<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, 1999 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, 1999
and December 31, 1998....................................... 3
Statements of Income for the Three Months and Nine Months
Ended September 30, 1999 and 1998........................... 4
Statements of Partners' Capital for the Year Ended
December 31, 1998 and the Nine Months
Ended September 30, 1999.................................... 5
Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998........................... 6
Condensed Notes to Financial Statements...................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 8
PART II. OTHER INFORMATION...................................................... 20
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets September 30, 1999 December 31, 1998
------ ------------------ -----------------
<S> <C> <C>
Investment in joint venture (Note 2) $ 27,368,505 $ 28,119,579
Cash and Cash equivalents 220,422 326,022
Due from affiliates 688,605 739,442
Deferred project costs 9,999 13,621
Organization costs, less accumulated
amortization of $18,750 in December
1998 and $25,000 in September 1999 6,250 12,500
Prepaid expenses and other assets 3,872 0
------------------ -----------------
Total assets $ 28,297,653 $ 29,211,164
================== =================
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 3,313 $ 3,500
Partnership distributions payable 687,145 681,204
------------------ -----------------
Total liabilities 690,458 684,704
------------------ -----------------
Partners' capital:
Limited partners:
Class A - 3,053,982 units outstanding 25,988,276 25,646,950
Class B - 446,018 units outstanding 1,618,919 2,879,510
------------------ -----------------
Total partners' capital 27,607,195 28,526,460
------------------ -----------------
Total liabilities and partners' capital $ 28,297,653 $ 29,211,164
================== =================
</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
------------------ -----------------
Sept 30, 1999 Sept 30,1998 Sept 30, 1999 Sept 30,1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Interest income $ 0 $ 527 $ 0 $ 79,481
Equity in income of joint ventures
(Note 2) 408,547 353,927 1,238,215 1,008,377
------------- ------------ ------------- ------------
408,547 354,454 1,238,215 1,087,858
------------- ------------ ------------- ------------
Expenses:
Computer cost 2,559 2,326 7,240 6,164
Partnership administration 11,278 16,439 50,936 41,964
Legal and accounting fees 626 1,013 15,848 28,933
Amortization of organization costs 3,125 1,562 6,250 4,687
------------- ------------ ------------- ------------
17,588 21,340 80,274 81,748
------------- ------------ ------------- ------------
Net income $ 390,959 $ 333,114 $ 1,157,941 $ 1,006,110
============= ============ ============= ============
Net (loss) allocated to General Partners $ 0 $ 0 $ 0 $ 0
Net income allocated to Class A Limited
Partners $ 693,905 $ 658,410 $ 2,068,171 $ 1,860,639
Net (loss) allocated to Class B Limited
Partners $ (302,946) $ (325,296) $ (910,230) $ (854,529)
Net income per Class A Limited Partner
Unit $ 0.23 $ 0.22 $ 0.68 $ 0.60
Net (loss) per Class B Limited Partner
Unit $ (0.68) $ (0.62) $ (2.04) $ (1.60)
Cash distribution per Class A Limited
Partner Unit $ 0.23 $ 0.21 $ 0.68 $ 0.38
</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 NINE MONTHS ENDED SEPTEMBER 30, 1999
AND YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Limited Partners Total
----------------
Class A Class B Partners'
------------------------ ---------------------
Units Amount Units Amount Capital
----- ------ ----- ------ -------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 2,949,776 $25,322,591 550,224 $ 4,186,127 $29,508,718
Net income (loss) 0 2,597,938 0 (1,147,983) 1,449,955
Partnership distributions 0 (2,432,213) 0 0 (2,432,213)
Class A conversion elections 40,099 158,634 (40,099) (158,634) 0
--------- ----------- ------- ----------- -----------
BALANCE, December 31, 1998 2,989,875 25,646,950 510,125 2,879,510 28,526,460
--------- ----------- ------- ----------- -----------
Net income (loss) 0 2,068,171 0 (910,230) 1,157,941
Partnership distributions 0 (2,077,206) 0 0 (2,077,206)
Class B conversion elections 68,215 385,419 (68,215) (385,419) 0
