<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 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 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
-----
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1999
and December 31, 1998.............................. 3
Statements of Income for the Three and Six
Months Ended June 30, 1999
and 1998........................................... 4
Statement of Partners' Capital
for the Year Ended December 31, 1998,
and the Six Months Ended June 30, 1999............. 5
Statements of Cash Flows for the Six Months
Ended June 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......................................... 8
PART II. OTHER INFORMATION.......................................... 19
2
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets June 30, 1999 December 31, 1998
------ ------------- -----------------
<S> <C> <C>
Investment in joint ventures (Note 2) $24,904,985 $25,451,768
Cash and cash equivalents 83,288 8,792
Due from affiliates 591,231 605,655
Organization costs, less accumulated
amortization of $25,000 in December 1998 and
$28,125 in June 1999 3,125 6,250
Prepaid expenses and other assets 4,140 0
---------- ----------
Total assets $25,586,769 $26,072,465
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Partnership distribution payable $ 598,159 $ 591,948
----------- -----------
Partners' capital:
Limited partners:
Class A - 2,717,160 units outstanding 23,399,669 23,113,046
Class B - 486,109 units outstanding 1,588,941 2,367,471
----------- -----------
Total partners' capital 24,988,610 25,480,517
----------- -----------
Total liabilities and partners'
capital $25,586,769 $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 Six Months Ended
---------------------------------- -------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Equity in earnings of joint
ventures (Note 2) $ 414,856 $ 333,523 $ 745,943 $ 661,293
Interest income 2 103 2 16,109
--------- --------- ---------- ----------
414,858 333,626 745,945 677,402
--------- --------- ---------- ----------
Expenses:
Legal and accounting 8,720 9,739 18,252 14,510
Computer costs 2,246 1,837 4,681 3,854
Partnership administration 13,804 16,472 33,122 24,205
Amortization of
organization costs 1,563 1,563 3,125 3,125
--------- --------- ---------- ----------
26,333 29,611 59,180 45,694
--------- --------- ---------- ----------
Net income $ 388,525 $ 304,015 $ 686,765 $ 631,708
========= ========= ========== ==========
Net income allocated to Class
A Limited Partners $ 688,038 $ 610,559 $1,285,718 $1,202,496
Net loss allocated to Class B
Limited Partners $(299,513) $(306,544) $ (598,953) $ (570,788)
Net income per Class A Limited
Partner Unit $ 0.25 $ 0.23 $ 0.47 $ 0.45
Net loss per Class B
Limited Partner Unit $ (0.62) $ (0.55) $ (1.22) $ (1.02)
Cash distribution per Class A
Limited Partner Unit $ 0.22 $ 0.21 $ 0.43 $ 0.42
</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 SIX MONTHS ENDED
JUNE 30, 1999
<TABLE>
<CAPTION>
Limited Partners
------------------------------------------------
Class A Class B Total
------------------------ ---------------------- 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 1,285,718 0 (598,953) 0 686,765
Partnership distributions 0 (1,178,672) 0 0 0 (1,178,672)
Class B conversion elections 42,576 179,577 (42,576) (179,577) 0 0
--------- ----------- ------- ----------- -- -----------
BALANCE,
June 30, 1999 2,717,160 $23,399,669 486,109 $ 1,588,941 $0 $24,988,610
========= =========== ======= =========== == ===========
</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
For the Six Months Ended
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
------------------- ------------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 686,765 $ 631,708
Adjustments to reconcile net income to net
cash used in operating activities:
Equity in income of joint ventures (745,943) (661,293)
Amortization of organization costs 3,125 3,125
Changes in assets and liabilities:
Prepaid expenses and other assets (4,140) 3,514
----------- -----------
Net cash used in investing activities (60,193) (22,946)
----------- -----------
Cash flows from investing activities:
Distributions received from joint ventures 1,307,150 1,099,073
Investment in joint ventures 0 (1,810,476)
----------- -----------
Net cash provided by (used in) investing activities: 1,307,150 (711,403)
----------- -----------
Cash flows from financing activities:
Distributions to partners from accumulated earnings (1,172,461) (1,081,496)
----------- -----------
Net increase (decrease) cash and cash equivalents 74,496 (1,815,845)
Cash and cash equivalents, beginning of year 8,792 1,848,493
----------- -----------
Cash and cash equivalents, end of period $ 83,288 $ 32,648
=========== ===========
Supplemental disclosure of noncash investing activities:
Deferred project costs applied to joint venture property $ 0 $ 100,567
=========== ===========
</TABLE>
6
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statement
June 30, 1999
(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, 1997, when it received
and accepted subscriptions for 125,000 units. The offering was terminated on
January 4, 1997, 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 interests 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 June 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, 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, 1998.
