<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, 1999 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 or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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.
(A Georgia Public Limited Partnership)
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets--September 30, 1999 and December 31, 1998 3
Statements of Income for the Three Months and Nine Months Ended September 30, 1999
and 1998 4
Statements of Partners' Capital for the Year Ended December 31, 1998 and the Nine
Months Ended September 30, 1999 5
Statements of Cash Flows for the Nine Months Ended September 30, 1999 and 1998 6
Condensed Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9
PART II. OTHER INFORMATION 19
</TABLE>
-2-
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------------- -------------------
<S> <C> <C>
ASSETS:
Investment in joint ventures (Note 2) $24,626,483 $25,451,768
Cash and cash equivalents 114,923 8,792
Due from affiliates 560,241 605,655
Organization costs, less accumulated amortization of $25,000
in December 1998 and $29,687 in September 1999 1,563 6,250
Prepaid expenses and other assets 1,820 0
------------------- -------------------
Total assets $25,305,030 $26,072,465
------------------- -------------------
LIABILITIES AND PARTNERS' CAPITAL:
Partnership distributions payable $ 609,484 $ 591,948
------------------- -------------------
Partners' capital:
Limited partners:
Class A--2,707,530 units outstanding at September 30,
1999 and 2,674,585 at December 31, 1998 23,315,732 23,113,046
Class B--495,739 units outstanding at September 30, 1999
and 528,684 at December 31, 1998 1,379,814 2,367,471
------------------- -------------------
Total partners' capital 24,695,546 25,480,517
------------------- -------------------
Total liabilities and partners' capital $25,305,030 $26,072,465
=================== ===================
</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, September 30, September 30, September 30,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Equity earnings of joint ventures (Note 2) $ 331,739 $ 288,768 $1,077,682 $ 950,061
Interest income 1 36 3 16,145
------------- ------------- ------------- -------------
331,740 288,804 1,077,685 966,206
------------- ------------- ------------- -------------
EXPENSES:
Legal and accounting 200 338 18,452 14,848
Computer costs 2,559 2,341 7,240 6,195
Partnership administration 11,195 18,568 44,317 42,773
Amortization of organization costs 1,562 1,562 4,687 4,687
------------- ------------- ------------- -------------
15,516 22,809 74,696 68,503
------------- ------------- ------------- -------------
Net income $ 316,224 $ 265,995 $1,002,989 $ 897,703
============= ============= ============= =============
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 614,272 $ 592,469 $1,899,990 $ 1,794,965
============= ============= ============= =============
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $(298,048) $(326,474) $ (897,001) $ (897,262)
============= ============= ============= =============
NET INCOME PER CLASS A LIMITED PARTNER UNIT $ 0.23 $ 0.22 $ 0.70 $ 0.67
============= ============= ============= =============
NET LOSS PER CLASS B LIMITED PARTNER UNIT $ (0.60) $ (0.60) $ (1.82) $ (1.62)
============= ============= ============= =============
CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT $ 0.23 $ 0.22 $ 0.66 $ 0.64
============= ============= ============= =============
</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, 1998
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Limited Partners Total
----------------------------------------------
Class A Class B General Partners'
---------------------- ---------------------
Units Amounts Units Amounts Partners Capital
--------- ----------- ------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 2,643,680 $22,828,363 559,589 $ 3,662,617 $0 $26,490,980
Net income (loss) 0 2,431,246 0 (1,162,075) 0 1,269,171
Partnership distributions 0 (2,279,634) 0 0 0 (2,279,634)
Class B conversion elections 30,904 133,071 (30,904) (133,071) 0 0
--------- ----------- ------- ----------- -------- -----------
BALANCE, December 31, 1998 2,674,584 23,113,046 528,685 2,367,471 0 25,480,517
Net income (loss) 0 1,899,990 0 (897,001) 0 1,002,989
Partnership distributions 0 (1,787,960) 0 0 0 (1,787,960)
Class B conversion elections 32,946 90,656 (32,946) (90,656) 0 0
--------- ----------- ------- ----------- -------- -----------
BALANCE, September 30, 1999 2,707,530 $23,315,732 495,739 $ 1,379,814 $0 $24,695,546
========= =========== ======= =========== ======== ===========
</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>
For the Nine Months Ended
-----------------------------
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,002,989 $ 897,703
Adjustments to reconcile net income to net cash used in operating activities:
Equity in income of joint ventures (1,077,682) (950,061)
Amortization of organization costs 4,687 4,687
Changes in assets and liabilities:
Prepaid expenses and other assets (1,820) 7,000
------------- -------------