Class A conversion elections (4,108) (35,058) 4,108 35,058 0
--------- ----------- ------- ----------- -----------
BALANCE, September 30, 1999 3,053,982 $25,988,276 446,018 $ 1,618,919 $27,607,195
========= =========== ======= =========== ===========
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 1,157,941 $ 1,006,110
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Equity in income of joint venture (1,238,215) (1,008,377)
Amortization of organization costs 6,250 4,687
Changes in assets and liabilities:
Prepaids and other assets (3,872) 39,000
Accounts payable (3,500) 0
----------- ------------
Net cash (used in ) provided by
operating activities (81,396) 41,420
----------- ------------
Cash flow from investing activities:
Investment in joint ventures (82,515) (9,392,246)
Distributions received from joint ventures 2,126,264 1,475,397
----------- ------------
Net cash provided by (used in) investing
activities 2,043,749 (7,916,849)
----------- ------------
Cash flow from financing activities:
Distributions to partners from
accumulated earning (2,067,953) (1,556,546)
----------- ------------
Net decrease in cash and cash equivalents (105,600) (9,431,975)
Cash and cash equivalents, beginning of year 326,022 9,764,129
----------- ------------
Cash and cash equivalents, end of period $ 220,422 $ 332,154
=========== ============
Supplemental disclosure of noncash investing
activities: Deferred project costs applied to
joint venture activities $ 3,624 $ 509,656
=========== ============
</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, 1999
(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. After payment of $1,400,000
in acquisition and advisory fees and acquisition expenses, payments of
$5,254,603 in selling commissions and organization and offering expenses,
the investment by the Partnership of $13,289,359 in the Fund VIII - Fund IX
Joint Venture, and the investment by the Partnership of $14,833,708 in the
Fund IX-X-XI-REIT Joint Venture, as of September 30, 1999, the Partnership
was holding net offering proceeds of $222,330 available for investment in
properties, all of which is being reserved for completion of the ABB
Building owned by the Fund IX-X-XI-REIT Joint Venture.
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 -IX Joint Venture"), and (ii) Fund IX-X-XI-REIT Associates, a
joint venture among the Partnership, Wells Real Estate Fund X, L..P., Wells
Real Estate Fund XI, L.P. and Wells Operating Partnership, L.P. ("Wells
OP"), a Delaware limited partnership having Wells Real Estate Investment
Trust, Inc. (the "Wells REIT") as its general partner (the "Fund IX-X-XI-
REIT Joint Venture").
7
<PAGE>
As of September 30, 1999, 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"), which is owned
by the Fund VIII - IX Joint Venture; (ii) a one-story office building in
Farmer's Branch, Texas (the "TCI Building"), which is owned by the Fund VIII -
IX Joint Venture; (iii) a three-story office building in Knoxville, Tennessee
(the "ABB Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture;
(iv) a two-story office building in Irvine, California (the"Matsushita
Building"), which is owned by the Fund VIII - IX Joint Venture; (v) a two-story
office building in Boulder County, Colorado (the "Cirrus Logic Building"), which
is owned by the Fund VIII - IX Joint Venture; (vi) a two-story office building
in Boulder County, Colorado (the "Ohmeda Building"), which is owned by the Fund
IX-X-XI-REIT Joint Venture; (vii) a three-story office building located in
Boulder County, Colorado (the "360 Interlocken Building"), which is owned by the
Fund IX-X-XI-REIT Joint Venture; (viii) a one-story office building located in
Oklahoma City, Oklahoma (the "Lucent Technologies Building"), which is owned by
the Fund IX-X-XI-REIT Joint Venture; and (ix) a single-story warehouse and
office building located in Ogden, Weber County, Utah (the "Iomega Building"),
which is owned by the Fund IX-X-XI-REIT Joint Venture.
(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, 1998.
2) Investment in Joint Ventures
- --------------------------------
The Partnership owns interests in nine properties as of September 30, 1999,
through its ownership in joint ventures. 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, 1998.
