10-K 1 d10k.txt FUND VI FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) |X| Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 2001 or --------------------------------------------------- |_| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from to -------------------- ------------------------- Commission file number 0-23656 --------------------------------------------------------- WELLS REAL ESTATE FUND VI, L. P -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Georgia 58-2022628 ------------------------------------------------------ ---------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 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 Securities registered pursuant to Section 12(b) ---------------------- of the Act: Name of exchange on Title of each class which registered ------------------------------------------------------ ---------------------- NONE NONE ------------------------------------------------------ ---------------------- Securities registered pursuant to Section 12(g) of the Act: CLASS A UNITS -------------------------------------------------------------------------------- (Title of Class) CLASS B UNITS -------------------------------------------------------------------------------- (Title of Class) 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 |_| Aggregate market value of the voting stock held Not Applicable by non-affiliates: ---------------------- PART I ITEM 1. BUSINESS. General Wells Real Estate Fund VI, L.P. (the "Partnership") is a Georgia public limited partnership having Leo F. Wells, III and Wells Partners, L.P. ("Wells Partners"), a Georgia non-public limited partnership, as General Partners. The Partnership was formed on December 1, 1992, for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing and otherwise managing for investment purposes income-producing commercial or industrial properties. The Partnership has two classes of limited partnership interests, Class A and Class B Units. Limited Partners have the right to change their prior elections to have some or all of their units treated as Class A Units or Class B Units one time during each quarterly accounting period. Limited Partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c) add or remove a general partner. A majority vote on any of the above described matters will bind the Partnership, without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of class. On April 5, 1993, the Partnership commenced a public offering of up to its limited partnership units pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership terminated its offering on April 4, 1994, and received gross proceeds of $25,000,000 representing subscriptions from 2,500,000 Limited Partners, composed of two classes of limited partnership interests, Class A and Class B limited partnership units. Employees The Partnership has no direct employees. The employees of Wells Capital, Inc. and Wells Management Company, Inc. perform a full range of real estate services including leasing and property management, accounting, asset management and investor relations for the Partnership. See item 11 - "Compensation of General Partners and Affiliates" for a summary of the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 2001. Insurance Wells Management Company, Inc., an affiliate of the General Partners, carries comprehensive liability and extended coverage with respect to all of the properties by the Partnership through its interests in joint ventures. In the opinion of management, all such properties are adequately insured. Competition The Partnership will experience competition for tenants from owners and managers of competing projects which may include the General Partners and their affiliates. As a result, the Partnership may provide free rent, reduced charges for tenant improvements and other inducements, all of which may have an adverse impact on results of operations. At the time the Partnership elects to dispose of its properties, the Partnership will also be in competition with sellers of similar properties to locate suitable purchasers for its properties. 2 ITEM 2. PROPERTIES. The Partnership owns interests in properties through the following joint ventures between the Partnership and affiliated limited partnerships: (i) Fund V and Fund VI Associates, a joint venture between the Partnership and Wells Real Estate Fund V, L.P. (the "Fund V-VI Joint Venture"); (ii) Fund V, Fund VI, and Fund VII Associates, a joint venture between the Partnership, Wells Real Estate Fund V, L.P. and Wells Real Estate Fund VII, L.P. (the "Fund V-VI-VII Joint Venture"); (iii) Fund VI and Fund VII Associates, a joint venture between the Partnership and Wells Real Estate Fund VII, L.P. (the "Fund VI-VII Joint Venture"); (iv) Fund II, Fund III, Fund VI and Fund VII Associates, a joint venture between the Partnership, Fund II and Fund III Associates, and Wells Real Estate Fund VII, L.P., (the "Fund II-III-VI-VII Joint Venture"); (v) Fund VI, Fund VII and Fund VIII Associates, a joint venture between the Partnership, Wells Real Estate Fund VII, L.P. and Wells Real Estate Fund VIII, L.P. (the "Fund VI-VII-VIII Joint Venture"); and (vi) Fund I-II-IIOW-VI-VII Associates, a joint venture between the Partnership, Wells Real Estate Fund I, Fund II and Fund IIOW Associates and Wells Real Estate Fund VII, L.P. (the "Fund I-II-IIOW-VI-VII Joint Venture"). As of December 31, 2001, the Partnership owned interests in the following properties through its ownership in the foregoing joint ventures: (i) a four story office building located in Hartford, Connecticut ("Hartford Building") and (ii) two retail buildings located in Clayton County, Georgia ("Stockbridge Village II"), both of which are owned by the Fund V - VI Joint Venture; (iii) a three-story office building located in Appleton Wisconsin (the "Marathon Building"), which is owned by the Fund V-VI-VII Joint Venture; (iv) two retail buildings located in Clayton County, Georgia ("Stockbridge Village III"); and (v) a shopping center expansion located in Clayton County, Georgia ("Stockbridge Village I Expansion"), both of which are owned by the Fund VI-VII Joint Venture; (vi) an office/retail center located in Roswell, Georgia (the "Holcomb Bridge Property"), which is owned by the Fund II-III-VI-VII Joint Venture; (vii) a four story office building located in Jacksonville, Florida (the "BellSouth Building") and (viii) a shopping center located in Clemmons, North Carolina ( "Tanglewood Commons"), both of which are owned by the Fund VI-VII- VIII Joint Venture. All of the foregoing properties were acquired on an all cash basis. 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. On October 1, 2001, the Fund I-II-IIOW-VI-VII Joint Venture sold Cherokee Commons for net sale proceeds of $8,434,089 and recognized a gain of $1,725,015 on the sale. The Partnership was allocated a taxable gain of $21,867 and net sale proceeds of $903,122 from this transaction. The following table shows lease expirations during the next ten years for all leases at properties in which the Partnership owned an interest through the joint ventures described above as of December 31, 2001, assuming no exercise of renewal options or termination rights: 3
Partnership Percentage Percentage Number Share of of Total of Total Year of of Square Annualized Annualized Square Annualized Lease Leases Feet Gross Base Gross Base Feet Gross Base Expiration Expiring Expiring Rent (1) Rent (1) Expiring Rent ---------- ------------ ------------ ------------ ------------ ------------ ------------ 2002 22 43,514 $ 740,852 $ 247,241 12.1% 13.9% 2003 (2) 10 87,174 966,615 491,202 24.3 18.2 2004 4 17,195 310,377 129,428 4.8 5.8 2005 5 12,550 184,154 75,006 3.5 3.5 2006 (3) 10 191,996 2,979,539 1,102,992 53.5 56.0 2011 1 6,732 134,640 60,318 1.8 2.6 ------------ ------------ ------------ ------------ ------------ ------------ 52 359,161 $ 5,316,177 $ 2,106,187 100.00% 100.00% ============ ============ ============ ============ ============ ============