Net cash used in operating activities (71,826) (40,671)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from joint ventures 1,948,380 1,731,211
Investment in joint ventures 0 (1,850,788)
------------- -------------
Net cash provided by (used in) investing activities 1,948,380 (119,577)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (1,770,423) (1,646,317)
------------- -------------
NET INCREASE (DECREASE) CASH AND CASH EQUIVALENTS 106,131 (1,806,565)
CASH AND CASH EQUIVALENTS, beginning of year 8,792 1,848,493
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 114,923 $ 41,928
============= =============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
Deferred project costs applied to joint venture property $ 0 $ 100,567
============= =============
</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 STATEMENTS
SEPTEMBER 30, 1999 AND 1998 AND DECEMBER 31, 1998
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 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 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, 1995 when it
received and accepted subscriptions for 125,000 units. The offering was
terminated 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 limited partners, respectively, for total limited partner
capital contributions of $32,042,689.
The Partnership owns interest in the following properties through its equity
ownership in 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 and
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, 1999, the Partnership owned interests in the following
properties through its ownership in 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 Building") 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 located in Madison, Wisconsin (the "US Cellular Building"), (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,
-7-
<PAGE>
Colorado (the "Cirrus Logic Building") which are owned by the Fund VIII-Fund
IX Joint Venture.
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, 1998.
(b) Basis of Presentation
The financial statements of Wells Real Estate Fund VIII, L.P. 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, 1998.
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, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
accompanying financial statements of the Partnership and notes thereto. This
report contains forward-looking statements, within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including discussion and analysis of the financial condition of the
Partnership, anticipated capital expenditures required to complete certain
projects, amounts of cash distributions anticipated to be distributed to
limited partners in the future, and certain other matters. Readers of this
report should be aware that there are various factors that could cause actual
results to differ materially from any forward-looking statement made in this
report, which include construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants upon
expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
-8-
<PAGE>
1. RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL CONDITIONS
(a) General
As of September 30, 1999, the properties owned by the Partnership were 99%
occupied as compared to 97% as of September 30, 1998. Gross revenues of the
Partnership were $1,077,685 for the nine months ended September 30, 1999, as
compared to $966,206 for the nine months ended September 30, 1998. The
increase was attributable primarily to increased income from joint ventures
due to increased occupancy offset partially by decreased interest income
earned on funds held by the Partnership prior to the investment in the joint
venture. Expenses of the Partnership increased to $74,696 for the nine months
ended September 30, 1999, compared to $68,503 for the same period in 1998, as
the result of increased expenses primarily in accounting and partnership
administration. Net income of the Partnership was $1,002,989 for the nine
months ended September 30, 1999, as compared to $897,703 for the nine months
ended September 30, 1998.
The Partnership's net cash used in operating activities increased to $71,826
for 1999 as compared to $40,671 for 1998. The increase is due primarily to an
increase in expenses and by decreased interest earned on funds held by the
Partnership prior to investment in properties. Net cash provided by investing
activities increased to $1,948,380 for 1999 from $(119,577) in 1998, due
primarily to decreased investments in joint ventures, and increased
distributions from joint ventures. Net cash used in financing activities
increased from 1998 due to increased distributions to partners. Cash and cash
equivalents increased from $41,928 at September 30, 1998 to $114,923 for the
same period in 1999.
The Partnership's distributions from investment income accrued to Class A
unit holders for the third quarter of 1999 was $.23 per Class A unit as
compared to distributions of $.22 per Class A unit for the third quarter of
1998. No distributions were made to limited partners holding Class B units or
to the general partners.
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 operations.
