<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 10, 1997
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Wells Real Estate Fund VIII, L.P.
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(Exact name of registrant as specified in its charter)
Georgia
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(State or other jurisdiction of incorporation)
0-27888 58-2126618
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(Commission File Number) (IRS Employer Identification No.)
3885 Holcomb Bridge Road, 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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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OF ASSETS.
On January 10, 1997, Fund VIII and Fund IX Associates (the "Fund VIII/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 at 15253 Bake
Parkway, in the Irvine Spectrum planned business community in metropolitan
Orange County, California (the "Matsushita Building").
The Fund VIII/IX Joint Venture is a joint venture formed on June 10, 1996,
between Wells Real Estate Fund VIII, L.P. (the "Registrant") and Wells Real
Estate Fund IX, L.P. ("Wells Fund IX") for the purpose of the acquisition,
ownership, development, leasing, operation, sale and management of real
properties. The investment objectives of Wells Fund IX are substantially
identical to those of the Registrant. All income, loss, profit, net cash flow,
resale gain, resale loss and sale proceeds of the Fund VIII/IX Joint Venture are
allocated and distributed between Wells Fund IX and the Registrant based upon
their respective capital contributions to the Joint Venture.
The Fund VIII/IX Joint Venture purchased the Matsushita Building from
Magellan Bake Parkway Limited Partnership (the "Seller"), an Arizona limited
partnership having Magellan Bake Parkway I, L.L.C., an Arizona limited liability
company, as its sole general partner. None of the Fund VIII/IX Joint Venture,
Wells Fund IX or the Registrant are affiliated with either the Seller or its
general partner.
The total consideration paid to the Seller for the Matsushita Building was
$7,193,000. The Fund VIII/IX Joint Venture also incurred additional acquisition
expenses in connection with the purchase of the Matsushita Building, including
without limitation, engineering costs, appraisal expenses, attorneys' fees,
title insurance charges, accounting fees, recording fees and other closing costs
of approximately $39,860. At the closing, the Seller paid real estate
commissions to unaffiliated entities totalling $215,790, and title insurance
charges and transfer taxes totalling $16,520.
The Matsushita Building was originally constructed in 1984 and was
completely refurbished in 1996. Prior to closing, the Fund VIII/IX Joint
Venture received an independent appraisal of the Matsushita Building from
Koeppel Tener Real Estate Services, Inc., dated January 9, 1997, estimating the
fair market value of the leased fee interest in the Matsushita Building subject
to the terms of the Lease (described below) to be $7,200,000, as of January 1,
1997, based on market conditions existing January 7, 1997. In accordance with
the terms of the Custodial Agency Agreement of the Registrant dated November 15,
1994, and the Amended and Restated Custodial Agency Agreement of Wells Fund IX
dated November 30, 1995, legal title to the Matsushita Building is being held by
The Bank of New York (as successor-in-interest to NationsBank of Georgia, N.A.),
as agent for the Fund VIII/IX Joint Venture.
The entire Matsushita Building is currently under a net lease dated April
29, 1996 (the "Lease") to Matsushita Avionics Systems Corporation, a Delaware
corporation ("Matsushita Avionics"), which Lease was assigned to the Fund
VIII/IX Joint Venture at the closing. The Lease currently expires in September
2003, and Matsushita Avionics has the option to extend the Lease for two
additional five-year periods.
The Lease provides that Matsushita Avionics' rental payment obligations do
not commence 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 will be $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. Under the Lease, Matsushita Avionics is
responsible for all utilities, taxes, insurance and other operating expenses
with respect to the Matsushita Building during the term of the Lease, and the
Fund VIII/IX Joint Venture, as landlord, is responsible for maintenance and
repair of the exterior structure of the Matsushita Building, including the floor
slabs, foundation, roof structure, roof membrane, curtain walls and exterior
glass and mullions.
2
<PAGE>
The obligations of Matsushita Avionics under the Lease have been guaranteed
by Matsushita Electronic Corporation of America, a Delaware corporation (the
"Guarantor"). Matsushita Avionics is a wholly owned subsidiary of the
Guarantor. The Guarantor reported total sales for its fiscal year ended March
31, 1995 in excess of $7 billion and net worth of approximately $937 million.
The funds used by the Fund VIII/IX Joint Venture to acquire the Matsushita
Building were derived entirely from capital contributions made to the Fund
VIII/IX Joint Venture by the Registrant and Wells Fund IX. Each of the
Registrant and Wells Fund IX made capital contributions of approximately
$3,616,430 to fund the purchase of the Matsushita Building, for total capital
contributions to the Fund VIII/IX Joint Venture with respect to the Matsushita
Building of approximately $7,232,860.
In addition to owning the Matsushita Building, the Fund VIII/IX Joint
Venture also owns (i) a four story office building under development located in
Madison, Wisconsin (the "Madison Project"), which Westel-Milwaukee Company, Inc.
d/b/a Cellular One has agreed to lease upon completion (anticipated to occur on
or before June 15, 1997), and (ii) a single story office building located in
Farmers Branch, Dallas County, Texas, which is leased to TCI Central, Inc.