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
8
<PAGE>
this Report should be aware that there are various factors that could cause
actual results to differ materially from any forward-looking statement made in
this Report, which include construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants upon
expiration of existing leases, and the potential need to fund tenant
improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions
- ---------------------------------------------------------
General
- -------
As of September 30, 1999, the developed properties owned by the Partnership were
99.8% occupied, whereas they were 99.4% occupied at September 30, 1998. Gross
revenues of the Partnership were $1,238,215 for the nine months ended September
30, 1999, as compared to $1,087,858 for the nine months ended September 30,
1998. The increase was attributable primarily to increased earnings from joint
venture investments. Total expenses of the Partnership decreased to $80,274 for
the nine months ended September 30, 1999, as compared to $81,748 for the same
period in 1998. Net income of the Partnership was $1,157,941 for the nine
months ended September 30, 1999, as compared to $1,006,110 for the nine months
ended September 30, 1998 due primarily to increased revenues and lower expenses.
The Partnership's net cash (used in) provided by operating activities was
$(81,396) for 1999, as compared to $41,420 for 1998, which is due primarily to
changes in prepaid assets and liabilities and a decrease in interest income.
Net cash provided by (used in) investing activities increased to $2,043,749 from
($7,916,849) as investing in joint ventures decreased. Net cash used in
financing activities increased from $1,556,546 to $2,067,953 due to increased
distributions to partners from accumulated earnings. Cash and cash equivalents
decreased from $332,154 as of September 30, 1998 to $220,422 for the same period
in 1999.
The Partnership's distributions from Net Cash from Operations accrued to Class A
Unit holders for the third quarter of 1999 was $0.23 per weighted average unit
compared to $0.21 for the same period in 1998. The Partnership currently
anticipates that distributions will continue to be paid on a quarterly basis at
a level at least consistent with 1999 distributions.
Year 2000
- ---------
The Partnership is presently reviewing the potential impact of Year 2000
compliance issues on its information systems and business operations. A full
assessment of Year 2000 compliance issues was begun in late 1997 and was
completed during the first half of 1999. Renovations and replacements of
equipment have been and are being made as warranted. The costs incurred by the
Partnership and its affiliates thus far for renovations and replacements have
been immaterial. As of September 30, 1999, all testing of systems has been
completed.
As to the status of the Partnerships' information technology systems, it is
presently believed that all major systems and software packages are Year 2000
compliant. At the present time, it is believed that
9
<PAGE>
all non-major information technology systems are Year 2000 compliant. The cost
to upgrade any noncompliance systems is believed to be immaterial.
The Partnership has confirmed with the Partnership's vendors, including third-
party service providers such as banks, that their systems are Year 2000
compliant.
The Partnership relies on computers and operating systems provided by equipment
manufacturers, and also on application software designed for use with its
accounting, property management and investment portfolio tracking. The
Partnership has primarily determined that any costs, problems or uncertainties
associated with the potential consequences of Year 2000 issues are not expected
to have a material impact on the future operations or financial condition of the
Partnership. The Partnership will perform due diligence as to the Year 2000
readiness of each property owned by the Partnership and each property
contemplated for purchase by the Partnership.
The Partnership's reliance on embedded computer systems (i.e. microcontrollers)
is limited to facilities related matters, such as office security systems and
environmental control systems.
The Partnership is currently formulating contingency plans to cover any areas of
concern. Alternate means of operating the business are being developed in the
unlikely circumstance that the computer and phone systems are rendered
inoperable. An off-site facility from which the Partnership could operate is
being sought as well as alternate means of communication with key third-party
vendors. A written plan is being developed for testing and dispensation to each
staff member of the General Partner of the Partnership.
Management believes that the Partnership's risk of Year 2000 problems is
minimal. In the unlikely event there is a problem, the worst case scenarios
would include the risks that the elevator or security systems within the
Partnership's properties would fail or the key third-party vendors upon which
the Partnership relies would be unable to provide accurate investor information.
In the event that the elevator shuts down, the Partnership has devised a plan
for each building whereby the tenants will use the stairs until the elevators
are fixed. In the event that the security system shuts down, the Partnership
has devised a plan for each building to hire temporary on-site security guards.
In the event that a third-party vendor has Year 2000 problems relating to
investor information, the Partnership intends to perform a full system back-up
of all investor information as of December 31, 1999, so that the Partnership
will have accurate hard-copy investor information.