Year 2000
The Partnership is presently reviewing the potential impact of Year 2000
compliance issues on its information systems and business operations. A full
assessment of Year 2000 compliance issues was begun in late 1997 and was
completed by March 31, 1999. Renovations and replacements of equipment have
been and are being made as warranted. The costs incurred by the Partnership
and its affiliates thus far for renovations and replacements have been
immaterial. As of September 30, 1999, testing of systems has been completed.
As to the status of the Partnership's information technology systems, it is
presently believed that all major systems and software packages are Year 2000
compliant. At the
-9-
<PAGE>
present time, it is believed that all major noninformation technology systems
are Year 2000 compliant. The cost to upgrade any noncompliant systems is
believed to be immaterial.
The Partnership has confirmed with the Partnership's vendors, including
third-party service providers such as banks, that their systems are Year 2000
compliant.
The Partnership relies on computers and operating systems provided by
equipment manufacturers, and also on application software designed for use
with its accounting, property management, and investment portfolio tracking.
The Partnership has preliminarily determined that any costs, problems, or
uncertainties associated with the potential consequences of Year 2000 issues
are not expected to have a material impact on the future operations or
financial condition of the Partnership. The Partnership will perform due
diligence as to the Year 2000 readiness of each property owned by the
Partnership and each property contemplated for purchase by the Partnership.
The Partnership's reliance on embedded computer systems (i.e.,
microcontrollers) is limited to facilities-related matters, such as office
security systems and environmental control systems.
The Partnership is currently formulating contingency plans to cover any areas
of concern. Alternate means of operating the business are being developed in
the unlikely circumstance that the computer and phone systems are rendered
inoperable. An off-site facility from which the Partnership could operate is
being sought as well as alternate means of communication with key third-party
vendors. A written plan is being developed for testing and dispensation to
each staff member of the general partner of the Partnership.
Management believes that the Partnership's risk of Year 2000 problems is
minimal. In the unlikely event there is a problem, the worst-case scenarios
would include the risks that the elevator or security systems within the
Partnership's properties would fail or the key third-party vendors upon which
the Partnership relies would be unable to provide accurate investor
information. In the event that the elevator shuts down, the Partnership has
devised a plan for each building whereby the tenants will use the stairs
until the elevators are fixed. In the event that the security system shuts
down, the Partnership has devised a plan for each building to hire temporary
on-site security guards. In the event that a third-party vendor has Year
2000 problems relating to investor information, the Partnership intends to
perform a full system back-up of all investor information as of December 31,
1999 so that the Partnership will have accurate hard-copy investor
information.
-10-
<PAGE>
2. PROPERTY OPERATIONS
As of September 30, 1999, the Partnership owned interest in the following
operational properties:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
CH2M Hill/ September 30, September 30, September 30, September 30,
Fund VII-Fund VIII Joint Venture 1999 1998 1999 1998
------------------------------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $144,035 $143,832 $431,747 $420,850
------------- ------------- ------------- -------------
Expenses:
Depreciation 66,077 68,946 202,902 182,837
Management and leasing expenses 17,890 14,330 65,886 65,019
Other operating expenses 16,225 14,902 5,806 43,967
------------- ------------- ------------- -------------
100,192 98,178 274,594 291,823
------------- ------------- ------------- -------------
Net income $ 43,843 $ 45,654 $157,153 $129,027
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VI-VII-VIII
Joint Venture 63.3% 63.3% 63.3% 63.3%
============= ============= ============= =============
Cash distribution to the Partnership $ 70,967 $ 74,018 $229,197 $197,514
============= ============= ============= =============
Net income allocated to the Partnership $ 27,774 $ 28,892 $ 99,556 $ 81,197
============= ============= ============= =============
</TABLE>
Rental income increased for the nine months ended September 30, 1999, as
compared to the nine months ended September 30, 1998 due to an underestimate
of straight-line adjustments in 1998. Expenses decreased due primarily to
common-area maintenance billings to tenants that were underestimated in 1998.
Tenants are billed an estimated amount for the current year common-area
maintenance which is then reconciled in the following year and the difference
billed to the tenants.
