<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 10, 1996
-----------------------------
Wells Real Estate Fund IX, L.P.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia
----------------------------------------------
(State or other jurisdiction of incorporation)
33-83852-01 58-2126622
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
----------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS.
On October 10, 1996, a joint venture (the "Joint Venture") between Wells
Real Estate Fund VIII, L.P. ("Wells Fund VIII") and Wells Real Estate Fund IX,
L.P. (the "Registrant") acquired an office building located on a 4.864 acre
tract of real property in Farmers Branch, Texas in the north Dallas, Texas
metropolitan area (the "Dallas Property"). Descriptions of the Joint Venture,
the acquisition of the Dallas Property purchased by the Joint Venture, and the
leasing of the Dallas Property are described in Supplement No. 3 dated October
22, 1996 ("Supplement No. 3") to the Prospectus of the Registrant, dated January
5, 1996, contained in Post-Effective Amendment No. 12 to the Registration
Statement of Wells Fund VIII and the Registrant (Commission File No. 33-83852),
filed with the Securities and Exchange Commission on October 24, 1996, which is
incorporated herein by reference and hereby made a part hereof.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Audited Financial Statements. The following audited financial
----------------------------
statements of the real estate property acquired are submitted at the end of this
Report (as Appendix I to Supplement No. 3) and are incorporated herein by
reference:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditor's Report I-1
Statement of Excess Revenues Over Operating Expenses For the Period I-2
from July 19, 1996 to September 30, 1996
Notes to Statement of Excess Revenues Over Operating Expenses For the I-3
Period from July 19, 1996 to September 30, 1996
</TABLE>
(b) Pro Forma Financial Information. The following unaudited pro forma
-------------------------------
financial statements of the Registrant relating to the real property acquired
are submitted at the end of this Report (as Appendix I to Supplement No. 3) and
are incorporated herein by reference:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Unaudited Pro Forma Combined Balance Sheet of Wells Real Estate Fund IX, I-4
L.P. as of September 30, 1996
Unaudited Pro Forma Combined Income Statement of Wells Real Estate Fund I-5
IX, L.P. for the Nine Months ended September 30, 1996
Notes to the Pro Forma Combined Balance Sheet and the Pro Forma Combined I-6
Income Statement of Wells Real Estate Fund IX, L.P.
</TABLE>
After reasonable inquiry, the Registrant is not aware of any material
factors relating to the real estate property described in this Current Report on
Form 8-K dated October 10, 1996 that would cause the financial information
reported herein not to be necessarily indicative of future operating results.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WELLS REAL ESTATE FUND IX, L.P.
Registrant
By: /s/ Leo F. Wells, III
---------------------------------------
Leo F. Wells, III, as General Partner
and as President and sole Director of
Wells Capital, Inc., the General
Partner of Wells Partners, L.P.,
General Partner
Date: October 23, 1996
3
<PAGE>
EXHIBIT INDEX
The following document is incorporated by reference in this report and
accordingly is filed as an exhibit to this report:
<TABLE>
<CAPTION>
Sequential
Description of Document Page No.
- ----------------------- ---------
<S> <C>
Supplement No. 3 dated October 22, 1996 to the Prospectus of
Wells Real Estate Fund IX, L.P. dated January 5, 1996,
contained in 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. filed with the
Commission on October 24, 1996 (Commission File No. 33-83852)
</TABLE>
4
<PAGE>
Wells Real Estate Fund IX, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Balance Sheet
September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Fund IX, L.P. Adjustments Balance Sheet
--------------- -------------- -------------
<S> <C> <C> <C>
Assets
Investments in joint ventures $ 1,577,396(2) 2,320,553 $ 3,897,949
Cash 14,715,325(1) (2,182,231) 12,533,094
Other assets 1,043,560 (93,033) 950,527
-------------- -------------- ------------
Total assets $ 17,336,281 45,289 $ 17,381,570
============== ============== ============
Liabilities and Partners' Capital
Liabilities $ 678,738 0 $ 678,738
Partners' Capital
General Partner 500 500
Limited Partners
Class A 13,388,768 45,289 13,434,057
Class B 3,268,175 0 3,268,175
Original limited partner 100 0 100
------------- -------------- ------------
Total partners' capital 16,657,543 45,289 16,702,832
------------- -------------- ------------
Total liabilities and partners' capital $ 17,336,281 45,289 $ 17,381,570
============= ============== ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Statements.
