VIII Joint Venture, and approximately
$250,000 for construction of the Cellular One Property owned by the Fund
VIII-Fund IX Joint Venture. It is anticipated that Wells Fund IX will fund
the approximately $250,000 in additional costs needed to complete the
Cellular One Property.
9
<PAGE>
Property Operations
- -------------------
As of September 30, 1997, the Partnership owned interests in the following
operational properties:
CH2M Hill at Gainesville/Fund VII - Fund VIII Joint Venture
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ---------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 132,578 $ 132,578 $ 397,735 $ 401,698
Expenses:
Depreciation 56,025 54,476 162,157 163,401
Management and leasing
expenses 21,473 25,939 64,090 55,035
Other operating expenses (25,759) (922) (60,032) (3,628)
--------- --------- --------- ---------
51,739 79,493 166,215 214,808
--------- --------- --------- ---------
Net income $ 80,839 $ 53,085 $ 231,520 $ 186,890
========= ========= ========= =========
Occupied % 93.6% 93.6% 93.6% 93.5%
Partnership's Ownership %
in the Fund VII - Fund
VIII Joint Venture 62.0% 62.0% 62.0% 62.0%
Cash distribution to
Partnership $ 85,609 $ 67,429 $ 246,334 $ 205,671
Net income allocated to the
Partnership $ 50,157 $ 32,937 $ 143,649 $ 127,715
</TABLE>
Rental income remained stable in 1997 as compared to 1996. Net income increased
in 1997 as compared to 1996, due to savings in various operating expenses,
accounting fees and timing differences in billing common area maintenance to the
tenant offset partially by increased management and leasing expenses.
10
<PAGE>
The Hannover Center/Fund VII - Fund VIII Joint Venture
- ------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Four Months Ended
---------------------------------------- ------------------ ------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 26,061 $ 23,335 $ 81,318 $ 25,660
Expenses:
Depreciation 110,981 9,362 32,944 20,717
Management and leasing
expenses 2,775 1,830 7,779 1,830
Other operating expenses 4,872 3,149 19,025 11,474
----------- ----------- ----------- -----------
18,628 14,341 59,748 34,021
----------- ----------- ----------- -----------
Net loss $ 7,433 $ 8,994 $ 21,570 $ (8,361)
=========== =========== =========== ===========
Occupied % 50.0% 50.0% 50.0% 50.0%
Partnership's Ownership %
in the Fund VII - Fund
VIII Joint Venture 62.0% 62.0% 62.0% 62.0%
Cash distribution to
Partnership $ 10,446 $ 3,043 $ 28,634 $ 3,043
Net income (loss) allocated
to the Partnership $ 4,612 $ 5,581 $ 13,383 $ (5,188)
</TABLE>
On April 1, 1996, the Fund VII-Fund VIII Joint Venture acquired a 1.01 acre
tract of land located in Stockbridge, Georgia, upon which it has developed a
12,000 square foot combination retail/office building known as the Hannover
Retail Center. Moovies, Inc., a video sales and rental store, signed a nine
year, eleven month lease for 6,020 square feet and occupied the space on June
22, 1996. Efforts are being made to lease the remaining space.
Rental income increased for the three months ended September 30, 1997, compared
to the same period of 1996, due to the straight-lining of rent in 1997.
Depreciation expense increased for the quarter ended September 30, 1997,
compared to the same quarter of 1996, due to the calculation of expense for a
partial year in 1996. Management and leasing expenses increased slightly for the
three months ended September 30, 1997, compared to the three months ended
September 30, 1996, due primarily to adjustments in the amortization of leasing
fees in 1997. Other operating expenses increased for the period ended September
30, 1997, as compared to the same period of 1996, due primarily to an increase
in property taxes and insurance. Since Moovies, Inc. did not occupy its space
until June 1996, no comparative, year-to-date data are available.
11
<PAGE>
BellSouth Property/Fund VI - Fund VII-Fund VIII Joint Venture
- -------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Five Months Ended
---------------------------------------- ----------------- -----------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 350,461 $ 364,732 $ 1,137,024 $ 511,472
Interest income 2,097 1,366 6,114 58,000
----------- ----------- ----------- -----------
352,558 366,098 1,143,138 569,472
----------- ----------- ----------- -----------
Expenses:
Depreciation 110,889 109,116 332,667 186,092
Management and leasing
expenses 47,095 39,597 143,554 57,525
Other operating expenses 85,739 147,446 312,986 213,407
----------- ----------- ----------- -----------
243,723 296,159 789,207 457,024
----------- ----------- ----------- -----------
Net income $ 108,835 $ 69,939 $ 353,931 $ 112,448
=========== =========== =========== ===========
Occupied % 100.0% 96.0% 100.0% 96.0%
Partnership's Ownership %
in the Fund VI - Fund VII -
Fund VIII Joint Venture 32.3% 22.6% 32.3% 22.6%
Cash distribution to
Partnership $ 71,099 $ 16,437 $ 211,619 $ 36,695
Net income allocated to the
Partnership $ 33,773 $ 5,658 $ 104,999 $ 18,580
</TABLE>
On April 25, 1996, the Fund VI-Fund VII-Fund VIII Joint Venture purchased 5.55
acres of land located in Jacksonville, Florida. In May, 1996, the 92,964 square
foot office building was completed, with BellSouth Advertising and Publishing
Corporation occupying approximately 66,333 square feet and American Express
occupying approximately 22,607 square feet. An additional approximate 2,900
square feet of additional space was occupied by BellSouth commencing in December
1996 bringing occupancy to 100%.
