<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1999 or
----------------------------------------------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to _____________________ to ____________________
Commission file number 0-27888
WELLS REAL ESTATE FUND VIII, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Georgia 58-2126618
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(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of exchange on which registered
- ------------------------------------------------------------ -------------------------------------------------
NONE NONE
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</TABLE>
Securities registered pursuant to Section 12 (g) of the Act:
Class A Unit
- --------------------------------------------------------------------------------
(Title of Class)
Class B Unit
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
-
Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
---------------
<PAGE>
PART I
ITEM 1. BUSINESS
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., a Georgia
non-public limited partnership, as General Partners. The Partnership was formed
on August 15, 1994, for the purpose of acquiring, developing, constructing,
owning, operating, improving, leasing, and otherwise managing for investment
purposes income-producing commercial or industrial 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 filed on Form S-11 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 on
January 5, 1996, and received gross proceeds of $32,042,689 representing
subscriptions from 3,204,269 Limited Partners units, composed of two classes of
limited partnership interests, Class A and Class B limited partnership units.
The Partnership owns interests in properties through the following joint
ventures: (i) Fund VII and Fund VIII Associates, a joint venture between the
Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VII-Fund VIII Joint
Venture"); (ii) Fund VI, Fund VII and Fund VIII Associates, a joint venture
among the Partnership, Wells Real Estate Fund VI, L.P., and Wells Real Estate
Fund VII, L.P. (the "Fund VI-VII-VIII Joint Venture"); and (iii) Fund VIII and
Fund IX Associates, a joint venture between the Partnership and Wells Real
Estate Fund IX, L.P. (the "Fund VIII-Fund IX Joint Venture").
As of December 31, 1999, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a single-
story retail/office building located in Clayton County, Georgia (the "Hannover
Center") and (ii) a two-story office building located in Gainesville, Florida
(the "CH2M Hill") which are owned by the Fund VII-Fund VIII Joint Venture; (iii)
a four-story office building located in Jacksonville, Florida (the "BellSouth
Property") and (iv) a retail shopping center located in Clemmons, North Carolina
(the "Tanglewood Commons") which are owned by the Fund VI-VII-VIII Joint
Venture; and (v) a four-story office building in Madison, Wisconsin (the "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.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc.,
the sole general partner of Wells Partners, L.P., a General Partner of the
Partnership, perform a full range of real estate services including leasing and
property management, accounting, asset management and investor relations for the
Partnership. See Item 11 "Compensation of General Partners and Affiliates," for
a summary of the fees paid to the General Partners and their affiliates during
the fiscal year ended December 31, 1999.
<PAGE>
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management
of the registrant, the properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates. As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements and other inducements, all of which may
have an adverse impact on results of operations. At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.
ITEM 2. PROPERTIES
The Partnership owns interests in eight properties through its investment in
joint ventures of which six are office buildings and two are retail buildings.
The Partnership does not have control over the operations of the joint ventures;
however, it does exercise significant influence. Accordingly, investment in
joint ventures is recorded on the equity method. As of December 31, 1999, these
properties were 99% occupied as compared to 99% occupied as of December 31, 1998
and 90% at December 31, 1997.
<PAGE>
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 1999, assuming no exercise of renewal options
or termination rights:
<TABLE>
<CAPTION>
Partnership Percentage Percentage
Number Share of of Total of Total
Year of of Square Annualized Annualized Square Annualized
Lease Leases Feet Gross Base Gross Base Feet Gross Base
Expiration Expiring Expiring Rent (1) Rent (1) Expiring Rent
---------- -------- -------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
2000 0 0 $ 0 $ 0 0.0% 0.0%
2001 1 22,607 369,852 119,647 6.5 8.2
2002 6 31,301 411,816 205,707 9.0 9.2
2003 7 76,266 844,554 453,396 21.9 18.7
2004 1 5,600 87,636 28,350 1.6 1.9
2005(2) 2 60,347 575,109 350,445 17.4 12.8
2006(3) 2 75,444 1,258,635 440,456 21.7 27.9
2007(4) 1 76,276 959,148 525,581 21.9 21.3
2008 0 0 0 0 0.0 0.0
2009 0 0 0 0 0.0 0.0
-------- -------- ---------- ---------- ---------- ----------
20 347,841 $4,506,750 $2,123,582 100% 100%
======== ======== ========== ========== ========== ==========
</TABLE>
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of 57,457 square feet CH2M Hill lease, Gainesville,
Florida.
(3) Expiration of 69,424 square feet BellSouth lease, Jacksonville,
Florida.
(4) Expiration of US Cellular lease, Madison, Wisconsin.
The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:
Fund VII--Fund VIII Joint Venture
On February 10, 1995, the Partnership and Wells Real Estate Fund VII, L.P.
("Wells Fund VII"), a Georgia public limited partnership affiliated with
the Partnership through common general partners, entered into a Joint
Venture Agreement known as Fund VII and Fund VIII Associates (the "Fund
VII--Fund VIII Joint Venture"). The investment objectives of Wells Fund
VII are substantially identical to those of the Partnership. The
Partnership holds an approximate 63% equity interest and Wells Fund VII
holds an approximate 37% equity interest in the Fund VII--Fund VIII Joint
Venture which owns and operates an office building and a retail/office
building as described below. As of December 31, 1999, the Partnership had
contributed $4,267,721 and Wells Fund VII had contributed $2,474,725 for a
total cost of $6,742,446 to the Fund VII--Fund VIII Joint Venture for the
acquisition and development of the property.
The Hannover Center
On April 1996, Wells Fund VII contributed 1.01 acres of land located
in Clayton County, Georgia and improvements thereon valued at $512,000
to the Fund VII--Fund VIII Joint Venture for the development of a
12,080 square foot, single story combination retail/office building.
As of December 31, 1999, Wells Fund VII had funded approximately
$1,437,801 for the development of the Hannover property in addition to
the cost of the land, and the Partnership had contributed $190,311 to
the joint venture for the development of the property.
<PAGE>
A 9 year, 11 month lease has been signed with Moovies, Inc., a video
sale and rental store, to occupy 6,020 square feet. The annual base
rent: (1) for the initial term of 36 months is $93,310; (2) for the
second term of 36 months is $102,340; (3) for the third term of 36
months is $111,370, and (4) for the final term of eleven months is
$110,367. Moovies, Inc. has the option to extend its lease for two
five year terms at market rate. The tenant, which provided its own
build-out from the existing shell, moved into the building and opened
for business June 22, 1996. The lease will expire in 2006. Two
additional tenants have occupied the remaining space at the property.
The average effective annual rental per square foot at the Hannover
Property was $15.97 for 1999, $10.05 for 1998, and $8.92 for 1997. The
occupancy rate at year end for 1999 and 1998 was 100%, and was 50% for
1997.
CH2M Hill at Gainesville
Wells Fund VII made an initial contribution to the Fund VII--Fund VIII
Joint Venture of $677,534, which constituted the total purchase price
and all other acquisition and development costs expended by the Fund
VII--Fund VIII Joint Venture for the purchase of a 5.0 acre parcel of
land in Gainesville, Alachua County, Florida. Construction of a 62,975
square foot office building, containing 61,468 rentable square feet
was completed in December, 1995. The average effective annual rental
per square foot at the Gainesville Property was $9.37 for 1999, $9.19
for 1998, $8.63 for 1997, $8.69 for 1996, and $8.63 for 1995. The
occupancy rate at year end for 1999 and 1998 was 100% and was 93.5%
for 1997 and 1996.
A 9 year, 11 month lease, to occupy 57,457 square feet has been signed
with CH2M Hill, Engineers, Planners, Economists, Scientists, with an
option to extend for an additional five year period. The annual base
rent during the initial term is $530,313 payable in equal monthly
installments of $44,193. The annual rent for the extended term will be
at market rate. Assuming no options or termination rights, the lease
with CH2M Hill will expire in the year 2005.
As of December 31, 1999, the Partnership had contributed $4,077,310,
and Wells Fund VII had contributed $1,036,923 to the Fund VII--Fund
VIII Joint Venture toward the completion of this project.
Fund VI-VII-VIII Joint Venture
On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate
Fund VI, L.P. ("Wells Fund VI") a Georgia public limited partnership,
affiliated with the Partnership through common general partners, formed a
joint venture known as the Fund VI, Fund VII, and Fund VIII Associates (the
"Fund VI-VII-VIII Joint Venture"). The investment objectives of Wells Fund
VI are substantially identical to those of the Partnership. As of December
31, 1999, the Partnership had contributed approximately $5,700,000 for an
approximately 32.3% equity interest in the Fund VI-VII-VIII Joint Venture
which owns an office building in Jacksonville, Florida and a multi-tenant
retail center in Clemmons, North Carolina. As of December 31, 1999, Wells
Fund VI had contributed $6,067,688 for an equity interest in the Fund VI-
VII-VIII Joint Venture of approximately 34.3%, and Wells Fund VII
contributed approximately $5,932,312 for an equity interest in the Fund VI-
VII-VIII Joint Venture of approximately 33.4%. The total cost to complete
both properties is approximately $17,700,000.
<PAGE>
BellSouth Property
On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55
acre parcel of land in Jacksonville, Florida for a total of $1,245,059
including closing costs. In May 1996, the 92,964 square foot office
building was completed with BellSouth Advertising and Publishing
Corporation, a subsidiary of BellSouth Company, occupying
approximately 66,333 square feet and American Express Travel Related
Services Company, Inc. occupying approximately 22,607 square feet.
BellSouth occupied an additional 3,901 square feet in December, 1996.
The land purchase and construction costs, totaling approximately $9
million, were funded by capital contributions of $2,000,000 by the
Partnership, $3,500,000 by Wells Fund VI and $3,500,000 by Wells Fund
VII.
The BellSouth lease is for a term of nine years and eleven months with
an option to extend for an additional five-year period at market rate.
The annual base rent during the initial term is $1,094,426 during the
first five years and $1,202,034 for the balance of the initial lease
term. The American Express lease is for a term of five years at an
annual base rent of $369,851. BellSouth and American Express are
required to pay additional rent equal to their share of operating
expenses during their respective lease terms.
The average effective annual rental per square foot at the BellSouth
property was $16.36 for 1999 and 1998, $16.40 for 1997 and $14.15 for
1996, the first year of occupancy. The occupancy rate at year end was
100% for 1999, 1998 and 1997.
Tanglewood Commons Shopping Center
On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683
acre tract of real property located in Clemmons, Forsyth County, North
Carolina. The land purchase costs were funded by a capital
contribution made by Wells Fund VI. As of December 31, 1999, Fund VI
had contributed $2,567,688, and Fund VII had contributed $2,432,312
and the Partnership had contributed $3,700,000 for the development of
this project.
The Fund VI-VII-VIII Joint Venture developed and constructed one large
strip shopping center building containing approximately 67,320 gross
square feet on a 12.48 acre tract. The remaining 2.2 acre portion of
the property consists of four outparcels which have been graded and
are held for future development or resale.
Total costs and expenses incurred by the Fund VI-VII-VIII Joint
Venture for the acquisition, development, construction and completion
of the shopping center are approximately $8,700,000. Construction of
the project began in March, 1996, and was substantially completed in
the first quarter of 1997. As of December 31, the Joint Venture has
reserved $236,000, to complete the remaining tenant improvement costs.
Harris Teeter, Inc., a regional supermarket chain, executed a lease
for a minimum of 45,000 square feet with an initial term of 20 years
with extension options of four successive five year periods with the
same terms as the initial lease. The annual base rent during the
initial term is $488,250. In addition, Harris Teeter has agreed to pay
percentage rents equal to one percent of the amount by which Harris
Teeters gross sales exceed $35,000,000 for any lease year.
<PAGE>
The average effective annual rental per square foot at Tanglewood
Commons was $11.48 for 1999, $10.96 for 1998 and $9.12 for 1997, the
first year of occupancy. The occupancy rate at year end was 91% for
1999 and 1998 and 86% for December 31, 1997.
Fund VIII-Fund IX Joint Venture
On June 10, 1996, the Partnership and Wells Real Estate Fund IX, L.P.
("Wells Fund IX"), a Georgia public limited partnership, affiliated with
the Partnership through common general partners, formed a joint venture
known as Fund VIII and Fund IX Associates (the "Fund VIII-Fund IX Joint
Venture"). The investment objectives of Wells Fund IX are substantially
identical to those of the Partnership. As of December 31, 1999, the
Partnership had contributed $15,987,323 for an approximately 55% equity
interest, and Wells Fund IX had contributed $13,289,358 for an
approximately 45% equity interest in the Fund VIII-Fund IX Joint Venture.