(1) Average monthly gross rent over the life of the lease, annualized. (2) Primarily expiration of Hartford lease of (71,000 square feet). (3) Primarily expiration of Marathon lease (76,000 square feet), BellSouth lease (69,424 square feet) and American Express lease (22,607 square feet). The following describes the properties in which the Partnership owns an interest as of December 31, 2001: Fund V-VI Joint Venture On December 27, 1993, the Partnership and Wells Real Estate Fund V, L.P. ("Wells Fund V"), a Georgia public limited partnership affiliated with the Partnership through common general partners, entered into the Fund V-VI Joint Venture. The investment objectives of Wells Fund V are substantially identical to those of the Partnership. As of December 31, 2001, the Partnership had contributed approximately $5,329,541 and Wells Fund V had contributed approximately $4,544,601 to the Fund V-VI Joint Venture. The Partnership holds approximately 54% equity interest, and Wells Fund V currently holds approximately 46% equity interest in the Fund V-VI Joint Venture. The Partnership owns interests in the following two properties through the Fund V-VI Joint Venture: The Hartford Building On December 29, 1993, the Fund V-VI Joint Venture purchased the Hartford Building, a four-story office building containing approximately 71,000 rentable square feet from Hartford Accident and Indemnity Company for a purchase price of $6,900,000. The Hartford Building is located on 5.56 acres of land in Southington, Hartford County, Connecticut. The funds used by the Fund V-VI Joint Venture to acquire the Hartford Building were derived from capital contributions made by the Partnership and Wells Fund V totaling $3,432,707 and $3,508,797, respectively, for total capital contributions to the Fund V-VI Joint Venture of $6,941,504. The entire building is leased to Hartford Fire Insurance Company for a period of nine years and eleven months commencing on December 29, 1993. The annual base rent during the initial term is $458,400 commencing April 1, 1994 and continuing through the expiration of the initial term of the lease under the terms of its lease. Hartford also has the option to extend the initial term of the lease for two consecutive five year periods at currently prevailing market rates. Under the terms of its lease, Hartford is responsible for property taxes, operating expenses, general repair and maintenance 4 work and a pro rata share of capital expenditures based upon the number of years remaining in the lease. The occupancy rate at the Hartford Building was 100% as of years ended December 31 2001, 2000 1999, 1998 and 1997. The average effective annual rental rate per square foot was $10.11 for 2001, 2000, 1999, 1998 and 1997. Stockbridge Village II On November 12, 1993, Wells Fund V purchased 2.46 acres of real property located in Clayton County, Georgia for $1,022,634. On July 1, 1994, Wells Fund V contributed the property as capital contribution to the Fund V-VI Joint Venture. Construction of a 5,400 square foot retail building was completed in November, 1994. A second retail building containing approximately 10,423 square feet was completed in June, 1995. The total construction cost of the second building in Stockbridge Village II was approximately $2,933,000. As of December 31, 2001, the Partnership had contributed $1,896,834, and Wells Fund V contributed $1,035,804 to the Fund V-VI Joint Venture for the acquisition and development of Stockbridge Village II. The entire first building is leased by Apple Restaurants, Inc. for a term of nine years and eleven months beginning in December 9, 1994. The annual base rent under the lease was $125,982 until December 15, 1999, at which time the annual base rent increased to $137,700. The occupancy rate for Stockbridge Village II at year-end was 100% in 2001, 2000 and 1999, 72% in 1998 and 1997. The average effective annual rental rate per square foot at Stockbridge Village II was $17.23 for 2001, $19.70 for 2000, $19.66 for 1999, $14.90 for 1998 and $14.88 for 1997. Fund V-VI-VII Joint Venture On September 8, 1994, the Partnership, Wells Fund V and Wells Real Estate Fund VII, L.P. ("Wells Fund VII"), Georgia public limited partnerships affiliated with the Partnership through common general partners, entered into a joint venture agreement known as Fund V, Fund VI and Fund VII Associates (the "Fund V-VI-VII Joint Venture"). The investment objectives of Wells Fund VII are substantially identical to those of the Partnership. The Partnership owns a 42% interest in the following property through the Fund V-VI-VII Joint Venture: The Marathon Building On September 16, 1994, the Fund V-VI-VII Joint Venture purchased a three-story office building containing approximately 76,000 rentable square feet, located on approximately 6.2 acres of land in Appleton, Wisconsin (the "Marathon Building") for a purchase price of $8,250,000, excluding acquisition costs. The funds used by the Fund V-VI-VII Joint Venture to acquire the Marathon Building were derived from capital contributions made by the Partnership, Wells Fund V and Wells Fund VII totaling $3,470,958, $1,337,505, and $3,470,958, respectively, for total contributions to the Fund V-VI-VII Joint Venture of $8,279,421 including acquisition costs. The entire Marathon Building is leased to Jaakko Poyry Fluor Daniel for a period of twelve years expiring December 31, 2006, with options to extend the lease for two additional five-year periods at currently prevailing market rates. The annual base rent payable under the lease is $910,000. 5 The occupancy rate at the Marathon Building was 100% at year-end in 2001, 2000, 1999, 1998 and 1997. The average effective annual rental rate per square foot in was $12.78 for 2001, 2000, 1999 and 1998 and $12.74 for 1997. Fund VI-VII Joint Venture On December 9, 1994, the Partnership and Wells Fund VII entered into a Joint Venture Agreement and formed the Fund VI-VII Joint Venture. As of December 31, 2001, the Partnership contributed $2,710,639, including its cost to acquire land, and Wells Fund VII contributed $3,358,633 to the Fund VI -VII Joint Venture for the acquisition and development of Stockbridge Village III Project and Stockbridge Village I Expansion. As of December 31, 2001, the Partnership's equity interest in the Fund VI-VII Joint Venture was approximately 45%, and Wells Fund VII's equity interest in the Fund VI-VII Joint Venture was approximately 55%. The Partnership owns interests in the following two properties through the Fund VI-VII Joint Venture: Stockbridge Village III In April 1994, the Partnership purchased 3.27 acres of real property located in Clayton County, Georgia for a cost of $1,015,673. This tract of land is located directly across Route 138 from the Stockbridge Village Shopping Center was developed and is owned by an affiliate of the Partnership. On December 9, 1994, the Partnership contributed this property as a capital contribution to the Fund VI-VII Joint Venture. As of December 31, 2001, the Partnership has contributed $1,033,285 and Wells Fund VII has contributed $1,917,483 to the Fund VI-VII Joint Venture for the acquisition and development of the Stockbridge Village III Property. The first building is a 3,200 square foot restaurant, which was completed in March 1995, at a cost of approximately $400,000, excluding land. The space is now leased by RMS / Fazoli's for a term of 13 years, which commenced on December 10, 1998. The second out-parcel building containing approximately 15,000 square feet was completed in October 1995, at a cost of approximately $1,500,000, excluding land. In October 2001, Stockbridge Ribs, Inc. took occupancy of 6,732 square feet with a lease for ten years. The initial annual base rent for the first five years is $125,215, and $144,065 thereafter. Four other tenants occupy the remaining 6,543 square feet of this building. The average effective annual rental rate per square foot at Stockbridge Village III was $14.99 for 2001, $17.05 for 2000, $17.08 for 1999, $13.08 for 1998, and $15.67 for 1997. The occupancy rate at year-end was 91% in 2001, and 100% in 2000, 1999, 1998 and 1997. Stockbridge Village I Expansion On June 7, 1995, the Fund VI-VII Joint Venture purchased 3.38 acres of real property located in Clayton County, Georgia for approximately $718,000. The Stockbridge Village I Expansion consists of a multi-tenant shopping center containing approximately 29,200 square feet. Construction was substantially complete in April 1996, upon which Cici's Pizza restaurant took occupancy of 4,000 square feet of the premises. The term of the CiCi's Pizza lease is nine years and eleven months commencing upon occupancy. The initial base rent is $48,000. In the third year, the annual base rent increased to $50,000, in the sixth year to $52,000, and in the ninth year to $56,000. 