(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, 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 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
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>
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
(a) General
- -----------
As of June 30, 1999, the properties owned by the Partnership were 99% occupied
as compared to 97% as of June 30, 1998. Gross revenues of the Partnership were
$745,945 for the six months ended June 30, 1999, as compared to $677,402 for the
six months ended June 30, 1998. The increase was attributable primarily to
increased income from joint ventures offset partially by decreased interest
income earned on funds held by the Partnership prior to the investment in joint
venture. Expenses of the Partnership increased to $59,180 for the six months
ended June 30, 1999, compared to $45,694 for the same period in 1998, as the
result of increased expenses primarily in accounting and partnership
administration. Net income of the Partnership was $686,765 for the six months
ended June 30, 1999, as compared to $631,708 for the six months ended June 30,
1998.
The Partnership's net cash used in operating activities increased to $60,193 for
1999 as compared to $22,946 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 $1,307,150 for 1999 from $(711,403) 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 $32,648 at June 30, 1998 to $83,288 for the same
period in 1999.
The Partnership's distributions from Investment Income accrued to Class A Unit
holders for the second quarter of 1999 was $0.22 per Class A Unit as compared to
distributions of $.21 per Class A Unit for the second 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 as the assessment progresses. The costs
incurred by the Partnership and its affiliates thus far for renovations and
replacements have been immaterial. As of June 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 present time, it is believed that all major non-
9
<PAGE>
information technology systems are Year 2000 compliant. The cost to upgrade any
non-compliant systems is believed to be immaterial.
The Partnership has confirmined 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>
Property Operations
- -------------------
As of June 30, 1999, the Partnership owned interests in the following
operational properties:
CH2M Hill/Fund VII - Fund VIII Joint Venture
- --------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $143,856 $144,440 $287,712 $277,018
-------- -------- -------- --------
Expenses:
Depreciation 67,879 59,346 136,824 113,891
Management & leasing expenses 21,115 22,568 47,995 50,689
Other operating expenses (27,771) 13,584 (10,417) 29,065
-------- -------- -------- --------
61,223 95,498 174,402 193,645
-------- -------- -------- --------
Net income $ 82,633 $ 48,942 $113,310 $ 83,373
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund VII-VIII Joint Venture 63.4% 63.4% 63.4% 63.4%
Cash distribution to Partnership $ 96,718 $ 79,949 $158,230 $123,496
Net income allocated to the
Partnership $ 52,348 $ 30,881 $ 71,781 $ 52,305
</TABLE>
Expenses of the property decreased for the six month ended June 30, 1999 as
compared to the same period for 1998, due primarily to common area maintenance
billings to tenants that were overestimated in 1998. Tenants are billed an
estimated amount for the current year common area maintenance which is then
reconciled the second quarter of the following year and the difference billed to
the tenant.
11
<PAGE>
BellSouth Building/Fund VI - Fund VII - Fund VIII Joint Venture
---------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- ------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $380,277 $380,277 $760,554 $760,554
Interest income 1,160 2,098 2,302 4,172
-------- -------- -------- --------
381,437 382,375 762,856 764,726
-------- -------- -------- --------
Expenses:
Depreciation 111,606 110,953 223,212 221,842
Management & leasing expenses 49,041 47,381 96,933 95,196
Other operating expenses 106,051 102,655 209,835 190,065
-------- -------- -------- --------
266,698 260,989 529,980 507,103
-------- -------- -------- --------
Net income $114,739 $121,386 $232,876 $257,623
======== ======== ======== ========
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 Partnership $ 75,932 $ 77,871 $152,964 $160,527
Net income allocated to the Partnership $ 37,123 $ 39,275 $ 75,346 $ 83,353
</TABLE>
Net income has decreased slightly due primarily to increased expenditures in
electricity, HVAC repairs, lightning replacement and various other operating
expenses.