US Cellular Building
On June 17, 1996, the Fund VIII-Fund IX Joint Venture purchased a 7.09
acre tract of real property in Madison, Dane County, Wisconsin for a
total cost of $859,255 including closing costs. Construction has been
completed on a four-story office building containing approximately
101,727 rentable square feet (the "US Cellular Building").
In June 1997, US Cellular, a subsidiary of BellSouth Corporation,
occupied its leased space of 76,276 rentable square feet comprising
approximately 75% of the building. The initial term of the lease is 9
years and 11 months beginning in June 1997, with the option to extend
the initial term of the lease for two consecutive five year periods.
The annual base rent payable during the initial term is $902,418
payable in equal monthly installments of $75,201 during the first five
years and $1,016,822 payable in equal monthly installments of $84,735
during the last 4 years and 11 months of the initial term. The annual
base rent for each extended term will be at market rental rate. US
Cellular is required to pay additional rent equal to its share of
operating expenses during the lease term.
The land purchase and construction costs have been funded by capital
contributions of $6,573,342 by the Partnership and $3,912,444 by Wells
Fund IX for a total cost of approximately $10,500,000.
The average effective annual rental per square foot at the US Cellular
Building was $12.60 for 1999 and 1998 and $8.87 for 1997, the first
year of occupancy. The occupancy rate at year end was 100% in 1999 and
1998 and was 75% in 1997.
The TCI Building
On October 10, 1996, the Fund VIII-Fund IX Joint Venture purchased a
one-story office building containing approximately 40,000 rentable
square feet, located on approximately 4.864 acres of land in Farmer's
Branch, Dallas County, Texas for a purchase price of $4,450,000
excluding acquisition costs (the "TCI Building").
The funds used by the Fund VIII-Fund IX Joint Venture to acquire the
TCI Building were derived from capital contributions made by the
Partnership and Wells Fund IX totaling $2,238,170 and $2,236,530,
respectively, for total contributions to the
<PAGE>
Fund VIII-Fund IX Joint Venture of $4,474,700, including acquisition
costs. The Partnership currently owns an approximately 55% equity
interest in the Fund VIII-Fund IX Joint Venture.
The TCI Building is leased to TCI Valwood Limited Partnership I for a
period of fifteen years, with options to extend the lease for three
consecutive five-year periods. The annual base rent is $430,001 during
the first five years, $454,001 during the next five years and $482,001
during the last five years. The TCI lease commenced on July 19, 1996
and was assigned by the seller to the Fund VIII--Fund IX Joint Venture
on October 10, 1996. The lease agreement is a net lease in that the
tenant is responsible for the operating expenses including real estate
taxes.
The occupancy rate at the TCI Building at year end was 100% for 1999,
1998 and 1997. The average effective rental per square foot in the TCI
Building is $11 for 1999, 1998, 1997 and 1996.
The Matsushita Building
On January 10, 1997, the Fund VIII--Fund IX Joint Venture acquired a
two story office building containing approximately 65,006 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 total
consideration paid for the Matsushita Building was $7,193,000
excluding acquisition expenses.
The Matsushita Building was originally constructed in 1984 and was
completely refurbished in 1996. 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-
Fund 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 funds used by the Fund VIII-Fund IX Joint Venture to acquire the
Matsushita Building were derived entirely from capital contributions
made to the Fund VIII-Fund IX Joint Venture by the Partnership and
Wells Fund IX. The Partnership and Wells Fund IX made capital
contributions of approximately $3,620,316 and $3,608,109,
respectively, to fund the purchase of the building, for total capital
contributions to the Fund VIII-Fund IX Joint Venture with respect to
the Matsushita Building of approximately $7,228,425.
The average effective rental per square foot at the Matsushita
building was $10.11 for 1999, $10.32 for 1998 and $9.91 for 1997, the
first year of ownership. The occupancy rate at year end was 100% for
1999, 1998 and 1997.
On March 15, 1999, Wells Operating Partnership ("Wells OP") purchased
an 8.8 tract of land in Lake Forest, Orange County, California, for a
purchase price of $4,450,230. On February 18, 1999, Wells OP entered
into an office lease with Matsushita Avionics Systems Corporation
("Matsushita Avionics") for the occupancy of a to be constructed two-
story office building containing approximately $150,000 rentable
square feet on this tract (the "Matsushita Project"). Matsushita
Avionics currently occupies an existing
<PAGE>
building owned by Fund VIII-Fund XI Joint Venture, a joint venture
between Wells Fund VIII, L.P. and Wells Fund IX, L.P.--related parties
to Wells OP.
On February 18, 1999, Wells OP entered into a rental income guaranty
agreement with Fund VIII and IX Joint Venture, whereby Wells OP
guaranteed the Fund VIII-Fund IX Joint Venture that the joint venture
would 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. Matsushita Avionics will vacate the existing building in
December 1999, with the existing lease term ending in September 2003.
Current rental and building expenses are approximately $90,000 per
month.
Wells OP's maximum liability to Fund VIII-Fund XI Joint Venture for
rental income and building expenses for the existing building was
included in the economic analysis for developing the Matsushita
Project. Wells OP anticipates that the ultimate liability will be less
than the maximum liability; however, management cannot determine at
this time the ultimate liability under the rental income guaranty
agreement. Wells OP began payments in January 2000, in accordance with
the rental income, guaranty agreement and as called for in the
economic analysis.
The Cirrus Logic Building
On February 20, 1997, the Fund VIII-Fund IX Joint Venture acquired a
4.26 acre tract of real property in Broomfield, Colorado, located in
Boulder County in the Denver/Boulder metropolitan area (the "Denver
Property"). A two-story office building containing approximately
49,460 rentable square feet has been constructed on the Denver
Property (the "Cirrus Logic Building"). The Denver Property is part of
the Interlocken Business Park, a 963-acre business development for
advanced technology and research/development oriented companies.
The purchase price paid for the Cirrus Logic Building was $7,029,000
excluding acquisition costs. Construction of the Cirrus Logic Building
was substantially completed in March 1997 with Cirrus Logic, Inc.
occupying the entire building.
The lease, as well as Cirrus Logic's obligation to pay rent, commenced
on the date upon which Cirrus Logic took occupancy of the building.
The lease with Cirrus Logic provides for a term of 15 years from the
commencement date. Cirrus Logic has the option to renew the lease for
two additional terms of five years each. The base rental payable
during any such extended term would be 95% of the then current market
rental rate for comparable office buildings in the Boulder County
area. The annual initial base rent payable by Cirrus Logic under its
lease is $677,755. The base annual rent will be increased by 10%
beginning with the sixth year of the lease and will be increased
another 10% beginning with the eleventh year of the lease.
Under its lease, Cirrus Logic is responsible for all utilities,
cleaning taxes and other operating expenses and for maintaining
property and liability insurance on the Cirrus Logic Building. The
Fund VIII-Fund IX Joint Venture shall maintain for its own benefit
liability insurance for the Cirrus Logic Building as well as insurance
for fire, vandalism and malicious mischief.
<PAGE>
The funds used by the Fund VIII-Fund IX Joint Venture to acquire the
Cirrus Logic Building were derived entirely from capital contributions
made to the Fund VIII-Fund IX Joint Venture by the Partnership and
Wells Fund IX. The Partnership and Wells Fund IX each made capital
contributions of approximately $3,555,495 and $3,532,275,
respectively, to Fund the purchase of the property, for total capital
contributions to the Fund VIII-Fund IX Joint Venture with respect to
the Cirrus Logic Building of approximately $7,087,770.
The average effective rental rate per square foot at the Cirrus Logic
Building was $14.92 for 1999 and 1998 and $13.25 for 1997, the first
year of occupancy. The occupancy rate at year end was 100% for 1999,
1998 and 1997.
ITEM 3. LEGAL PROCEEDINGS
There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Limited Partners for the year of
1999.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE>
PART II
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS.
As of February 29, 2000, the Partnership had 2,731,576 outstanding Class A Units
held by a total of 2,017 Limited Partners and 471,693 outstanding Class B Units
held by a total of 253 Limited Partners. The capital contribution per unit is
$10.00. There is no established public trading for the Partnership's limited
partnership units, and it is not anticipated that a public trading market for
the units will develop. Under the Partnership Agreement, the General Partners
have the right to prohibit transfers of units.
The General Partners have estimated the investment value of properties held by
the Partnership, as of December 31, 1999, to be $10.75 per Class A Unit and
$13.60 per Class B Units based on market conditions existing in early December
1999. The value was confirmed as reasonable by an independent MAI appraiser,
David L. Beal Company, although no actual MAI appraisal was performed due to the
inordinate expense involved with such an undertaking. The valuation does not
include any fractional interest valuation.
Class A Status Limited Partners are entitled to a distribution from Net Cash
from Operations, as defined in the Partnership Agreement to mean cash flow, less
adequate cash reserves for other obligations of the Partnership for which there
is no provision, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of Net Cash From Operations equal to 10% of the total amount
of Net Cash From Operations distributed. Thereafter, the Limited Partners
holding Class A Units will receive 90% of Net Cash From Operations and the
General Partners will receive 10%. No Net Cash from Operations will be
distributed to Limited Partners holding Class B Units. Holders of Class A Units
will, except in limited circumstances, be allocated none of the Partnership's
net loss, depreciation, amortization and cost recovery deductions. These
deductions will be allocated to the Class B Units, until their capital account
balances have been reduced to zero. No distributions have been made to the
General Partner as of December 31, 1999.
Cash distributions made to Class A Limited Partners during the two most recent
fiscal years were as follows:
<TABLE>
<CAPTION>
Distribution Total
for Quarter Cash Investment Return of
Ended Distributed Income Capital
------------------ ----------- ---------- ---------
<S> <C> <C> <C>
March 31, 1998 $552,051 $0.21 $0.00
June 30, 1998 564,821 0.21 0.00
September 30, 1998 572,083 0.22 0.00
December 31, 1998 590,679 0.22 0.00
March 31, 1999 580,710 0.22 0.00
June 30, 1999 597,963 0.22 0.00
September 30, 1999 609,288 0.23 0.00
December 31, 1999 613,584 0.21 0.00
</TABLE>
The fourth quarter distribution was accrued for accounting purposes in 1999, and
was not actually paid to Limited Partners until February, 2000. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Units will continue in 2000 at a level at least
comparable with 1999 cash distributions on an annual basis.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The Partnership did not commence active operations until it received and
accepted subscriptions for a minimum of 125,000 units on February 24, 1995.
The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1999, 1998, 1997, 1996 and the eleven months ended
December 31, 1995:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total assets $24,960,196 $26,072,465 $27,021,694 $27,506,234 $26,254,253
Total revenues 1,360,497 1,362,513 1,204,018 1,057,694 402,428
Net income 1,266,946 1,269,171 1,102,567 936,590 273,914
Net loss allocated to General Partners 0 0 0 (297) (203)
Net income allocated to Class A
limited partners 2,481,559 2,431,246 1,947,536 1,207,540 294,221
Net loss allocated to Class B limited
partners (1,214,613) (1,162,075) (844,969) (270,653) (20,104)
Net income per weighted average (1)
Class A Limited Partner Unit $0.91 $0.86 $0.73 $0.46 $0.28
Net loss per weighted average (1)
Class B Limited Partner Unit (2.47) (2.12) (1.50) (0.47) (0.03)
Cash distributions per weighted
average (1)
Class A Limited Partner Unit:
Investment income 0.88 0.86 0.62 0.44 0.28
Return of capital 0.00 0.00 0.00 0.00 0.00
</TABLE>
(1) The weighted average unit is calculated by averaging units over the period
they are outstanding during the time units are still being purchased or
converted by Limited Partners in the Partnership.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
selected financial data and the accompanying financial statements of the
Partnership and notes thereto. This Report contains forward-looking statements,
within the meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of the
financial condition of the Partnership, anticipated capital expenditures
required to complete certain projects, amounts of cash distributions anticipated
to be distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that could
cause actual results to differ materially from any forward-looking statement
made in this Report, which include construction costs which may exceed
estimates, construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
General
Gross revenues of the Partnership were $1,360,497 for the year ended December
31, 1999, as compared to $1,362,513 for the year ended December 31, 1998 and
$1,204,018 for the year ended December 31,
<PAGE>
1997. This increase was attributable primarily to increased earnings from joint
ventures primarily due to increased occupancy at some of the properties
partially offset by decreased interest income earned on funds held by the
Partnership. Expenses of the Partnership were $93,551 for 1999 as compared to
$93,342 for 1998 and $101,451 for 1997. Expenses were $101,451 in 1997, as
compared to $93,342 in 1998 and $93,551 in 1999. These changes were due
primarily to fluctuations in partnership administrative costs and legal and
accounting expenses. Net income of the Partnership was $1,266,946 for the year
ended December 31, 1999, as compared to $1,269,171 for the year ended December
31, 1998 and $1,102,567 for the year ended December 31, 1997.