6 As of December 31, 2001, the Partnership contributed a total of $1,677,354, and Wells Fund VII contributed a total of $1,441,150 for a total cost of approximately $3,118,504 toward the development and construction of the Stockbridge Village I Expansion. The occupancy rate at the Stockbridge Village I Expansion was 100%, 100%, 86%, 81% and 74% at year-end 2001, 2000, 1999, 1998 and 1997, respectively. The average effective annual rental rate per square foot was $13.87 for 2001, $11.97 for 2000, $10.74 for 1999, $10.08 for 1998 and $6.82 for 1997. Fund II-III-VI-VII Joint Venture On January 10, 1995, the Partnership, Fund II-III Joint Venture, and Wells Fund VII entered into the Fund II-III-VI-VII Joint Venture. The Fund II-III Joint Venture is a joint venture between Wells Real Estate Fund III, L.P. ("Wells Fund III"), a Georgia public limited partnership having Leo F. Wells, III and Wells Capital, Inc. as general partners, and an existing joint venture (the "Fund II-IIOW Joint Venture") formed by Wells Real Estate Fund II ("Wells Fund II") and Wells Real Estate Fund II-OW ("Wells Fund IIOW"), Georgia public limited partnerships having Leo F. Wells, III and Wells Capital, Inc. as general partners. The investment objectives of Wells Fund II, Wells Fund IIOW and Wells Fund III are substantially identical to those of the Partnership. Holcomb Bridge Property In January 1995, the Fund II-III Joint Venture contributed to the Fund II-III-VI-VII Joint Venture approximately 4.3 acres of land at the intersection of Warsaw Road and Holcomb Bridge Road in Roswell, Fulton County, Georgia (the "Holcomb Bridge Property") including land improvements for the development and construction of two buildings containing a total of 49,530 square feet. Thirteen tenants occupied the Holcomb Bridge Property at December 31, 2001, for an occupancy rate at year end of 90%, 92%, 100%, 94%, and 94% in 2001, 2000, 1999, 1998 and 1997, respectively. The average effective annual rental rate per square foot was $17.07 for 2001, $17.55 for 2000, $19.26 for 1999, $17.62 for 1998 and $13.71 for 1997. As of December 31, 2001, the Fund II-III Joint Venture contributed $1,729,116 in land and improvements for an equity interest of approximately 24%, the Partnership contributed $1,929,541 for an equity interest of approximately 27%, and Wells Fund VII contributed $3,525,041 for an equity interest of approximately 49%. The total cost to develop the Holcomb Bridge Property was approximately $5,454,582, excluding land. Fund VI-VII-VIII Joint Venture On April 17, 1995, the Partnership, Wells Fund VII and Wells Real Estate Fund VIII, L.P. ("Wells Fund VIII"), a Georgia public limited partnership affiliated with the Partnership through common general partners, formed the Fund VI-VII-VIII Joint Venture. The investment objectives of Wells Fund VII and Wells Fund VIII are substantially identical to those of the Partnership. As of December 31, 2001, the Partnership had contributed approximately $6,067,688 for an approximate equity interest of 34% in the Fund VI-VII-VIII Joint Venture, through which an office building in Jacksonville, Florida and a multi-tenant retail center in Clemmons, North Carolina are owned. As of December 31, 2001, Wells Fund VII has contributed $5,932,312 for an equity interest in the Fund VI-VII-VIII Joint Venture of approximately 33%, and Wells Fund VIII has contributed approximately $5,700,000 for an equity interest in the Fund VI-VII-VIII Joint Venture of approximately 32%. Thus, a total of 7 $17,700,000 has been contributed to the Fund VI-VII-VIII Joint Venture for the acquisition and development of the properties aforementioned. BellSouth Building On April 25, 1995, the Fund VI-VII-VIII Joint Venture purchased a 5.55 acre parcel of land in Jacksonville, Florida for a total of $1,245,059 including closing costs. In May 1996, the 92,964 square foot office building was completed with BellSouth Advertising and Publishing Corporation, a subsidiary of BellSouth Company, taking occupancy of approximately 66,333 square feet and American Express Travel Related Services Company, Inc. taking occupancy of approximately 22,607 square feet. BellSouth took occupancy of an additional 3,901 square feet in December 1996. The land purchase and construction costs, totaling approximately $9,000,000, were funded by capital contributions of $3,500,000 from the Partnership, $3,500,000 from Wells Fund VII and $2,000,000 from the Wells Fund VIII. The BellSouth lease is for a term of nine years and eleven months with an option to extend for an additional five-year period at the currently prevailing market rate. The annual base rent during the initial term is $1,094,426 during the first five years and $1,202,034 for the balance of the initial lease term. The original American Express lease was for a term of five years with an annual base rent of $369,851 and expired in June 2001. American Express has renewed their lease for five years at an annual base rent of $405,117 for the first year with a cumulative 3 percent escalation each year thereafter. BellSouth and American Express are required to pay additional rent equal to their share of operating expenses during their respective lease terms. The occupancy rate at year-end was 100% in 2001, 2000, 1999, 1998 and 1997.The average effective annual rental rate per square foot at the BellSouth Building was $16.65 for 2001, $16.36 for 2000, 1999, and 1998, and $16.40 for 1997. Tanglewood Commons Shopping Center On May 31, 1995, the Fund VI-VII-VIII Joint Venture purchased a 14.683 acre tract of real property located in Clemmons, Forsyth County, North Carolina. The Fund VI-VII-VIII Joint Venture constructed one large strip shopping center building containing approximately 67,320 gross square feet on a 12.48 acre tract. The remaining 2.2 acre portion of the property consists of four out parcels which have been graded and will be held for future development or resale. As of December 31, 2001, the Partnership contributed $2,567,688, Wells Fund VII contributed $2,432,312 and Wells Fund VIII had contributed $3,700,000 for the development of this project. Total cost and expenses to be incurred by the Fund VI-VII-VIII Joint Venture for the acquisition, development, construction and completion of the shopping center is approximately $8,700,000. Construction of the project began in March, 1996, and was substantially completed in the first quarter of 1997. Harris Teeter, Inc., a regional supermarket chain, executed a lease for a minimum of 45,000 square feet with an initial term of 20 years with extension options of four successive five year periods with the same terms as the initial lease. The annual base rent during the initial term is $488,250. In addition, Harris Teeter has agreed to pay percentage rents equal to one percent of the amount by which Harris Teeter's gross sales at this location exceed $35,000,000 for any lease year. 8 The occupancy rate at year-end was 100% in 2001 and 2000, 91% for 1999 and 1998, and 86% for 1997. The average effective annual rental rate per square foot at Tanglewood Commons was $13.02 for 2001, $12.53 for 2000, $11.48 for 1999, $10.96 for 1998, and $9.12 for 1997. Fund I-II-IIOW-VI-VII Joint Venture On August 1, 1995, the Partnership, Wells Real Estate Fund I ("Wells Fund I"), a Georgia public limited partnership, the Fund II-Fund IIOW Joint Venture and Wells Fund VII, entered into Fund I-II-IIOW-VI-VII Joint Venture, which was formed to own and operate Cherokee Commons described below. Cherokee Commons Cherokee Commons consists of a retail shopping center located in metropolitan Atlanta, Cherokee County, which has been expanded to consist of approximately 103,755 net leasable square feet. Cherokee Commons was initially developed through a joint venture between Wells Fund I and the Fund II-Fund IIOW Joint Venture, which contributed Cherokee Commons to the Fund I-II-IIOW-VI-VII Joint Venture on August 1, 1995 to complete the required funding for the expansion. As of September 30, 2001, Wells Fund I contributed property with a book value of $2,139,900, the Fund II-Fund IIOW Joint Venture contributed property with a book value of $4,860,100, the Partnership contributed cash in the amount of $953,798, and Wells Fund VII contributed cash in the amount of $953,798 to the Fund I-II-IIOW-VI-VII Joint Venture. As of September 30, 2001, the equity interests in the Fund I-II-IIOW-VI-VII Joint Venture were as follows: Wells Fund I at 24%, Fund II-Fund IIOW Joint Venture at 54%, Wells Fund VII at 11% and the Partnership at 11%. On October 1, 2001, the Fund I-II-IIOW-VI-VII Joint Venture sold Cherokee Commons for net sale proceeds of $8,434,089 and recognized a gain of $1,725,015 on the sale. The Partnership was allocated a taxable gain of $21,867 and net sale proceeds of $903,122 from this transaction. Because of the requirement for fiduciaries of retirement plans subject to ERISA to determine the value of the assets of such retirement plans on an annual basis, the General Partners are required under the Partnership Agreement to report estimated Unit values to the Limited Partners each year in the Partnership's annual Form 10-K. The methodology to be utilized for determining such estimated Unit values under the Partnership Agreement is for the General Partners to estimate the amount a Unit holder would receive if the Partnership's properties were sold at their estimated fair market values as of the end of the Partnership's fiscal year and the proceeds therefrom (without reduction for selling expenses) were distributed to the Limited Partners in liquidation of the Partnership. Utilizing this methodology, the General Partners have estimated Unit valuations, based upon their estimates of property values as of December 31, 2001, to be approximately $9.02 per Class A Unit and $9.02 per Class B Unit, based upon market conditions existing in early December 2001. In connection with these estimated valuations, the General Partners obtained an opinion from David L. Beal Company, an independent MAI appraiser, to the effect that such estimates of value were reasonable; however, due to the inordinate expense involved in obtaining appraisals for all of the Partnership's properties, no actual appraisals were obtained. Accordingly, these estimates should not be viewed as an accurate reflection of the fair market value of the Partnership's properties, nor do they represent the amount of net proceeds which would result from an immediate sale of the Partnership's properties. The valuations performed by the General Partners are estimates only, and are based a number of assumptions which may not be accurate or complete. In addition, property values are subject to change and could decline in the future. Further, as set forth above, no appraisals have or will be obtained. For these reasons, the estimated Unit valuations set forth above should not be relied upon for any purpose other than required ERISA disclosures. 