Interest income was generated from construction dollars, not as yet funded on
construction, being invested in interest bearing accounts.
Since the building opened in May 1996, comparative year-to-date income and
expense figures are not available. The Partnership's ownership percentage in the
Fund VI - Fund VII - Fund VIII Joint Venture increased to 32.3% for 1997, as
compared to 22.6% in 1996, due to additional funding by the Partnership in 1997.
12
<PAGE>
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Eight Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 172,682 $ 382,265
Interest income 3,890 10,275
------------- ------------
176,572 392,540
------------- ------------
Expenses:
Depreciation 53,435 135,686
Management & leasing expense 13,390 26,727
Other operating expenses 20,740 72,352
------------- ------------
87,565 234,765
------------- ------------
Net income $ 89,007 $ 157,775
============= ============
Occupied % 78.0% 78.0%
Partnership's Ownership % in the
Fund VI - Fund VII - Fund VIII Joint Venture 32.3% 32.3%
Cash distribution to Partnership $ 41,269 $ 72,048
Net income allocated to Partnership $ 27,705 $ 48,607
</TABLE>
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
land purchase costs were funded by a capital contribution made by Wells Fund VI.
Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for
the acquisition, development, construction and completion of the shopping center
are anticipated to be approximately $8,700,000. It is anticipated that the
Partnership will fund approximately $200,000 needed to complete construction of
Tanglewood Commons.
A strip shopping center containing approximately 67,320 gross square feet opened
on the site on February 26, 1997.
In February 1997, Harris Teeter, Inc., a regional supermarket chain, occupied
its leased space of 46,120 square feet with an initial term of 20 years. 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. Since this
property commenced operations in February 1997, comparable income and expense
figures for prior year are not available.
13
<PAGE>
The TCI Building/Fund VIII-Fund IX Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 118,273 $ 345,862
Expenses:
Depreciation 41,648 124,945
Management & leasing expense 2,389 11,196
Other operating expenses 2,167 8,556
------------- ------------
46,204 144,697
------------- ------------
Net income $ 72,069 $ 201,165
============= ============
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 50.1% 50.1%
Cash distribution to Partnership $ 53,815 $ 153,723
Net income allocated to Partnership $ 36,104 $ 100,656
</TABLE>
On October 10, 1996, the Fund VIII-Fund IX Joint Venture purchased a one-story
office building containing approximately 40,000 rentable square feet, located on
approximately 4.864 acres of land in Farmer's Branch, Dallas, Texas (the "TCI
Building") for a purchase price of $4,450,000 excluding acquisition costs.
The TCI Building is leased to TCI Valwood Limited Partnership I for a period of
fifteen years, with options to extend the lease for three consecutive five-year
periods. The annual base rent is $430,001 during the first five years, $454,001
during the next five years and $482,001 during the last five years. The TCI
lease commenced on July 19, 1996, and was assigned by the seller to the Fund
VIII-Fund IX Joint Venture at closing.
Since the TCI Building was purchased in October 1996, comparative income and
expense figures for the prior year are not available.
14
<PAGE>
The Matsushita Building/Fund VIII-Fund IX Joint Venture
- -------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 270,821 $ 493,486
Interest income 0 1,511
------------- ------------
270,821 494,997
------------- ------------
Expenses:
Depreciation 54,219 161,452
Management & leasing expense 13,496 25,376
Other operating expenses 950 1,943
------------- ------------
68,665 188,771
------------- ------------
Net income $ 202,156 $ 306,226
============= ============
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 50.1% 50.1%
Cash distribution to Partnership $ 65,718 $ 101,453
Net income allocated to Partnership $ 101,273 $ 153,365
</TABLE>
On January 10, 1997, the Fund VIII-Fund IX Joint Venture acquired a two-story
office building containing approximately 63,417 rentable square feet on a 4.4
acre tract of land located in the Irvine Spectrum planned business community in
metropolitan Orange County, California (the "Matsushita Building") for a
purchase price of $7,193,000 excluding acquisition costs.