The Partnership made cash distributions of investment income to Limited Partners
holding Class A units of $0.88 per Class A unit for the year ended December 31,
1999, $0.86 per Class A unit for the year ended December 31, 1998 and $0.62 per
Class A unit for the year ended December 31, 1997. The General Partners
anticipate distributions per unit will continue to increase for limited partners
holding Class A units in 2000. Distributions accrued for the fourth quarter of
1999 to the Limited Partners holding Class A units were paid in February, 2000.
No cash distributions were made to Limited Partners holding Class B units.
Property Operations
The Partnership's ownership interest in the Fund VII-Fund VIII Joint Venture is
63%, in the Fund VI-VII-VIII Joint Venture is 33%, and in the Fund VIII-Fund IX
Joint Venture is 55%.
As of December 31, 1999, the Partnership owned equity through interests in Joint
Ventures in the following operational properties:
CH2M Hill at Gainesville/Fund VII-Fund VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $576,139 $564,683 $530,493
-------- -------- --------
Expenses:
Depreciation 263,243 251,783 218,181
Management and leasing expenses 103,551 82,031 78,850
Other operating expenses (5,810) 49,250 (66,963)
-------- -------- --------
360,984 383,064 230,068
-------- -------- --------
Net income $215,155 $181,619 $300,425
======== ======== ========
Occupied percentage 100% 100% 94%
======== ======== ========
Partnership ownership percentage 63.4% 63.4% 62.0%
======== ======== ========
Cash distribution to the Partnership $305,270 $276,044 $324,539
======== ======== ========
Net income allocated to the Partnership $136,301 $114,514 $186,402
======== ======== ========
</TABLE>
Rental income, net income, depreciation, and management and leasing expense
increased due primarily to a full year occupancy of Affiliated Engineers in 1999
as compared to 1998. Other operating expenses decreased due primarily to common
area maintenance billings to tenant that were under estimated in
<PAGE>
1998. Tenant are billed an estimated amount for the current year common area
maintenance which is then reconciled the following year and the difference is
billed to the tenant.
Real estate taxes were $81,703 for 1999, $79,407 for 1998, and $79,428 for 1997.
For comments on the general competitive conditions to witch the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, Page 3.
The Hannover Center/Fund VII-Fund VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
----------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $192,913 $121,056 $107,379
-------- -------- --------
Expenses:
Depreciation 84,403 43,925 43,925
Management and leasing expenses 20,489 11,487 11,237
Other operating expenses 20,290 20,482 25,813
-------- -------- --------
125,182 75,894 80,975
-------- -------- --------
Net income $ 67,731 $ 45,162 $ 26,404
======== ======== ========
Occupied percentage 100% 100% 50%
======== ======== ========
Partnership ownership percentage 63.4% 63.4% 62.0%
======== ======== ========
Cash distribution to the Partnership $ 92,003 $ 11,561 $ 37,892
======== ======== ========
Net income generated to the Partnership $ 42,904 $ 28,554 $ 16,382
======== ======== ========
</TABLE>
Moovies, Inc., a video store and rental store, signed a nine year, eleven month
lease for 6,020 square feet and occupied the space and opened for business on
June 22, 1996. As of September 30, 1998, the remaining 6,060 square feet was
leased to Norwest Financial and Prudential Realty, which commenced in October
1998.
Rental income, net income, and cash distributions have increased due to 100%
occupancy starting in late 1998. Depreciation expense increased due to tenant
improvement built out at the end of 1998.
Distributions decreased in 1998 due to $44,000 in construction being funded by
operating cash flow in 1998 but increased in 1999 due to the increased occupancy
and decrease in construction funding.
Real estate taxes were $12,995 for 1999, $12,668 for 1998 and $12,219 for 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
<PAGE>
BellSouth Property / Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $1,521,109 $1,521,109 $1,524,708
Interest income 4,763 7,806 8,188
Other income 360 9,373 360
---------- ---------- ----------
1,526,232 1,538,288 1,533,256
---------- ---------- ----------
Expenses:
Depreciation 446,429 444,448 443,544
Management and leasing expenses 192,716 190,025 191,176
Other operating expenses 415,562 436,403 415,114
---------- ---------- ----------
1,054,707 1,070,876 1,049,834
---------- ---------- ----------
Net income $ 471,525 $ 467,412 $ 483,422
========== ========== ==========
Occupied percentage 100% 100% 100%
========== ========== ==========
Partnership ownership percentage 32.3% 32.3% 32.3%
========== ========== ==========
Cash distribution to the Partnership $ 307,919 $ 305,826 $ 289,843
========== ========== ==========
Net income allocated to the Partnership $ 152,560 $ 151,229 $ 146,895
========== ========== ==========
</TABLE>
Rental income, depreciation and management and leasing expenses have remained
relatively stable, while other operating expenses have fluctuated from $415,114
for 1997, to $436,403 for 1998 and $415,562 for 1999. HVAC and various other
operating expenses were higher in 1998. This created a greater common area
maintenance billing to the tenants in 1999. Tenants are billed an estimated
amount for the current year common area maintenance which is then reconciled the
following year and the difference is billed to the tenant.
The BellSouth Property incurred property taxes of $166,706 for 1999, $171,629
for 1998 and $164,400 for 1997.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
<PAGE>
Tanglewood Commons/Fund VI-VII-VIII Joint Venture
<TABLE>
<CAPTION>
Eleven Months
Year Ended Ended
December 31 December 31,
-------------------------
1999 1998 1997
-------- -------- ------------
<S> <C> <C> <C>
Revenues:
Rental income $772,907 $737,862 $562,880
Interest income 10,174 17,610 11,276
-------- -------- --------
783,081 755,472 574,156
-------- -------- --------
Expenses:
Depreciation 255,456 244,311 191,155
Management and leasing expenses 66,637 61,562 41,589
Operating costs, net of reimbursements 67,726 49,338 88,873
-------- -------- --------
389,819 355,211 321,617
-------- -------- --------
Net income $393,262 $400,261 $252,539
======== ======== ========
Occupied percentage 91% 91% 86%
======== ======== ========
Partnership ownership percentage 32.3% 32.3% 32.3%
======== ======== ========
Cash distributions to Partnership $211,576 $206,319 $118,839
======== ======== ========
Net income allocated to the Partnership $127,238 $129,503 $ 79,268
======== ======== ========
</TABLE>
Rental income has increased in 1999 as compared to 1998 due to an increase in
occupancy in late 1998. Depreciation, management and leasing expense and other
operating expenses have also increased due to the increased occupancy, creating
a slight decrease in net income. Common area maintenance billings to tenants
were lower in 1999 as compared to 1998 by approximately $9,000. Tenants are
billed an estimated amount for the current year common area maintenance which is
then reconciled the following year and the difference is billed to the tenant.
Since this property commenced operations in February 1997, comparable income and
expense figures for 1997 are not available.
Tanglewood Commons incurred property taxes of $53,259 in 1999, $52,229 for 1998
and $58,466 for 1997, the first year of occupancy.
For comments on the general competitive conditions to which the property may be
subject, see Item I, Business, page 2. For additional information on the
tenants, etc., refer to Item 2, Properties, page 3.
<PAGE>
The TCI Building--Fund VIII-Fund IX Joint Venture
<TABLE>
<CAPTION>
For the Year Ended December 31
---------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $455,178 $455,177 $455,177
Interest income 25,995 32,194 6,607
Other income 0 0 4,479
-------- -------- --------
481,173 487,371 466,263
-------- -------- --------
Expenses:
Depreciation 166,593 166,594 166,595
Management and leasing expenses 17,370 17,199 17,496
Other operating expenses 10,044 9,236 10,082
-------- -------- --------
194,007 193,029 194,173
-------- -------- --------
Net income $287,166 $294,342 $272,090
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Partnership ownership percentage 54.8% 54.8% 50.1%
======== ======== ========
Cash distribution to the Partnership $234,849 $235,051 $206,961
======== ======== ========
Net income allocated to the Partnership $157,358 $158,794 $136,186
======== ======== ========
</TABLE>
Rental income and expenses remained constant. Total revenue increased in 1998
but decreased in 1999 due to fluctuations in interest income.
Net income and cash distribution allocated to the Partnership have increased in
1999 and 1998 as compared to 1997 due primarily to the Partnership's increased
ownership in the Fund VIII-Fund IX Joint Venture. The Partnership's ownership
increased due to additional funding by the Partnership.
Real estate taxes and primarily all operational expenses for the building are
the responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
<PAGE>
The Matsushita Building/Fund VIII-Fund IX Joint Venture
<TABLE>
<CAPTION>
For the Year Ended
December 31
----------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $657,513 $670,792 $644,240
Interest income 0 0 1,511
-------- -------- --------
657,513 670,792 645,751
-------- -------- --------
Expenses:
Depreciation 215,670 215,669 215,670
Management and leasing expenses 24,902 26,050 30,872
Other operating expenses 9,388 16,180 3,973
-------- -------- --------
249,960 257,899 250,515
-------- -------- --------
Net income $407,553 $412,893 $395,236
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Partnership ownership percentage 54.8% 54.8% 50.1%
======== ======== ========
Cash distributed to the Partnership $377,513 $358,857 $185,783
======== ======== ========
Net income allocated to the Partnership $223,326 $222,754 $197,953
======== ======== ========
</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
year ended December 31, 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 which increased the Partnership percentage of ownership.
On March 15, 1999, Wells Operating Partnership, L.P. ("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 Avioncis Systems Corporation ("Matsushita
Avionics"), pursuant to which Matsushita Avionics agreed to lease all of the
Matsushita property on its completion. Matsushita Avionics vacated its current
space in January 2000.
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 vacate the existing building and be relieved of
any of its obligations under the existing lease on 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
<PAGE>
expenses that the Fund VIII-Fund IX Joint Venture would have received over the
remaining term of the existing lease.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The Cirrus Logic Building/Fund VIII-Fund IX Joint Venture
<TABLE>
<CAPTION>
Ten Months
Year Ended Ended
December 31 December 31,
-------------------------
1999 1998 1997
-------- -------- ------------
<S> <C> <C> <C>
Revenues:
Rental income $738,156 $738,156 584,373
Interest income 0 0 21,402
-------- -------- --------
738,156 738,156 605,775
-------- -------- --------
Expenses:
Depreciation 291,063 291,064 236,049
Management and leasing expenses 44,329 39,149 25,605
Operating costs, net of reimbursements (81,061) 62,038 5,330
-------- -------- --------
254,331 392,251 266,984
-------- -------- --------
Net income $483,825 $345,905 $338,791
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Partnership ownership percentage 54.8% 54.8% 50.1%
======== ======== ========
Cash distributions to Partnership $390,372 $309,040 $234,721
======== ======== ========
Net income allocated to the Partnership $265,120 $185,782 $169,670
======== ======== ========
</TABLE>
On February 20, 1997, the Fund VIII-Fund IX Joint Venture purchased a two-story
partially completed office building in Boulder County, Colorado (the "Cirrus
Logic Building") for $7,029,000, excluding acquisition costs. Construction of
the 49,460 square foot building was substantially completed in March 1997.
Cirrus Logic, Inc. has leased the entire building for a fifteen-year term
beginning March 17, 1997.
Rental income, depreciation, and management and leasing fees remained relatively
stable while other operating expenses decreased for the year ended December 31,
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.
Since the Cirrus Logic Building was purchased in February 1997 and was not
completed until March 1997, comparative income and expense figures are not
available. The building incurred property taxes of $215,174 for 1999, $101,229
for 1998, and $44,623 for 1997, the first year of occupancy.
