8-K 1 d8k.htm FORM 8-K Form 8-K
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) September 30, 2002
 
Wells Real Estate Fund III, L.P.
(Exact Name of Registrant as Specified in Charter)
 
GEORGIA
  
0-18407
  
58-1800833
(State or Other Jurisdiction of Incorporation)
  
(Commission File Number)
  
(IRS Employer
Identification No.)
 
6200 The Corners Parkway, Suite 250, Norcross, Georgia 30092
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code (770) 449-7800
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
 
 

 
Item 2.    Sale of Assets
 
Greenville Center
 
On September 30, 2002, Wells Real Estate Fund III, L.P. (the “Registrant”) sold an office building located in Greenville, North Carolina (the “Greenville Center”) for $2,400,000 to East Carolina University Real Estate Foundation, Inc. (“East Carolina University”). The Registrant originally purchased the land for the Greenville Center as a build-to-suit property in June 1990. The Registrant’s total acquisition cost for the land and the development and construction of the Greenville Center was approximately $3,778,000.
 
The Greenville Center is a two-story office building containing approximately 35,300 rentable square feet located on a 2.34-acre tract of land. As of September 30, 2002, the Greenville Center was approximately 26.4% occupied by multiple tenants.
 
The Registrant received net proceeds of $2,271,187 from the sale of the Greenville Center. The Registrant recognized a loss of $494,143 in connection with the sale of the Greenville Center, including an impairment loss of $373,750 which had been recorded for the quarter ended June 30, 2002 as a result of writing down the Greenville Center to its fair market value based upon the purchase price contained in the Purchase and Sale Agreement executed between the Registrant and East Carolina University on July 1, 2002.
 
Item 7.    Financial Statements and Exhibits
 
(a) Financial Statements.    The Registrant hereby provides the following unaudited pro forma financial information relating to the sale of the Greenville Center. Such financial statements are submitted at the end of this Current Report and are filed herewith and incorporated herein by reference:
 
Wells Real Estate Fund III, L.P.
 
Unaudited Pro Forma Financial Statements
     
      
Summary of Unaudited Pro Forma Financial Statements
   
F-1
      
Pro Forma Balance Sheet as of June 30, 2002 (unaudited)
   
F-2
      
Pro Forma Statement of Income for the year ended December 31, 2001 (unaudited)
   
F-3
      
Pro Forma Statement of (Loss) Income for the six months ended June 30, 2002 (unaudited)
   
F-4
 
 
 
 
 

2

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
WELLS REAL ESTATE FUND III, L.P.
(Registrant)
 
By: WELLS CAPITAL, INC.
    General Partner
        By:
  
/S/    LEO F. WELLS, III        
   
Leo F. Wells, III
President
By:
  
/S/    LEO F. WELLS, III        
   
Leo F. Wells, III
General Partner
 
Date: October 14, 2002

3

 
WELLS REAL ESTATE FUND III, L.P.
 
SUMMARY OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
 
This pro forma information should be read in conjunction with the financial statements and notes of Wells Real Estate Fund III, L.P. included in its annual report filed on Form 10-K for the year ended December 31, 2001 and quarterly report filed on Form 10-Q for the period ended June 30, 2002.
 
The following unaudited pro forma balance sheet as of June 30, 2002 has been prepared to give effect to the disposition of the Greenville Center Building by Wells Real Estate Fund III, L.P. as if the disposition occurred on June 30, 2002.
 
The following unaudited pro forma statement of income for the year ended December 31, 2001 has been prepared to give effect to the disposition of the Greenville Center Building as if the disposition occurred on January 1, 2001.
 
The following unaudited pro forma statement of loss (income) for the six months ended June 30, 2002 has been prepared to give effect to the disposition of the Greenville Center Building as if the disposition occurred on January 1, 2001.
 
These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the disposition of the Greenville Center Building been consummated as of January 1, 2001.

F-1

 
WELLS REAL ESTATE FUND III, L.P.
 
PRO FORMA BALANCE SHEET
 
JUNE 30, 2002
 
(Unaudited)
 
    
Wells Real Estate Fund III, L.P. (b)
   
Pro Forma Adjustments
     
Pro Forma
Total
ASSETS:
                       
Real Estate, at cost:
                       
Land
   
$
498,690
   
$
(498,690
)
   
$
0
Building and improvements, less accumulated depreciation of $1,524,151 as of June 30, 2002
   
 
1,901,310
   
 
(1,901,310
)
   
 
0
    
  
  
Total real estate
   
 
2,400,000
   
 
(2,400,000
)
   
 
0
    
  
  
Cash and cash equivalents
   
 
379,967
   
 
2,278,859
(a)
   
 
2,658,826
Investments in joint ventures
   
 
10,800,682
   
 
0
 
   
 
10,800,682
Accounts receivable
   
 
7,049
   
 
(3,777
)
   
 
3,272
Prepaid expenses and other assets
   
 
20,394
   
 
(15,413
)
   
 
4,981
    
  
  
Total assets
   
$
13,608,092
   
$
(140,331
)
   
$
13,467,761
    
  
  
LIABILITIES AND PARTNERS’ CAPITAL:
                       
Liabilities:
                       
Accounts Payable
   
$
32,389
   
$
(15,648
)
   
$
16,741
Due to affiliates
   
 
87,720
   
 
0
 
   
 
87,720
    
  
  
Total liabilities
   
 
120,109
   
 
(15,648
)
   
 
104,461
Partners’ Capital:
                       
Limited partners:
                       
Class A — 19,635,965 units
   
 
13,487,983
   
 
(124,683
)
   
 
13,363,300
Class B — 2,544,540 units
   
 
0
   
 
0
 
   
 
0
    
  
  
Total partners’ capital
   
 
13,487,983
   
 
(124,683
)
   
 
13,363,300
    
  
  
Total liabilities and partners’ capital
   
$
13,608,092
   
$
(140,331
)
   
$
13,467,761
    
  
  
 
(a)
 
Represents sale proceeds for the land and building.
 
