<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, 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
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1999
and December 31, 1998............................. 3
Statements of Income for the Three Months
Ended March 31, 1999 and 1998..................... 4
Statements of Partners' Capital for the Year Ended
December 31, 1998 and the Three Months
Ended March 31, 1999.............................. 5
Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998..................... 6
Condensed Notes to Financial Statements............. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.......................................... 9
PART II. OTHER INFORMATION........................................... 21
2
<PAGE>
WELLS REAL ESTATE FUND IX, L.P.
(a Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets March 31, 1999 December 31, 1998
------ -------------- -----------------
<S> <C> <C>
Investment in joint venture (Note 2) $ 27,921,564 $ 28,119,579
Cash and Cash equivalents 276,257 326,022
Due from affiliates 687,664 739,442
Deferred project costs 10,261 13,621
Organization costs, less accumulated
amortization of $12,500 in December
1998 and $14,063 in March 1999 10,938 12,500
------------- -------------
Total assets $ 28,906,684 $ 29,211,164
============= =============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable and accrued expenses $ 0 $ 3,500
Partnership distributions payable 694,497 681,204
------------- -------------
Total liabilities 694,497 684,704
------------- -------------
Partners' capital:
Limited partners:
Class A-3,036,063 units outstanding 25,898,226 25,646,950
Class B-463,937 units outstanding 2,313,961 2,879,510
------------- -------------
Total partners' capital 28,212,187 28,526,460
------------- -------------
Total liabilities and partners' capital $ 28,906,684 $ 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
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Interest income $ 0 $ 90,043
Equity in income of joint ventures
(Note 2) 409,083 275,517
--------- ---------
409,083 365,560
--------- ---------
Expenses:
Computer cost 2,435 1,986
Partnership administration 19,158 10,783
Legal and accounting fees 5,704 8,047
Amortization of organization costs 1,562 1,563
--------- ---------
28,859 22,379
--------- ---------
Net income $ 380,224 $ 343,181
========= =========
Net income allocated to Class A Limited Partners $ 685,045 $ 577,869
Net (loss) allocated to Class B Limited Partners $(304,821) $(234,688)
Net income per weighted average per Class A Limited
Partner Unit $ 0.23 $ 0.20
Net (loss) per weighted average Limited Partner Unit $ (0.66) $ (0.43)
Cash distribution per Class A Limited
Partner Unit $ 0.23 $ 0.17
</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 THREE MONTHS ENDED MARCH 31, 1999
AND YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Limited Partners
-------------------------------------------------------------
Class A Class B Total
----------------------------- ---------------------------- General Partners'
Units Amount Units Amount Partners Capital
----------- ------------- ---------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 2,949,776 $25,322,591 550,224 $ 4,186,127 $0 $29,508,718
Net income (loss) 0 2,597,938 0 (1,147,983) 0 1,449,955
Partnership distributions 0 (2,432,213) 0 0 0 (2,432,213)
Class A conversion elections 40,099 158,634 (40,099) (158,634) 0 0
--------- ----------- ------- ----------- -- ------------
BALANCE, December 31, 1998 2,989,875 $25,646,950 510,125 $ 2,879,510 $0 $28,526,460
========= =========== ======= =========== -- ===========
Net income (loss) 0 685,045 0 (304,821) 0 380,224
Partnership distributions 0 (697,497) 0 0 0 (694,497)
Class A conversion elections 46,188 260,728 (46,188) (260,728) 0 0
--------- ----------- ------- ----------- -- ------------
BALANCE, March 31, 1999 3,036,063 $25,898,226 463,937 $ 2,313,961 $0 $28,212,187
========= =========== ======= =========== -- ===========
</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>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 380,224 $ 343,181
Adjustments to reconcile net income to net
cash (used in) provided by operating activities: (409,083) (275,517)
Equity in income of joint venture
Amortization of organization costs 1,562 1,563
Changes in assets and liabilities:
Prepaids and other assets 0 26,311
Accounts payable (3,500) 0
---------- ------------
Net cash (used in) provided by operating
activities (30,797) 95,536
========== ============
Cash flow from investing activities:
Distributions received from joint ventures 739,441 335,508
Investment in joint ventures (76,205) (9,279,921)
---------- ------------
Net cash used by investing activities 663,236 (8,944,413)
---------- ------------
Cash flow from financing activities:
Distributions to partners from
accumulated earning (681,204) (437,162)
---------- ------------
Net cash used in financing activities (681,204) (437,162)
---------- ------------
Net (decrease) in cash and cash equivalents (49,765) (9,286,038)
Cash and cash equivalents, beginning of year 326,022 9,764,129
---------- ------------
Cash and cash equivalents, end of period $ 276,257 $ 478,091
========== ============
Supplemental disclosure of noncash investing
activities: Deferred project costs
applied to joint venture activities $ 3,361 $ 473,276
========== ============
</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
March 31, 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 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 $14,823,526 in the Fund IX-X-
XI-REIT Joint Venture, as of March 31, 1999, the Partnership was holding net
offering proceeds of $232,512 available for investment in properties, of which
$90,434 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").
