<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1997 or
--------------------------------------
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________________to__________________
Commission file number 0-22039
---------------------------------------------------------
Wells Real Estate Fund IX, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2126622
- ------------------------------- -----------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
--------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
<PAGE>
Form 10-Q
---------
Wells Real Estate Fund IX, L.P.
-------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1997
and December 31, 1996...................................................3
Statements of Income for the Three Months and Nine Months
Ended September 30, 1997 and 1996.......................................4
Statements of Partners' Capital for the Year Ended
December 31, 1996 and the Nine Months
Ended September 30, 1997................................................5
Statements of Cash Flows for the Nine Months
Ended September 30, 1997 and 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.................................................................17
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets September 30, 1997 December 31, 1996
------ ------------------ -----------------
<S> <C> <C>
Nonoperating real estate assets, at cost:
Land $ 0 $ 607,930
Construction in progress 0 482,959
----------- -----------
Total nonoperating real estate assets 0 1,090,889
Investment in joint venture (Note 2) $18,828,706 $ 4,929,728
Cash and cash equivalents 10,346,656 23,557,985
Due from affiliates 268,850 46,197
Deferred project costs 548,777 1,161,078
Organization costs, less accumulated
amortization of $6,250 in December 1996
and $10,937 in September 1997 20,313 25,000
Prepaid expenses and other assets 45,000 103,000
----------- -----------
Total assets $30,058,302 $30,913,877
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 18 $ 393,001
Partnership distribution payable 395,715 178,771
Due to affiliates 0 422,996
Sales commissions payable 0 166,701
----------- -----------
Total liabilities 395,733 1,161,469
----------- -----------
Partners' capital:
General partners: 0 206
Limited partners:
Class A - 2,944,776 units outstanding 25,271,156 24,911,231
Class B - 555,224 units outstanding 4,391,413 4,840,871
Original limited partner 0 100
----------- -----------
Total partners' capital 29,662,569 29,752,408
----------- -----------
Total liabilities and partners'
capital $30,058,302 $30,913,877
=========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------------- ----------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Equity in income of joint
venture $ 247,882 $ 0 $ 411,448 $ 0
Interest income 138,106 135,635 490,608 215,961
----------- ----------- ----------- -----------
385,988 135,635 902,056 215,961
Expenses:
Computer cost 2,354 1,403 6,516 3,619
Printing and notebooks (1,660) 2,856 13,516 16,010
Administrative salaries 6,658 7,796 18,674 20,490
Office expense 1,339 1,974 3,864 5,780
Postage 2,317 1,937 11,318 2,416
Taxes and licenses 0 0 19 30
Other (3,832) (2,299) 0 229
Accounting fees 165 300 16,775 2,950
Legal fees 658 313 9,660 1,233
Investment analysis expense 0 5,366 3,688 9,945
Professional fees 453 1,651 1,689 1,680
Registration filing fees 0 0 250 0
Amortization of organization
costs 1,562 0 4,687 0
Bank service charge 2,934 2,300 2,935 2,300
----------- ----------- ----------- -----------
12,948 23,597 93,591 66,682
----------- ----------- ----------- -----------
Net income $ 373,040 $ 112,038 $ 808,465 $ 149,279
=========== =========== =========== ===========
Net (loss) allocated to
General Partners $ 0 $ 0 $ (206) $ 0
Net income allocated to
Class A Limited Partners $ 577,831 $ 112,038 $ 1,115,737 $ 149,279
Net (loss) allocated to Class
B Limited Partners $ (204,791) $ 0 $ (307,066) $ 0
Net income per Class A
Limited Partner Unit $ 0.20 $ 0.12 $ 0.38 $ 0.19
Net (loss) per Class B
Limited Partner Unit $ (0.37) $ 0 $ (.55) $ 0
Cash distribution per Class A
Limited Partner Unit $ 0.13 $ 0.19 $ 0.30 $ 0.19
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND NINE MONTHS ENDED
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Limited Partners
----------------------------------------------------
Class A Class B Total
------- ------- General Partners'
Original Units Amounts Units Amounts Partners Capital
-------- ----- ------- ----- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ 100 0 $ 0 0 $ 0 $ 500 $ 600
Net income (loss) 0 0 330,270 0 (31,220) (294) 298,756