<PAGE>
Wells Real Estate Fund IX, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Income Statement
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Fund VIII, L.P. Adjustments Income Statement
----------------- ------------- ----------------
<S> <C> <C> <C>
Revenues:
Equity in earnings of joint ventures $ 0(1) 45,289 $ 45,289
Interest Income 215,961 0 215,961
-------------- -------------- --------------
215,961 45,289 261,250
-------------- -------------- --------------
Expenses:
General and administrative expenses 66,682 0 66,682
-------------- -------------- --------------
Net income $ 149,279 45,289 $ 194,568
============== ============== ==============
Net income (loss) allocated to general partners $ 0 0 $ 0
Net income allocated to Class A limited partners $ 149,279 45,289 $ 194,568
Net loss allocated to Class B limited partners $ 0 0 $ 0
Net income allocated per Class A weighted
average limited partner unit $ 0.19 0.02 $ 0.21
Net loss allocated per Class B weighted
average limited partner unit $ 0.00 0 $ 0.00
Cash distribution per Class A weighted
average limited partner unit $ 0.19 0 $ 0.19
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Statements.
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
Notes to Unaudited Pro Forma Combined Balance Sheet
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1996. As the TCI
Central, Inc. Building was not completed and did not commence operations until
July 1996, December 31, 1995 pro forma information is not presented.
In the opinion of the management of Wells Real Estate Fund IX, L.P., the Pro
Forma Combined Balance Sheet includes all adjustments necessary for a fair
presentation of the financial position as of September 30, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Balance Sheet:
(1) Reflects cash used for the purchase of the TCI Central, Inc. Building;
(2) Reflects contribution to the Fund VIII - Fund IX Joint Venture.
Notes to Unaudited Pro Forma Combined Income Statement
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Income Statement for the nine months ended
September 30, 1996. As the TCI Central, Inc. Building was not completed and did
not commence operations until July, 1996, December 31, 1995, pro forma
information is not presented.
In the opinion of the management of Wells Real Estate Fund IX, L.P., the
Unaudited Pro Forma Combined Income Statement includes all adjustments necessary
for a fair presentation of the results of operations for the nine months ended
September 30, 1996.
The Unaudited Pro Forma Combined Income Statement for the nine months ended
September 30, 1996, includes the results of operations for Wells Real Estate
Fund IX, L.P., and the estimated equity in earnings provided by the TCI Central,
Inc. Building. In the opinion of management, this estimate is a fair
presentation of the results of operations for the nine months ended September
30, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Combined Income Statement.
(1) Reflects Wells Real Estate Fund IX, L.P.'s 50% equity in earnings of the
TCI Central, Inc. Building.
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
SUPPLEMENT NO. 3 DATED OCTOBER 22, 1996 TO THE PROSPECTUS
DATED JANUARY 5, 1996
This document supplements, and should be read in conjunction with, the
Prospectus of Wells Real Estate Fund IX, L.P. dated January 5, 1996, Supplement
No. 1 thereto dated April 24, 1996 and Supplement No. 2 thereto dated June 28,
1996 ("Supplement No. 2") (collectively, the "Prospectus"). Unless otherwise
defined herein, capitalized terms used in this Supplement shall have the same
meanings as in the Prospectus.
The purpose of this Supplement is to describe the following:
(i) The status of the offering of units of limited partnership interest
(the "Units") in Wells Real Estate Fund IX, L.P. (the "Partnership");
(ii) The acquisition by a joint venture (the "Joint Venture") between
the Partnership and Wells Real Estate Fund VIII, L.P. ("Wells Fund VIII") of an
office building in Farmers Branch, Texas in the north Dallas, Texas metropolitan
area; and
(iii) Revisions to the "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" section of the Prospectus.
