<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1996 or
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________________to__________________
Commission file number 33-83852 (1933 Act)
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Wells Real Estate Fund IX, L.P.
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(Exact name of registrant as specified in its charter)
Georgia 58-2126622
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Form 10-Q
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Wells Real Estate Fund IX,L.P.
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INDEX
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1996
and December 31, 1995................................ 3
Statements of Income for the Three
Months Ended March 31, 1996.......................... 4
Statement of Partners' Capital
for the Three Months Ended March 31, 1996............ 5
Statements of Cash Flows for the Three Months
Ended March 31, 1996................................. 6
Condensed Notes to Financial Statements.............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................... 10
PART II. OTHER INFORMATION.................................... 11
2
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WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets March 31, 1996 December 31, 1995
------ -------------- -----------------
<S> <C> <C>
Cash and cash equivalents (Note 2) $ 3,943,113 $ 600
Deferred project costs (Note 3) 166,880 0
Deferred offering costs (Note 4) 230,549 142,229
Prepaid expenses and other assets 11,600 0
--------- -------
Total assets $ 4,352,142 $ 142,829
========= =======
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 999 $ 0
Sales commissions payable 63,476 0
Due to affiliates (Note 5) 235,245 142,229
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Total liabilities 299,720 142,229
--------- -------
Partners' capital:
General partners 490 500
Original limited partner 100 100
Limited partners:
Class A-365,986 units at March 31, 1996 3,110,882 0
Class B-110,814 units at March 31, 1996 940,950 0
--------- -------
Total partners' capital 4,052,422 600
--------- -------
Total liabilities and partners' capital $4,352,142 $142,829
========= =======
</TABLE>
See accompanying condensed notes to financial statements.
3
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WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
Three Months Ended
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March 31, 1996
---------------
Revenues:
Interest Income $ 11,172
Expenses:
Computer costs 1,210
Printing and Notebooks 3,794
Administrative Salaries 4,179
Office Expense 2,792
Postage 29
Taxes and licenses 30
Other 119
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12,153
----------
Net income (loss) $ (981)
==========
Net loss allocated to General Partners $ (10)
Net income allocated to Class A Limited Partners $ 0
Net loss allocated to Class B Limited Partners $ (971)
Net income per Class A weighted average Limited
Partner Unit $ 0
Net loss per weighted average Class B Limited
Partner Unit $ ( 0.01)
Cash distribution per Class A Limited Partner
Unit $ 0
See accompanying condensed notes to financial statements.
4
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WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Limited Partners
---------------------------------------
Class A Class B Total
------- ------- General Partners'
Original Units Amount Units Amount Partners Capital
-------- ------- ----------- ------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 $100 - $ - - $ - $500 $ 600
Limited partner con-
tributions - 365,986 3,659,861 110,814 1,108,142 - 4,768,003
Net loss - - - - (971) (10) (981)
Sales commissions - - (365,986) - (110,814) - (476,800)
Other offering expenses - - (182,993) - (55,407) - (238,400)
----- ------- ---------- ------- ---------- ---- ----------
BALANCE, MARCH 31, 1996 $100 365,986 $3,110,882 110,814 $ 940,950 $490 $4,052,422
===== ======= ========== ======= ========== ==== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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WELLS REAL ESTATE FUND IX, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 1996
----------------
<S> <C>
Cash flow from operating activities:
Net income (loss) $ (981)
Adjustments to reconcile net loss to net
cash used in operating activities:
Changes in assets and liabilities:
Increase in prepaid and other assets (11,600)
Increase in accounts payable 999
Increase in due to affiliates 4,696
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Net cash used in operating activities (6,886)
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Cash flow from investing activities:
Deferred Project Costs Paid (166,880)
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Cash flows from financing activities:
Limited partners' contributions 4,768,003
Sales commissions paid (413,324)
Offering costs paid (238,400)
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Net cash provided by financing
activities 4,116,279
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Net increase in cash and cash equivalents 3,942,513
Cash and cash equivalents, beginning of year 600
----------
Cash and cash equivalents, end of period $3,943,113
==========
</TABLE>
See accompanying condensed notes to financial statements.
6
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WELLS REAL ESTATE FUND IX, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statement
March 31, 1996
(1) Summary of Significant Account Policies
---------------------------------------
(a) General
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Wells Real Estate Fund IX, L.P. (the "Partnership") is a Georgia public
limited partnership having Leo F. Wells, III and Wells Partners, L.P., as
General Partners. The Partnership was formed on August 15, 1994, for the
purpose of acquiring, developing, owning, operating, improving, leasing, and
otherwise managing for investment purposed income producing commercial or
industrial properties.
On January 5, 1996, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10.00 per unit) pursuant to a
Registration Statement on Form S-11 filed under the Securities Act of 1933.
The Partnership commenced active operations on February 12, 1996, when it
received and accepted subscriptions for 125,000 units. An aggregate
requirement of $2,500,000 of offering proceeds was reached on February 26,
1996, thus allowing for the admission of New York and Pennsylvania investors
in the Partnership. As of March 31, 1996, the Partnership had sold 365,986
Class A status Units, and 110,814 Class B Status Units, held by a total of
822 and 55 Limited Partners respectively, for total Limited Partner capital
contributions of $4,768,003. After payment of $166,880 in selling
commissions and organization and offering expenses, the Partnership was
holding net offering proceeds of $3,885,923 available for investment in
properties.