<PAGE>
The Partnership's ownership in the Fund VIII-Fund IX-Joint Venture increased due
to additional funding by the Partnership in 1998 on the US Cellular Building.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The US Cellular Building/Fund VIII-Fund IX Joint Venture
<TABLE>
<CAPTION>
Seven Months
Year Ended Ended
December 31 December 31,
----------------------------
1999 1998 1997
---------- ---------- ------------
<S> <C> <C> <C>
Revenues:
Rental income $1,282,078 $1,282,076 $ 519,542
---------- ---------- ----------
Expenses:
Depreciation 601,652 601,509 276,566
Management and leasing expenses 129,474 139,396 47,957
Operating costs, net of reimbursements 84,345 (118,009) (8,883)
---------- ---------- ----------
815,471 622,896 315,640
---------- ---------- ----------
Net income $ 466,607 $ 659,180 $ 203,902
========== ========== ==========
Occupied percentage 100% 100% 75%
========== ========== ==========
Partnership ownership percentage 54.8% 54.8% 50.1%
========== ========== ==========
Cash distributions to Partnership $ 569,345 $ 647,955 $ 191,778
========== ========== ==========
Net income allocated to the Partnership $ 255,685 $ 355,237 $ 102,151
========== ========== ==========
</TABLE>
On June 17, 1996, the Fund VIII-Fund IX Joint Venture purchased a 7.09 acre
tract of real property in Madison, Dane County, Wisconsin. Total cost and
expenses incurred by the Fund VIII-Fund IX Joint Venture for the acquisition,
development, construction and completion of the 101,727 rentable square foot
building was approximately $10,371,000. In June 1997, US Cellular, a subsidiary
of BellSouth Corporation, occupied its leased space of 76,276 square feet
comprising approximately 75% of the building. One additional tenant has
occupied the remaining 25% of the building in 1998.
Net income decreased for the year ended December 31, 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. 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 tenant. Since
the US Cellular Building opened in June, 1997, comparative income and expenses
figures are not available. The building incurred property taxes of $60,096 for
1999, $50,825 for 1998 and $93,865 for 1997, the first year of occupancy.
The Partnership's ownership in the Fund VIII-Fund IX Joint Venture increased due
to additional funding by the Partnership in 1998 for tenant improvements.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
<PAGE>
Liquidity and Capital Resources
During its offering, which terminated on January 5, 1996 the Partnership raised
a total of $32,042,689 in capital through the sale of 3,204,269 Units. No
additional units will be sold by the Partnership. As of December 31, 1999, the
Partnership incurred $6,087,744 in acquisition and advisory fees, selling
commissions and organizational and offering expenses, a repurchase of 1,000
limited partnership units, and investment by the Partnership of $25,954,945 in
Joint Ventures.
The Partnership's net cash (used in) provided by operating activities decreased
to ($87,298) in 1999 as compared to ($63,946) in 1998 and $7,909 for 1997 due
primarily to decreased interest income earned on funds held by the Partnership
prior to investment in properties offset by changes in prepaid assets and due to
affiliates. Net cash provided by investing activities of $2,558,623 in 1999 is
primarily the result of distributions received from the joint ventures.
Distribution to partners increased in 1997, 1998, and 1999. Net cash used in
financing activities has increased due primarily to increased Partnership
distributions.
The Partnership's distributions paid and payable through the fourth quarter of
1999 have been paid from net cash from operations. The Partnership anticipates
that distributions will continue to be paid on a quarterly basis from such
sources. No cash distributions were paid to Class B unitholders for 1999. The
Partnership expects to meet liquidity requirements and budget demands through
cash flow from operations.
Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.
Inflation
Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. Most leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, or in some cases, annual reimbursement of operating expenses
above a certain per square foot allowance. These provisions should reduce the
Partnership's exposure to increases in costs and operating expenses resulting
from inflation.
Year 2000
The Partnership made the transition into the year 2000 without any information
systems, business operations, or facilities related system problems. Management
believes that there are no other Y2K related issues that may require disclosure.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Financial Statements of the Registrant and supplementary data are detailed
under Item 14(a) and filed as part of the report on the pages indicated.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with the Partnership's accountants or other
reportable events during 1999.
PART III
ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP
Wells Partners, L.P.
Wells Partners, L.P. is a private Georgia limited partnership formed on October
25, 1990. The sole General Partner of Wells Partners, L.P. is Wells Capital,
Inc., a Georgia Corporation. The executive offices of Wells Capital, Inc. are
located at 3885 Holcomb Bridge Road, Norcross, Georgia 30092.
Leo F. Wells, III.
Mr. Wells is a resident of Atlanta, Georgia, is 56 years of age and holds a
Bachelor of Business Administration Degree in Economics from the University of
Georgia. Mr. Wells is the President and sole Director of Wells Capital. Mr.
Wells is the President of Wells & Associates, Inc., a real estate brokerage and
investment company formed in 1976 and incorporated in 1978, for which he serves
as principal broker. Mr. Wells is also currently the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983. In addition, Mr. Wells is the President and Chairman of the
Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells
Management Company, Inc. which are affiliates of the General Partners. From
1980 to February 1985, Mr. Wells served as Vice-President of Hill-Johnson, Inc.,
a Georgia corporation engaged in the construction business. From 1973 to 1976,
he was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he
was a real estate salesman and property manager for Roy D. Warren & Company, an
Atlanta real estate company.
ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES
The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999:
<TABLE>
<CAPTION>
(A) (B) (C)
Name of Individual Capacities in Which Served Cash
or Number in Group Form of Compensation Compensation
- ------------------------------- --------------------------------- ---------------------
<S> <C> <C>
Wells Management Company, Inc. Property Manager-Management $238,682 (1)
and Leasing Fees
</TABLE>
(1) The majority of these fees are not paid directly by the Partnership but are
paid by the joint venture entities which own properties to which the
property management and leasing services relate and include management and
leasing fees which were accrued for accounting purposes in 1999 but not
actually paid until January, 2000.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of December 31, 1999.
<TABLE>
(1) (2) (3) (4)
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- --------------------------- --------------------------- ----------------------
<S> <C> <C> <C>
Class A units Leo F. Wells, III 140.88 units (IRA, 401(k) Less than 1%
Plan)
</TABLE>
No arrangements exist which would, upon implementation, result in a change in
control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are compensation and fees paid or to be paid by the Partnership to
the General Partners and their affiliates in connection with the operation of
the Partnership.
Interest in Partnership Cash Flow and Net Sale Proceeds
The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners holding
Class A Status Units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A Status Units have received a return of
their adjusted capital contributions plus a 10% cumulative return on their
adjusted capital contributions and Limited Partners holding Class B Units have
received a return of their adjusted capital contributions plus a 15% cumulative
return on their adjusted capital contributions; provided, however, that in no
event shall the General Partners receive in the aggregate in excess of 15% of
net sales proceeds and net financing proceeds remaining after payments to
Limited Partners from such proceeds of amounts equal to the sum of their
adjusted capital contributions plus a 6% cumulative return on their adjusted
capital contributions. The General Partners did not receive any distributions
from net cash flow from operations or net sales proceeds for the year ended
December 31, 1999.
Property Management and Leasing Fees
Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to the lessor of (A) (i) 3% of the gross revenues for
management and 3% of the gross revenues for leasing (aggregate maximum of 6%)
plus a separate one-time fee for initial rent-up or leasing-up of newly
constructed properties in an amount not to exceed the fee customarily charged in
arm's-length transactions by others rendering similar services in the same
geographic area for similar properties; and (ii) in the case of industrial and
commercial properties which are leased on a long-term basis (ten or more years),
1% of the gross revenues except for initial leasing fees equal to 3% of the
gross revenues over the first five years of the lease term; or (B) the amounts
charged by unaffiliated persons rendering comparable services in the same
geographic area.
<PAGE>
Wells Management Company, Inc. accrued $238,682 in cash compensation for the
year ended December 31, 1999.
Real Estate Commissions
In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. No real estate commissions were
paid to the General Partners or affiliates for the year ended December 31, 1999.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-25 of this
Annual Report on Form 10-K, and the list of the financial statements
contained herein is set forth on page F-1, which is hereby incorporated
by reference.
(a)2. Financial statement Schedule III
Information with respect to this item begins on page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) No reports on Form 8-K were filed with the commission for the year of
1999.
(c) The exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(d) See (a) 2 above.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 27th day of March
2000.
Wells Real Estate Fund VIII, L.P.
(Registrant)
By: /s/ Leo F. Wells, III
------------------------------------------
Leo F. Wells, III
Individual General Partner and as President and
Chief Financial Officer of Wells Capital, Inc.,
the Corporate General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.
<TABLE>
<CAPTION>
Signature TITLE Date
- -------------------------------- ------------------------------- ------------------------
<S> <C> <C>
/s/Leo F. Wells, III
- --------------------------------
Leo F. Wells, III Individual General Partner, March 27, 2000
President and Sole Director of
Wells Capital, Inc., the
Corporate General Partner
</TABLE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Financial Statements Page
- --------------------------------------------------------------------------------------- --------
<S> <C>
Independent Auditors' Report F2
Balance Sheets as of December 31, 1999 and 1998 F3
Statements of Income for the Years ended December 31, 1999, 1998 and 1997 F4
Statements of Partners' Capital for the Years Ended December 31, 1999, 1998 and 1997 F5
Statements of Cash Flows for the Years Ended December 31, 1999, 1998 and 1997 F6
Notes to Financial Statements for December 31, 1999, 1998 and 1997 F7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund VIII, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VIII,
L.P. (a Georgia public limited partnership) as of December 31, 1999 and 1998 and
the related statements of income, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1999. These financial
statements and the schedule referred to below are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund VIII,
L.P. as of December 31, 1999 and 1998 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments
and Accumulated Depreciation as of December 31, 1999 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 20, 2000
F-2
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENT IN JOINT VENTURES $24,323,418 $25,451,768
CASH AND CASH EQUIVALENTS 100,902 8,792
DUE FROM AFFILIATES 535,876 605,655
ORGANIZATION COSTS, less accumulated amortization of $31,250 in
1999 and $25,000 in 1998 0 6,250
----------- -----------
Total assets $24,960,196 $26,072,465
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Partnership distributions payable $ 614,277 $ 591,948
----------- -----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Limited partners:
Class A--2,728,425 units and 2,674,584 units as of December 31, 23,341,878 23,113,046
1999 and 1998, respectively
Class B--474,844 units and 528,685 units as of December 31,
1999 and 1998, respectively 1,004,041 2,367,471
----------- -----------
Total partners' capital 24,345,919 25,480,517
----------- -----------
Total liabilities and partners' capital $24,960,196 $26,072,465
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-3
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES:
Equity in income of joint ventures $ 1,360,494 $ 1,346,367 $1,034,907
Interest income 3 16,146 169,111
----------- ----------- ----------
1,360,497 1,362,513 1,204,018
----------- ----------- ----------
EXPENSES:
Partnership administration 53,499 59,470 58,391
Legal and accounting 23,016 15,355 27,592
Amortization of organization costs 6,250 6,250 6,250
Other 10,786 12,267 9,218
----------- ----------- ----------
93,551 93,342 101,451
----------- ----------- ----------
NET INCOME $ 1,266,946 $ 1,269,171 $1,102,567
=========== =========== ==========
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 2,481,559 $ 2,431,246 $1,947,536
=========== =========== ==========
NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $(1,214,613) $(1,162,075) $ (844,969)
=========== =========== ==========
NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED
PARTNER UNIT $ 0.91 $ 0.91 $ 0.73
=========== =========== ==========
NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED
PARTNER UNIT $ (2.47) $ (2.12) $ (1.50)
=========== =========== ==========
CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A
LIMITED PARTNER UNIT $ 0.88 $ 0.86 $ 0.62
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
Limited Partners Total
---------------------------------------------------------------------
Class A Class B Partners'
------------------------- -----------------------
Original Units Amount Units Amount Capital
-------- --------- ----------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 $ 100 2,622,636 $22,367,784 581,633 $ 4,662,896 $27,030,780
Net income (loss) 0 0 1,947,536 0 (844,969) 1,102,567
Partnership distributions 0 0 (1,633,767) 0 0 (1,633,767)
Class B conversion elections 0 22,044 155,310 (22,044) (155,310) 0
Return of capital (100) (1,000) (8,500) 0 0 (8,600)
----- --------- ----------- ------- ----------- -----------
BALANCE, December 31, 1997 0 2,643,680 22,828,363 559,589 3,662,617 26,490,980
Net income (loss) 0 0 2,431,246 0 (1,162,075) 1,269,171
Partnership distributions 0 0 (2,279,634) 0 0 (2,279,634)
Class B conversion elections 0 30,904 133,071 (30,904) (133,071) 0
----- --------- ----------- ------- ----------- -----------
BALANCE, December 31, 1998 0 2,674,584 23,113,046 528,685 2,367,471 25,480,517
Net income (loss) 0 0 2,481,559 0 (1,214,613) 1,266,946
Partnership distributions 0 0 (2,401,544) 0 0 (2,401,544)
Class B conversion elections 0 53,841 148,817 (53,841) (148,817) 0
----- --------- ----------- ------- ----------- -----------
BALANCE, December 31, 1999 $ 0 2,728,425 $23,341,878 474,844 $ 1,004,041 $24,345,919
===== ========= =========== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,266,946 $ 1,269,171 $ 1,102,567
----------- ----------- ------------
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
Equity in income of joint ventures (1,360,494) (1,346,367) (1,034,907)
Amortization of organization costs 6,250 6,250 6,250
Changes in assets and liabilities:
Prepaid expenses and other assets 0 7,000 92,000
Accounts payable and accrued expenses 0 0 (5,500)
Due to affiliates, net of deferred offering costs 0 0 (152,501)
----------- ----------- ------------
Total adjustments (1,354,244) (1,333,117) (1,094,658)
----------- ----------- ------------
Net cash (used in) provided by operating activities (87,298) (63,946) 7,909
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in joint ventures 0 (694,758) (10,675,811)
Purchase of joint venture interest 0 (1,156,101) 0
Distributions received from joint ventures 2,558,623 2,293,504 1,229,282
----------- ----------- ------------
Net cash provided by (used in) investing activities 2,558,623 442,645 (9,446,529)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners from accumulated earnings (2,379,215) (2,218,400) (1,420,506)
Return of capital 0 0 (8,600)
----------- ----------- ------------
Net cash used in financing activities (2,379,215) (2,218,400) (1,429,106)
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 92,110 (1,839,701) (10,867,726)
CASH AND CASH EQUIVALENTS, beginning of year 8,792 1,848,493 12,716,219
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 100,902 $ 8,792 $ 1,848,493
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Deferred project costs contributed to joint ventures $ 0 $ 103,318 $ 593,983
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998, AND 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund VIII, L.P. (the "Partnership") is a public limited
partnership organized on August 15, 1994 under the laws of the state of
Georgia. The general partners are Leo F. Wells, III and Wells Partners L.P.
