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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) March 20, 1998
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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
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(State or other jurisdiction of incorporation)
0-22039 58-2126622
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(Commission File Number) (IRS Employer 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 or former address, if changed since last report)
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Purchase of the Interlocken Building. On March 20, 1998, Fund IX and Fund
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X Associates (the "Fund IX-X Joint Venture") acquired a three-story multi-tenant
office building containing approximately 51,974 rentable square feet located in
Broomfield, Boulder County, Colorado (the "Interlocken Building") from ORIX
Prime West Broomfield Venture, a Colorado general partnership ("ORIX"), pursuant
to that certain Agreement for the Purchase and Sale of Property (the "Contract")
between ORIX and Wells Development Corporation ("Wells Development"), an
affiliate of the Fund IX-X Joint Venture.
The Fund IX-X Joint Venture is a joint venture formed on March 20, 1997
between Wells Real Estate Fund IX, L.P. (the "Registrant") and Wells Real Estate
Fund X, L.P. ("Wells Fund X") for the purpose of the acquisition, ownership,
development, leasing, operation, sale and management of real properties. The
investment objectives of Wells Fund X are substantially identical to those of
the Registrant.
The rights as purchaser under the Contract were assigned by Wells
Development to the Fund IX-X Joint Venture prior to closing, and the Fund IX-X
Joint Venture purchased the Interlocken Building directly from ORIX. ORIX is
not affiliated in any way with the Fund IX-X Joint Venture, the Registrant,
Wells Fund X or their General Partners. The purchase price paid for the
Interlocken Building was $8,275,000, and all tenant leases relating to the
Interlocken Building, as described below, were assigned to the Fund IX-X Joint
Venture at closing. The Fund IX-X Joint Venture also incurred additional
acquisition expenses in connection with the purchase of the Interlocken
Building, including attorneys' fees, recording fees and other closing costs, of
approximately $18,000.
The Registrant contributed $6,624,729 to the Fund IX-X Joint Venture for
its share of the purchase of the Interlocken Building, and Wells Fund X
contributed $1,668,271 to the Fund IX-X Joint Venture for its share of the
purchase of the Interlocken Building. All income, loss, profit, net cash flow,
resale gain and sale proceeds of the Fund IX-X Joint Venture are allocated and
distributed between the Registrant and Wells Fund X based upon their respective
capital contributions to the joint venture. As of March 31, 1998, the
Registrant had made total capital contributions to the Fund IX-X Joint Venture
of $13,921,686 and currently has an equity percentage interest in the Fund IX-X
Joint Venture of approximately 53%, and Wells Fund X had made total capital
contributions to the Fund IX-X Joint Venture of $12,403,919 and currently has an
equity percentage interest in the Fund IX-X Joint Venture of approximately 47%.
Description and Location of the Interlocken Building. As set forth above,
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the Interlocken Building is a three-story multi-tenant building containing
approximately 51,974 rentable square feet which was completed in December of
1996. The first floor of the Interlocken Building has multiple tenants and
contains 15,599 rentable square feet; the second floor is leased to ODS
Technologies, L.P. ("ODS") and contains 17,146 rentable square feet; and the
third floor is leased to Transecon, Inc. ("Transecon") and contains 19,229
rentable square feet.
The site fronts on Highway 36 (the Boulder-Denver Turnpike), which is the
main thoroughfare between Boulder and Denver, and is located approximately eight
miles southeast of Boulder and approximately 15 miles northwest of Denver. The
site is a 5.1 acre tract of land in the Interlocken Business Park in Broomfield,
Colorado. The site contains a parking lot surrounding the entire building with
ample parking spaces available for tenants and visitors. The Interlocken
Business Park is a 963-acre business park containing primarily advanced
technology and research/development oriented companies. The Interlocken
Conference Resort, which will contain a 430 room hotel, 57,000 square feet of
conference space and a 27-hole championship golf course, is nearly complete and
will border the Park's western boundary.
Description of Leases. As stated above, the entire third floor of the
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Interlocken Building containing 19,229 rentable square feet (37% of the total
rentable square feet) is currently under lease to Transecon dated June 27, 1996
(the "Transecon Lease"). The Transecon Lease currently expires in October 2001,
subject to Transecon's right to extend for one additional term of five years
upon 180 days' notice.
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Transecon is a consumer distributor of environmental friendly products,
including on-site video and audio production of environmental and alternative
health videos using state-of-the-art electronics and sound stage. Transecon was
founded in 1989 and currently employs approximately 60 people.