As of March 31, 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 "US Cellular Office Building"),
which is owned by the Fund VIII - IX Joint Venture; (ii) a one-story
7
<PAGE>
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 several properties as of March 31, 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.
The following describes additional information about the properties in which the
Partnership owned an interest as of March 31, 1999:
Fund IX-X-XI-REIT Joint Venture
- -------------------------------
Iomega
- ------
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 intended to be additional parking and loading dock area and will include
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 expected
completion date of this project is July 1, 1999. The tenant, Iomega
Corporation, has agreed to extend the term of their lease to April 30, 2009 and
will pay as additional base rent, an amount equal to
8
<PAGE>
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 is due and payable, commencing on May 1, 1999.
The land was purchased at a cost of $212,000, excluding acquisition costs. It
is anticipated that the total cost to complete the project will be $612,689.
The funds used to acquire the land and for the improvements are being funded
entirely out of capital contributions made by Wells Fund XI to the Fund IX-X-XI-
REIT Joint Venture in the amount of $851,000.
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
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
- ---------------------------------------------------------
(a) General
- -----------
As of March 31, 1999, the developed properties owned by the Partnership were
99.8% occupied, whereas they were 99.75% occupied at March 31, 1998. Gross
revenues of the Partnership were $409,083 for the three months ended March 31,
1999, as compared to $365,560 for the three months ended March 31, 1998. The
increase was attributable primarily to the equity in income of joint venture.
Expenses of the Partnership increased to $28,859 for the three months ended
March 31, 1999, as compared to $22,379 for the same period in 1998, as a result
of increased activity primarily in administrative salaries. Net income of the
Partnership was $380,224 for the three months ended March 31, 1999, as compared
to a net income of $343,181 for the three months ended March 31, 1998.
The Partnership's net cash provided by operating activities decreased to
$(31,797) for 1999, as compared to $95,536 for 1998, which is due primarily to
equity in income of joint ventures and changes in assets and liabilities. Net
cash provided by investing activities increased to $663,236 from ($8,944,413).
Net cash used in financing activities increased from $437,162 to $681,204 due to
the distribution to partners from accumulated earnings. Cash and cash
equivalents decreased from $478,091 to $276,257 for the same period in 1999.
9
<PAGE>
The Partnership's distributions from Net Cash from operations accrued to Class A
Unit holders for the first quarter of 1999 was $ 0.23 per weighted average unit
compared to $0.17 for the same period in 1998.
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 by March 31, 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.
Some testing of systems has begun and all testing is expected to be complete by
June 30, 1999.
As to the status of the Partnerships' information technology systems, it is
presently believed that all major systems and software packages with the
exception of the accounting and property management package are Year 2000
compliant. The Partnerships' affiliated entities are purchasing the upgrade for
the accounting and property management package system; however, it is not
expected to be available until the end of the second quarter of 1999. At the
present time, it is believed that all non-major information technology systems
are Year 2000 compliant. The cost to upgrade any noncompliance systems is
believed to be immaterial.