Through January 15, 1996, the Registrant had contributed a total of
approximately $8,333,722 and Wells Fund IX had contributed a total of $8,357,083
to the Fund VIII/IX Joint Venture with respect to these three properties.
Accordingly, the Registrant currently holds an approximately 50% equity interest
in the Fund VIII/IX Joint Venture, and Wells Fund IX currently holds an
approximately 50% equity interest in the Fund VIII/IX Joint Venture. It is
anticipated that an additional approximate $4,916,155 will be required to be
expended to complete the Madison Project, which funds are anticipated to be
contributed to the Fund VIII/IX Joint Venture by the Registrant and Wells Fund
IX in equal shares. Accordingly, upon completion of the Madison Project, it is
anticipated that the Registrant will own an approximate 50% equity interest in
the Fund VIII/IX Joint Venture and Wells Fund IX will own an approximate 50%
equity interest in the Fund VIII/IX Joint Venture.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Audited Financial Statements. The following audited financial
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statements of the real estate property acquired are submitted as exhibits to
this Current Report and are incorporated herein by reference:
<TABLE>
<CAPTION>
Page
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<S> <C>
Independent Auditor's Report I-1
Statement of Excess Revenues Over Operating Expenses
For the Year Ended December 31, 1996 I-2
Notes to Statement of Excess Revenues Over Operating
Expenses For the Year Ended December 31, 1996 I-3
</TABLE>
(b) Pro Forma Financial Information. The following unaudited pro forma
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financial statements of the Registrant relating to the real property acquired
are submitted as exhibits to this Current Report and are incorporated herein by
reference:
<TABLE>
<CAPTION>
Page
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<S> <C>
Unaudited Pro Forma Combined Balance Sheet of
Wells Real Estate Fund VIII, L.P. as of
December 31, 1996 I-4
Unaudited Pro Forma Combined Income Statement of
Wells Real Estate Fund VIII, L.P. For the Year Ended
December 31, 1996 I-5
Notes to the Pro Forma Combined Balance Sheet
and the Pro Forma Combined Income Statement of
Wells Real Estate Fund VIII, L.P. I-6
</TABLE>
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WELLS REAL ESTATE FUND VIII, L.P.
Registrant
By: /s/ Leo F. Wells, III
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Leo F. Wells, III, as General Partner
and as President and sole Director of
Wells Capital, Inc., the General
Partner of Wells Partners, L.P.,
General Partner
Date: January 23, 1997
<PAGE>
EXHIBIT INDEX
The following exhibits are attached to this Current Report and thereby made
a part thereof:
<TABLE>
<CAPTION>
Sequential
Description of Document Page No.
- ----------------------- ----------
<S> <C>
Independent Auditor's Report I-1
Statement of Excess Revenues Over Operating Expenses for the
Year Ended December 31, 1996 I-2
Notes to Statement of Excess Revenues Over Operating Expenses
for the Year Ended December 31, 1996 I-3
Unaudited Pro Forma Combined Balance Sheet of Wells Real Estate
Fund VIII, L.P. as of December 31, 1996 I-4
Unaudited Pro Forma Combined Income Statement of Wells Real Estate
Fund VIII, L.P. For the Year Ended December 31, 1996 I-5
Notes to the Pro Forma Combined Balance Sheet and the Pro Forma
Combined Income Statement of Wells Real Estate Fund VIII, L.P. I-6
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P.:
We have audited the accompanying statement of excess revenues over operating
expenses for the BAKE PARKWAY BUILDING for the year ended December 31, 1996.
This financial statement is the responsibility of management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of excess revenues over operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of excess
revenues over operating expenses. 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
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Bake
Parkway Building after acquisition by Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P. The accompanying statement of excess revenues
over operating expenses was prepared for the purpose of complying with the rules
and regulations of the Securities and Exchange Commission and is not intended to
be a complete presentation of the Bake Parkway Building's revenues and expenses.
In our opinion, the statement of excess revenues over operating expenses
presents fairly, in all material respects, the excess of revenues over operating
expenses (exclusive of expenses described in Note 2) of the Bake Parkway
Building for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 23, 1997
<PAGE>
BAKE PARKWAY BUILDING
STATEMENT OF EXCESS REVENUES
OVER OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C>
RENTAL REVENUES $187,274
OPERATING EXPENSES, net of reimbursements 71,492
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EXCESS OF REVENUES OVER OPERATING EXPENSES $115,782
========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
BAKE PARKWAY BUILDING
NOTES TO STATEMENT OF EXCESS REVENUES
OVER OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF REAL ESTATE PROPERTY ACQUIRED
On January 10, 1997, Wells Real Estate Fund VIII, L.P. ("Fund VIII") and
Wells Real Estate Fund IX, L.P. ("Fund IX"), through Fund VIII and Fund IX
Associates, a Georgia joint venture, acquired the Bake Parkway Building, a
63,417 square foot office building located in Irvine, California, for a cash
purchase price of $7,193,000. The building is 100% occupied by one tenant
with a lease term of 7 years commencing September 13, 1996. The lease is a
triple net lease, whereby the terms require that the tenant pay certain
operating expenses relating to the building after the lease commencement
date.