-11-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
BellSouth Building/Fund VI-VII- VIII September 30, September 30, September 30, September 30,
Joint Venture 1999 1998 1999 1998
-------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $380,278 $380,278 $1,140,832 $1,140,832
Interest income 1,159 2,096 3,461 6,268
------------- ------------- ------------- -------------
381,437 382,374 1,144,293 1,147,100
------------- ------------- ------------- -------------
Expenses:
Depreciation 111,606 110,985 334,818 332,827
Management and leasing expenses 47,891 47,414 144,824 142,610
Other operating expenses 111,440 121,718 321,275 311,783
------------- ------------- ------------- -------------
270,937 280,117 800,917 787,220
------------- ------------- ------------- -------------
Net income $110,500 $102,257 $ 343,376 $ 359,880
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VI-VII-VIII Joint
Venture 32.3% 32.3% 32.3% 32.3%
============= ============= ============= =============
Cash distribution to the Partnership $ 74,761 $ 71,693 $ 227,725 $ 232,220
============= ============= ============= =============
Net income allocated to the Partnership $ 35,752 $ 33,085 $ 111,098 $ 116,438
============= ============= ============= =============
</TABLE>
Net income and cash distributions have decreased slightly for the nine months
ended September 30, 1999 as compared to the same period in 1998 due primarily
to increased expenditures in electricity and lighting replacement.
-12-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The Hannover Center/ September 30, September 30, September 30, September 30,
Fund VII-Fund VIII Joint Venture 1999 1998 1999 1998
--------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $53,354 $26,061 $165,847 $78,183
------------- ------------- ------------- -------------
Expenses:
Depreciation 10,981 10,981 32,944 32,944
Management and leasing expenses 3,746 2,661 16,788 7,983
Other operating expenses 3,683 2,133 6,601 16,422
------------- ------------- ------------- -------------
18,410 15,775 56,333 57,349
------------- ------------- ------------- -------------
Net income $34,944 $10,286 $109,514 $20,834
============= ============= ============= =============
Occupied % 100% 50% 100% 50%
============= ============= ============= =============
Partnership's ownership % in the Fund VII-Fund VIII Joint
Venture 63.3% 63.3% 63.3% 63.3%
============= ============= ============= =============
Cash distribution to the Partnership $28,920 $ 0 $ 83,615 $ 3,698
============= ============= ============= =============
Net income allocated to the Partnership $22,137 $ 6,513 $ 69,377 $13,143
============= ============= ============= =============
</TABLE>
Rental income, net income, and cash distributions increased for the nine
months ended September 30, 1999, as compared to the nine months ended
September 30, 1998, due to increased occupancy at the property. Operating
expenses decreased for the nine months ended September 30, 1999 as compared
to the same period in 1998 due to common-area maintenance reimbursements.
Tenants are billed an estimated amount for the current year common-area
maintenance which is then reconciled in the following year and the difference
billed to the tenants.
-13-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
Tanglewood Commons/ September 30, September 30, September 30, September 30,
Fund VI-VII-VIII Joint Venture 1999 1998 1999 1998
------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $192,850 $183,587 $579,169 $548,339
Interest income 2,374 4,345 7,663 14,070
------------- ------------- ------------- -------------
195,224 187,932 586,832 562,409
------------- ------------- ------------- -------------
Expenses:
Depreciation 64,677 61,235 190,779 182,721
Management and leasing expenses 16,639 14,953 49,281 44,804
Other operating expenses 18,093 19,150 47,541 24,380
------------- ------------- ------------- -------------
99,409 95,338 287,601 251,905
------------- ------------- ------------- -------------
Net income $ 95,815 $ 92,594 $299,231 $310,504
============= ============= ============= =============
Occupied % 91% 90% 91% 90%
============= ============= ============= =============
Partnership's ownership % in the Fund VI-VII-VIII Joint
Venture 32.3% 32.3% 32.3% 32.3%
============= ============= ============= =============
Cash distribution to the Partnership $ 52,317 $ 49,401 $159,608 $158,693
============= ============= ============= =============
Net income allocated to the Partnership $ 31,001 $ 29,958 $ 96,815 $100,462
============= ============= ============= =============
</TABLE>
Rental income, depreciation expense, and management and leasing expenses have
increased in 1999 as compared to 1998 due to the increased occupancy at the
Tanglewood Commons center for the nine months ended September 30, 1999.