The Partnership is in the process of confirming with the Partnership's vendors,
including third-party service providers such as banks, that their systems will
be Year 2000 compliant. Based on the information received thus far, the primary
third-party service providers with which the Partnership has relationships have
confirmed their Year 2000 readiness.
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 preliminarily 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.
10
<PAGE>
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
- -------------------------------
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.
The Partnership expects to make future real estate investments, directly or
through investments in joint ventures, from limited partners' capital
contributions. As of March 31, 1999, the Partnership was holding $232,512
available for investment in properties, including approximately $90,434, which
is being reserved to complete the ABB Building in Knoxville, Tennessee, owned by
the Fund IX-X-XI-REIT Joint Venture.
11
<PAGE>
Property Operations
- -------------------
As of March 31, 1999, the Partnership owned interests in the following
operational properties
The TCI Building/Fund VIII - IX Joint Venture
- ---------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $113,794 $113,794
Interest income 8,921 7,450
-------- --------
122,715 121,244
-------- --------
Expenses:
Depreciation 41,648 41,648
Management & leasing expenses 4,300 4,300
Other operating expenses 4,132 3,158
-------- --------
50,080 49,106
-------- --------
Net income $ 72,635 $ 72,138
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII - IX Joint Venture 45.2% 45.8%
Cash Distribution to Partnership $ 48,815 $ 52,092
Net income allocated to the Partnership $ 32,833 $ 34,950
</TABLE>
Net income and cash distributions decreased slightly in 1999, as compared to
1998, due primarily to decreased ownership in the Fund VIII - IX Joint Venture
in 1999, as compared to 1998, due to additional funding by Wells Fund VIII which
decreased the Partnership's ownership interest.
12
<PAGE>
The Matsushita Building/Fund VIII - IX Joint Venture
- ----------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $164,379 $167,698
-------- --------
Expenses:
Depreciation 53,918 53,918
Management & leasing expenses 6,313 6,513
Other operating expenses 4,043 5,582
-------- --------
64,274 66,013
-------- --------
Net income $100,105 $101,685
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII - IX Joint Venture 45.2% 45.8%
Cash Distribution to Partnership $ 75,184 $ 79,853
Net income allocated to the Partnership $ 45,251 $ 49,259
</TABLE>
Net income remains relatively stable as compared to 1998, while distributions
have decreased due to additional fundings by the Wells Fund VIII which decreased
the Partnership's ownership interest in the Fund VIII - IX Joint Venture.
13
<PAGE>
The Cirrus Logic Building/Fund VIII - IX Joint Venture
- ------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $184,539 $184,539
-------- --------
Expenses:
Depreciation 72,765 72,765
Management & leasing expenses 8,839 9,350
Other operating expenses 5,610 1,901
-------- --------
87,214 84,016
-------- --------
Net income $ 97,325 $100,523
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII - IX Joint Venture 45.2% 45.8%
Cash distribution to Partnership $ 69,825 $ 76,487
Net income allocated to the Partnership $ 43,994 $ 48,780
</TABLE>
Net income remains relatively stable, while distributions have decreased due to
additional fundings by the Wells Fund VIII which decreased the Partnership's
ownership interest in Fund VIII - IX Joint Venture.
14
<PAGE>
The US Cellular One Building/Fund VIII - IX Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $320,519 $320,519
-------- --------
Expenses:
Depreciation 150,378 128,049
Management & leasing expenses 35,187 34,398
Other operating expenses 4,925 (16,543)
-------- --------
190,490 145,904
-------- --------
Net income $130,029 $174,615
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund VIII - IX Joint Venture 45.2% 45.8%
Cash Distribution to Partnership $123,448 $129,166
Net income allocated to the Partnership $ 58,777 $ 84,670
</TABLE>
Net income decreased in 1999, as compared to 1998, due to an increase in
depreciation because of the occupancy of a tenant in early 1998, and a decrease
in CAM reimbursement billed in 1999 to the tenants. 1998 CAM charges were over
billed and were adjusted in 1999. Cash distributions have increased in the Fund
VIII - IX Joint Venture in 1999, as compared to 1998, due to additional fundings
by the Partnership, which increased the Partnership's ownership interest in the
Fund VIII - IX Joint Venture offset partially by the decrease in CAM billings.