Limited partner contributions 0 2,935,931 29,359,306 564,069 5,640,694 0 35,000,000
Partnership distributions 0 0 (328,196) 0 0 0 (328,196)
Sales commissions and discounts 0 0 (2,935,927) 0 (564,073) 0 (3,500,000)
Other offering expenses 0 0 (1,441,752) 0 (277,000) 0 (1,718,752)
Class B conversion elections 0 (8,488) (72,470) 8,488 (72,470) 0 0
------- ---------- ------------ --------- ------------ --------- ------------
BALANCE, December 31, 1996 $ 100 2,927,443 $ 24,911,231 572,557 $ 4,840,871 $ 206 $ 29,752,408
Net income (loss) 0 0 $ 1,115,737 0 (307,066) (206) $ 808,465
Partnership distributions 0 0 (893,601) 0 0 0 (893,601)
Class B conversion elections 0 17,333 142,392 (17,333) (142,392) 0 0
Return of original Limited
Partners Investments (100) 0 0 0 0 0 (100)
Sales commissions 0 0 (4,603) 0 0 0 (4,603)
------- ---------- ------------ --------- ------------ --------- ------------
BALANCE, September 30, 1997 $ 0 2,944,776 $ 25,271,156 555,224 $ 4,391,413 $ 0 $ 29,662,569
======= ========== ============ ========= ============ ========= ============
</TABLE>
See accompanying condensed notes to financial statements
5
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 808,465 $ 149,279
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of joint ventures (411,449) 0
Amortization of organization costs 4,687 0
Changes in assets and liabilities:
Prepaids and other assets 58,000 (40,000)
Accounts payable (3,383) (1,600)
Due to affiliates (422,995) 34,492
Accounts receivable (58) 0
------------ ------------
Net cash provided by operating
activities 33,267 142,171
------------ ------------
Cash flows from investing activities:
Investment in joint ventures (13,721,748) (1,512,444)
Deferred project costs paid 0 (685,874)
Distributions received from joint ventures 259,356 0
Investment in real estate 1,065,857 0
------------ ------------
Net cash used in investing activities (12,396,535) (2,198,318)
------------ ------------
Cash flows from financing activities:
Limited partners' contributions 0 19,596,403
Sales commissions paid (171,304) (1,845,711)
Offering costs paid 0 (979,820)
Distributions to partners from accumulated
earnings (676,657) 0
Return of original limited partner investment (100) 0
------------ ------------
Net cash (used in) provided by financing
activities (848,061) 16,770,872
------------ ------------
Net (decrease) increase in cash and cash
equivalents (13,211,329) 14,714,725
Cash and cash equivalents, beginning of year 23,557,985 600
------------ ------------
Cash and cash equivalents, end of period $ 10,346,656 $ 14,715,325
============ ============
Supplemental disclosure of noncash investing
activities:
Deferred project costs applied to joint venture
activities $ 612,300 $ 64,952
============ ============
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statement
September 30, 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
-----------
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, constructing, owning, operating,
improving, leasing, and otherwise managing for investment purposes income-
producing commercial properties 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. The offering was terminated on December 30,
1996, at which time the Partnership had sold 2,935,931 Class A Status
Units, and 564,069 Class B Status Units, held by a total of 1,841 and 257
Class A and Class B Limited Partners respectively, for total Limited
Partner capital contributions of $35,000,000.
The Partnership owns interests in properties through equity ownership in
the following joint ventures: (i) Fund VIII and Fund IX Associates, a joint
venture between the Partnership and Wells Real Estate Fund VIII, L.P. (the
"Fund VIII - Fund IX Joint Venture"), and (ii) Fund IX and Fund X
Associates, a joint venture between the Partnership and Wells Real Estate
Fund X, L.P. (the "Fund IX - Fund X Joint Venture").
As of September 30, 1997, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
four-story office building in Madison, Wisconsin (the "Cellular One Office
Building"), which is owned by the Fund VIII-Fund IX Joint Venture; (ii) a
one-story office building in Farmer's Branch, Texas (the "TCI Building"),
which is owned by the Fund VIII-Fund IX Joint Venture; (iii) a three-story
office building under construction in Knoxville, Tennessee (the "ABB
Building"), which is owned by the Fund IX-Fund X Joint Venture; (iv) a
two-story office building in Irvine, California (the "Matsushita
Building"), which is owned by the Fund VIII-Fund IX Joint Venture; and (v)
a two-story office building in Boulder County, Colorado (the "Cirrus Logic
Building"), which is owned by the Fund VIII-Fund IX Joint Venture.