Status of the Offering
Pursuant to the Prospectus, the offering of Units in the Partnership
commenced January 5, 1996. The Partnership commenced operations on February 12,
1996, upon the acceptance of subscriptions for the minimum offering of
$1,250,000 (125,000 Units). As of October 15, 1996, the Partnership had raised a
total of $20,468,407 in offering proceeds (2,046,841 Units), comprised of
$16,488,592 raised from the sale of Class A Status Units (1,648,859 Units) and
$3,979,815 raised from the sale of Class B Status Units (397,982 Units).
The Joint Venture
The Joint Venture was originally formed for the purpose of acquiring a
7.09 acre tract of real property located in Madison, Wisconsin and constructing
thereon a four-story office building containing approximately 96,750 rentable
square feet (the "Madison Project"). Westel-Milwaukee Company, Inc. d/b/a
Cellular One ("Cellular One") has agreed to lease approximately 75,000 rentable
square feet of the Project upon its completion pursuant to an Agreement to
Lease, as described in Supplement No. 2. As of September 30, 1996, the Joint
Venture had expended $2,309,040 in connection with the Madison Project, and it
is anticipated that a total of $8,190,960 in additional funds will be required
to complete the construction. Construction of the Madison Project is currently
on schedule with an anticipated completion date on or before June 15, 1997.
All income, profit, loss, cash flow, resale gain, resale loss and sale
proceeds of the Joint Venture will be allocated and distributed between Wells
Fund VIII and the Partnership based on their respective capital contributions to
the Joint Venture.
The Joint Venture acquired an office building located in Farmers Branch,
Dallas County, Texas (the "Dallas Property") on October 10, 1996. As of October
15, 1996, each of Wells Fund VIII and the Partnership had invested $3,723,974
and $3,748,974, respectively, in the Joint Venture and owned a 50% equity
interest in the Joint Venture. It is anticipated that the ultimate percentage
ownership in the Joint Venture to be owned by each of the respective
partnerships will remain at 50% as further contributions are made to the Joint
Venture to fund the Madison Project and any future costs associated with the
Dallas Property.
<PAGE>
Wells Fund VIII is acting as the initial Administrative Venturer of the
Joint Venture and, as such, is responsible for establishing policies and
operating procedures with respect to the business and affairs of the Joint
Venture. However, approval of each of Wells Fund VIII and the Partnership is
required for any major decision or any action which materially affects the Joint
Venture or its real property investments.
No payment will be made by the Joint Venture to any of Wells Fund VIII,
the Partnership or any Affiliate, or partners or employees of any of Wells Fund
VIII or the Partnership for the services of any such party, other than under
management agreements and leasing and tenant coordinating agreements with Wells
Management Company, Inc., an Affiliate of the General Partners, as manager and
agent, which agreements concern the management and leasing of the real property
owned and operated by the Joint Venture. The Partnership will pay fees and
expenses to the General Partners and their Affiliates as described in the
section of the Prospectus entitled "COMPENSATION OF THE GENERAL PARTNERS AND
AFFILIATES."
The Dallas Property
Purchase of the Dallas Property. The Joint Venture entered into an
-------------------------------
Agreement for the Purchase and Sale of Property dated October 10, 1996 (the
"Purchase Agreement") with TCI Valwood Limited Partnership I, a Texas limited
partnership (the "Seller"), for the acquisition of a 4.864 acre tract of real
property and the one-story office building thereon located in Farmers Branch,
Dallas County, Texas (the "Dallas Property") for a purchase price of $4,450,000.
The Seller is not affiliated with the Joint Venture, Wells Fund VIII, the
Partnership or their General Partners. The Dallas Property has 40,000 gross
rentable square feet and is 100% leased to TCI Central, Inc. ("TCI").
The office building on the Dallas Property is a single-story
office/flexible purpose building which is split into three main areas, a larger
main office section which includes conference rooms and a studio, together with
studio-related areas as well as a reception and general office area, a smaller,
office section which includes a conference room, a design room, and an open work
area, as well as general offices, and a warehouse area. The entire building is
air conditioned. Its appearance is modern, with a reinforced concrete
foundation, steel column frames, reflective glass windows and a stucco-like
exterior. Off street parking is provided in three separate areas surrounding the
building with a total of approximately 235 designated parking spaces. The Dallas
Property has been landscaped with the assistance of a landscape architect. The
grounds include strip lawn areas as well as ornamental shrubs and trees, and are
equipped with an automatic underground irrigation system.