9 ITEM 3. LEGAL PROCEEDINGS. There were no material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during 2001. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of the Limited Partners during 2001. 10 PART II ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS. As of February 28, 2002, the Partnership had 2,236,361 outstanding Class A Units held by a total of 1,659 Limited Partners and 263,639 outstanding Class B Units held by a total of 180 Limited Partners. The capital contribution per unit is $10.00. There is no established public trading market for the Partnership's limited partnership units, and it is not anticipated that a public trading market for the units will develop. Under the Partnership Agreement, the General Partners have the right to prohibit transfers of units. Cash available for distribution to the Limited Partners is distributed on a quarterly basis unless Limited Partners elect to have their cash distributions paid monthly. Under the Partnership Agreement, distributions from net cash from operations are allocated first to the Limited Partners holding Class A Units (and limited partners holding Class B Units that have elected a conversion right that allows them to share in the distribution rights of limited partners holding Class A Units) until they have received 10% of their adjusted capital contributions. Net Cash From Operations, as defined in the Partnership Agreement to mean cash flow, less adequate cash reserves for other obligations of the Partnership for which there is no provision, but are initially allocated none of the depreciation, amortization, cost recovery and interest expense. These items are allocated to Class B Unit holders until their capital account balances have been reduced to zero. Cash available for distribution is then distributed to the General Partners until they have received an amount equal to 10% of cash distributions previously distributed to the limited partners. Any remaining cash available for distribution is split between the Limited Partners holding Class A units and the General Partners on a basis of 90% and 10% respectively. No distributions will be made to the Limited Partners holding Class B Units. No distributions have been made to the General Partner or holders of Class B Units as of December 31, 2001. 11 Cash distributions made to Limited Partners holding Class A Units (and limited partners holding Class B Units that have elected a conversion right) during 2000 and 2001 were as follows: Per Class A Unit ------------------------- Distribution Total for Quarter Cash Investment Return of Ended Distributed Income Capital ------------------ ----------- ---------- --------- March 31, 2000 $494,887 $0.12 $0.11 June 30, 2000 494,941 0.11 0.11 September 30, 2000 494,957 0.12 0.11 December 31, 2000 481,146 0.11 0.10 March 31, 2001 481,593 0.10 0.12 June 30, 2001 467,872 0.11 0.10 September 30, 2001 468,581 0.13 0.09 December 31, 2001 461,250 0.20 0.00 Fourth quarter distributions were accrued for accounting purposes in 2001 and paid to the limited partners holding Class A Units in February 2002. ITEM 6. SELECTED FINANCIAL DATA. The following sets forth a summary of the selected financial data for the years ended December 31, 2001, 2000, 1999, 1998 and 1997.
2001 2000 1999 1998 1997 -------------------------------------------------------------------------- Total assets $ 16,894,291 $ 17,602,253 $ 18,532,975 $ 19,328,676 $ 20,218,514 Total revenues 1,281,251 1,107,788 1,056,568 939,519 884,802 Net income 1,190,997 1,027,798 969,613 855,788 795,654 Net income allocated to Class A Limited Partners 1,190,997 1,027,798 1,274,859 1,770,058 1,677,826 Net loss allocated to Class B Limited Partners 0 0 (305,246) (914,270) (882,172) Net income per weighted average (1) Class A Limited Partner Unit $0.54 $0.47 $0.58 $0.81 $0.78 Net loss per weighted average (1) Class B Limited Partner Unit 0.0 0.0 (0.99) (2.80) (2.47) Class A Limited Partner Unit: Investment income 0.54 0.46 0.63 0.80 0.73 Return of capital $0.31 $0.43 $0.20 $0.00 $0.00
(1) The weighted average unit is calculated by averaging units over the period they are outstanding during the time units are still being sold or converted to Class A or Class B Limited Partner Units. 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION. Forward-Looking Statements The following discussion and analysis should be read in conjunction with the Selected Financial Data and 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 statements made in this Report, which include construction costs which may exceed estimates, construction delays, lease-up risks, inability to obtain new tenants upon the 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 Gross revenues of the Partnership were $1,281,251, $1,107,788 and $1,056,568 for the years ended December 31, 2001, 2000 and 1999, respectively. The 2001 increase over 2000 and 1999 was due primarily to the sale of Cherokee Commons in 2001 partially offset by fluctuations in interest income. Expenses of the Partnership were $90,254 for the year ended 2001, as compared to $79,990 for 2000 and $86,955 for 1999. The change in expenses for 2001, as compared to 2000 and 1999 was primarily due to increased administrative salaries. As a result, net income of the Partnership was $1,190,997, $1,027,798 and $969,613 for the years ended December 31, 2001, 2000 and 1999, respectively. The Partnership made cash distributions of investment income and a return of capital to Limited Partners holding Class A Units of $0.54, $0.47 and $0.58 per Class A Unit for the years ended December 31, 2001, 2000, 1999, respectively. The General Partners anticipate that distributions per unit to limited partners holding Class A Units will continue in 2002. Distributions accrued for the fourth quarter of 2001 to the Limited Partners holding Class A Units were paid in February 2002. No cash distributions were made to Limited Partners holding Class B Units. Liquidity and Capital Resources Pursuant to the terms of the Partnership Agreement, the Partnership is required to maintain working capital reserves in an amount equal to the cash operating expenses required to operate the Partnership for a six-month period not to be reduced below 1% of Limited Partners' capital contributions. As set forth above, in order to fund tenant improvements at Stockbridge Village II, Stockbridge Village I Expansion and at the Holcomb Bridge Property, the General Partners have used $223,932 of the Partnership's working capital reserves to reduce the balance below this minimum amount, rather than funding the tenant improvements out of operating cash flow, which would have the effect of reducing cash flow distributions to Limited Partners. The General Partners anticipate that the remaining $26,068 in working capital reserves will be sufficient to meet its future needs. The Partnership's net cash used in operating activities increased to $87,744 for the year ended December 31, 2001 as compared to $64,324 and $80,493 for the years ended December 31 2000 and 1999, respectively. The 13 increase from 2000 to 2001 is primarily due to a decrease in interest income to the Partnership and an increase in partnership expenses. The decrease in net cash used in operating activities from 1999 to 2000 is due to an increase in interest income to the Partnership and a decrease in partnership expenses. Net cash provided by investing activities increased to $1,986,277 in 2001 from $1,898,256 in 2000 and $1,855,362 in 1999 due primarily to decreased investments in joint ventures partially offset by a decrease in joint venture distributions received. Net cash used in financing activities were $1,899,493, $1,960,520 and $1,765,314 for the years ended December 31, 2001, 2000 and 1999, respectively. The fluctuations from year to year correlate with the fluctuations in distributions received from joint ventures in investing activities. These changes produced cash and cash equivalents of $27,895, $28,855 and $155,443 at December 31, 2001, 2000 and 1999, respectively. The Partnership is unaware of any known demands, commitments, events or capital expenditures other than that which is required for the normal operations of the properties in which it owns a joint venture interest that will result in the Partnership's liquidity increasing or decreasing in any material way. The Partnership expects to meet liquidity requirements and budget demands