Other operating expenses increased in 1999 over 1998 due primarily to a
timing difference in billing tenants for common-area maintenance expenses.
Tenants are billed an estimated amount for the current year common-area
maintenance which is then reconciled in the following year and the difference
billed to the tenants.
-14-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The TCI Building/ September 30, September 30, September 30, September 30,
Fund VIII-Fund IX Joint Venture 1999 1998 1999 1998
-------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $113,794 $113,794 $341,383 $341,383
Interest income 5,756 7,800 19,415 22,950
------------- ------------- ------------- -------------
119,550 121,594 360,798 364,333
------------- ------------- ------------- -------------
Expenses:
Depreciation 41,648 41,648 124,945 124,945
Management and leasing expenses 4,435 4,300 13,070 12,900
Other operating expenses 997 1,755 8,162 6,728
------------- ------------- ------------- -------------
47,080 47,703 146,177 144,573
------------- ------------- ------------- -------------
Net income $ 72,470 $ 73,891 $214,621 $219,760
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VIII-Fund IX Joint
Venture 54.8% 54.8% 54.8% 54.8%
============= ============= ============= =============
Cash distribution to the Partnership $ 59,085 $ 59,853 $175,725 $174,810
============= ============= ============= =============
Net income allocated to the Partnership $ 39,711 $ 40,490 $117,605 $117,925
============= ============= ============= =============
</TABLE>
Net income has decreased in 1999, as compared to 1998, due primarily to
decreased interest income and an increase in landscape expenditures.
-15-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The Matsushita Building/ September 30, September 30, September 30, September 30,
Fund VIII-Fund IX Joint Venture 1999 1998 1999 1998
-------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $164,378 $167,698 $493,135 $503,094
------------- ------------- ------------- -------------
Expenses:
Depreciation 53,917 53,917 161,752 161,752
Management and leasing expenses 6,196 6,513 18,706 19,538
Other operating expenses 3,619 1,660 4,074 11,903
------------- ------------- ------------- -------------
63,732 62,090 184,532 193,193
------------- ------------- ------------- -------------
Net income $100,646 $105,608 $308,603 $309,901
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VIII-Fund IX Joint
Venture 54.8% 54.8% 54.8% 54.8%
============= ============= ============= =============
Cash distribution to the Partnership $ 94,451 $ 92,446 $283,991 $267,845
============= ============= ============= =============
Net income allocated to the Partnership $ 55,150 $ 57,869 $169,104 $166,317
============= ============= ============= =============
</TABLE>
Rental income decreased as compared to 1998, due primarily to an adjustment
to straight-line rent in 1998. Other operating expenses have decreased for
the nine months ended September 30, 1999 as compared to 1998 due primarily to
a billing of 1998 common-area maintenance expenses to the tenant in 1999.
Tenants are billed an estimated amount for the current year common-area
maintenance which is then reconciled in the following year and the difference
billed to the tenants. Cash distributions and net income allocated to the
Partnership have increased in 1999 due primarily to additional funding by the
Partnership in January through March of 1998.
On March 15, 1999, Wells OP purchased an 8.8-acre tract of land located in
Lake Forest, Orange County, California for a purchase price of $4,450,230.
Wells OP entered into a development agreement for the construction of a two-
story office building containing approximately 150,000 rentable square feet
to be erected on the Matsushita property. Wells OP entered into an office
lease with Matsushita Avionics Systems Corporation ("Matsushita Avionics"),
pursuant to which Matsushita Avionics agreed to lease all of the Matsushita
project upon its completion. It is anticipated that Matsushita Avionics will
vacate its current space in December 1999.