An independent appraisal of the Dallas Property was prepared by The
David L. Beal Company Real Estate Appraisers and Consultants, as of October 1,
1996, pursuant to which the market value of the land and the leased fee interest
in the Dallas Property subject to the TCI Lease (described below) was estimated
to be $4,500,000, in cash or terms equivalent to cash. This value estimate was
based upon a number of assumptions, including that the Dallas Property will
continue operating at a stabilized level with TCI occupying 100% of the rentable
area. The Joint Venture also obtained an environmental report prior to closing
evidencing that the environmental condition of the Dallas Property was
satisfactory.
The Joint Venture purchased the Dallas Property from the Seller on
October 10, 1996 pursuant to the terms of the Purchase Agreement. In accordance
with the terms of the Custodial Agency Agreement dated November 15, 1994 between
Wells Fund VIII and The Bank of New York (as successor-in-interest to
NationsBank of Georgia, N.A.) (the "Agent"), and the Amended and Restated
Custodial Agency Agreement dated November 30, 1995 between the Partnership and
the Agent, legal title to the Dallas Property is being held by the Agent as
agent for the Joint Venture.
At the closing of the acquisition of the Dallas Property, the Joint
Venture paid attorneys fees of $12,750, a fee of $6,000 to the appraiser for the
appraisal report, a fee of $3,952.52 to an independent engineering firm for a
report evaluating the condition of the improvements on the real property, and
other miscellaneous closing costs of approximately $358. At the closing, the
Seller also paid real estate commissions and, pursuant to the Purchase
Agreement, paid for the Joint Venture's owners title insurance policy.
2
<PAGE>
Location of the Dallas Property. The Dallas Property is located in an
-------------------------------
office park development known as Valwood Park -Farmers Branch, Phase II, which
is a controlled development industrial park. Valwood Park is located in the
city of Farmers Branch, Dallas County, in the north Dallas, Texas metropolitan
area. The Dallas Property has a highly visible location within Valwood Park, by
virtue of is location on Valwood Parkway near the intersection of I-35 (Stemmons
Freeway) and I-635 (LBJ Freeway). DFW Airport is located 15 minutes west of
Valwood Park via I-635, downtown Dallas is approximately 30 minutes south and
Love Field (Dallas' other major airport) is 25 minutes away. The area is
surrounded by both mature and recently constructed residential developments as
well as nearby hotel, retail and office complexes.
Dallas is the seventh most populous city in the United States with over
one million residents and the second largest city in Texas. The Dallas Primary
Metropolitan Statistical Area ("PMSA"), with a population of over 2.6 million
residents, is one of the fastest growing urban areas in the United States. Its
area population has grown by 35% since 1980 and is expected to be the fourth
largest in the nation by the year 2010. Since 1990, the Dallas PMSA has created
over 300,000 jobs. Dallas recently ranked in the top ten in the country in
terms of growth and employment. With over 7,500 corporations represented in
Dallas County, the Dallas PMSA recently ranked fifth on the Dun & Bradstreet
list of "Million Dollar" corporate headquarters, third on the Future 500 list of
industrial headquarters, fourth on the Fortune 500 list of service headquarters,
and fourth among insurance headquarters cities in the United States.
Valwood Park's development commenced in the late 1970's, and the park is
currently approximately 85% developed. Within Valwood Park, there are
approximately 9.2 million square feet of industrial and service/tech office
space. A property owner's association oversees the maintenance of landscaping
and common areas within Valwood Park. Each property within the park is required
to conform to quality-oriented covenants, codes and restrictions, including
guidelines for landscape requirements, construction materials, building set back
lines, coverage ratios and other aesthetic issues. The streets and common areas
incorporate extensive landscaped areas in the street medians and are designed to
accommodate both functional and appearance concerns. Lease rates in Valwood
Park are generally higher than the overall Dallas office rental market.
The Joint Venture will experience competition for tenants from owners
and managers of various other office buildings located in the immediate area of
the Dallas Property which would adversely effect the Joint Venture's ability to
retain the Dallas Property's existing tenant, and if necessary in the future, to
attract and retain other tenants.