(b)
 
Historical financial information obtained from Wells Real Estate Fund III, L.P.’s quarterly report filed on Form 10-Q for the period ended June 30, 2002.
 
The accompanying notes are an integral part of this statement.

F-2

 
WELLS REAL ESTATE FUND III, L.P.
 
PRO FORMA STATEMENT OF INCOME
 
FOR THE YEAR ENDED DECEMBER 31, 2001
 
(Unaudited)
 
    
Wells Real
Estate Fund
III, L.P. (e)
     
Pro Forma
Adjustments
       
Pro Forma
Total
REVENUES:
                           
Rental income
   
$
266,677
     
$
(266,677
)(a)
     
$
0
Equity in income of joint ventures
   
 
602,145
     
 
0
 
     
 
602,145
Interest income
   
 
9,042
     
 
0
 
     
 
9,042
Other Income
   
 
2,235
     
 
(2,235
)(a)
     
 
0
    
    
    
    
 
880,099
     
 
(268,912
)
     
 
611,187
    
    
    
EXPENSES:
                           
Operating costs, net of reimbursements
   
 
201,334
     
 
(201,334
)(b)
     
 
0
Depreciation
   
 
167,383
     
 
(167,383
)(c)
     
 
0
Partnership administration
   
 
64,277
     
 
0
 
     
 
64,277
Management and leasing fees
   
 
29,335
     
 
(29,335
)(d)
     
 
0
Legal and accounting
   
 
25,434
     
 
(19,076
)(b)
     
 
6,358
Computer costs
   
 
16,894
     
 
(12,671
)(b)
     
 
4,223
    
    
    
    
 
504,657
     
 
(429,799
)
     
 
74,858
    
    
    
NET INCOME
   
$
375,442
     
$
160,887
 
     
$
536,329
    
    
    
NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS
   
$
375,442
                
$
536,329
    
               
NET INCOME PER CLASS A LIMITED PARTNER UNIT
   
$
0.02
                
$
0.03
    
               
NET CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT
   
$
0.05
                
$
0.05
    
               
 
(a)
 
Represents rental and other income related to the Greenville Center Building. Rental income is recognized on a straight-line basis.
 
(b)
 
Consists of expenses associated with the Greenville Center Building.
 
(c)
 
Depreciation expense is recognized using the straight-line method and a 25-year life.
 
(d)
 
Represents management and leasing fees related to the Greenville Center Building.
 
(e)
 
Historical financial information obtained from Wells Real Estate Fund III, L.P.’s annual report filed on Form 10-K for the year ended December 31, 2001.
 
The accompanying notes are an integral part of this statement.
 
 

F-3

 
WELLS REAL ESTATE FUND III, L.P.
 
PRO FORMA STATEMENT OF (LOSS) INCOME
 
FOR THE SIX MONTHS ENDED JUNE 30, 2002
 
(Unaudited)
 
    
Wells Real Estate Fund III, L.P. (f)
     
Pro Forma Adjustments
     
Pro Forma Total
  
REVENUES:
                           
Rental income
   
$
96,701
 
   
$
(96,701
) (a)
   
$
0
 
Equity in income of joint ventures
   
 
21,782
 
   
 
0
 
   
 
21,782
 
Interest income
   
 
3,171
 
   
 
0
 
   
 
3,171
 
    
  
  
    
 
121,654
 
   
 
(96,701
)
   
 
24,953
 
    
  
  
EXPENSES:
                           
Operating costs, net of reimbursements
   
 
101,208
 
   
 
(101,208
) (b)
   
 
0
 
Depreciation
   
 
89,293
 
   
 
(89,293
) (c)
   
 
0
 
Partnership administration
   
 
33,344
 
   
 
0
 
   
 
33,344
 
Management and leasing fees
   
 
6,919
 
   
 
(6,919
) (d)
   
 
0
 
Legal and accounting
   
 
9,748
 
   
 
(7,311
) (b)
   
 
2,437
 
Computer costs
   
 
4,374
 
   
 
(3,281
) (b)
   
 
1,093
 
Impairment loss
   
 
373,750
 
   
 
(373,750
) (e)
   
 
0
 
    
  
  
    
 
618,636
 
   
 
(581,762
)
   
 
36,874
 
    
  
  
NET (LOSS) INCOME
   
$
(496,982
)
   
$
485,061
 
   
$
(11,921
)
    
  
  
NET LOSS ALLOCATED TO CLASS A LIMITED PARTNERS
   
$
(496,982
)
            
$
(11,921
)
    
           
NET LOSS PER CLASS A LIMITED PARTNER UNIT
   
$
(0.03
)
            
$
0.00
 
    
           
NET CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT
   
$
0.00
 
            
$
0.00
 
    
           
 
(a)
 
Represents rental and other income related to the Greenville Center Building. Rental income is recognized on a straight-line basis.
 
(b)
 
Consists of expenses associated with the Greenville Center Building.
 
(c)
 
Depreciation expense is recognized using the straight-line method and a 25-year life.
 
(d)
 
Represents management and leasing fees related to the Greenville Center Building.
 
(e)
 
Represents impairment loss recognized on the fixed assets of the Greenville Center Building.
 
(f)
 
Historical financial information obtained from Wells Real Estate Fund III, L.P.’s quarterly report filed on Form 10-Q for the period ended June 30, 2002.
 
The accompanying notes are an integral part of this statement.

F-4