("Wells Partners"), a Georgia nonpublic limited partnership. The
Partnership has two classes of limited partnership interests, Class A and
Class B units. Limited partners shall have the right to change their prior
elections to have some or all of their units treated as Class A units or
Class B units one time during each quarterly accounting period. Limited
partners may vote to, among other things, (a) amend the partnership
agreement, subject to certain limitations, (b) change the business purpose
or investment objectives of the Partnership, and (c) remove a general
partner. A majority vote on any of the above described matters will bind
the Partnership, without the concurrence of the general partners. Each
limited partnership unit has equal voting rights, regardless of class.
The Partnership was formed to acquire and operate commercial real
properties, including properties which are either to be developed,
currently under development or construction, newly constructed, or have
operating histories. The Partnership owns an interest in the following
properties through joint ventures between the Partnership and other Wells
Real Estate Funds: (i) an office building in Jacksonville, Florida (the
"BellSouth property"); (ii) a retail shopping center in Clemmons, Forsyth
County, North Carolina; (iii) an office building in Gainesville, Florida;
(iv) a retail office building located in Stockbridge, Georgia; (v) an
office building in Madison, Wisconsin (the "U.S. Cellular Building"); (vi)
an office building in Farmers Branch, Texas (the "Dallas property"); (vii)
a two-story office building in Orange County, California (the "Matsushita
Building"); and (viii) a two-story office building in Boulder County,
Colorado (the "Cirrus Logic Building").
Use of Estimates and Factors Affecting the Partnership
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The carrying values of real estate are based on management's current intent
to hold the real estate assets as long-term investments. The success of the
Partnership's future operations and the ability to realize the investment
in its assets will be dependent on the Partnership's ability to maintain
rental rates, occupancy, and an appropriate level of operating expenses in
future years. Management believes that the steps it is taking will enable
the Partnership to realize its investment in its assets.
F-7
<PAGE>
Income Taxes
The Partnership is not subject to federal or state income taxes, and
therefore, none have been provided for in the accompanying financial
statements. The partners are required to include their respective shares of
profits and losses in their individual income tax returns.
Distributions of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement,
is distributed to the limited partners quarterly. In accordance with the
partnership agreement, such distributions are paid first to limited
partners holding Class A units until they have received a 10% per annum
return on their net capital contributions, as defined. Then, such
distributions are paid to the general partners until they have received 10%
of the total amount distributed thus far. Any remaining cash available for
distribution is split between the limited partners holding Class A units
and the general partners on a basis of 90% and 10%, respectively. No
distributions will be made to the limited partners holding Class B units.
Distribution of Sales Proceeds
Upon sales of properties, the net sales proceeds are distributed in the
following order:
. To limited partners holding units, which at any time have been
treated as Class B units, until they receive an amount necessary to
equal the net cash available for distribution received by the
limited partners holding Class A units
. To limited partners on a per unit basis until each limited partner
has received 100% of their net capital contributions, as defined
. To limited partners on a per unit basis until they receive a
cumulative 10% per annum return on their net capital contributions,
as defined
. To limited partners on a per unit basis until they receive an
amount equal to their preferential limited partners return (defined
as the sum of a 10% per annum cumulative return on net capital
contributions for all periods during which the units were treated
as Class A units and a 15% per annum cumulative return on net
capital contributions for all periods during which the units were
treated as Class B units)
. To the general partners until they have received 100% of their
capital contributions; in the event that limited partners have
received aggregate cash distributions from the Partnership over the
life of their investment in excess of a return of their net capital
contributions plus their preferential partner return, then the
general partners shall receive an additional sum equal to 25% of
such excess
. Thereafter, 80% to the limited partners on a per unit basis and 20%
to the general partners
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership,
excluding deductions for depreciation and amortization. Net income, as
defined, of the Partnership will be allocated each year in the same
proportions that net cash from operations is distributed to the partners.
To the extent the Partnership's net income in any year exceeds net cash
from operations, it will be allocated 99% to the limited partners holding
Class A units and 1% to the general partners.
F-8
<PAGE>
Net loss, depreciation, and amortization deductions for each fiscal year
will be allocated as follows: (a) 99% to the limited partners holding Class
B units and 1% to the general partners until their capital accounts are
reduced to zero, (b) then to any partner having a positive balance in his
capital account in an amount not to exceed such positive balance, and (c)
thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be
allocated generally in the same manner that the net proceeds from such sale
are distributed to partners after the following allocations are made, if
applicable: (a) allocations made pursuant to the qualified income offset
provisions of the partnership agreement, (b) allocations to partners having
negative capital accounts until all negative capital accounts have been
restored to zero, and (c) allocations to limited partners holding Class B
units in amounts equal to the deductions for depreciation and amortization
previously allocated to them with respect to the specific partnership
property sold, but not in excess of the amount of gain on sale recognized
by the Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investments in joint ventures are recorded using
the equity method of accounting.
Real Estate Assets. Real estate assets held by the joint ventures are
stated at cost less accumulated depreciation. Major improvements and
betterments are capitalized when they extend the useful life of the related
asset. All repairs and maintenance are expensed as incurred.
Management continually monitors events and changes in circumstances which
could indicate that carrying amounts of real estate assets may not be
recoverable. When events or changes in circumstances are present that
indicate the carrying amounts of real estate assets may not be recoverable,
management assesses the recoverability of real estate assets by determining
whether the carrying value of such real estate assets will be recovered
through the future cash flows expected from the use of the asset and its
eventual disposition. Management has determined that there has been no
impairment in the carrying value of real estate assets held by the joint
ventures as of December 31, 1999.
Depreciation for buildings and improvements is calculated using the
straight-line method over 25 years. Tenant improvements are amortized over
the life of the related lease or the life of the asset, whichever is
shorter.
Revenue Recognition. All leases on real estate assets held by the joint
ventures are classified as operating leases, and the related rental income
is recognized on a straight-line basis over the terms of the respective
leases.
Partners' Distributions and Allocations of Profit and Loss. Cash available
for distribution and allocations of profit and loss to the Partnership by
the joint ventures are made in accordance with the terms of the individual
joint venture agreements. Generally, these items are allocated in
proportion to the partners' respective ownership interests. Cash is paid
from the joint ventures to the Partnership quarterly.
Deferred Lease Acquisition Costs. Costs incurred to procure operating
leases are capitalized and amortized on a straight-line basis over the
terms of the related leases.
F-9
<PAGE>
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers
all highly liquid instruments purchased with an original maturity of three
months or less to be cash equivalents. Cash equivalents include cash and
short-term investments. Short-term investments are stated at cost, which
approximates fair value, and consist of investments in money market
accounts.
Per Unit Data
Net income (loss) per unit with respect to the Partnership for the years
ended December 31, 1999, 1998, and 1997 is computed based on the weighted
average number of units outstanding during the period.
Reclassifications
Certain prior year items have been reclassified to conform with the current
year financial statement presentation.
2. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 1999 and 1998 represents the
Partnership's share of cash distributed from its joint venture investments
for the fourth quarters of 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Fund VI, VII, and VIII Associates $ 82,364 $121,231
Fund VII and VIII Associates 84,460 120,024
Fund VIII and IX Associates 369,052 364,400
-------- --------
$535,876 $605,655
======== ========
</TABLE>
The Partnership entered into a property management agreement with Wells
Management, Inc. ("Wells Management"), an affiliate of the general
partners. In consideration for supervising the management of the
Partnership's properties, the Partnership will generally pay Wells
Management management and leasing fees equal to (a) 3% of the gross
revenues for management and 3% of the gross revenues for leasing (aggregate
maximum of 6%) plus a separate fee for the one-time initial lease-up of
newly constructed properties in an amount not to exceed the fee customarily
charged in arm's-length transactions by others rendering similar services
in the same geographic area for similar properties or (b) in the case of
commercial properties, which are leased on a long-term net basis (ten or
more years), 1% of the gross revenues except for initial leasing fees equal
to 3% of the gross revenues over the first five years of the lease term.
The Partnership incurred management and leasing fees and lease acquisition
costs, at the joint venture level, of $238,682, $200,145, and $164,662 for
the years ended December 31, 1999, 1998, and 1997, respectively, which were
paid to Wells Management.
Wells Capital, Inc. (the "Company") performs certain administrative
services for the Partnership, such as accounting and other partnership
administration, and incurs the related expenses. Such expenses are
allocated among the various Wells Real Estate Funds based on time spent on
each fund by individual administrative personnel. In the opinion of
management, such allocation is a reasonable estimation of such expenses.
F-10
<PAGE>
The general partners are also general partners of other Wells Real Estate
Funds. As such, there may exist conflicts of interest where the general
partners in the capacity as general partners of other Wells Real Estate
Funds may be in competition with the Partnership for tenants in similar
geographic markets.
3. INVESTMENT IN JOINT VENTURES
The Partnership's investment and percentage ownership in joint ventures at
December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------- ------------------------
Amount Percent Amount Percent
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Fund VI, VII, and VIII Associates $ 5,251,652 33% $ 5,491,347 32%
Fund VII and VIII Associates 3,790,050 63 4,008,114 63
Fund VIII and IX Associates 15,281,716 55 15,952,307 55
----------- -----------
$24,323,418 $25,451,768
=========== ===========
</TABLE>
The following is a rollforward of the Partnership's investment in the joint
ventures for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Investment in joint ventures, beginning of year $25,451,768 $24,501,876
Equity in income of joint ventures 1,360,494 1,346,367
Contributions to joint ventures 0 798,076
Purchases of joint venture interest 0 1,156,101
Distributions from joint ventures (2,488,844) (2,350,652)
----------- -----------
Investment in joint ventures, end of year $24,323,418 $25,451,768
=========== ===========
</TABLE>
Fund VI, VII, and VIII Associates
On April 17, 1995, the Partnership entered into a joint venture with Wells
Real Estate Fund VI, L.P. ("Fund VI") and Wells Real Estate Fund VII, L.P.
("Fund VII"). The joint venture, Fund VI, VII, and VIII Associates, was
formed to acquire, develop, operate, and sell real properties. On April 25,
1995, the joint venture purchased a 5.55-acre parcel of land in
Jacksonville, Florida. A 92,964-square-foot office building, known as the
BellSouth property, was completed and commenced operations in 1996. On May
31, 1995, the joint venture purchased a 14.683-acre parcel of land located
in Clemmons, Forsyth County, North Carolina. A retail shopping center was
developed and was substantially complete at December 31, 1997.