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1999, the Partnership was holding $222,330 available for
investment in properties, all of which is being reserved to complete the ABB
Building in Knoxville, Tennessee, owned by the Fund IX-X-XI-REIT Joint Venture.
Except for the foregoing funds being reserved for the completion of the ABB
Building. All of the Partnership's proceeds available for investment in
properties has been invested and, accordingly, it is unlikely that the
Partnership will be making any additional real estate investments.
10
<PAGE>
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.
Property Operations
- -------------------
As of September 30, 1999, the Partnership owned interests in the following
operational properties
The TCI Building/Fund VIII - Fund IX Joint Venture
- --------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ----------------------------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $113,794 $113,794 $341,383 $341,383
Interest income 5,756 7,800 19,415 22,950
-------- -------- -------- --------
119,550 121,594 360,798 364,333
-------- -------- -------- --------
Expenses:
Depreciation 41,648 41,648 124,945 124,945
Management & leasing expenses 4,435 4,300 13,070 12,900
Other operating expenses 997 1,755 8,162 6,728
-------- -------- -------- --------
47,080 47,703 146,177 144,573
-------- -------- -------- --------
Net income $ 72,470 $ 73,891 $214,621 $219,760
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 45.2% 45.2% 45.2% 45.2%
Cash Distribution to Partnership $ 48,740 $ 49,382 $144,960 $151,013
Net income allocated to the
Partnership $ 32,759 $ 33,401 $ 97,016 $101,835
</TABLE>
Net income has decreased in 1999, as compared to 1998, due primarily to
decreased interest income and an increase in landscape expenditures.
11
<PAGE>
The Matsushita Building/Fund VIII - Fund IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ----------------------------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $164,378 $167,698 $493,135 $503,094
-------- -------- -------- --------
Expenses:
Depreciation 53,917 53,917 161,752 161,752
Management & leasing expenses 6,196 6,513 18,706 19,538
Other operating expenses 3,619 1,660 4,074 11,903
-------- -------- -------- --------
63,732 62,090 184,532 193,193
-------- -------- -------- --------
Net income $100,646 $105,608 $308,603 $309,901
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 45.2% 45.2% 45.2% 45.2%
Cash Distribution to Partnership $ 77,915 $ 76,261 $234,272 $231,355
Net income allocated to the
Partnership $ 45,496 $ 47,739 $139,499 $143,584
</TABLE>
Rental income decreased, as compared to the same period in 1998, due primarily
to an adjustment to straight line rent in 1998. Other operating expenses have
decreased during the nine months ended September 30, 1999, as compared to 1998,
due to a billing of 1998 common area maintenance expenses to the tenant in 1999.
Tenants are billed an estimated amount for current year common area maintenance
which is then reconciled the following year and the difference is billed to the
tenant.
On March 15, 1999, Wells OP purchased an 8.8 acre tract of land located in Lake
Forest, Orange County, California, for a purchase price of $4,450,230. Wells OP
entered into a development agreement for the construction of a two story office
building containing approximately 150,000 rentable square feet to be erected on
the Matsushita Property. Wells OP entered into an Office Lease with Matsushita
Avionics Systems Corporation (Matsushita Avionics), pursuant to which Matsushita
Avionics agreed to lease all of the Matsushita Project upon its completion. It
is anticipated that Matsushita Avionics will vacate its current space in
December, 1999.
Matsushita Avionics and the Fund VIII-IX Joint Venture have entered into a Lease
and Guaranty Termination Agreement dated February 18, 1999, pursuant to which
Matsushita Avionics will be vacating the existing building and relieved of any
of its obligations under the existing lease upon the Matsushita commencement
date of the new Matsushita lease. In consideration for the Fund VIII-IX Joint
Venture releasing Matsushita Avionics from its obligations under the existing
lease and thereby allowing Wells OP to enter into the Matsushita lease with
Matsushita Avionics, Wells OP entered into a Rental Income Guaranty Agreement
dated as of February 18, 1999, whereby Wells OP guaranteed the Fund VIII-IX
Joint Venture that it will receive rental income on the existing building at
least equal to the rent and building expenses that the Fund VIII-IX Joint
Venture would have received over the remaining term of the existing lease.