7
<PAGE>
(b) 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. For further information, refer to the
financial statements and footnotes included in the Partnership's Form 10-K
for the year ended December 31, 1996.
2) Investment in Joint Ventures
----------------------------
The Partnership owns interests in five properties as of September 30, 1997,
through investments in the joint ventures described above. The Partnership
does not have control over the operations of the joint ventures; however,
it does exercise significant influence. Accordingly, investment in joint
ventures is recorded on the equity method. For further information on
investments in joint ventures, see Form 10-K for the Partnership for the
year ended December 31, 1996.
The following describes additional information about the properties in
which the Partnership owned an interest as of September 30, 1997:
Fund IX - Fund X Joint Venture
------------------------------
On March 20, 1997, the Partnership and Well Real Estate Fund X, L.P.
("Wells Fund X"), a Georgia public limited partnership affiliated with the
Partnership through common general partners, formed a joint venture known
as Fund IX and Fund X Associates (the "Fund IX-X Joint Venture"). Although
the ultimate percentages of ownership in the Fund IX-X Joint Venture have
not yet been finally determined, it is anticipated that the Partnership
will hold an approximately 50% equity interest in the two properties
described below. The Partnership has reserved sufficient funds for this
purpose. The total cost to complete both properties is anticipated to be
approximately $13,000,000. As of September 30, 1997, the Partnership had
contributed $3,691,765 and Wells Fund X had contributed $2,150,000 for
total contributions of $5,841,765 to the Fund IX - Fund X Joint Venture for
the acquisition and development of the two properties. At this time, the
Partnership's equity interest in the Fund IX - Fund X Joint Venture is
approximately 63.2%, and Well's Fund X equity interest in the Fund IX -
Fund X Joint Venture is 36.8%.
The ABB Property
----------------
On March 20, 1997, the Partnership contributed a 5.62 acre tract of real
property in Knoxville, Knox County, Tennessee and improvements thereon (the
"ABB Property"), valued at $1,306,393. As of September 30, 1997, the
Partnership had contributed $3,041,765 and Wells Fund X had contributed
$1,500,000 toward the development of this project for total contributions
of $4,541,765.
8
<PAGE>
A three-story office building containing approximately 83,885 rentable
square feet is under construction on the site. An agreement was signed with
ADEVCO Corporation to supervise, manage and coordinate the planning,
design, construction and completion of the property. Integra Construction,
Inc. is acting as the general contractor and Smallwood, Reynolds, Stewart,
Stewart Associates, Inc. as the architect.
ABB Environmental Systems, a subsidiary of ABB, Inc., has executed a lease
for 55,000 rentable square feet comprising approximately 66% of the
building. The initial term of the lease will be 9 years and 11 months
commencing on substantial completion of the project which is currently
anticipated to be January 1, 1998. ABB has 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 $646,250 payable in equal monthly
installments of $53,854 during the first five years and $728,750 payable in
equal monthly installments of $60,729 during the last four years and 11
months of the initial term. The annual base rent for each extended term
will be at market rental rates. In addition to the base rent, ABB is
required to pay additional rent equal to its share of operating expenses
during the lease term.
It is currently anticipated that the total cost to complete this project
will be approximately $7,800,000. Although the ultimate percentage of
ownership in the Fund IX - Fund X Joint Venture has not yet been finally
determined, it is anticipated that the Partnership will contribute $858,235
and Wells Fund X will contribute $2,400,000 to the remaining cost of
approximately $3,258,235 for an approximate 50% equity interest each.
The Partnership has reserved sufficient funds for this purpose. For further
information regarding the formation of the Fund IX - Fund X Joint Venture
and the development of the ABB Property, refer to the Form 8-K of Wells
Real Estate Fund X, L.P. dated March 26, 1997, which was filed with the
Commission on April 1, 1997 (Commission File No. 333-7979).