During 1996, Fund VI and Fund VII each withdrew $500,000 from the joint
venture in order to contribute needed funds to Fund II, III, VI, and VII
Associates. In addition, deferred project costs related to Fund VI and Fund
VII of $23,160 and $21,739, respectively, were unapplied when the
contributions were withdrawn. During 1996, the Partnership made an
additional contribution of $2,815,965, which included $115,965 of deferred
project costs that were applied. Ownership percentages were recomputed
accordingly.
F-11
<PAGE>
Following are the financial statements for Fund VI, VII, and VIII Associates:
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
----------- -----------
<S> <C> <C>
Real estate assets, at cost:
Land $ 4,461,819 $ 4,461,819
Building and improvements, less accumulated depreciation of
$2,315,750 in 1999 and $1,613,865 in 1998 10,657,052 11,276,322
Construction in progress 0 17,866
----------- -----------
Total real estate assets 15,118,871 15,756,007
Cash and cash equivalents 736,202 800,321
Accounts receivable 255,221 183,952
Prepaid expenses and other assets 545,816 633,589
----------- -----------
Total assets $16,656,110 $17,373,869
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 84,159 $ 52,026
Partnership distributions payable 324,100 339,696
Due to affiliates 16,281 9,735
----------- -----------
Total liabilities 424,540 401,457
----------- -----------
Partners' capital:
Wells Real Estate Fund VI 5,559,369 5,813,110
Wells Real Estate Fund VII 5,420,549 5,667,955
Wells Real Estate Fund VIII 5,251,652 5,491,347
----------- -----------
Total partners' capital 16,231,570 16,972,412
----------- -----------
Total liabilities and partners' capital $16,656,110 $17,373,869
=========== ===========
</TABLE>
F-12
<PAGE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $2,294,016 $2,258,971 $2,087,588
Interest income 14,937 25,416 19,464
Other income 360 9,373 360
---------- ---------- ----------
2,309,313 2,293,760 2,107,412
---------- ---------- ----------
Expenses:
Depreciation 701,885 688,759 634,699
Operating costs, net of reimbursements 444,156 451,299 460,873
Management and leasing fees 259,352 251,587 232,765
Legal and accounting 10,286 9,205 15,934
Partnership administration 27,804 25,109 27,180
Computer costs 1,043 128 0
---------- ---------- ----------
1,444,526 1,426,087 1,371,451
---------- ---------- ----------
Net income $ 864,787 $ 867,673 $ 735,961
========== ========== ==========
Net income allocated to Wells Real Estate Fund VI $ 296,193 $ 297,181 $ 258,122
========== ========== ==========
Net income allocated to Wells Real Estate Fund VII $ 288,796 $ 289,760 $ 251,676
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 279,798 $ 280,732 $ 226,163
========== ========== ==========
</TABLE>
F-13
<PAGE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Wells Real Total
Estate Estate Estate Partners'
Fund VI Fund VII Fund VIII Capital
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1996 $6,268,458 $6,111,934 $4,849,380 $17,229,772
Net income 258,122 251,676 226,163 735,961
Partnership contributions 0 0 1,055,900 1,055,900
Partnership distributions (468,498) (456,800) (408,682) (1,333,980)
---------- ---------- ---------- -----------
Balance, December 31, 1997 6,058,082 5,906,810 5,722,761 17,687,653
Net income 297,181 289,760 280,732 867,673
Partnership distributions (542,153) (528,615) (512,146) (1,582,914)
---------- ---------- ---------- -----------
Balance, December 31, 1998 5,813,110 5,667,955 5,491,347 16,972,412
Net income 296,193 288,796 279,798 864,787
Partnership distributions (549,934) (536,202) (519,493) (1,605,629)
---------- ---------- ---------- -----------
Balance, December 31, 1999 $5,559,369 $5,420,549 $5,251,652 $16,231,570
========== ========== ========== ===========
</TABLE>
Fund VI, VII, and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 864,787 $ 867,673 $ 735,961
----------- ----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 701,885 688,759 634,699
Changes in assets and liabilities:
Accounts receivable (71,269) (79,931) (76,170)
Prepaid expenses and other assets 87,773 79,225 (21,073)
Accounts payable 32,133 6,234 8,312
Due to affiliates 6,546 4,558 3,622
----------- ----------- -----------
Total adjustments 757,068 698,845 549,390
----------- ----------- -----------
Net cash provided by operating activities 1,621,855 1,566,518 1,285,351
----------- ----------- -----------
Cash flows from investing activities:
Decrease in construction payables 0 (55,000) (110,795)
Investment in real estate (64,749) (140,590) (828,992)
----------- ----------- -----------
Net cash used in investing activities (64,749) (195,590) (939,787)
----------- ----------- -----------
Cash flows from financing activities:
Contributions received from joint venture partners 0 0 1,000,000
Distributions to joint venture partners (1,621,225) (1,629,608) (1,216,246)
----------- ----------- -----------
Net cash used in financing activities (1,621,225) (1,629,608) (216,246)
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (64,119) (258,680) 129,318
Cash and cash equivalents, beginning of year 800,321 1,059,001 929,683
----------- ----------- -----------
Cash and cash equivalents, end of year $ 736,202 $ 800,321 $ 1,059,001
=========== =========== ===========
Supplemental disclosure of noncash items:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 55,900
=========== =========== ===========
</TABLE>
F-14
<PAGE>
Fund VII and VIII Associates
On February 10, 1995, the Partnership entered into a joint venture agreement
with Fund VII. The joint venture, Fund VII and VIII Associates, was formed to
acquire, develop, operate, and sell real properties. During 1995, the joint
venture purchased a five acre parcel of land in Gainesville, Alachua County,
Florida. A 62,975-square-foot office building was constructed and began
operations during 1995. In April 1996, Fund VII contributed 1.01 acres of land
located in Stockbridge, Georgia, and improvements thereon to the joint venture
for the development of a 12,000-square-foot, single-story combination
retail/office building. The building was completed and commenced operations in
1996.
The following are the financial statements for Fund VII and VIII Associates:
Fund VII and VIII Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
---------- ----------
<S> <C> <C>
Real estate assets, at cost:
Land $ 822,320 $ 882,320
Building and improvements, less accumulated depreciation of
$1,056,143 in 1999 and $735,803 in 1998 4,864,790 5,119,836
Personal property, less accumulated depreciation of $116,671 in 1999
and $89,365 in 1998 181,212 208,518
---------- ----------
Total real estate assets 5,868,322 6,210,674
Cash and cash equivalents 68,008 124,696
Accounts receivable 111,285 48,581
Prepaid expenses and other assets 90,350 104,269
---------- ----------
Total assets $6,137,965 $6,488,220
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 20,761 $ 24,468
Due to affiliates 2,227 1,500
Partnership distributions payable 133,324 136,377
---------- ----------
Total liabilities 156,312 162,345
---------- ----------
Partners' capital:
Wells Real Estate Fund VII 2,191,603 2,317,761
Wells Real Estate Fund VIII 3,790,050 4,008,114
---------- ----------
Total partners' capital 5,981,653 6,325,875
---------- ----------
Total liabilities and partners' capital $6,137,965 $6,488,220
========== ==========
</TABLE>
F-15
<PAGE>
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental income $769,052 $685,637 $637,692
Other income 300 0 180
-------- -------- --------
769,352 685,637 637,872
-------- -------- --------
Expenses:
Depreciation 347,646 295,708 262,106
Management and leasing fees 124,040 93,519 90,087
Legal and accounting 13,952 9,450 9,973
Partnership administration 29,182 26,095 24,830
Computer costs 0 0 107
Operating costs, net of reimbursements (28,354) 34,084 (76,060)
-------- -------- --------
486,466 458,856 311,043
-------- -------- --------
Net income $282,886 $226,781 $326,829
======== ======== ========
Net income allocated to Wells Real Estate Fund VII $103,681 $ 83,713 $124,045
======== ======== ========
Net income allocated to Wells Real Estate Fund VIII $179,205 $143,068 $202,784
======== ======== ========
</TABLE>
Fund VII And VIII Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Total
Estate Estate Partners'
Fund VII Fund VIII Capital
---------- ---------- ----------
<S> <C> <C> <C>
Balance, December 31, 1996 $2,474,474 $4,032,669 $6,507,143
Net income 124,045 202,784 326,829
Partnership distributions (221,701) (362,431) (584,132)
---------- ---------- ----------
Balance, December 31, 1997 2,376,818 3,873,022 6,249,840
Net income 83,713 143,068 226,781
Partnership contributions 25,800 279,626 305,426
Partnership distributions (168,570) (287,602) (456,172)
---------- ---------- ----------
Balance, December 31, 1998 2,317,761 4,008,114 6,325,875
Net income 103,681 179,205 282,886
Partnership distributions (229,839) (397,269) (627,108)
---------- ---------- ----------
Balance, December 31, 1999 $2,191,603 $3,790,050 $5,981,653
========== ========== ==========
</TABLE>
F-16
<PAGE>
Fund VII and VIII Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 282,886 $ 226,781 $ 326,829
--------- --------- ---------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 347,646 295,708 262,106
Changes in assets and liabilities:
Accounts receivable (62,704) (34,183) (14,398)
Prepaid expenses and other assets 13,919 (26,375) (5,931)
Accounts payable (3,707) (2,485) (24,340)
Due to affiliates 727 656 844
--------- --------- ---------
Total adjustments 295,881 233,321 218,281
--------- --------- ---------
Net cash provided by operating activities 578,767 460,102 545,110
--------- --------- ---------
Cash flows from investing activities:
Investment in real estate (5,294) (406,380) (6,016)
--------- --------- ---------
Cash flows from financing activities:
Contributions from partners 0 293,511 0
Distributions to joint venture partners (630,161) (460,759) (549,304)
--------- --------- ---------
Net cash used in financing activities (630,161) (167,248) (549,304)
--------- --------- ---------
Net decrease in cash and cash equivalents (56,688) (113,526) (10,210)
Cash and cash equivalents, beginning of year 124,696 238,222 248,432
--------- --------- ---------
Cash and cash equivalents, end of year $ 68,008 $ 124,696 $ 238,222
========= ========= =========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 11,915 $ 0
========= ========= =========
</TABLE>
Fund VIII and IX Associates
On June 10, 1996, the Partnership entered into a joint venture with Wells Real
Estate Fund IX, L.P ("Wells Fund IX"). The joint venture, Fund VIII and IX
Associates, was formed to acquire, develop, operate, and sell real properties.
On June 19, 1996, the joint venture purchased a 7.09-acre parcel of land in
Madison, Wisconsin. The parcel was developed and commenced operations as the
U.S. Cellular Building in 1997. On October 10, 1996, the joint venture
purchased a 40,000-square-foot, one-story office building, known as the Dallas
property, in Farmers Branch, Texas. On January 10, 1997, the joint venture
purchased a 63,417-square-foot, two-story office building, known as the
Matsushita Building, in Orange County, California. On February 20, 1997, the
joint venture purchased a two-story partially completed office building, known
as the Cirrus Logic Building, in Boulder County, Colorado. Construction of the
49,460-square-foot building was completed and commenced operations in 1997.
During 1998, the Partnership purchased a portion of Wells Fund IX's joint
venture interest for $1,100,000. In addition, the related deferred project
costs of $56,101 were transferred from Wells Fund IX to the Partnership. In
addition, the Partnership contributed $518,450 in 1998 to Fund VIII and IX
Associates, which included $32,352 of deferred project costs that were applied.
Ownership percentage interests were recomputed accordingly.