12
<PAGE>
The Hannover Center/Fund VII - Fund VIII Joint Venture
- ------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- ---------------------------------
June 30, 1999 June 30,1998 June 30, 1999 June 30, 1998
--------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $56,346 $26,061 $112,493 $52,122
------- ------- -------- -------
Expenses:
Depreciation 10,982 10,982 21,963 21,963
Management & leasing expenses 5,583 2,661 13,042 5,322
Other operating expenses (499) 6,173 2,918 14,289
------- ------- -------- -------
16,066 19,816 37,923 41,574
------- ------- -------- -------
Net income $40,280 $ 6,245 $ 74,570 $10,548
======= ======= ======== =======
Occupied % 100% 50% 100% 50%
Partnership's Ownership % in the
Fund VII - VIII Joint Venture 63.4% 63.4% 63.4% 63.4%
Cash distribution to Partnership $28,981 $ 9,809 $ 54,695 $18,280
Net income allocated to the
Partnership $25,518 $ 3,944 $ 47,240 $ 6,630
</TABLE>
On April 1, 1996, Fund VII-Fund VIII Joint Venture acquired a 1.01 acre tract of
land and a 12,000 square foot combination retail/office building known as the
Hannover Retail Center (the "Hannover 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 and opened for business on
June 22, 1996. Prudential and Norwest Financial occupied the remaining space in
November 1998 and signed a five year lease.
Rental income, net income and cash distributions increased for the six months
ended June 30, 1999, compared to the same period of 1998, due to increased
occupancy at the property. Operating expenses decreased due primarily to
differences in the annual adjustments for prior year common area maintenance.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the second quarter of the following year
and the difference billed to the tenant.
13
<PAGE>
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- ------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $193,288 $182,139 $386,319 $364,752
Interest income 2,353 4,587 5,289 9,725
-------- -------- -------- --------
195,641 186,726 391,608 374,477
-------- -------- -------- --------
Expenses:
Depreciation 64,677 61,059 126,102 121,486
Management & leasing expenses 17,537 15,032 32,642 29,851
Other operating expenses 10,367 (19,872) 29,448 5,230
-------- -------- -------- --------
92,581 56,219 188,192 156,567
-------- -------- -------- --------
Net income $103,060 $130,507 $203,416 $217,910
======== ======== ======== ========
Occupied % 91% 87% 91% 87%
Partnership's Ownership % in the
Fund VI - VII - Fund VIII Joint
Venture 32.3% 32.3% 32.3% 32.3%
Cash distribution to Partnership $ 54,660 $ 61,934 $107,291 $109,292
Net income allocated to the
Partnership $ 33,344 $ 42,225 $ 65,814 $ 70,504
</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
center. Other operating expenses increased in 1999 over 1998 due primarily to a
timing difference in billing tenants for CAM expenses. Tenants are billed an
estimated amount for the current year common area maintenance which is then
reconciled the second quarter of the following year and the difference billed to
the tenant.
14
<PAGE>
The TCI Building/Fund VIII-Fund IX Joint Venture
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- -----------------------------
Revenues: June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Rental income $113,795 $113,795 $227,589 $227,589
Interest income 4,738 7,700 13,659 15,150
-------- -------- -------- --------
118,533 121,495 241,248 242,739
-------- -------- -------- --------
Expenses:
Depreciation 41,649 41,649 83,297 83,297
Management & leasing expenses 4,335 4,300 8,635 8,600
Other operating expenses 3,033 1,815 7,165 4,973
-------- -------- -------- --------
49,017 47,764 99,097 96,870
-------- -------- -------- --------
Net income $ 69,516 $ 73,731 $142,151 $145,869
======== ======== ======== ========
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 Partnership $ 57,465 $ 59,546 $116,640 $114,947
Net income allocated to the
Partnership $ 38,092 $ 40,247 $ 77,894 $ 77,435
</TABLE>
Net income has decreased in 1999, as compared to 1998, due primarily to
decreased interest income and an increase in landscape expenditure.
Cash distributions and net income allocated to the Partnership for the six month
period ended June 30, increased in 1999, as compared to 1998, due to additional
funding by the Partnership in January through March of 1998 offset by the
decreased net income.