through cash flow from operations. Since properties are acquired on an all-cash basis, the partnership has no permanent, long-term liquidity requirements. Inflation The real estate market has not been affected significantly by inflation during the past three years due to the relatively low inflation rate. There are provisions in the majority of tenant leases to protect the partnership from the impact of inflation. Most leases contain common area maintenance charges, real estate tax and insurance reimbursements on a per square foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. These provisions should reduce the Partnership's exposure to increases in costs and operating expenses resulting from inflation. In addition, a number of the Partnership's leases are for remaining terms of less than five years, which may permit the Partnership to replace existing leases with new leases at higher base rental rates if the existing leases are below market rate. There is no assurance, however, that the Partnership would be able to replace existing leases with new leases at higher base rentals. Critical Accounting Policies The Partnership's accounting policies have been established and conformed to in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied; thus, resulting in a different presentation of our financial statements. Below is a discussion of the accounting policies that we consider to be critical in that they may require complex judgment in their application or require estimates about matters, which are inherently uncertain. Additional discussion of accounting policies that we consider to be significant, including further discussion of the critical accounting policies described below, is presented in the notes to the Partnership's financial statements in Item 14(a). Straight-Lined Rental Revenues The Partnership recognizes rental income generated from all leases on real estate assets in which the Partnership has an ownership interest, either directly or through investments in joint ventures, on a straight-line basis over the terms of the respective leases. If a tenant was to encounter financial difficulties in future periods, the amount recorded as receivables may not be realized. 14 Operating Cost Reimbursements The Partnership generally bills tenants for operating cost reimbursements, either directly or through investments in joint ventures, on a monthly basis at amounts estimated largely based on actual prior period activity and the respective lease terms. Such billings are generally adjusted on an annual basis to reflect reimbursements owed to the landlord based on the actual costs incurred during the period and the respective lease terms. Financial difficulties encountered by tenants may result in receivable not being realized. Real Estate Management continually monitors events and changes in circumstances indicating that the carrying amounts of the real estate assets in which the Partnership has an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When such events or changes in circumstances are present, management assesses the potential impairment by comparing the fair market value of the asset, estimated at an amount equal to the future undiscounted operating cash flows expected to be generated from tenants over the life of asset and from its eventual disposition, to the carrying value of the asset. In the event that the carrying amount exceeds the estimated fair market value, the Partnership would recognize an impairment loss in the amount required to adjust the carrying amount of the asset to its estimated fair market value. Neither the Partnership nor its joint ventures have recognized impairment losses on real estate assets in 2001, 2000 or 1999. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Financial Statements of the Registrant and supplementary data are detailed under Item 14 (a) and filed as part of the report on the pages indicated. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There were no disagreements with the Partnership's accountants or other reportable events during 2001. 15 PART III ITEM 10. GENERAL PARTNERS OF THE PARTNERSHIP. Wells Partners, L.P. The sole General Partner of Wells Partners, L.P. is Wells Capital, Inc., a Georgia corporation. The executive offices of Wells Capital, Inc. are located at 6200 The Corners Parkway, Suite 250, Norcross, Georgia 30092. Leo F. Wells, III. Mr. Wells is a resident of Atlanta, Georgia, is 58 years of age and holds a Bachelor of Business Administration Degree in Economics from the University of Georgia. Mr. Wells is the President and sole Director of Wells Capital. Mr. Wells is the President of Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which he serves as the principal broker. Mr. Wells is also currently the sole Director and President of Wells Management Company, Inc., a property management company he founded in 1983. In addition, Mr. Wells is the President and Chairman of the Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells Management Company, Inc., all of which are affiliates of the General Partners. From 1980 to February 1985, Mr. Wells served as vice-president of Hill-Johnson, Inc., a Georgia corporation engaged in the construction business. From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company, and from 1970 to 1973, he was a real estate salesman and property manager for Roy D. Warren & Company, an Atlanta real estate company. ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES. The following table summarizes the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 2001. -------------------------------------------------------------------------------- CASH COMPENSATION TABLE -------------------------------------------------------------------------------- Name of individual or Capacities in which served number in group Form of Compensation Cash Compensation -------------------------------------------------------------------------------- Wells Management Property Manager - $156,226 Company, Inc. Management and Leasing Fees (1) The majority of these fees are not paid directly by the Partnership but are paid by the joint venture entities which own properties for which the property management and leasing services relate and include management and leasing fees, some of which were accrued for accounting purposes in 2001, but not actually paid until January, 2002. 16 ITEM 12. OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. No Limited Partner is known by the Partnership to own beneficially more than 5% of the outstanding units of the Partnership. Set forth below is the security ownership of management as of February 28, 2002. Name and Address of Amount and Nature of Title of Class Beneficial Owner Beneficial Ownership Percent of Class -------------- ------------------- -------------------- ---------------- Class A Units Leo F. Wells, III 1,327.37 units (IRA, less than 1% 401(k) and Profit Sharing) No arrangements exist which would, upon execution thereof, result in a change in control of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The compensation and fees paid or to be paid by the Partnership to the General Partners and their affiliates in connection with the operation of the Partnership are as follows: Interest in Partnership Cash Flow and Net Sale Proceeds. The General Partners will receive a subordinated participation in net cash flow from operations equal to 10% of net cash flow after the Limited Partners holding Class A Units have received preferential distributions equal to 10% of their adjusted capital contribution. The General Partners will also receive a subordinated participation in net sale proceeds and net financing proceeds equal to 20% of residual proceeds available for distribution after the Limited Partners holding Class A Units have received a return of their adjusted capital contribution plus a 10% cumulative return on their adjusted capital contributions and Limited Partners holding Class B Units have received a return of their adjusted capital contribution plus a 15% cumulative return on their adjusted capital contribution; provided, however, that in no event shall the General Partners receive in the aggregate in excess of 15% of net sale proceeds and net financing proceeds remaining after payments to Limited Partners from such proceeds of amounts equal to the sum of their adjusted capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners have received no distribution from cash flow or net sales proceeds in 2001. Property Management and Leasing Fees. Wells Management Company, Inc., an affiliate of the General Partners, will receive compensation for supervising the management of the Partnership properties equal to the lesser of: (A)(i) 3% of gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate one-time fee for initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm's length transactions by others rendering similar services in the same geographic area for similar properties; and (ii) in the case of industrial and commercial properties which are leased on a long-term basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term; or (B) the amounts charged by unaffiliated persons rendering comparable services in the same geographic area. Wells Management Company, Inc. received $156,226 in property management cash compensation for services rendered during the year ended December 31, 2001. 