TCI Lease. On October 10, 1996, the Seller assigned to the Joint
---------
Venture all of its rights pursuant to the Industrial Lease Agreement between
Industrial Developments International, Inc., as landlord, and TCI, as tenant,
dated as of November 1, 1995, as amended by instruments dated July 16, 1996 and
August 29, 1996, and as assigned to the Seller (such agreement, as amended and
assigned, is referred to herein as the "TCI Lease"). TCI consented to the
assignment of the TCI Lease to the Joint Venture on October 1, 1996 and agreed
that that lease will remain in full force and effect following the assignment.
TCI is a wholly owned subsidiary of TCI Communications, Inc. ("TCI
Communications"), a publicly-held corporation which is the largest cable company
in the United States, serving 13 million customers. TCI Communications, through
its subsidiaries and affiliates, is principally engaged in the construction,
acquisition, ownership and operation of cable television systems. TCI
Communications reported annual revenues for 1995 in excess of $5 billion. TCI
reported annual revenues for 1995 in excess of $453 million and its net worth,
as of December 31, 1995, was in excess of $426 million.
TCI leases 100% of the 40,000 rentable square feet of the Dallas
Property as its Dallas area headquarters for TCI Cablevision of Dallas, Inc.
TCI uses approximately one-half of the leased area as office space for
approximately 80 to 100 employees who are technicians and supervisory staff.
TCI uses the remaining 20,000 square feet for an aggregate of approximately 35
employees in three separate functions, as follows: (i) a cash flow office, for
cable customers to bring in payments and exchange equipment, (ii) a production
studio for filming and editing of local origination programming and commercials,
and (iii) a construction warehouse area.
3
<PAGE>
The TCI Lease commenced on July 19, 1996, and extends for a term of
fifteen years. TCI has the option to extend the initial term of the TCI Lease
for three consecutive five year periods. Each extension option must be
exercised, if at all, by TCI giving notice to the Joint Venture at least 180
days prior to (but no more than 210 days prior to) the expiration of the then
current lease term.
The annual base rent payable under the TCI Lease is $430,001 payable in
equal monthly installments of $35,833.42 during the first five years of the
lease term, $454,001 payable in equal monthly installments of $37,833.42 during
the next five years, and $482,001 payable in equal monthly installments of
$40,166.75 during the last five years of the lease term. The annual base rent
for each extended five year term under the TCI Lease, if TCI exercises its
option to extend the TCI Lease, will be an amount established in the Joint
Venture's reasonable determination which shall not be less than the base rent
payable for the last year of the prior lease term for the applicable five year
option, taking into account all relevant factors for rental rates then being
charged by landlords of comparable space in the vicinity of the Dallas Property.
If TCI does not agree with the Joint Venture's determination of the base rent
for such option period, TCI would have the right to retract its option to extend
the term by notifying the Joint Venture within 30 days of its receipt of notice
from the Joint Venture of the determination of the base rental rate for the
option period.
In addition to the base rent, TCI is required to pay additional rent
equal to all expenses incurred by the Joint Venture on behalf of TCI under the
terms of the TCI Lease, including, without limitation, any expenses incurred for
taxes, insurance, maintenance, repairs, replacements and utilities. Under the
terms of the TCI Lease, TCI is required to carry and maintain, at its own cost
and expense, certain types of insurance in form acceptable to the Joint Venture,
naming the Joint Venture as an additional insured, and with respect to insurance
against loss or damage to the Dallas Property, also naming the Joint Venture as
loss payee. Among other types of insurance, the TCI Lease requires that TCI
maintain liability insurance covering the leased premises and TCI's use thereof
against claims for personal injury, death, property damage and product
liability, in single limit amounts in not less than one million dollars and a
general aggregate limit of not less than ten million dollars, and "all-risk" or
an equivalent form of insurance against loss or damage to the Dallas Property in
an amount not less than 100% of the actual replacement value of the building and
improvements.
Property Management Fees. Property management and leasing services for
------------------------
the Dallas Property will be performed by Wells Management Company, Inc. (the
"Property Manager"), a Georgia corporation affiliated with the General Partners.
As compensation for its services, the Property Manager will receive fees equal
to 1% of the gross revenues for property management services and, during the
first five years of the term of the TCI Lease, 3% of the gross revenues for
leasing services.