RENTAL REVENUES
Rental income from the lease is recognized on a straight-line basis over the
life of the lease.
2. BASIS OF ACCOUNTING
The accompanying statement of excess revenues over specific operating
expenses are presented on the accrual basis. This statement has been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statement excludes certain historical expenses not
comparable to the operations of the Bake Parkway Building after acquisition
by Fund VIII and Fund IX, such as depreciation.
<PAGE>
3. RENTAL INCOME
The future minimum rental income due the Bake Parkway Building under the
noncancelable operating lease at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1997 $ 414,352
1998 692,508
1999 711,538
2000 715,344
2001 724,224
Thereafter 1,236,640
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$4,494,606
==========
</TABLE>
One significant tenant contributed 100% of revenues for the year ended
December 31, 1996 and will contribute 100% of future minimum rental income.
<PAGE>
Wells Real Estate Fund VIII, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Assets Fund VIII, L.P. Adjustments Balance Sheet
- ------ ----------------- ------------ -------------
<S> <C> <C> <C>
Investments in joint ventures $13,787,531 $ 3,612,835 $17,400,366
Cash and cash equivalents 12,716,219 (3,546,500) 9,169,719
Due from affiliates 187,433 0 187,433
Deferred project costs 544,800 (152,304) 392,496
Organizational costs 18,750 0 18,750
Prepaid expenses and other assets 99,000 0 99,000
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Total Assets $27,353,733 $ (85,969) $27,267,764
=========== =========== ===========
Liabilities
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Liabilities $ 5,500 $ 0 $ 5,500
Accounts payable and accrued expenses 317,453 0 317,453
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Total Liabilities 322,953 0 322,953
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Partners' Capital
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Limited Partners
Class A 22,367,784 57,891 22,425,675
Class B 4,662,896 (143,860) 4,519,036
Original limited partner 100 0 100
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Total partners' capital 27,030,780 (85,969) 26,944,811
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Total liabilities and partners' capital $27,353,733 $ (85,969) $27,267,764
=========== =========== ===========
</TABLE>
<PAGE>
Wells Real Estate Fund VIII, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Income Statement
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Revenues Fund VIII, L.P. Adjustments Income Statement
- -------- ------------------ ------------ -----------------
<S> <C> <C> <C>
Equity in income (loss) of joint ventures $ 241,819 $ (85,969) $ 155,850
Interest income 815,875 0 815,875
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1,057,694 (85,969) 971,725
Expenses
- --------
Partnership administration 74,440 0 74,440
Legal and accounting 35,745 0 35,745
Amortization of organization costs 6,250 0 6,250
Other 4,669 0 4,669
---------- --------- ----------
121,104 0 121,104
Net Income $ 936,590 $ (85,969) $ 850,621
- ---------- ========== ========= ==========
Net loss allocated to general partners $ (297) $ 0 $ (297)
Net income allocated to Class A
limited partners $1,207,540 $ 57,891 $1,265,431
Net loss allocated to Class B
limited partners $ (270,653) $(143,860) $ (414,513)
Net income per weighted average
Class A limited partner unit $ 0.46 $ 0.02 $ 0.48
Net loss per weighted average
Class B limited partner unit $ (0.47) $ (0.25) $ (0.72)
Cash distribution per weighted average
Class A limited partner unit $ 0.44 $ 0.00 $ 0.44
</TABLE>
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
Notes to Unaudited Pro Forma Combined Balance Sheet
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Balance Sheet as of December 31, 1996.
In the opinion of the management of Wells Real Estate Fund VIII, L.P., the Pro
Forma Combined Balance Sheet includes all adjustments necessary for a fair
presentation of the financial position as of December 31, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Balance Sheet:
(1) Reflects cash used for the purchase of the Bake Parkway Building;
(2) Reflects contribution to the Fund VIII - Fund IX Joint Venture.
Notes to Unaudited Pro Forma Combined Income Statement
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Income Statement for year ended December 31, 1996.
In the opinion of the management of Wells Real Estate Fund VIII, L.P., the
Unaudited Pro Forma Combined Income Statement includes all adjustments necessary
for a fair presentation of the results of operations for the year ended December
31, 1996.
The Unaudited Pro Forma Combined Income Statement for the year ended December
31, 1996, includes the results of operations for Wells Real Estate Fund VIII,
L.P., and the estimated equity in income provided by the Bake Parkway Building.
In the opinion of management, this estimate is a fair presentation of the
results of operations for the year ended December 31, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Combined Income Statement.
(1) Reflects Wells Real Estate Fund VIII, L.P.'s 50% equity in income of the
Bake Parkway Building.