17 Real Estate Commissions. In connection with the sale of Partnership properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (A) 50% of the commissions customarily charged by other brokers in arm's-length transactions involving comparable properties in the same geographic area or (B) 3% of the gross sales price of the property, and provided that payments of such commissions will be made only after Limited Partners have received prior distributions totaling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners or their affiliates received no real estate commissions in 2001. 18 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)1. Financial Statements The Financial Statements are contained on pages F-2 through F-40 of this Annual Report on Form 10-K, and the list of the Financial Statements contained herein is set forth on page F-1, which is hereby incorporated by reference. (a)2. The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto. (b) No reports on Form 8-K were filed with the Commission during the fourth quarter of 2001. (c) The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto. (d) See (a) 2 above. 19 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 22nd day of March, 2002. Wells Real Estate Fund VI, L.P. (Registrant) By: /s/ Leo F. Wells, III --------------------------------- Individual General Partner and as President and Chief Financial Officer of Wells Capital, Inc., the General Partner of Wells Partners, L.P. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity as and on the date indicated. Signature Title Date ----------------------- ---------------------------------- ----------------- /s/ Leo F. Wells, III Individual General Partner, March 22, 2002 --------------------- President and Sole Director of Leo F. Wells, III Wells Capital, Inc., the General Partner of Wells Partners, L.P. SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRARS THAT HAVE NOT BEEN REGISTERED PURSUANT TO SECTION 12 OF THE ACT. No annual report or proxy material relating to an annual or other meeting of security holders has been sent to security holders 20 INDEX TO FINANCIAL STATEMENTS Financial Statements Page -------------------------------------------------------------------------------- Independent Auditors' Reports F-2 Balance Sheets as of December 31, 2001 and 2000 F-3 Statements of Income for the Years Ended December 31, 2001, 2000 and 1999 F-4 Statements of Partners' Capital for the Years Ended December 31, 2001, 2000 and 1999 F-5 Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999 F-6 Notes to Financial Statements for December 31, 2001, 2000 and 1999 F-7 Audited Financial Statements - The Hartford Building F-34 F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Wells Real Estate Fund VI, L.P.: We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND VI, L.P. (a Georgia public limited partnership) as of December 31, 2001 and 2000 and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wells Real Estate Fund VI, L.P. as of December 31, 2001 and 2000 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP Atlanta, Georgia January 25, 2002 F-2 WELLS REAL ESTATE FUND VI, L.P. (A Georgia Public Limited Partnership) BALANCE SHEETS DECEMBER 31, 2001 AND 2000 ASSETS
2001 2000 ----------- ----------- INVESTMENT IN JOINT VENTURES $16,403,394 $17,090,238 CASH AND CASH EQUIVALENTS 27,895 28,855 DUE FROM AFFILIATES 462,092 480,960 ACCOUNTS RECEIVABLE 0 2,200 PREPAID EXPENSES AND OTHER ASSETS 910 0 ----------- ----------- Total assets $16,894,291 $17,602,253 =========== =========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Partnership distributions payable $ 461,250 $ 481,447 Accounts payable 2,534 2,000 ----------- ----------- Total liabilities 463,784 483,447 ----------- ----------- COMMITMENTS AND CONTINGENCIES PARTNERS' CAPITAL: Limited partners: Class A--2,236,360 units and 2,198,969 units as of December 31, 2001 and 2000, respectively 16,430,507 17,118,806 Class B--263,640 units and 301,031 units as of December 31, 2001 and 2000, respectively 0 0 ----------- ----------- Total partners' capital 16,430,507 17,118,806 ----------- ----------- Total liabilities and partners' capital $16,894,291 $17,602,253 =========== ===========
The accompanying notes are an integral part of these balance sheets. F-3 WELLS REAL ESTATE FUND VI, L.P. (A Georgia Public Limited Partnership) STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999 ----------- ----------- ----------- REVENUES: Equity in income of joint ventures $ 1,280,565 $ 1,092,222 $ 1,050,106 Interest income 686 15,566 6,462 ----------- ----------- ----------- 1,281,251 1,107,788 1,056,568 ----------- ----------- ----------- EXPENSES: Partnership administration 58,638 50,167 53,350 Legal and accounting 18,076 17,950 23,619 Computer costs 13,540 11,873 9,986 ----------- ----------- ----------- 90,254 79,990 86,955 ----------- ----------- ----------- NET INCOME $ 1,190,997 $ 1,027,798 $ 969,613 =========== =========== =========== NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS $ 1,190,997 $ 1,027,798 $ 1,274,859 =========== =========== =========== NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS $ 0 $ 0 $ (305,246) =========== =========== =========== NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.54 $ 0.47 $ 0.58 =========== =========== =========== NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT $ 0.00 $ 0.00 $ (0.99) =========== =========== =========== DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT $ 0.85 $ 0.89 $ 0.83 =========== =========== ===========
The accompanying notes are an integral part of these statements. F-4 WELLS REAL ESTATE FUND VI, L.P. (A Georgia Public Limited Partnership) STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
Limited Partners ------------------------------------------------------------ Class A Class B Total ---------------------------- ---------------------------- Partners' Units Amount Units Amount Capital ------------ ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 1998 2,187,757 $ 18,608,322 312,243 $ 292,359 $ 18,900,681 Net income (loss) 0 1,274,859 0 (305,246) 969,613 Partnership distributions 0 (1,813,355) 0 0 (1,813,355) Class A conversion elections (1,751) (14,903) 1,751 14,903 0 Class B conversion elections 9,963 2,016 (9,963) (2,016) 0 ------------ ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 1999 2,195,969 18,056,939 304,031 0 18,056,939 Net income 0 1,027,798 0 0 1,027,798 Partnership distributions 0 (1,965,931) 0 0 (1,965,931) Class B conversion elections 3,000 0 (3,000) 0 0 ------------ ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 2000 2,198,969 17,118,806 301,031 0 17,118,806 Net income 0 1,190,997 0 0 1,190,997 Partnership distributions 0 (1,879,296) 0 0 (1,879,296) Class B conversion elections 37,391 0 (37,391) 0 0 ------------ ------------ ------------ ------------ ------------ BALANCE, DECEMBER 31, 2001 2,236,360 $ 16,430,507 263,640 $ 0 $ 16,430,507 ============ ============ ============ ============ ============
The accompanying notes are an integral part of these statements. F-5 WELLS REAL ESTATE FUND VI, L.P. (A Georgia Public Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,190,997 $ 1,027,798 $ 969,613 ----------- ----------- ----------- Adjustments to reconcile net income to net cash used in operating activities: Equity in income of joint ventures (1,280,565) (1,092,222) (1,050,106) Changes in assets and liabilities: Accounts receivable 2,200 (2,200) 0 Prepaid expenses and other assets (910) 300 0 Accounts payable and accrued expenses 534 2,000 0 ----------- ----------- ----------- Total adjustments (1,278,741) (1,092,122) (1,050,106) ----------- ----------- ----------- Net cash used in operating activities (87,744) (64,324) (80,493) ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in joint ventures 0 (105,416) (13,943) Distributions received from joint ventures 1,986,277 2,003,672 1,869,305 ----------- ----------- ----------- Net cash provided by investing activities 1,986,277 1,898,256 1,855,362 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners in excess of accumulated earnings (895,946) (940,621) (41,177) Distributions to partners from accumulated earnings (1,003,547) (1,019,899) (1,724,137) ----------- ----------- ----------- Net cash used in financing activities (1,899,493) (1,960,520) (1,765,314) ----------- ----------- ----------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (960) (126,588) 9,555 CASH AND CASH EQUIVALENTS, beginning of year 28,855 155,443 145,888 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, end of year $ 27,895 $ 28,855 $ 155,443 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES: Deferred project costs contributed to joint ventures $ 0 $ 307 $ 581 =========== =========== ===========