The entire Matsushita Building is currently under a net lease to Matsushita
Avionics Systems Corporation. Matsushita Avionics' rental payment obligations do
not begin until the ninth month of the lease term which commenced when
Matsushita Avionics took possession in September 1996. Commencing in May 1997,
the ninth month of the lease term, the monthly base rental payable by Matsushita
Avionics under the lease is $45,879.47 through the 12th month of the lease term.
The monthly base rental payable under the lease for the 13th month of the lease
term through the 30th month of the lease term is $57,709.47; the monthly base
rental payable for the 31st month of the lease term through the 60th month of
the lease term is $59,611.98; and the monthly base rental payable for the 61st
month of the lease term through the 84th month of the lease term is $61,831.58.
The base rental payable during the option periods, if Matsushita Avionics
exercises its option to extend the lease, is 95% of the then-market rental rate
for office space in other comparable buildings located in the Irvine area of
southern California.
Since the Matsushita Building was purchased in January 1997, comparative income
and expense figures for the prior year are not available.
15
<PAGE>
The Cirrus Logic Building/Fund VIII-Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Seven Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 197,344 $ 399,835
Interest income 21,345 21,402
------------- ------------
218,689 421,237
------------- ------------
Expenses:
Depreciation 72,874 158,900
Management & leasing expense 10,348 16,949
Other operating expenses 368 7,336
------------- ------------
83,590 183,185
------------- ------------
Net income $ 135,099 $ 238,052
============= ============
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 50.1% 50.1%
Cash distribution to Partnership $ 90,332 $ 153,432
Net income allocated to Partnership $ 67,680 $ 119,205
</TABLE>
On February 20, 1997, the Fund VIII-Fund IX Joint Venture purchased a two-story
partially completed office building in Boulder County, Colorado (the "Cirrus
Logic Building") for $7,029,000 excluding acquisition costs. Construction of the
49,460 square foot building was substantially completed in March 1997.
Cirrus Logic, Inc. has leased the entire building for a fifteen-year term
beginning March 17, 1997. The annual base rental under the term of the Cirrus
Logic lease is $617,656 for the first five years, will be increased by 10% in
the sixth through tenth years and will be increased an additional 10% in years
eleven through fifteen.
Since the Cirrus Logic Building was purchased in February 1997 and was not
completed until March 1997, comparative income and expense figures for the prior
year are not available.
16
<PAGE>
The Cellular One Building/Fund VIII-Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Four Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 239,645 $ 279,753
Expenses:
Depreciation 118,500 156,500
Management & leasing expense 24,817 24,817
Other operating expenses 8,937 19,812
------------- ------------
152,254 201,129
------------- ------------
Net loss $ 87,391 $ 78,624
============= ============
Occupied % 75.0% 75.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 50.1% 50.1%
Cash distribution to Partnership $ 59,962 $ 74,604
Net loss allocated to Partnership $ 43,779 $ 39,393
</TABLE>
On June 17, 1996, the Fund VIII - Fund IX Joint Venture purchased a 7.09 acre
tract of real property in Madison, Dane County, Wisconsin. Total cost and
expenses to be incurred by the Fund VIII - Fund IX Joint Venture for the
acquisition, development, construction and completion of the 101,727 rentable
square foot building is estimated to be approximately $10,500,000. It is
anticipated that the Partnership and Wells Fund IX will fund equally the
approximately $500,000 needed to complete construction on this project.
In June 1997, Cellular One, a subsidiary of BellSouth Corporation, occupied its
leased space of 76,276 square feet comprising approximately 75% of the building.
The initial term of the lease is 9 years and 11 months beginning in June 1997,
with the option to extend the initial term of the lease for two consecutive
five-year periods. The annual base rent payable during the initial term is
$862,500 payable in equal monthly installments of $71,875 during the first five
years and $975,000 payable in equal monthly installments of $81,250 during the
last four years and 11 months of the initial term. The annual base rent for each
extended term will be at market rental rates.
Since the building opened June 15, 1997, comparative income and expenses figures
are not available for prior periods.
17
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the third quarter
of 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
WELLS REAL ESTATE FUND VIII, L.P.
(Registrant)
Dated: November 10, 1997 By: /s/ Leo F. Wells, III
---------------------
Leo F. Wells, III, as Individual
General Partner and as President,
Sole Director and Chief Financial
Officer of Wells Capital, Inc., the
General Partner of Wells Partners, L.P.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,861,097
<SECURITIES> 24,738,734
<RECEIVABLES> 478,247
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,204,459
<CURRENT-LIABILITIES> 496,957
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,707,502
<TOTAL-LIABILITY-AND-EQUITY> 27,204,459
<SALES> 0
<TOTAL-REVENUES> 872,656
<CGS> 0
<TOTAL-COSTS> 84,181
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 788,475
<INCOME-TAX> 788,475
<INCOME-CONTINUING> 788,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 788,475
<EPS-PRIMARY> 52
<EPS-DILUTED> 0
</TABLE>