(b) 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.
(c) 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.
(d) Competition
---------------
The Partnership will experience competition for tenants from owners and
managers of competing projects which may include the General Partners and
their
7
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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.
(e) Basis of Presentation
-------------------------
The financial statements of Wells Real Estate Fund IX, L.P. (the
"Partnership") have been prepared in accordance with instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
These quarterly statements have not been examined by independent
accountants, but in the opinion of the General Partners, the statements for
the unaudited interim periods presented include all adjustments, which are
of a normal and recurring nature, necessary to present a fair presentation
of the results for such periods.
(f) Partnership Distribution
----------------------------
Net Cash From Operations, as defined in the Partnership Agreement, will be
distributed first to Limited Partners holding Class A Status Units on a per
Unit basis until they have received a 10% annual return on their Net Capital
Contributions, as defined in the Partnership Agreement. Further
distributions of Net Cash From Operations will be made to the General
Partners until they receive distributions equal to 10% of the total amount
of Net Cash From Operations distributed. Thereafter, the Limited Partners
holding Class A status Units will receiver 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 Status Units. No
distribution will be paid to the Limited Partners for the quarter ended
March 31, 1996.
(g) Income Taxes
----------------
The Partnership has not requested a ruling from the Internal Revenue Service
to the effect that it will be treated as a partnership and not an
association taxable as a corporation for Federal income tax purposes. The
Partnership requested an opinion of counsel as to its tax status, but such
opinion is not binding upon the Internal Revenue Service.
(h) Statement of Cash Flows
---------------------------
For the purpose of the statement of cash flows, the Partnership considers
all highly liquid debt instruments purchased with an original maturity of
three months or less to be cash equivalents. Cash equivalents include cash
and short-term investments.
(2) Deferred Project Costs
----------------------
The Partnership pays Acquisitions and Advisory Fees to the General Partners
for acquisition and advisory services. These payments, as provided by the
Partnership Agreement, may not exceed 5% of the Limited Partners' capital
contributions. Acquisition and Advisory Fees paid as of March 31, 1996,
amounted to $166,880 and represented approximately 3.5% of the Limited
Partners' capital contributions received. These fees are allocated to
specific properties as they are purchased.
8
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(3) Deferred Offering Costs
------------------------
Wells Capital, Inc. (the "Company"), the general partner of Wells Partners,
L.P., pays all the offering expenses for the Partnership. The Company may be
reimbursed by the Partnership to extent that such offering expenses do not
exceed 5% of total Limited Partners' capital contributions. As of March 31,
1996, the Partnership had reimbursed the Company for $238,400 in offering
expenses, which amounted to approximately 5% of Limited Partners' capital
contributions.
(4) Due To Affiliates
------------------
Due to Affiliates consists of Acquisition and Advisory Fees, deferred
offering costs, and other operating expenses paid by the Company on behalf
of the Partnership.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
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RESULTS OF OPERATION.
- ---------------------
The Partnership commenced active operations on February 12, 1996, when it
received and accepted subscriptions for 125,000 units. An aggregate requirement
of $2,500,000 of offering proceeds was reached on February 26, 1996, thus
allowing for the admission of New York and Pennsylvania investors into the
Partnership. As of March 31, 1996, the Partnership had sold 365,986 Class A
Status Units and 110,814 Class B Status Units, held by a total of 822 and 55
Limited Partners respectively, for total Limited Partner contributions of
$4,768,003. After payment of $166,880 in Acquisition and Advisory Fees, payment
of $715,200 in selling commissions and organization and offering expenses, as of
March 31, 1996, the Partnership was holding net offering proceeds of $3,885,923
available for investment in properties.
Gross revenues of the Partnership of $11,172 for the three months ended March
31, 1996, were attributable primarily to interest income earned on funds held by
the Partnership prior to the investment in properties. Expenses of the
Partnership were $12,153 for the three months ended March 31, 1996, and
consisted primarily of printing, computer, office and partnership administrative
costs. Since the Partnership did not commence active operations until it
received and accepted subscriptions for a minimum of 125,000 units on February
12, 1996, there is no comparative financial data available from the prior fiscal
year.
Net loss per weighted average unit for Class B Limited Partners was $0.01 for
the three months ended March 31, 1996.
Net increase in cash and cash equivalents is the result of raising $3,942,513 in
Limited Partners' capital contributions before deducting commissions and
offering costs.
No cash distributions were made to Limited Partners during the first quarter of
1996.
10
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PART II - OTHER INFORMATION
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ITEM 6 (b). No reports on Form 8-K were filed during the first quarter of
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WELLS REAL ESTATE FUND IX, L.P.
Dated: May 13, 1996 By: /s/ Leo F. Wells, III
---------------------------------
Leo F. Wells, III, as Individual
General Partner and as President,
Sole Director and Chief Financial
Officer of Wells Capital, Inc., the
General Partner of Wells Partners, L.P.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,943,113
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,600
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,352,142
<CURRENT-LIABILITIES> 299,720
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,052,422
<TOTAL-LIABILITY-AND-EQUITY> 4,352,142
<SALES> 0
<TOTAL-REVENUES> 11,172
<CGS> 0
<TOTAL-COSTS> 12,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (981)
<INCOME-TAX> (981)
<INCOME-CONTINUING> (981)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (981)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