The accompanying notes are an integral part of these statements. F-6 WELLS REAL ESTATE FUND VI, L.P. (A Georgia Public Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001, 2000, AND 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business Wells Real Estate Fund VI, L.P. (the "Partnership") is a public limited partnership organized on December 1, 1992 under the laws of the state of Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P. ("Wells Partners"), a Georgia nonpublic limited partnership. The Partnership has two classes of limited partnership interests, Class A and Class B units. Limited partners have the right to change their prior elections to have some or all of their units treated as Class A units or Class B units once every five years. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c) remove a general partner. A majority vote on any of the above-described matters will bind the Partnership, without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of class. The Partnership was formed to acquire and operate commercial real properties, including properties which are to be developed, are currently under development or construction, are newly constructed, or have operating histories. During the periods audited, the Partnership owned an interest in the following properties through joint ventures between the Partnership and other Wells Real Estate Funds: (i) a shopping center located in Cherokee County, Georgia ("Cherokee Commons"), (ii) an office/retail center in Roswell, Georgia ("880 Holcomb Bridge"), (iii) the Hartford Building, a four-story office building located in Southington, Connecticut, (iv) the Stockbridge Village II property, two retail buildings located in Clayton County, Georgia, (v) the Marathon Building, a three-story office building located in Appleton, Wisconsin, (vi) the Stockbridge Village III Retail Center, two retail buildings located in Stockbridge, Georgia, (vii) a retail center expansion in Stockbridge, Georgia ("Stockbridge Expansion"), (viii) the BellSouth property, a four-story office building in Jacksonville, Florida, and (ix) a retail shopping center in Clemmons, Forsyth County, North Carolina ("Tanglewood Commons"). Use of Estimates and Factors Affecting the Partnership The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Partnership recently began considering selling its properties. Management estimates that the net realizable value of each of the properties exceeds the carrying value of the corresponding real estate assets; consequently, no impairment loss has been recorded. In the event that the net sales proceeds are less than the carrying value of the property sold, the Partnership would recognize a loss on the sale. Management is not contractually or financially obligated to sell any of its properties, and it is management's current intent to fully realize the Partnership's investment in real estate. The success of the Partnership's future operations and the ability to realize the investment in its assets will be dependent on the Partnership's ability to maintain rental rates, occupancy, and an appropriate level of operating F-7 expenses in future years. Management believes that the steps that it is taking will enable the Partnership to realize its investment in its assets. Income Taxes The Partnership is not subject to federal or state income taxes; therefore, none have been provided for in the accompanying financial statements. The partners are required to include their respective shares of profits and losses in their individual income tax returns. Distribution of Net Cash From Operations Cash available for distribution, as defined by the partnership agreement, is distributed to limited partners quarterly. In accordance with the partnership agreement, distributions are paid first to limited partners holding Class A units until they have received a 10% per annum return on their adjusted capital contributions, as defined. Cash available for distribution is then paid to the general partners until they have received an amount equal to 10% of distributions. Any remaining cash available for distribution is split between the limited partners holding Class A units and the general partners on a basis of 90% and 10%, respectively. No distributions will be made to the limited partners holding Class B units. Distribution of Sales Proceeds Upon sales of properties, the net sales proceeds are distributed in the following order: . To limited partners, on a per unit basis, until each limited partner has received 100% of his/her adjusted capital contribution, as defined . To limited partners holding Class B units, on a per unit basis, until they receive an amount equal to the net cash available for distribution received by the limited partners holding Class A units . To all limited partners, on a per unit basis, until they receive a cumulative 10% per annum return on their adjusted capital contributions, as defined . To limited partners holding Class B units on a per unit basis, until they receive a cumulative 15% per annum return on their adjusted capital contributions, as defined . To the general partners until they have received 100% of their capital contributions, as defined . Thereafter, 80% to the limited partners and 20% to the general partners Allocation of Net Income, Net Loss, and Gain on Sale Net income is defined as net income recognized by the Partnership, excluding deductions for depreciation and amortization. Net income, as defined, of the Partnership will be allocated each year in the same proportions that net cash from operations is distributed to the partners. To the extent the Partnership's net income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners holding Class A units and 1% to the general partners. Net loss, depreciation, and amortization deductions for each fiscal year will be allocated as follows: (a) 99% to the limited partners holding Class B units and 1% to the general partners until their capital accounts are reduced to zero, (b) then to any partner having a positive balance in his/her capital account in an amount not to exceed such positive balance, and (c) thereafter to the general partners. Gain on the sale or exchange of the Partnership's properties will be allocated generally in the same manner that the net proceeds from such sale are distributed to partners after the following allocations are F-8 made, if applicable: (a) allocations made pursuant to a qualified income offset provision in the partnership agreement, (b) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero, (c) allocations to Class B limited partners in amounts equal to deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property, and (d) allocations to Class A limited partners and general partners in amounts equal to deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property. Investment in Joint Ventures Basis of Presentation The Partnership does not have control over the operations of the joint ventures; however, it does exercise significant influence. Accordingly, investments in joint ventures are recorded using the equity method of accounting. Real Estate Assets Real estate assets held through investments in affiliated joint ventures are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related assets. All repairs and maintenance expenditures are expensed as incurred. Management continually monitors events and changes in circumstances which could indicate that carrying amounts of real estate assets may not be recoverable. When events or changes in circumstances are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of real estate assets by determining whether the carrying value of such real estate assets will be recovered through the future cash flows expected from the use of the asset and its eventual disposition. Management has determined that there has been no impairment in the carrying value of real estate assets held by the joint ventures as of December 31, 2001 or 2000. Depreciation for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real estate asset, whichever is shorter. Revenue Recognition All leases on real estate held by the joint ventures are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the respective leases. Partners' Distributions and Allocations of Profit and Loss Cash available for distribution and allocations of profit and loss to the Partnership by the joint ventures are made in accordance with the terms of the individual joint venture agreements. Generally, these items are allocated in proportion to the partners' respective ownership interests. Cash is paid by the joint ventures to the Partnership quarterly. Deferred Lease Acquisition Costs Costs incurred to procure operating leases are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred lease acquisition costs are included in prepaid expenses and other assets, net, in the balance sheets presented in Note 3. F-9 Cash and Cash Equivalents For the purposes of the statements of cash flows, the Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts. Per Unit Data Net income (loss) per unit, with respect to the Partnership for the years ended December 31, 2001, 2000, and 1999, is computed based on the weighted average number of units outstanding during the period. Reclassifications Certain prior year amounts have been reclassified to conform with the current year financial statement presentation. 