Oklahoma City Project
---------------------
On May 30, 1997, the Fund IX - Fund X Joint Venture entered into an
agreement for the purchase and sale of real property with Wells Development
Corporation ("Wells Development"), an affiliate of the General Partners,
for the acquisition of a one-story building to be developed on property
located in Oklahoma City, Oklahoma (the "Oklahoma City Project"). The Fund
IX - Fund X Joint Venture will purchase the Oklahoma City Project for a
purchase price which is currently anticipated to be approximately
$5,200,000. Under the terms of its contract with Wells Development, the
Fund IX - Fund X Joint Venture was required to make an earnest money
deposit to Wells Development in the amount of $1,300,000. The earnest money
deposit was used to fund the purchase of the land upon which the Oklahoma
City property will be developed and will also be used to fund the initial
costs of construction and development of the project. The Partnership and
Wells Fund X made capital contributions of $650,000 each to the Fund IX -
Fund X Joint Venture to provide the Joint Venture with sufficient funds
with which to make the required earnest money deposit to Wells Development.
9
<PAGE>
The site of the Oklahoma City Project consists of approximately 5.3 acres
and, when completed, the Oklahoma City Project will be a one-story office
building containing 57,186 net rentable square feet. An agreement was
signed with ADEVCO Corporation to supervise, manage and coordinate the
planning, design, construction and completion of the property.
Lucent Technologies, Inc., a world-wide leader in the telecommunications
technology producing a variety of communication products, has executed a
lease agreement with Wells Development to lease the entire Oklahoma City
Project upon completion. The initial item of the lease will be ten years
commencing on substantial completion of the project which is currently
anticipated to be January 1, 1998. Lucent Technologies has the option to
extend the initial term of the lease for two additional five year periods.
The annual base rent payable during the initial term is $508,383 payable in
equal monthly installment of $42,365 during the first five years and
$594,152 payable in equal monthly installments of $49,513 during the second
five years of the lease term. The annual base rent for each extended term
will be at market rental rates. In addition to the base rent, Lucent
Technologies will be required to pay additional rent equal to its share of
operating expenses during the lease term.
It is currently anticipated that the total cost to complete the property
which is estimated to be approximated $5,200,000, will be contributed
equally by the Partnership and Wells Fund X for an ultimate percentage
ownership of approximately 50% for each Partnership. The Partnership has
reserved sufficient funds for this purpose. For further information
regarding the contract entered into between the Fund IX - Fund X Joint
Venture and Wells Development and the development of the Oklahoma City
Project, refer to Supplement No. 2 dated September 17, 1997, to the
Prospectus of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI,
L.P. dated December 31, 1996, contained in Post-Effective Amendment No. 2
to the Registration Statement of Wells Real Estate Fund X, L.P. and Wells
Real Estate Fund XI, L.P. which was filed with the Commission on September
17, 1997 (Commission File No. 333-7979).
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
------------------------------------------------------------------------
RESULTS OF OPERATION.
---------------------
The following discussion and analysis should be read in conjunction with
the accompanying financial statements of the Partnership and notes thereto.
This Report contains forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and 21E of the Securities
Exchange Act of 1934, including discussion and analysis of the financial
condition of the Partnership, anticipated capital expenditures required to
complete certain projects, amounts of cash distributions anticipated to be
distributed to Limited Partners in the future and certain other matters.
Readers of this Report should be aware that there are various factors that
could cause actual results to differ materially form any forward-looking
statement made in this Report, which include construction costs which may
exceed estimates, construction delays, lease-up risks, inability to obtain
new tenants upon expiration of existing leases, and the potential need to
fund tenant improvements or other capital expenditures out of operating
cash flow.
10
<PAGE>
Results of Operations and Changes in Financial Conditions
---------------------------------------------------------
(a) General
-----------
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. The offering was terminated on December 30,
1996, at which time the Partnership had sold 2,935,931 Class A Status
Units, and 564,069 Class B Status Units, held by a total of 1,841 and 257
Class A and Class B Limited Partners respectively, for total Limited
Partner capital contributions of $35,000,000. After payment of $1,400,000
in Acquisition and Advisory Fees and expenses, payment of $5,250,000 in
selling commissions and organization and offering expenses, the investment
by the Partnership of $14,389,357 in the Fund VIII - Fund IX Joint Venture
and $3,691,765 in the Fund IX - Fund X Joint Venture, as of September 30,
1997, the Partnership was holding net offering proceeds of $10,268,878
available for investment in properties. As of September 30, 1997, the
developed properties owned by the Fund VIII - Fund IX Joint Venture was 90%
occupied.