F-17
<PAGE>
Following are the financial statements for Fund VIII and IX Associates:
Fund VIII and IX Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets
1999 1998
----------- -----------
<S> <C> <C>
Real estate assets, at cost:
Land $ 4,724,579 $ 4,724,579
Building and improvements, less accumulated depreciation of
$3,495,138 in 1999 and $2,220,160 in 1998 22,416,032 23,687,510
----------- -----------
Total real estate assets 27,140,611 28,412,089
Cash and cash equivalents 866,510 907,778
Accounts receivable 691,752 504,608
Prepaid expenses and other assets 176,723 209,329
----------- -----------
Total assets $28,875,596 $30,033,804
=========== ===========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 283,548 $ 189,141
Due to affiliates 30,547 26,627
Partnership distributions payable 673,493 706,250
----------- -----------
Total liabilities 987,588 922,018
----------- -----------
Partners' capital:
Wells Real Estate Fund VIII 15,281,716 15,952,307
Wells Real Estate Fund IX 12,606,292 13,159,479
----------- -----------
Total partners' capital 27,888,008 29,111,786
----------- -----------
Total liabilities and partners' capital $28,875,596 $30,033,804
=========== ===========
</TABLE>
F-18
<PAGE>
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $3,132,925 $3,146,201 $2,203,332
Interest income 25,995 32,194 29,520
Other income 0 0 4,479
---------- ---------- ----------
3,158,920 3,178,395 2,237,331
---------- ---------- ----------
Expenses:
Depreciation 1,274,978 1,274,836 894,880
Management and leasing fees 216,075 221,794 121,930
Property administration expenses 30,249 29,299 21,006
Legal and accounting 15,632 22,806 13,602
Operating costs, net of reimbursements (23,165) (82,660) (24,106)
---------- ---------- ----------
1,513,769 1,466,075 1,027,312
---------- ---------- ----------
Net income $1,645,151 $1,712,320 $1,210,019
========== ========== ==========
Net income allocated to Wells Real Estate Fund VIII $ 901,489 $ 922,567 $ 605,960
========== ========== ==========
Net income allocated to Wells Real Estate Fund IX $ 743,662 $ 789,753 $ 604,059
========== ========== ==========
</TABLE>
F-19
<PAGE>
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
Wells Real Wells Real Total
Estate Estate Partners'
Fund VIII Fund IX Capital
----------- ----------- -----------
<S> <C> <C> <C>
Balance, December 31, 1996 $ 4,905,482 $ 4,929,728 $ 9,835,210
Net income 605,960 604,059 1,210,019
Partnership contributions 10,213,894 10,132,043 20,345,937
Partnership distributions (819,243) (816,705) (1,635,948)
----------- ----------- -----------
Balance, December 31, 1997 14,906,093 14,849,125 29,755,218
Net income 922,567 789,753 1,712,320
Transfer of joint venture interest 1,156,101 (1,156,101) 0
Partnership contributions 518,450 0 518,450
Partnership distributions (1,550,904) (1,323,298) (2,874,202)
----------- ----------- -----------
Balance, December 31, 1998 15,952,307 13,159,479 29,111,786
Net income 901,489 743,662 1,645,151
Partnership distributions (1,572,080) (1,296,849) (2,868,929)
----------- ----------- -----------
Balance, December 31, 1999 $15,281,716 $12,606,292 $27,888,008
=========== =========== ===========
</TABLE>
F-20
<PAGE>
Fund VIII and IX Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 1,645,151 $ 1,712,320 $ 1,210,019
----------- ----------- ------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 1,274,978 1,274,836 894,880
Changes in assets and liabilities:
Accounts receivable (187,144) (115,261) (381,858)
Prepaid expenses and other assets 32,606 28,381 (237,710)
Accounts payable 94,407 49,288 115,507
Due to affiliates 3,920 6,228 20,399
----------- ----------- ------------
Total adjustments 1,218,767 1,243,472 411,218
----------- ----------- ------------
Net cash provided by operating activities 2,863,918 2,955,792 1,621,237
----------- ----------- ------------
Cash flows from investing activities:
Decrease in construction payables 0 (248,870) (335,406)
Investment in real estate (3,500) (534,944) (19,131,612)
----------- ----------- ------------
Net cash used in investing activities (3,500) (783,814) (19,467,018)
----------- ----------- ------------
Cash flows from financing activities:
Contributions from joint venture partners 0 486,098 19,316,193
Distributions to joint venture partners (2,901,686) (2,838,736) (1,057,327)
----------- ----------- ------------
Net cash (used in) provided by financing activities (2,901,686) (2,352,638) 18,258,866
----------- ----------- ------------
Net (decrease) increase in cash and cash equivalents (41,268) (180,660) 413,085
Cash and cash equivalents, beginning of year 907,778 1,088,438 675,353
----------- ----------- ------------
Cash and cash equivalents, end of year $ 866,510 $ 907,778 $ 1,088,438
=========== =========== ============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 32,352 $ 1,029,744
=========== =========== ============
</TABLE>
F-21
<PAGE>
4. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the years ended December
31, 1999, 1998, and 1997 is calculated as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ----------- ----------
<S> <C> <C> <C>
Financial statement net income $1,266,946 $1,269,171 $1,102,567
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes
in excess of amounts for income tax purposes 494,088 486,066 332,046
Expenses deductible when paid for income tax
purposes, accrued for financial reporting purposes 4,682 5,249 12,319
Rental income accrued for financial reporting
purposes in excess of amounts for income tax purposes (75,301) (59,723) (215,837)
Other (17,571) (17,571) (17,571)
---------- ----------- ----------
Income tax basis net income $1,672,844 $1,683,192 $1,213,524
========== ========== ==========
</TABLE>
The Partnership's income tax basis partners' capital at December 31, 1999,
1998, and 1997 is computed as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Financial statement partners' capital $24,345,919 $25,480,517 $26,490,980
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes in
excess of amounts for income tax purposes 1,415,213 921,125 435,059
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of capital for
financial reporting purposes 4,774,787 4,774,787 4,774,787
Accumulated expenses deductible when paid for income tax
purposes, accrued for financial reporting purposes 110,941 106,259 101,010
Accumulated rental income accrued for financial reporting
purposes in excess of amounts for income tax purposes (358,224) (282,923) (223,200)
Partnership's distributions payable 614,277 591,948 530,714
Other (115,003) (97,433) (40,503)
----------- ----------- -----------
Income tax basis partners' capital $30,787,910 $31,494,280 $32,068,847
=========== =========== ===========
</TABLE>
F-22
<PAGE>
5. RENTAL INCOME
The future minimum rental income due from the Partnership's respective
ownership interests in joint ventures under noncancelable operating leases
at December 31, 1999 is as follows:
<TABLE>
<S> <C>
Year ending December 31:
2000 $ 2,893,536
2001 2,871,246
2002 2,907,529
2003 2,612,350
2004 2,185,506
Thereafter 9,254,966
-----------
$22,725,133
===========
</TABLE>
Three tenants contributed approximately 19%, 15%, and 14% of rental income.
In addition, five tenants will contribute approximately 22%, 17%, 13%, 13%,
and 10% of future minimum rental income.
The future minimum rental income due Fund VI, VII, and VIII Associates
under noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<S> <C>
Year ending December 31:
2000 $ 2,239,045
2001 2,126,978
2002 1,972,479
2003 1,912,574
2004 1,763,419
Thereafter 8,130,020
-----------
$18,144,515
===========
</TABLE>
Three tenants contributed approximately 46%, 23%, and 16% of rental income
for the year ended December 31, 1999. In addition, two tenants will
contribute approximately 51% and 39% of future minimum rental income.
The future minimum rental income due Fund VII and VIII Associates under
noncancelable operating leases at December 31, 1999 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending December 31:
2000 $ 780,472
2001 784,375
2002 792,225
2003 745,862
2004 641,683
Thereafter 652,172
----------
$4,396,789
==========
</TABLE>
Two tenants contributed approximately 69% and 13% of rental income for the
year ended December 31, 1999. In addition, two tenants will contribute
approximately 71% and 16% of future minimum rental income.
F-23
<PAGE>
The future minimum rental income due Fund VIII and IX Associates under
noncancelable operating leases as of December 31, 1999 is as follows:
<TABLE>
<S> <C>
Year ending December 31:
2000 $ 3,056,160
2001 3,077,130
2002 3,225,470
2003 2,775,782
2004 2,205,354
Thereafter 11,335,317
-----------
$25,675,213
===========
</TABLE>
Five tenants contributed approximately 29%, 23%, 21%, 14%, and 10% of
rental income for the year ended December 31, 1999. In addition, four
tenants will contribute approximately 36%, 28%, 21%, and 11% of future
minimum rental income.
6. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 Quarters Ended
-------------------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 331,087 $ 414,858 $ 331,740 $ 282,812
Net income 298,240 388,525 316,224 263,957
Net income allocated to Class A limited 597,680 688,038 614,272 581,569
partners
Net loss allocated to Class B limited (299,440) (299,513) (298,048) (317,612)
partners
Net income per weighted average Class A
limited partner unit outstanding $ 0.22 $ 0.25 $ 0.23 $ 0.21
Net loss per weighted average Class B
limited partner unit outstanding (a) (0.60) (0.62) (0.60) (0.67)
Cash distribution per weighted average Class
A limited partner unit outstanding 0.22 0.22 0.23 0.21
</TABLE>
(a) The totals of the four quarterly amounts for the year ended December
31, 1999 do not equal the totals for the year. This difference
results from the use of a weighted average to compute the number of
units outstanding for each quarter and the year.
24
<PAGE>
<TABLE>
<CAPTION>
1998 Quarters Ended
------------------------------------------------------------
March 31 June 30 September 30 December 31
--------- --------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 344,289 $ 333,626 $ 288,804 $ 395,794
Net income 327,696 304,015 265,995 371,465
Net income allocated to Class A limited 591,940 610,559 592,469 636,278
partners
Net loss allocated to Class B limited partners (264,244) (306,544) (326,474) (264,813)
Net income per weighted average Class A $ 0.22 $ 0.23 $ 0.22 $ 0.24
limited partner unit
Net loss per weighted average Class B limited (0.47) (0.55) (0.60) (0.50)
partner unit
Cash distribution per weighted average Class 0.21 0.21 0.22 0.22
A limited partner unit
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Partnership or the Company. In
the normal course of business, the Partnership or the Company may become
subject to such litigation or claims.
25
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Initial Cost
--------------------------
Costs of
Buildings and Capitalized
Description Ownership Encumbrances Land Improvements Improvements
- -------------------------------------------- ----------- -------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
BELLSOUTH PROPERTY (a) 32 None $1,244,256 $ 0 $ 7,425,154
TANGLEWOOD COMMONS (b) 32 None 3,020,040 0 5,745,172
GAINESVILLE PROPERTY (c) 63 None 222,627 0 5,094,425
HANNOVER PROPERTY (d) 63 None 512,001 869,037 337,752
TCI-DALLAS PROPERTY (e) 55 None 650,000 0 4,016,866
U.S. CELLULAR PROPERTY (f) 55 None 833,942 0 10,055,562
MATSUSHITA PROPERTY (g) 55 None 2,108,304 5,120,835 383,994
CIRRUS LOGIC PROPERTY (h) 55 None 881,840 6,182,710 402,096
---------- -------------- --------------
Total $9,473,010 $ 12,172,582 $ 33,460,621
========== ============= =============
<CAPTION>
Gross Amount at Which Carried at December 31, 1999
------------------------------------------------------
Buildings and Construction Accumulated Date of
Description Land Improvements in Progress Total Depreciation Construction
- -------------------------------------------- ----------- --------------- ------------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
BELLSOUTH PROPERTY (a) $ 1,301,890 $ 7,367,520 $ 0 $ 8,669,410 $ 1,624,828 1996
TANGLEWOOD COMMONS (b) 3,159,928 5,605,284 0 8,765,212 690,922 1997
GAINESVILLE PROPERTY (c) 288,058 5,028,994 0 5,317,052 968,910 1995
HANNOVER PROPERTY (d) 534,262 1,184,528 0 1,718,790 203,159 1996
TCI-DALLAS PROPERTY (e) 677,914 3,988,952 0 4,666,866 550,226 1996
U.S. CELLULAR PROPERTY (f) 896,698 9,992,806 0 10,889,504 1,479,727 1997
MATSUSHITA PROPERTY (g) 2,220,993 5,391,740 0 7,612,733 647,009 1997
CIRRUS LOGIC PROPERTY (h) 928,974 6,537,672 0 7,466,646 818,176 1997
Total ----------- --------------- ------------- ------------ --------------
$10,008,717 $ 43,097,496 $ 0 $ 55,106,213 $ 6,982,957
=========== =============== ============= ============ ==============
<CAPTION>
Life on Which
Date Depreciation
Description Acquired Is Computed (i)
- -------------------------------------------- ---------- -------------------
<S> <C> <C>
BELLSOUTH PROPERTY (a) 04/25/95 20 to 25 years
TANGLEWOOD COMMONS (b) 05/31/95 20 to 25 years
GAINESVILLE PROPERTY (c) 01/20/95 20 to 25 years
HANNOVER PROPERTY (d) 01/16/95 20 to 25 years
TCI-DALLAS PROPERTY (e) 10/10/96 20 to 25 years
U.S. CELLULAR PROPERTY (f) 06/17/96 20 to 25 years
MATSUSHITA PROPERTY (g) 01/10/97 20 to 25 years
CIRRUS LOGIC PROPERTY (h) 02/20/97 20 to 25 years
Total
</TABLE>
(a) The BellSouth Property consists of a four-story office building located in
Jacksonville, Florida. It is owned by Fund VI, VII, and VIII Associates.