The monthly base rental payable under the Transecon Lease is approximately
$24,000 for the initial term of the lease, and is calculated under the Transecon
Lease based upon 18,011 rentable square feet. Under the Transecon Lease,
Transecon is responsible for its share of utilities, taxes, insurance and other
operating costs with respect to the Interlocken Building during the term of the
Transecon Lease. In addition, Transecon has a right of first refusal under the
lease for any second floor space proposed to be leased by the landlord. If
Transecon elects to extend the lease, the monthly base rental shall be a market
rate, but no less than $24,000 and no more than $27,700. In accordance with the
Transecon Lease, Golden Rule, Inc., an affiliate of Transecon, occupies 6,621
rentable square feet of the third floor. Transecon guarantees the entire
payment due under the Transecon Lease.
Transecon also leases 1,510 rentable square feet on the first floor. The
monthly base rent payable for this space is approximately $2,000 through January
1999; approximately $2,100 through January 2000; approximately $2,150 through
January 2001; and approximately $2,200 through October 2001.
The entire second floor of the Interlocken Building containing 17,146
rentable square feet (33% of total rentable square feet) is currently under
lease to ODS dated January 14, 1997 (the "ODS Lease"). The ODS Lease currently
expires in September 2003, subject to ODS's right to extend for one additional
term of three years upon 180 days' notice.
ODS provides in-home financial transaction services via telephone and
television, and it has developed interactive computer-based applications for
such in-home purchasing. Originally based in Tulsa, Oklahoma, ODS has relocated
its business to the Interlocken Building.
The monthly base rental payable under the ODS Lease is approximately
$22,100 through January 1998; approximately $22,150 through January 1999;
approximately $22,600 through January 2000; approximately $23,100 through
January 2001; approximately $23,550 through January 2002; approximately $24,050
through January 2003; and approximately $24,550 through September 2003. The
rental payments to be made by the tenant under the ODS Lease are also secured by
the assignment of a $275,000 letter of credit which may be drawn upon by the
landlord in the event of a tenant default under the lease. Under the ODS Lease,
ODS is responsible for its share of utilities, taxes, insurance and other
operating costs with respect to the Interlocken Building during the term of the
Lease. If ODS elects to extend the lease, the monthly base rental shall be a
market rate as described in the ODS Lease.
The first floor of the Interlocken Building containing 15,599 rentable
square feet is occupied by several tenants whose leases expire in late 2001 or
2002. The aggregate monthly base rental payable under these leases for 1998 is
approximately $21,250. Each lessee is responsible for its share of utilities,
taxes, insurance and other operating costs with respect to the Interlocken
Building during the term of its lease. Most of these leases contain a right to
extend for one additional five year period upon 180 days' notice.
In the event that Transecon, ODS or any of the first floor tenants fail to
extend their respective leases, the Fund IX-X Joint Venture will be required to
find one or more new suitable tenants for the Interlocken Building at the then
prevailing market rental rates.
Competition in the Area. Currently, the Interlocken Building is in
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competition for tenants from owners and managers of several other office
buildings around the immediate area of the Interlocken Business Park which could
adversely affect the Fund IX-X Joint Venture's ability to attract and retain
tenants in the future. The
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following table sets forth the name of the property, the square footage of the
building, the vacancy rate and the rental per square foot for properties in
competition with the Interlocken Building:
<TABLE>
<CAPTION>
PROPERTY SQ. FT. VACANCY NET RENT
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<S> <C> <C> <C>
Canyon Center 69,000 0.0% $13-$16
Exeter Building 111,700 4.3% $12-$18
West End Plaza 41,700 1.0% $14-$16
The Registry 20,800 2.0% $ 25.00
Continental Building 26,700 3.0% $ 16.00
CBJ Law Building 30,000 0.0% $ 16.50
Park Place 45,000 2.9% $ 16.00
East Park 36,000 0.0% $ 14.80
Viewpoint 49,500 3.5% $ 20.00
105 Technology Drive 40,000 0.0% $ 14.00
303 Technology Drive 75,000 0.0% $ 11.00
Cirrus Logic 49,460 0.0% $ 13.50
Panattoni-Catlin Venture 42,000 0.0% $ 16.25
"1997 Development" 45,000 To-Be-Built $14-$15
350 Interlocken Blvd. 43,800 0.0% $ 11.00
360 Interlocken Blvd. (Subject) 51,974 3.0% $ 16.00
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Audited Financial Statements. Since it is impracticable to
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provide the required financial statements for the acquired real property
described above at the time of this filing and no financial statements (audited
or unaudited) are available at this time, the Registrant hereby confirms that
the required financial statements will be filed on or before June 2, 1998 by
amendment to this Form 8-K, which date is within the 60 day period allowed to
file such an amendment.
(b) Pro Forma Financial Information. See paragraph (a) above.
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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
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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: April 2, 1998
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