Matsushita Avionics and the Fund VIII-Fund IX Joint Venture have entered into
a lease and guaranty termination agreement dated February 18, 1999, pursuant
to which Matsushita Avionics will be vacating the existing building and
relieved of any of its obligations under the existing lease upon the
commencement date of the new Matsushita lease. In consideration for the Fund
VIII-Fund IX Joint Venture releasing Matsushita Avionics from its obligations
under the existing lease and thereby allowing Wells OP to enter into the
Matsushita lease with Matsushita Avionics, Wells OP entered into a rental
income guaranty agreement dated as of February 18, 1999, whereby Wells OP
guaranteed the Fund VIII-Fund IX Joint Venture that it will receive rental
income on the existing building at least equal to the rent and building
expenses that the Fund VIII-Fund IX Joint Venture would have received over
the remaining term of the existing lease.
-16-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The Cirrus Logic Building/ September 30, September 30, September 30, September 30,
Fund VIII-Fund IX Joint Venture 1999 1998 1999 1998
-------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $184,539 $184,539 $553,617 $553,617
------------- ------------- ------------- -------------
Expenses:
Depreciation 72,765 72,765 218,295 218,295
Management and leasing expenses 10,314 11,293 30,654 29,699
Other operating expenses (5,240) 33,455 (87,572) 25,406
------------- ------------- ------------- -------------
77,839 117,513 161,377 273,400
------------- ------------- ------------- -------------
Net income $106,700 $ 67,026 $392,240 $280,217
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VIII-Fund IX Joint
Venture 54.8% 54.8% 54.8% 54.8%
============= ============= ============= =============
Cash distribution to the Partnership $ 89,780 $ 68,041 $308,872 $241,730
============= ============= ============= =============
Net income allocated to the Partnership $ 58,468 $ 36,728 $214,935 $149,787
============= ============= ============= =============
</TABLE>
Rental income, depreciation, and management and leasing fees remain
relatively stable while other operating expenses decreased for the nine
months ended September 30, 1999, as compared to the same period in 1998, due
primarily to an adjustment for common-area maintenance billing to the tenants
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled in the following year and the difference
billed to the tenants. Property taxes increased substantially in 1998, but
the tenant was not billed until the annual adjustment was computed in the
second quarter of 1999. Management fees reimbursed by the tenant are also
included in other operating expenses.
-17-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
The U.S. Cellular Building/ September 30, September 30, September 30, September 30,
Fund VIII-Fund IX Joint Venture 1999 1998 1999 1998
-------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $320,520 $320,519 $961,558 $961,557
------------- ------------- ------------- -------------
Expenses:
Depreciation 150,414 202,625 451,238 509,826
Management and leasing expenses 31,870 35,422 97,605 103,973
Other operating expenses 25,553 (18,320) 49,200 (36,868)
------------- ------------- ------------- -------------
207,837 219,727 598,043 576,931
------------- ------------- ------------- -------------
Net income $112,683 $100,792 $363,515 $384,626
============= ============= ============= =============
Occupied % 100% 100% 100% 100%
============= ============= ============= =============
Partnership's ownership % in the Fund VIII-Fund IX Joint
Venture 54.8% 54.8% 54.8% 54.8%
============= ============= ============= =============
Cash distribution to the Partnership $140,162 $161,413 $434,439 $452,117
============= ============= ============= =============
Net income allocated to the Partnership $ 61,746 $ 55,231 $199,194 $204,791
============= ============= ============= =============
</TABLE>
Net income decreased for the nine months ended September 30, 1999, as
compared to 1998, due to a decrease in common-area maintenance reimbursements
billed to tenants in 1999, due to overbilling of property tax in 1998 offset
by a decrease in depreciation expense. Depreciation was overaccrued in 1998,
but corrected by December 31, 1998.
-18-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6 (b.) NO REPORTS ON FORM 8-K WERE FILED DURING THE THIRD QUARTER OF 1999.
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, 1999 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.
-19-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 114,923
<SECURITIES> 24,626,483
<RECEIVABLES> 560,241
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,383
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,305,030
<CURRENT-LIABILITIES> 609,484
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,695,546
<TOTAL-LIABILITY-AND-EQUITY> 25,305,030
<SALES> 0
<TOTAL-REVENUES> 1,077,685
<CGS> 0
<TOTAL-COSTS> 74,696
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,002,989
<INCOME-TAX> 1,002,989
<INCOME-CONTINUING> 1,002,989
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,002,989
<EPS-BASIC> 0.70
<EPS-DILUTED> 0
</TABLE>