(b) Tanglewood Commons is a retail shopping center located in Clemmons, Forsyth
County, North Carolina. It is owned by Fund VI, VII, and VIII Associates.
(c) The Gainesville Property consists of a two-story building located in
Gainesville, Florida. It is owned by Fund VII and VIII Associates.
(d) The Hannover Property consists of a one-story building located in
Stockbridge, Georgia. It is owned by Fund VII and VIII Associates.
(e) The TCI Property consists of a one-story office building located in Farmers
Branch, Texas. It is owned by Fund VIII and IX Associates.
(f) The U.S. Cellular Property consists of a four-story office building located
in Madison, Wisconsin. It is owned by Fund VIII and IX Associates.
(g) The Matsushita Property consists of a two-story office building located in
Irvine, California. It is owned by Fund VIII and IX Associates.
(h) The Cirrus Logic Property consists of a two-story office building located
in Broomfield, Colorado. It is owned by Fund VIII and IX Associates.
(i) Depreciation lives used for buildings were 40 years through September 30,
1995, changed to 25 years thereafter. Depreciation lives used for land
improvements are 20 years.
S-1
<PAGE>
WELLS REAL ESTATE FUND VIII, L.P.
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1999
Accumulated
Cost Depreciation
-------------- --------------
BALANCE AT DECEMBER 31, 1996 $ 32,859,516 $ 608,204
1997 additions 21,052,266 1,791,686
-------------- --------------
BALANCE AT DECEMBER 31, 1997 53,911,782 2,399,890
1998 additions 1,126,182 2,259,303
-------------- --------------
BALANCE AT DECEMBER 31, 1998 55,037,964 4,659,193
1999 additions 68,249 2,323,764
-------------- --------------
BALANCE AT DECEMBER 31, 1999 $ 55,106,213 $ 6,982,957
============== ==============
S-2
<PAGE>
EXHIBIT INDEX
-------------
(Wells Real Estate Fund VIII, L.P.)
The following documents are filed as exhibits to this report. Those
exhibits previously filed and incorporated herein by reference are identified
below by an asterisk. For each such asterisked exhibit, there is shown below
the description of the previous filing. Exhibits which are not required for
this report are omitted.
Exhibit
Number Description of Document
- ------ -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real
Estate Fund VIII, L.P. dated January 6, 1995 (Exhibit to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1995, File No. 0-27888)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund VIII,
L.P. (Exhibit 3(b) to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund VIII, L.P., File No.
33-83852)
*10(a) Management Agreement dated January 6, 1995, between Wells Real Estate
Fund VIII, L.P. and Wells Management Company, Inc. (Exhibit to Form
10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1995, File No. 0-27888)
*10(b) Leasing and Tenant Coordinating Agreement dated January 6, 1995,
between Wells Real Estate Fund VIII, L.P. and Wells Management
Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VIII,
L.P. for the fiscal year ended December 31, 1995, File No. 0-27888)
*10(c) Custodial Agency Agreement dated November 15, 1994, between Wells Real
Estate Fund VIII, L.P. and NationsBank of Georgia, N.A. (Exhibit to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1995, File No. 0-27888)
*10(d) Fund VII and Fund VIII Associates Joint Venture Agreement dated
February 10, 1995 (Exhibit 10(g) to Post-Effective Amendment No. 1 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(e) Agreement for the Purchase and Sale of Real Property dated March 31,
1994 (Exhibit 10(h) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
<PAGE>
*10(f) Letter Agreement amending Agreement for the Purchase and Sale of Real
Property dated July 27, 1994 (Exhibit 10(i) to Post-Effective
Amendment No. 1 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(g) Letter Agreement amending Agreement for the Purchase and Sale of Real
Property dated October 27, 1994 (Exhibit 10(j) to Post-Effective
Amendment No. 1 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(h) Letter Agreement between NationsBank of Georgia, N.A., as Agent for
Wells Real Estate Fund VII, L.P., as Landlord, and CH2M Hill, Inc., as
Tenant (Exhibit 10(k) to Post-Effective Amendment No. 1 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(i) First Amendment to Lease Agreement between NationsBank of Georgia,
N.A., as Agent for Wells Real Estate Fund VII, L.P., as Landlord, and
CH2M Hill, Inc., as Tenant (Exhibit 10(l) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(j) Second Amendment to Lease Agreement between NationsBank of Georgia,
N.A., as Agent for Wells Real Estate Fund VII, L.P., as Landlord, and
CH2M Hill, Inc, as Tenant (Exhibit 10(m) to Post-Effective Amendment
No. 1 to Form S-11 Registration Statement of Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(k) Development Agreement between Wells Real Estate Fund VII, L.P. and
ADEVCO Corporation (Exhibit 10(n) to Post-Effective Amendment No. 1 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(l) Owner-Contractor Agreement between Wells Real Estate Fund VII, L.P.,
as Owner, and Integra Construction, Inc., as Contractor (Exhibit 10(o)
to Post-Effective Amendment No. 1 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(m) Architect's Agreement between Wells Real Estate Fund VII, L.P., as
Owner, and Smallwood, Reynolds, Stewart, Stewart & Associates, Inc.,
as Architect (Exhibit 10(p) to Post-Effective Amendment No. 1 to Form
S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
<PAGE>
*10(n) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII Associates
dated April 17, 1995 (Exhibit 10(q) to Post-Effective Amendment No. 3
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(o) Agreement for the Purchase and Sale of Real Property dated February
13, 1995, between G.L. National, Inc. and Wells Capital, Inc. (Exhibit
10(r) to Post-Effective Amendment No. 3 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(p) Agreement to Lease dated February 15, 1995, between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., and
BellSouth Advertising & Publishing Corporation (Exhibit 10(s) to Post-
Effective Amendment No. 3 to Form S-11 Registration Statement of Wells
Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(q) Development Agreement dated April 25, 1995, between Fund VI, Fund VII
and Fund VIII Associates and ADEVCO Corporation (Exhibit 10(t) to
Post-Effective Amendment No. 3 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(r) Owner-Contractor Agreement dated April 24, 1995, between Fund VI, Fund
VII and Fund VIII Associates, as Owner, and McDevitt Street Bovis,
Inc., as Contractor (Exhibit 10(u) to Post-Effective Amendment No. 3
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(s) Architect's Agreement dated February 15, 1995, between Wells Real
Estate Fund VII, L.P., as Owner, and Mayes, Suddereth & Etheredge,
Inc., as Architect (Exhibit 10(v) to Post-Effective Amendment No. 3 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(t) First Amendment to Joint Venture Agreement of Fund VI, Fund VII and
Fund VIII Associates dated May 30, 1995 (Exhibit 10(w) to Post-
Effective Amendment No. 4 to Form S-11 Registration Statement of Wells
Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File
No. 33-83852)
*10(u) Real Estate Purchase Agreement dated April 13, 1995 (Exhibit 10(x) to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(v) Lease Agreement dated February 27, 1995, between NationsBank of
Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P., and
Harris Teeter, Inc. (Exhibit 10(y) to Post-Effective Amendment No. 4
to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852)
<PAGE>
*10(w) Development Agreement dated May 31, 1995, between Fund VI, Fund VII
and Fund VIII Associates and Norcom Development, Inc. (Exhibit 10(z)
to Post- Effective Amendment No. 4 to Form S-11 Registration Statement
of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX,
L.P., File No. 33-83852)
*10(x) First Amendment to Joint Venture Agreement of Fund VII and Fund VIII
Associates dated April 1, 1996 (Exhibit 10(nn) to Form 10-K of Wells
Real Estate Fund VII, L.P. for the fiscal year ended December 31,
1996, File No. 0-25606)
*10(y) Lease Agreement with Moovies, Inc. dated May 20, 1996 (Exhibit 10(oo)
to Form 10-K of Wells Real Estate Fund VII, L.P. for the fiscal year
ended December 31, 1996, File No. 0-25606)
*10(z) Joint Venture Agreement of Fund VIII and Fund IX Associates dated June
10, 1996 (Exhibit 10(aa) to Post-Effective Amendment No. 11 to Form S-
11 Registration Statement of Wells Real Estate Fund VIII, L.P. and
Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(aa) Agreement for the Purchase and Sale of Real Property dated April 23,
1996, between American Family Mutual Insurance Company and Wells
Capital, Inc. (Exhibit 10(bb) to Post-Effective Amendment No. 11 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(bb) Agreement to Lease dated June 18, 1996, between Fund VIII and IX
Associates and Westel-Milwaukee, Inc., d/b/a Cellular One (Exhibit
10(cc) to Post-Effective Amendment No. 11 to Form S-11 Registration
Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., File No. 33-83852)
*10(cc) Development Agreement dated June 18, 1996, between Fund VIII and Fund
IX Associates and ADEVCO Corporation (Exhibit 10(dd) to Post-Effective
Amendment No. 11 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(dd) Owner-Contractor Agreement dated June 18, 1996, with Kraemer Brothers,
Inc. (Exhibit 10(ee) to Post-Effective Amendment No. 11 to Form S-11
Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P., File No. 33-83852)
*10(ee) First Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated October 10, 1996 (Exhibit 10(ii) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
<PAGE>
*10(ff) Agreement for the Purchase and Sale of Property dated October 10,
1996, between TCI Valwood Limited Partnership I and Fund VIII and Fund
IX Associates (Exhibit 10(ff) to Post-Effective Amendment No. 12 to
Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P., File No. 33-83852)
*10(gg) Build to Suite Industrial Lease Agreement dated November 1, 1995,
between Industrial Developments International, Inc. and TCI Central,
Inc., as amended July 16, 1996 and August 29, 1996 (Exhibit 10(gg) to
Post-Effective Amendment No. 12 to Form S-11 Registration Statement of
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
File No. 33-83852)
*10(hh) Assignment and Assumption of Lease dated October 10, 1996, between TCI
Valwood Limited Partnership I and The Bank of New York, as Agent for
Fund VIII and Fund IX Associates (Exhibit 10(hh) to Post-Effective
Amendment No. 12 to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No.
33-83852)
*10(ii) Second Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated January 7, 1997 (Exhibit 10 (ii) to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1997, File No. 0-27888)
*10(jj) Agreement for the Purchase and Sale of Property with Magellan Bake
Parkway Limited Partnership dated December, 1996 (Exhibit 10 (jj) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, File No. 0-27888)
*10(kk) Office Lease with Matsushita Avionics Systems Corporation dated April
29, 1996 (Exhibit 10 (kk) to Form 10-K of Wells Real Estate Fund VIII,
L.P. for the fiscal year ended December 31, 1997, File No. 0-27888)
*10(ll) Third Amendment to Joint Venture Agreement of Fund VIII and Fund IX
Associates dated February 18, 1997 (Exhibit 10 (ll) to Form 10-K of
Wells Real Estate Fund VIII, L.P. for the fiscal year ended December
31, 1997, File No. 0-27888)
*10(mm) Agreement for the Purchase and Sale of Property with Orix Prime West
Bloomfield II Venture dated February 5, 1997 (Exhibit 10 (mm) to Form
10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year ended
December 31, 1997, File No. 0-27888)
*10(nn) Lease with Cirrus Logic, Inc. dated July 5, 1995 (Exhibit 10 (nn) to
Form 10-K of Wells Real Estate Fund VIII, L.P. for the fiscal year
ended December 31, 1997, File No. 0-27888)
<PAGE>
*10(oo) Rental Income Guaranty Agreement relating to the Bake Parkway Building
dated February 18, 1999, between Wells Operating Partnership, L.P. and
Fund VIII and Fund IX Associates (Exhibit 10.53 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc., as
amended to date, Commission File No. 333-32099)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 100,902
<SECURITIES> 24,323,418
<RECEIVABLES> 535,876
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,960,196
<CURRENT-LIABILITIES> 614,277
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,345,919
<TOTAL-LIABILITY-AND-EQUITY> 24,960,196
<SALES> 0
<TOTAL-REVENUES> 1,360,497
<CGS> 0
<TOTAL-COSTS> 93,551
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 1,266,946
<INCOME-TAX> 1,266,946
<INCOME-CONTINUING> 1,266,946
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