15
<PAGE>
The ABB Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $260,092 $190,986
Interest income 15,060 0
-------- --------
275,152 190,986
-------- --------
Expenses:
Depreciation 134,100 91,094
Management & leasing expenses 21,386 25,282
Other operating expenses (11,607) 37,768
-------- --------
143,879 154,144
-------- --------
Net income $131,273 $ 36,842
======== ========
Occupied % 98% 67%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 52.9%
Cash distribution to Partnership $100,085 $ 32,621
Net income allocated to the Partnership $ 51,949 $ 17,901
</TABLE>
ABB Environmental Systems, a subsidiary of ABB, Inc., occupied its leased space
of 56,012 rentable square feet comprising approximately 67% of the building in
December 1997. The initial term of the lease is 9 years and 11 months. ABB has
the option under its lease 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. Another tenant has occupied 23,490
rentable square feet bringing the occupancy to 98%. The Partnership contributed
an additional $79,566 towards the completion of this project. It is currently
anticipated that the total cost to complete the project will be approximately
$90,434 which is anticipated to be funded by the Partnership and which is being
reserved by the Partnership for this purpose.
Rental income increased in 1999, over 1998, due primarily to the increased
occupancy level of the property. Total expenses decreased due to an the offset
of tenant reimbursements in operating costs which resulted in a negative figure.
Cash distributions for the quarter increased significantly in 1999, over the
1998 amount, due to the increase in rental income.
16
<PAGE>
The Partnership's ownership percentage decreased due to the admission of Wells
Fund XI and Wells OP to the Fund IX-X-XI-REIT Joint Venture and additional
funding in the Fund IX-X-XI-REIT Joint Venture by Wells Fund XI.
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Two Months Ended
------------------ ----------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $256,829 $134,084
-------- --------
Expenses:
Depreciation 81,576 54,384
Management & leasing expenses 11,618 0
Other operating expenses, net of reimbursements 363 (699)
-------- --------
93,557 53,685
-------- --------
Net income $163,272 $ 80,399
======== ========
Occupied % 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 52.9%
Cash distribution to Partnership $ 94,648 $ 54,424
Net income allocated to the Partnership $ 64,620 $ 38,604
</TABLE>
On February 13, 1998, the Fund IX-X-XI-REIT Joint Venture acquired a two story
office building containing approximately 106,750 rentable square feet on a 15
acre tract of land located in Louisville, Boulder County, Colorado (the "Ohmeda
Building") for a purchase price of $10,325,000 excluding acquisition costs.
The entire Ohmeda Building is currently under a net lease with Ohmeda, Inc. The
lease currently expires in January, 2005. The monthly base rental payable under
the lease is $83,709.79 through January 31, 2003; $87,890.83 from February 1,
2003 through January 31, 2004; and $92,249.79 from February 1, 2004 through
January 31, 2005. Under the lease, Ohmeda is responsible for all utilities,
taxes, insurance and other operating costs with respect to the Ohmeda Building.
In addition, Ohmeda is required to pay a $21,000 per year management fee for
maintenance and administrative services of the Ohmeda Building. The Fund IX-X-
XI-REIT Joint Venture, as landlord, is responsible for
17
<PAGE>
maintenance of the roof, exterior and structural walls, foundations, other
structural members and floor slab, provided that the landlord's obligation to
make repairs specifically excludes items of cosmetic and routine maintenance
such as the painting of walls.
Since the Ohmeda Building was purchased in February, 1998, comparative income
and expense figures are available for only two months of the prior quarter.
The Partnership's ownership percentage decreased due to the admission of Wells
Fund XI and Wells OP to the Fund IX-X-XI-REIT Joint Venture and additional
funding in the Fund IX-X-XI-REIT Joint Venture by Fund XI.