12
<PAGE>
The Cirrus Logic Building/Fund VIII - Fund IX Joint Venture
- -----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------- ------------------------------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $184,539 $184,539 $553,617 $553,617
-------- -------- -------- --------
Expenses:
Depreciation 72,765 72,765 218,295 218,295
Management & leasing expenses 10,314 11,293 30,654 29,699
Other operating expenses (5,240) 33,455 (87,572) 25,406
-------- -------- --------- --------
77,839 117,513 161,377 273,400
-------- -------- --------- --------
Net income $106,700 $ 67,026 $392,240 $280,217
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 45.2% 45.2% 45.2% 45.2%
Cash distribution to Partnership $ 74,063 $ 56,129 $254,797 $209,916
Net income allocated to the
Partnership $ 48,232 $ 30,298 $177,305 $130,430
</TABLE>
Rental income, depreciation and management and leasing fees remained relatively
stable while other operating expenses decreased for the nine months ended
September 30, 1999, as compared to the same period in 1998, due primarily to an
adjustment for common area maintenance billing to the tenant. Tenants are billed
an estimated amount for current year common area maintenance which is then
reconciled the following year and the difference billed to the tenant. Property
taxes increased substantially in 1998, but the tenant was not billed until the
annual adjustment was computed in the second quarter of 1999. Management fees
reimbursed by the tenant is also included in other operating expenses.
13
<PAGE>
U.S. Cellular Building/Fund VIII - Fund IX Joint Venture
- --------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $320,520 $320,519 $961,558 $961,557
-------- -------- -------- --------
Expenses:
Depreciation 150,414 202,625 451,238 509,826
Management & leasing expenses 31,870 35,422 97,605 103,973
Other operating expenses 25,553 (18,320) 49,200 (36,868)
-------- -------- -------- --------
207,837 219,727 598,043 576,931
-------- -------- -------- --------
Net income $112,683 $100,792 $363,515 $384,626
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund VIII - Fund IX Joint Venture 45.2% 45.2% 45.2% 45.2%
Cash Distribution to Partnership $115,623 $133,154 $358,380 $389,164
Net income allocated to the
Partnership $ 50,937 $ 45,561 $164,321 $179,835
</TABLE>
Net income decreased for the nine months ended September 30, 1999, as compared
to 1998, due to a decrease in common area maintenance reimbursement billed to
the tenants in 1999 which was the result of an overbilling of property tax in
1998 offset by a decrease in depreciation expense. Depreciation was overaccrued
in 1998, but corrected by December 31, 1998.
14
<PAGE>
The ABB Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $261,986 $208,370 $784,065 $590,342
Interest income 15,024 6,000 46,765 6,000
-------- -------- -------- --------
277,010 214,370 830,830 596,342
-------- -------- -------- --------
Expenses:
Depreciation 135,499 120,433 403,699 305,211
Management & leasing expenses 32,260 25,577 93,666 75,765
Other operating expenses (17,097) 3,050 (13,390) 49,717
-------- -------- -------- --------
150,662 149,060 483,975 430,693
-------- -------- -------- --------
Net income $126,348 $ 65,310 $346,855 $165,649
======== ======== ======== ========
Occupied % 98% 95% 98% 95%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 39.8% 38.9% 39.8%
Cash distribution to Partnership $102,725 $ 73,983 $294,561 $186,032
Net income allocated to the
Partnership $ 49,217 $ 25,843 $135,938 $ 75,405
</TABLE>
Rental income increased in 1999, over 1998, due primarily to the increased
occupancy level of the property. Other operating expenses were negative for the
nine month period ended September 30, 1999 and three month period ended
September 30, 1999, due to an offset of tenant reimbursements in operating
costs, as well as management and leasing fee reimbursement. Tenants are billed
an estimated amount for current year common area maintenance which is then
reconciled the second quarter of the following year and the difference billed to
the tenant. Total expenses increased for the nine month period ended September
30, 1999, over the same period for 1998 due to increased depreciation and
management and leasing fees as the building was leased up.
Cash distributions and net income allocated to the Partnership for the quarter
and nine month period increased significantly in 1999 over 1998 amounts. The
Partnership's ownership in the Fund IX-X-XI-REIT Joint Venture decreased in
1999, as compared to 1998, due to additional funding Wells Fund XI to the Joint
Venture in 1999.