Financial Information. The Statement of Excess Revenues Over Operating
---------------------
Expenses of the Dallas Property for the period from July 19, 1996 to September
30, 1996, included herein as Appendix I to this Supplement, has been included in
reliance upon the report of Arthur Andersen LLP, independent certified public
accountants, upon the authority of said firm as experts in accounting and
auditing. The pro forma financial information for the Partnership as of
September 30, 1996, and for the nine month period ended September 30, 1996,
included in Appendix I, has not been audited.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The information contained on page 52 of the Prospectus in the
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" section of the Prospectus is revised as of the date of this
Supplement by the deletion of the first paragraph of that section and the
insertion of the following paragraph in lieu thereof:
The Partnership commenced operations on February 12, 1996, upon the
acceptance of subscriptions for the minimum offering of $1,250,000 (125,000
Units). As of October 15, 1996, the Partnership had raised a total of
$20,468,407 in offering proceeds (2,046,841 Units), comprised of $16,488,592
raised from the sale of Class A Status Units (1,648,859 Class A Status Units)
and $3,979,815 raised from the sale of Class B Status Units (397,982 Class B
Status Units). After the payment of $716,394 in Acquisition and Advisory Fees,
payment of $3,070,261 in selling commissions and organizational and offering
expenses, the investment of $3,748,974 in the Joint Venture,
4
<PAGE>
as of October 15, 1996, the Partnership was holding net offering proceeds of
$12,932,778 available for investment in properties.
5
<PAGE>
APPENDIX I
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Wells Real Estate Fund VIII, L.P. and Wells
Real Estate Fund IX, L.P.:
We have audited the accompanying statement of excess revenues over operating
expenses for the TCI CENTRAL, INC. BUILDING for the period from July 19, 1996 to
September 30, 1996. This financial statement is the responsibility of
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of excess revenues over operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of excess
revenues over operating expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the TCI
Central, Inc. Building after acquisition by Wells Real Estate Fund VIII, L.P.
and Wells Real Estate Fund IX, L.P.. The accompanying statement of excess
revenues over operating expenses was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the TCI Central, Inc. Building's
revenues and expenses.
In our opinion, the statement of excess revenues over operating expenses
presents fairly, in all material respects, the excess of revenues over operating
expenses (exclusive of expenses described in Note 2) of the TCI Central, Inc.
Building for the period from July 19, 1996 to September 30, 1996 in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 15, 1996
<PAGE>
TCI CENTRAL, INC. BUILDING
STATEMENT OF EXCESS REVENUES OVER
OPERATING EXPENSES
<TABLE>
<CAPTION>
For the Period
From
July 19, 1996 to
September 30,
1996
----------------
<S> <C>
RENTAL REVENUES $90,578
OPERATING EXPENSES -
----------------
EXCESS OF REVENUES OVER OPERATING EXPENSES $90,578
================
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
TCI CENTRAL, INC. BUILDING
NOTES TO STATEMENT OF EXCESS REVENUES OVER
OPERATING EXPENSES
FOR THE PERIOD FROM JULY 19, 1996 TO
SEPTEMBER 30, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF REAL ESTATE PROPERTY ACQUIRED
On October 10, 1996, Wells Real Estate Fund VIII, L.P. and Wells Real Estate
Fund IX, L.P., through Fund VIII and Fund IX Associates, a Georgia joint
venture, acquired the TCI Central, Inc. Building, a 40,000 square foot office
and warehouse building located in Farmers Branch, Texas, for a cash purchase
price of $4,450,000. The building is 100% occupied by one tenant with a lease
term of 15 years commencing July 19, 1996. The lease is a triple net lease,
whereby the terms require the tenant to pay all operating expenses relating to
the building.
RENTAL REVENUES
Rental income from the lease is recognized on a straight-line basis over the
life of the lease.
2. BASIS OF ACCOUNTING
The accompanying statement of excess revenues over specific operating expenses
are presented on the accrual basis. This statement has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties acquired. Accordingly, the
statement excludes certain historical expenses not comparable to the operations
of the TCI Central, Inc. Building after acquisition by Wells Real Estate Fund
VIII, L.P. and Wells Real Estate Fund IX, L.P., such as depreciation.