The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended One Month Ended
------------------ ---------------
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $206,522 $26,133
-------- -------
Expenses:
Depreciation 71,670 23,574
Management & leasing expenses 17,864 0
Other operating expenses, net of
reimbursements (2,250) 0
-------- -------
87,284 23,574
-------- -------
Net income $119,238 $ 2,559
======== =======
Occupied % 100% 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9% 52.9%
Cash distribution to Partnership $ 74,879 $13,818
Net income allocated to the
Partnership $ 47,107 $ 1,352
</TABLE>
On March 20, 1998, the Fund IX-X-XI-REIT Joint Venture acquired a three-story
multi-tenant office building containing approximately 51,974 rentable square
feet on a 5.1 acre tract in Broomfield, Boulder County, Colorado (the "360
Interlocken Building") for a purchase price of $8,275,000, excluding acquisition
costs.
18
<PAGE>
The 360 Interlocken Building was completed in December, 1996. The first floor
has multiple tenants and contains 15,599 rentable square feet; the second floor
is leased to ODS Technologies, L.P. and contains 17,146 rentable square feet;
and the third floor is leased to Transecon, Inc. and contains 19,229 rentable
square feet.
Since the 360 Interlocken Building was purchased in March 1998, comparable
income and expenses figures for the prior quarter are available for only one
month. Other operating expenses were negative for the first quarter due to
tenant reimbursements being greater than operating expenses. Management and
leasing expense reimbursement is also included in this category.
The Lucent Technologies Building/Fund IX-X-XI-REIT Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999
--------------
<S> <C>
Revenues:
Rental income $145,752
--------
Expenses:
Depreciation 45,801
Management & leasing expenses 5,370
Other operating expenses 3,014
--------
54,185
--------
Net income $ 91,567
========
Occupied % 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9%
Cash distribution to Partnership $ 49,822
Net income allocated to the
Partnership $ 36,251
</TABLE>
On June 24, 1998, Fund IX-X-XI-REIT Joint Venture acquired a one-story office
building containing approximately 57,186 rentable square feet on a 5.3 acre
tract of land in Oklahoma City, Oklahoma, (the "Lucent Technologies Building")
for a purchase price of $5,504,276, excluding acquisition cost.
The Lucent Technologies Building was completed in January, 1998, with Lucent
Technologies occupying the entire building. Under the terms of the lease, the
tenant is responsible for all utilities, property taxes and other operating
expenses.
19
<PAGE>
Since the Lucent Technologies Building was purchased by the IX-X-XI-REIT Joint
Venture in June, 1998, comparable income and expense figures for the prior
period are not available.
The Iomega Building/Fund IX-X-XI-REIT Joint Venture
- ---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------
March 31, 1999
--------------
<S> <C>
Revenues:
Rental income $123,873
--------
Expenses:
Depreciation 48,495
Management & leasing expenses 5,603
Other operating expenses (1,713)
--------
52,385
--------
Net income $ 71,488
========
Occupied % 100%
Partnership's Ownership % in the
Fund IX-X-XI-REIT Joint Venture 38.9%
Cash distribution to Partnership $ 45,962
Net income allocated to the Partnership $ 28,304
</TABLE>
On April 1, 1998, the 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 quarter are not available. Other operating
expenses were negative for the first quarter due to tenant reimbursements
reflected in this category. Management and leasing expense reimbursements are
also reflected in this category.
20
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 (b). No reports were filed during the first 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: May 11, 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.
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 276,257
<SECURITIES> 27,921,564
<RECEIVABLES> 687,664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 28,906,684
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,906,684
<CURRENT-LIABILITIES> 694,497
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,212,187
<TOTAL-LIABILITY-AND-EQUITY> 28,906,684
<SALES> 0
<TOTAL-REVENUES> 409,083
<CGS> 0
<TOTAL-COSTS> 28,859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 380,224
<INCOME-TAX> 380,224
<INCOME-CONTINUING> 308,224
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380,224
<EPS-PRIMARY> .23
<EPS-DILUTED> 0
</TABLE>