One major tenant, The Associates, vacated its leased space in September, 1999. A
new lease was executed with Center Partners, Inc., a division of WPP Group,
U.S.A., for 23,992 rentable square feet. The initial term of the lease will be
five years commencing January 1, 2000 and expires December 31, 2004. Center
Partners 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 payable in equal monthly installments is $299,900 for the first year;
$307,338 second year; $315,015 third year; $322,932 fourth year and $331,090 in
the fifth year.
15
<PAGE>
It is currently anticipated that the total cost to complete the tenant
improvements and for leasing commissions estimated to be approximately $257,490
will be contributed by the Partnership and Wells Fund X.
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Eight Months Ended
------------------ ----------------- ------------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $256,829 $254,940 $770,486 $643,963
-------- -------- -------- --------
Expenses:
Depreciation 81,576 81,576 244,728 217,536
Management & leasing expenses 11,618 11,618 35,293 29,546
Other operating expenses 3,899 1,171 (188) 1,082
-------- -------- -------- --------
97,093 94,365 279,833 248,164
-------- -------- -------- --------
Net income $159,736 $160,575 $490,653 $395,799
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 39.8% 38.9% 39.8%
Cash distribution to Partnership $ 91,777 $ 94,342 $281,352 $266,091
Net income allocated to the
Partnership $ 62,220 $ 63,560 $192,162 $180,213
</TABLE>
Rental income remained relatively stable for the three months ended September
30, 1999, as compared to the same period in 1998. The nine month period ended
September 30, 1999 cannot be compared to 1998 because the prior year covered
only approximately eight months. Other operating expenses were negative for the
nine month period ended September 30, 1999, due to an offset of tenant
reimbursements in operating costs, as well as management and leasing fee
reimbursements. Cash distributions and net income allocated to the Partnership
increased for the nine month period ended September 30, 1999, as compared to the
same period in 1998.
16
<PAGE>
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Seven Months Ended
------------------ ----------------- ------------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $207,791 $215,289 $622,070 $453,864
-------- -------- -------- --------
Expenses:
Depreciation 71,670 71,793 215,010 166,432
Management & leasing expenses 18,899 18,086 54,518 37,323
Other operating expenses, net of
reimbursements (5,291) (7,850) 5,342 (56,128)
-------- -------- -------- --------
85,278 82,029 274,870 147,627
-------- -------- -------- --------
Net income $122,513 $133,260 $347,200 $306,237
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 39.8% 38.9% 39.8%
Cash distribution to Partnership $ 75,057 $ 77,664 $218,367 $208,973
Net income allocated to the
Partnership $ 47,720 $ 52,759 $135,914 $139,790
</TABLE>
Rental income remained relatively stable for the three month period ended
September 30, 1999, as compared to the same period for 1998. The nine month
period ended September 30, 1999, cannot be compared to 1998 since the prior year
covered only seven months.
The Partnership's ownership interest in the Fund IX-X-XI-REIT Joint Venture
decreased in 1999, as compared to 1998, due to additional funding by Wells Fund
X and Wells Fund XI to the Joint Venture in 1999. Cash distributions and net
income allocated to the Partnership for the nine months ended September 30,
1999, decreased as compared to the same period last year. Operating expenses
increased significantly for the nine month period ended September 30, 1999 as
compared to the same period for 1998, largely attributed to the increase in
property taxes, utilities and security. Other operating expenses are negative
for prior periods due to an offset of tenant reimbursements in operating costs,
as well as management and leasing fee reimbursements.
17
<PAGE>
The Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Four Months Ended
------------------ ----------------- -----------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $145,752 $133,600 $437,256 $143,485
-------- -------- -------- --------
Expenses:
Depreciation 45,801 51,514 137,403 55,896
Management & leasing expenses 5,370 5,084 16,109 5,084
Other operating expenses 1,766 7,584 13,964 7,584
-------- -------- -------- --------
52,937 64,182 167,476 68,564
-------- -------- -------- --------
Net income $ 92,815 $ 69,418 $269,780 $ 74,921
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 39.8% 38.9% 39.8%
Cash distribution to Partnership $ 49,512 $ 45,294 $145,972 $103,553
Net income allocated to the
Partnership $ 36,154 $ 27,478 $105,680 $ 29,997
</TABLE>
Since the Lucent Technologies Building was purchased in June, 1998, comparable
income and expense figures for the prior year's period ended September 30,
1998 covered only four months accordingly, the prior year cannot be compared
to the nine months ended September 30, 1999. Rental income increased slightly
for the three months ended September 30, 1999, as compared to the same period
in 1998. Total expenses decreased for the three month period ended September
30, 1999, as compared to the same period for 1998, due largely to the decrease
in other operating expenses.