Gross revenues of the Partnership of $385,988 for the three months and
$902,056 for the nine months ended September 30, 1997, and $135,635 for the
three months and $215,961 for the nine months ended September 30, 1996,
were attributable primarily to interest income earned on funds held by the
Partnership prior to the investment in properties, as well as income earned
from the investment in joint ventures for both periods in 1997. Total
expenses of the Partnership increased from $66,682 for the nine months
ended September 30, 1996, to $93,591 for the nine months ended September
30, 1997, as a result of increased postage expenses and accounting and
legal fees. Total expenses of the Partnership decreased from $23,597 for
the three months ended September 30, 1996, to $12,948 for the three months
ended September 30, 1997, as a result of an overall reduction of expenses,
primarily in the areas of printing and notebooks and investment and
analysis expense. Net income of the Partnership was $808,465 for the nine
months ended September 30, 1997, as compared to $149,279 for the same
period in 1996, and $373,040 for three months ended September 30, 1997, as
compared to $112,038 for the same period in 1996, due primarily to
increased revenues.
For the nine months ended September 30, 1997, net income allocated to Class
A Limited Partners was $.38 per Unit, net loss allocated to Class B Limited
Partners was $.55 per Unit and net loss allocated to General Partners was
$206 for 1997.
11
<PAGE>
The Partnership's net cash provided by operating activities decreased to
$33,267 for 1997 as compared to $142,171 for 1996 which is due primarily to
a decrease in due to affiliates. Net cash used in investing activities
increased to $12,396,535 from $2,198,318 which was the result of
$13,721,748 investments in joint venture. Net cash from financing
activities decreased from $16,770,872 provided by in 1996, to $(848,061)
used in financing activities in 1997, due to the termination of the
offering in December 1996. As a result, cash and cash equivalents decreased
from $14,715,325 as of September 30, 1996, to $10,346,656 as of September
30, 1997.
The Partnership's distribution to holders of Class A Status Units for the
third quarter ended September 30, 1997, will be paid in October, 1997, from
Investment Income. Although there is no assurance, the Partnership
anticipates that distributions will continue to be paid on a quarterly
basis.
Liquidity and Capital Resources
-------------------------------
The Partnership expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations which the
Partnership believes will continue to be adequate to meet both operating
requirements and distributions to limited partners. At this time, given the
nature of the joint ventures in which the Partnership has invested, there
are no known improvements or renovations to the properties expected to be
funded from cash flow from operations.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures from limited partnership
contributions. As of September 30, 1997, the Partnership has reserved
$10,268,878 for this purpose including approximately $250,000 towards the
completion of the office building in Madison, Wisconsin owned by the Fund
VIII-Fund IX Joint Venture and approximately $858,235 towards the
completion of the office building in Knoxville, Tennessee owned by the Fund
IX - Fund X Joint Venture.
12
<PAGE>
Property Operations
- -------------------
As of September 30, 1997, the Partnership owned interests in the following
operational property:
The TCI Building/Fund VIII-Fund IX Joint Venture
- -------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $118,273 $345,862
Expenses:
Depreciation 41,648 124,945
Management & leasing expense 2,389 11,196
Other operating expenses 2,167 8,556
-------- --------
46,204 144,697
-------- --------
Net income $ 72,069 $201,165
======== ========
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 49.9% 49.9%
Cash distribution to Partnership $ 53,608 $153,505
Net income allocated to Partnership $ 35,965 $100,509
</TABLE>
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, Texas (the "TCI
Building") for a purchase price of $4,450,000 excluding acquisition costs.
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 at closing.
Since the TCI Building was purchased in October 1996, comparative income and
expense figures for the prior year are not available.
13
<PAGE>
The Matsushita Building/Fund VIII-Fund IX Joint Venture
- --------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 270,821 $ 493,486
Interest income 0 1,511
------------- ------------
270,821 494,997
------------- ------------
Expenses:
Depreciation 54,219 161,452
Management & leasing expense 13,496 25,376
Other operating expenses 950 1,943
------------- ------------
68,665 188,771
------------- ------------
Net income $ 202,156 $ 306,226
============= ============
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 49.9% 49.9%
Cash distribution to Partnership $ 65,464 $ 101,094
Net income allocated to Partnership $ 100,883 $ 152,861
</TABLE>
On January 10, 1997, the Fund VIII-Fund IX Joint Venture acquired a two-story
office building containing approximately 63,417 rentable square feet on a 4.4
acre tract of land located in the Irvine Spectrum planned business community in
metropolitan Orange County, California (the "Matsushita Building") for a
purchase price of $7,193,000 excluding acquisition costs.