<PAGE>
Wells Real Estate Fund IX, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Balance Sheet
September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Fund IX, L.P. Adjustments Balance Sheet
--------------- -------------- -------------
<S> <C> <C> <C>
Assets
Investments in joint ventures $ 1,577,396(2) 2,320,553 $ 3,897,949
Cash 14,715,325(1) (2,182,231) 12,533,094
Other assets 1,043,560 (93,033) 950,527
-------------- -------------- ------------
Total assets $ 17,336,281 45,289 $ 17,381,570
============== ============== ============
Liabilities and Partners' Capital
Liabilities $ 678,738 0 $ 678,738
Partners' Capital
General Partner 500 500
Limited Partners
Class A 13,388,768 45,289 13,434,057
Class B 3,268,175 0 3,268,175
Original limited partner 100 0 100
------------- -------------- ------------
Total partners' capital 16,657,543 45,289 16,702,832
------------- -------------- ------------
Total liabilities and partners' capital $ 17,336,281 45,289 $ 17,381,570
============= ============== ============
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Statements.
<PAGE>
Wells Real Estate Fund IX, L.P.
(A Limited Partnership)
Unaudited Pro Forma
Combined Income Statement
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Wells Real Estate Pro Forma Combined
Fund VIII, L.P. Adjustments Income Statement
----------------- ------------- ----------------
<S> <C> <C> <C>
Revenues:
Equity in earnings of joint ventures $ 0(1) 45,289 $ 45,289
Interest Income 215,961 0 215,961
-------------- -------------- --------------
215,961 45,289 261,250
-------------- -------------- --------------
Expenses:
General and administrative expenses 66,682 0 66,682
-------------- -------------- --------------
Net income $ 149,279 45,289 $ 194,568
============== ============== ==============
Net income (loss) allocated to general partners $ 0 0 $ 0
Net income allocated to Class A limited partners $ 149,279 45,289 $ 194,568
Net loss allocated to Class B limited partners $ 0 0 $ 0
Net income allocated per Class A weighted
average limited partner unit $ 0.19 0.02 $ 0.21
Net loss allocated per Class B weighted
average limited partner unit $ 0.00 0 $ 0.00
Cash distribution per Class A weighted
average limited partner unit $ 0.19 0 $ 0.19
</TABLE>
See accompanying notes to Unaudited Pro Forma Combined Statements.
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
Notes to Unaudited Pro Forma Combined Balance Sheet
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1996. As the TCI
Central, Inc. Building was not completed and did not commence operations until
July 1996, December 31, 1995 pro forma information is not presented.
In the opinion of the management of Wells Real Estate Fund IX, L.P., the Pro
Forma Combined Balance Sheet includes all adjustments necessary for a fair
presentation of the financial position as of September 30, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Balance Sheet:
(1) Reflects cash used for the purchase of the TCI Central, Inc. Building;
(2) Reflects contribution to the Fund VIII - Fund IX Joint Venture.
Notes to Unaudited Pro Forma Combined Income Statement
The following notes describe the pro forma adjustments necessary to reflect the
Unaudited Pro Forma Combined Income Statement for the nine months ended
September 30, 1996. As the TCI Central, Inc. Building was not completed and did
not commence operations until July, 1996, December 31, 1995, pro forma
information is not presented.
In the opinion of the management of Wells Real Estate Fund IX, L.P., the
Unaudited Pro Forma Combined Income Statement includes all adjustments necessary
for a fair presentation of the results of operations for the nine months ended
September 30, 1996.
The Unaudited Pro Forma Combined Income Statement for the nine months ended
September 30, 1996, includes the results of operations for Wells Real Estate
Fund IX, L.P., and the estimated equity in earnings provided by the TCI Central,
Inc. Building. In the opinion of management, this estimate is a fair
presentation of the results of operations for the nine months ended September
30, 1996.
The following provides information regarding pro forma adjustments reflected in
the Unaudited Pro Forma Combined Income Statement.
(1) Reflects Wells Real Estate Fund IX, L.P.'s 50% equity in earnings of the
TCI Central, Inc. Building.