Cash distributions and net income allocated to the Partnership for the three
month period remained relatively stable for the period ended September 30,
1999 and 1998.
The Partnership's ownership interest in the Fund IX-X-XI-REIT Joint Venture
decreased in 1999, as compared to 1998, due to additional funding by Wells
Fund X and Wells Fund XI to the Joint Venture.
18
<PAGE>
The Iomega Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Six Months Ended
------------------ ----------------- ----------------
Sept 30, 1999 Sept 30, 1998 Sept 30, 1999 Sept 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $150,009 $126,666 $397,755 $246,666
-------- -------- -------- --------
Expenses:
Depreciation 48,495 48,594 145,485 97,578
Management & leasing expenses 8,291 5,596 17,629 11,199
Other operating expenses 1,290 3,526 3,815 5,731
-------- -------- -------- --------
58,076 57,716 166,929 114,508
-------- -------- -------- --------
Net income $ 91,933 $ 68,950 $230,826 $132,158
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.94% 39.8% 38.94% 39.8%
Cash distribution to Partnership $ 53,193 $ 43,887 $142,807 $ 43,887
Net income allocated to the
Partnership $ 35,812 $ 27,292 $ 90,380 $ 27,292
</TABLE>
On April 1, 1998, Wells Fund X acquired a single story warehouse and office
building containing approximately 108,250 rentable square feet on a 8.03 acre
tract of land in Ogden, Weber County, Utah (the "Iomega Building") for a
purchase price of $5,025,000.
On July 1, 1998, Wells Fund X contributed the Iomega Building to the Fund IX-X-
XI-REIT Joint Venture. The Partnership acquired an interest in the Iomega
Building and began participating in income and distribution from this property
as of July 1, 1998. The entire Iomega Building is under a net lease with Iomega
Corporation until July 31, 2006. Since the Iomega Building was purchased in
April 1998, comparable income and expense figures for the prior year's period
ended September 30, 1998 covered only six months.
On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a 4 acre tract
of vacant land adjacent to the Iomega Building located in Ogden, Utah. This site
is being used for additional parking and loading dock area which includes at
least 400 new parking stalls and new site work for truck maneuver space, in
accordance with the requirements of the tenants and City of Ogden. The project
was competed on July 1, 1999. The tenant, Iomega Corporation, has agreed to
extend the term of its lease to April 30, 2009 and will pay an additional base
rent, an amount equal to thirteen percent (13%) per annum payable in monthly
installments of the direct and indirect cost of acquiring the property and
constructing the improvements. This additional base rent commenced on May 1,
1999.
The land was purchased at a cost of $212,000, excluding acquisition costs. The
funds used to acquire the land and for the improvements are being funded
entirely out of capital contributions from Wells Fund XI to the Fund IX-X-XI-
REIT Joint Venture in the amount of $874,625. The project was completed at a
total cost of $874,625.
19
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports on Form 8-K were filed during the third quarter of 1999.
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, 1999 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.
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 220,422
<SECURITIES> 27,368,505
<RECEIVABLES> 688,605
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,872
<PP&E> 28,297,653
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,297,653
<CURRENT-LIABILITIES> 690,458
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 27,607,195
<TOTAL-LIABILITY-AND-EQUITY> 28,297,653
<SALES> 0
<TOTAL-REVENUES> 1,238,215
<CGS> 0
<TOTAL-COSTS> 80,274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,157,941
<INCOME-TAX> 1,157,941
<INCOME-CONTINUING> 1,157,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,157,941
<EPS-BASIC> .68
<EPS-DILUTED> 0
</TABLE>