The entire Matsushita Building is currently under a net lease to Matsushita
Avionics Systems Corporation. Matsushita Avionics' rental payment obligations do
not begin until the ninth month of the lease term which commenced when
Matsushita Avionics took possession in September 1996. Commencing in May 1997,
the ninth month of the lease term, the monthly base rental payable by Matsushita
Avionics under the lease is $45,879.47 through the 12th month of the lease term.
The monthly base rental payable under the lease for the 13th month of the lease
term through the 30th month of the lease term is $57,709.47; the monthly base
rental payable for the 31st month of the lease term through the 60th month of
the lease term is $59,611.98; and the monthly base rental payable for the 61st
month of the lease term through the 84th month of the lease term is $61,831.58.
The base rental payable during the option periods, if Matsushita Avionics
exercises its option to extend the lease, is 95% of the then-market rental rate
for office space in other comparable buildings located in the Irvine area of
southern California.
Since the Matsushita Building was purchased in January 1997, comparative income
and expense figures for the prior year are not available.
14
<PAGE>
The Cirrus Logic Building/Fund VIII-Fund IX Joint Venture
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Seven Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 197,344 $ 399,835
Interest income 21,345 21,402
------------- ------------
218,689 421,237
------------- ------------
Expenses:
Depreciation 72,874 158,900
Management & leasing expense 10,348 16,949
Other operating expenses 368 7,336
------------- ------------
83,590 183,185
------------- ------------
Net income $ 135,099 $ 238,052
============= ============
Occupied % 100.0% 100.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 49.9% 49.9%
Cash distribution to Partnership $ 89,984 $ 153,030
Net income allocated to Partnership $ 67,419 $ 118,847
</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. The annual base rental under the term of the Cirrus
Logic lease is $617,656 for the first five years, will be increased by 10% in
the ninth through tenth years and will be increased an additional 10% in years
eleven through fifteen.
Since the Cirrus Logic Building was purchased in February 1997 and was not
completed until March 1997, comparative income and expense figures for the prior
year are not available.
15
<PAGE>
The Cellular One Building/Fund VIII-Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Four Months Ended
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Rental income $ 239,645 $ 279,753
Expenses:
Depreciation 118,500 156,500
Management & leasing expense 24,817 24,817
Other operating expenses 8,937 19,812
------------- ------------
152,254 201,129
------------- ------------
Net income $ 87,391 $ 78,624
============= ============
Occupied % 75.0% 75.0%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 49.9% 49.9%
Cash distribution to Partnership $ 59,731 $ 74,322
Net loss allocated to Partnership $ 43,612 $ 39,231
</TABLE>
On September 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 to be incurred by the Fund VIII - Fund IX Joint Venture for the
acquisition, development, construction and completion of the 101,727 rentable
square foot building is estimated to be approximately $10,500,000. It is
anticipated that the Partnership and Wells Fund VIII will fund equally the
approximately $500,000 needed to complete construction on this project.
In September 1997, Cellular One, a subsidiary of BellSouth Corporation, occupied
its leased space of 76,276 square feet comprising approximately 75% of the
building. The initial term of the lease is 9 years and 11 months beginning in
September 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 $862,500 payable in equal monthly installments of $71,875 during the
first five years and $975,000 payable in equal monthly installments of $81,250
during the last four years and 11 months of the initial term. The annual base
rent for each extended term will be at market rental rates.
Since the building opened September 15, 1997, comparative income and expenses
figures are not available for prior periods.
16
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the third quarter
of 1997.
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.
(Registrant)
Dated: November 10, 1997 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.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,346,656
<SECURITIES> 18,828,706
<RECEIVABLES> 268,850
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,058,302
<CURRENT-LIABILITIES> 395,733
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 29,662,569
<TOTAL-LIABILITY-AND-EQUITY> 30,058,302
<SALES> 0
<TOTAL-REVENUES> 902,056
<CGS> 0
<TOTAL-COSTS> 93,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 808,465
<INCOME-TAX> 808,465
<INCOME-CONTINUING> 808,465
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 808,465
<EPS-PRIMARY> .38
<EPS-DILUTED> 0
</TABLE>