15
<PAGE>
The Matsushita Building/Fund VIII-Fund IX Joint Venture
- --------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ -----------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $164,378 $167,698 $328,757 $335,396
-------- -------- -------- --------
Expenses:
Depreciation 53,917 53,917 107,835 107,835
Management & leasing expenses 6,197 6,512 12,510 13,025
Other operating expenses (3,588) 4,661 455 10,243
-------- -------- -------- --------
56,526 65,090 120,800 131,103
-------- -------- -------- --------
Net income $107,852 $102,608 $207,957 $204,293
======== ======== ======== ========
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 Partnership $ 98,400 $ 90,468 $189,540 $175,399
Net income allocated to the
Partnership $ 59,100 $ 56,022 $113,954 $108,448
</TABLE>
Rental income decreased as compared to 1998, due primarily to an adjustment to
straight line rent in 1998 correcting 1997. Other operating expenses have
decreased in 1999 as compared to 1998 due primarily to a billing of 1998 common
area maintenance expenses to the tenant in 1999. 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. Tenants
are billed an estimated amount for the current year common area maintenance
which is then reconciled the second quarter of the following year and the
difference billed to the tenant.
On March 15, 1999, Wells OP purchased an 8.8 acre tract of land located in Lake
Forest, Orange County, California for a puchase 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.
Matsushita Avionics and the Fund VIII-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 Matsushita commencement
date of the new Matsushita lease. In consideration for the Fund VIII-IX Joint
Venture
16
<PAGE>
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-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-IX Joint Venture would have
received over the remaining term of the existing lease.
The Cirrus Logic Building/Fund VIII-Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------- ------------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
-------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $184,539 $184,539 $369,078 $369,078
-------- -------- -------- --------
Expenses:
Depreciation 72,765 72,765 145,530 145,530
Management & leasing expenses 11,501 9,056 20,340 18,406
Other operating expenses (87,942) (9,950) (82,332) (8,049)
-------- -------- -------- --------
(3,676) 71,871 83,538 155,887
-------- -------- -------- --------
Net income $188,215 $112,668 $285,540 $213,191
======== ======== ======== ========
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 Partnership $134,449 $ 92,510 $219,092 $173,689
Net income allocated to the
Partnership $103,135 $ 61,316 $156,466 $113,059
</TABLE>
Rental income, depreciation and management and leasing fees remain relatively
stable while other operating expenses decreased for the six months ended June
30, 1999, as compared to the same period in 1998, due primarily to differences
in the annual adjustments for common area maintenance billing to the tenant.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the second quarter of the following year
and the difference billed to the tenant. Property taxes increased substantially
in 1998, but the tenant was not billed until the annual adjustment was computed
in the second quarter of 1999.
The Partnership's ownership in the Fund VIII-Fund IX Joint Venture increased in
1999, as compared to 1998, due to additional fundings by the Partnership in
January through March in 1998, which increased the Partnership's ownership in
the Fund VIII-Fund IX Joint Venture.
17
<PAGE>
The Cellular One Building/Fund VIII-Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- ----------------------------
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $320,519 $320,519 $641,038 $641,038
-------- -------- -------- --------
Expenses:
Depreciation 150,446 179,152 300,824 307,201
Management & leasing expense 30,548 34,153 65,735 68,551
Other operating expenses 18,722 (2,005) 23,647 (18,548)
-------- -------- -------- --------
199,716 211,300 390,206 357,204
-------- -------- -------- --------
Net income $120,803 $109,219 $250,832 $283,834
======== ======== ======== ========
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 Partnership $144,628 $152,679 $294,277 $290,704
Net income allocated to Partnership $ 66,196 $ 59,615 $137,448 $149,560
</TABLE>
Net income decreased for the six months ended June 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. Cash distributions have
increased for the six months ended 1999, as compared to 1998, due primarily to
additional funding by the Partnership in January through March of 1998, which
increased in the Partnership's ownership interest in the Fund VIII-Fund IX Joint
Venture offset by the decreased in CAM billings.
18
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b.) No reports on Form 8-K were filed during the second 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: August 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 83,288
<SECURITIES> 24,904,985
<RECEIVABLES> 591,231
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,265
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,586,769
<CURRENT-LIABILITIES> 598,159
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,988,610
<TOTAL-LIABILITY-AND-EQUITY> 25,586,769
<SALES> 0
<TOTAL-REVENUES> 745,945
<CGS> 0
<TOTAL-COSTS> 59,180
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 686,765
<INCOME-TAX> 686,765
<INCOME-CONTINUING> 686,765
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 686,765
<EPS-BASIC> .47
<EPS-DILUTED> 0
</TABLE>