2. RELATED-PARTY TRANSACTIONS Due from affiliates at December 31, 2001 and 2000 represents the Partnership's share of cash to be distributed from its joint venture investments for the fourth quarters of 2001 and 2000, as follows: 2001 2000 -------- -------- Fund V and VI Associates $ 72,277 $115,089 Fund V, VI, and VII Associates 98,591 99,030 Fund VI and VII Associates 62,122 64,313 Fund VI, VII, and VIII Associates 173,414 155,253 Fund I, II, II-OW, VI, and VII Associates--Cherokee 8,261 20,703 Fund II, III, VI, and VII Associates 47,427 26,572 -------- -------- $462,092 $480,960 ======== ======== The Partnership entered into a property management and leasing agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of the general partners. In consideration for supervising the management of the Partnership's properties, the Partnership will generally pay Wells Management management and leasing fees equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm's-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term. The Partnership incurred management and leasing fees and lease acquisition costs, at the joint venture level, of $156,226, $157,719, and $161,779 for the years ended December 31, 2001, 2000, and 1999, respectively. Wells Capital, Inc. (the "Company"), the general partner of Wells Partners, performs certain administrative services for the Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel. In the opinion of management, such allocation is a reasonable estimation of such expenses. F-10 The general partners are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may be in competition with the Partnership for tenants in similar geographic markets. 3. INVESTMENT IN JOINT VENTURES The Partnership's investment and percentage ownership in joint ventures at December 31, 2001 and 2000 are summarized as follows:
2001 2000 --------------------- ---------------------- Amount Percent Amount Percent ----------- ------- ----------- ------- Fund I, II, II-OW, VI, and VII Associates--Cherokee $ 907,949 11% $ 749,777 11% Fund II, III, VI, and VII Associates 1,350,182 26 1,456,417 26 Fund V and VI Associates 4,179,416 54 4,378,890 54 Fund V, VI, and VII Associates 2,669,167 42 2,812,772 42 Fund VI and VII Associates 2,264,192 45 2,392,014 45 Fund VI, VII, and VIII Associates 5,032,488 34 5,300,368 34 ----------- ----------- $16,403,394 $17,090,238 =========== ===========
The following is a roll forward of the Partnership's investment in joint ventures for the years ended December 31, 2001 and 2000: 2001 2000 ------------ ------------ Investment in joint ventures, beginning of year $ 17,090,238 $ 17,884,649 Equity in income of joint ventures 1,280,565 1,092,222 Contributions to joint ventures 0 105,723 Distributions from joint ventures (1,967,409) (1,992,356) ------------ ------------ Investment in joint ventures, end of year $ 16,403,394 $ 17,090,238 ============ ============ Fund I, II, II-OW, VI, and VII Associates--Cherokee Fund I, II, II-OW, VI, and VII Associates--Cherokee (or the "Cherokee Joint Venture") was formed in August 1995 for the purpose of owning and operating Cherokee Commons, a retail shopping center containing approximately 103,755 square feet, located in Cherokee County, Georgia. Until the formation of this joint venture, Cherokee Commons was part of the Fund I and II Tucker--Cherokee Joint Venture. Concurrent with the formation of Fund I, II, II-OW, VI, and VII Associates--Cherokee, Cherokee Commons was transferred from the Fund I and II Tucker--Cherokee Joint Venture to the Cherokee Joint Venture. Percentage ownership interests in the Cherokee Joint Venture were determined at the time of formation based on relative capital contributions. Under the terms of the joint venture agreement, Fund VI and Fund VII each contributed approximately $1 million in return for an 11% ownership interest. Fund I's ownership interest in the Cherokee Joint Venture changed from 31% to 24%, and Fund II and II-OW joint venture's ownership interest changed from 69% to 55%. The $2 million in cash contributed to the Cherokee Joint Venture was used to fund an expansion of the property for an existing tenant. On October 1, 2001, the Cherokee Joint Venture sold Cherokee Commons for net proceeds of $8,434,089 and recognized a gain of $1,725,015 on the sale. F-11 Following are the financial statements for Fund I, II, II-OW, VI, and VII Associates--Cherokee: Fund I, II, II-OW, VI, and VII Associates--Cherokee (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ---------- ---------- Real estate assets, at cost: Land $ 0 $1,219,704 Building and improvements, less accumulated depreciation of $0 in 2001 and $3,606,079 in 2000 0 5,624,924 ---------- ---------- Total real estate assets 0 6,844,628 Cash and cash equivalents 8,455,308 214,940 Accounts receivable 54,871 31,356 Prepaid expenses and other assets 21,528 100,866 ---------- ---------- Total assets $8,531,707 $7,191,790 ========== ========== Liabilities and Partners' Capital Liabilities: Accounts payable and accrued expenses $ 30,777 $ 23,716 Refundable security deposits 0 23,839 Partnership distributions payable 77,142 197,191 Due to affiliates 149,898 137,334 ---------- ---------- Total liabilities 257,817 382,080 ---------- ---------- Partners' capital: Wells Real Estate Fund I 1,840,011 1,498,120 Fund II and II-OW 4,620,682 3,814,737 Wells Real Estate Fund VI 907,949 749,777 Wells Real Estate Fund VII 905,248 747,076 ---------- ---------- Total partners' capital 8,273,890 6,809,710 ---------- ---------- Total liabilities and partners' capital $8,531,707 $7,191,790 ========== ==========
F-12 Fund I, II, II-OW, VI, and VII Associates--Cherokee (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 ----------- ----------- ----------- Revenues: Rental income $ 758,302 $ 965,305 $ 945,222 Interest income 69,626 78 68 Other income 1,008 0 0 Gain on sale of real estate 1,725,015 0 0 ----------- ----------- ----------- 2,553,951 965,383 945,290 ----------- ----------- ----------- Expenses: Depreciation 254,448 442,250 447,969 Operating costs, net of reimbursements (65,676) 24,557 37,583 Partnership administration 15,627 23,352 24,882 Management and leasing fees 67,560 74,422 94,149 Legal and accounting 18,357 6,180 5,624 Bad debt expense 8,682 0 0 ----------- ----------- ----------- 298,998 570,761 610,207 ----------- ----------- ----------- Net income $ 2,254,953 $ 394,622 $ 335,083 =========== =========== =========== Net income allocated to Wells Real Estate Fund I $ 541,707 $ 94,800 $ 80,496 =========== =========== =========== Net income allocated to Fund II and II-OW $ 1,230,326 $ 215,310 $ 182,825 =========== =========== =========== Net income allocated to Wells Real Estate Fund VI $ 241,460 $ 42,256 $ 35,881 =========== =========== =========== Net income allocated to Wells Real Estate Fund VII $ 241,460 $ 42,256 $ 35,881 =========== =========== ===========
Fund I, II, II-OW, VI, and VII Associates--Cherokee (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Fund II Wells Real Wells Real Total Estate and Estate Estate Partners' Fund I II-OW Fund VI Fund VII Capital ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1998 $1,741,492 $4,295,663 $844,160 $841,460 $7,722,775 Net income 80,496 182,825 35,881 35,881 335,083 Partnership distributions (203,855) (425,383) (83,483) (83,483) (796,204) ---------- ---------- -------- -------- ---------- Balance, December 31, 1999 1,618,133 4,053,105 796,558 793,858 7,261,654 Net income 94,800 215,310 42,256 42,256 394,622 Partnership distributions (214,813) (453,678) (89,037) (89,038) (846,566) ---------- ---------- -------- -------- ---------- Balance, December 31, 2000 1,498,120 3,814,737 749,777 747,076 6,809,710 Net income 541,707 1,230,326 241,460 241,460 2,254,953 Partnership distributions (199,816) (424,381) (83,288) (83,288) (790,773) ---------- ---------- -------- -------- ---------- Balance, December 31, 2001 $1,840,011 $4,620,682 $907,949 $905,248 $8,273,890 ========== ========== ======== ======== ==========
F-13 Fund I, II, II-OW, VI, and VII Associates--Cherokee (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 ---------- -------- -------- Cash flows from operating activities: Net income $2,254,953 $394,622 $335,083 ---------- -------- -------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 254,448 442,250 447,969 Gain on sale of real estate (1,725,015) 0 0 Changes in assets and liabilities: Accounts receivable (56,972) (3,653) 7,814 Prepaid expenses and other assets, net 12,961 (11,020) 1,133 Accounts payable and accrued expenses, and refundable security deposits (29,563) 12,694 (72,272) Due to affiliates 12,564 15,062 13,005 ---------- -------- -------- Total adjustments (1,531,577) 455,333 397,649 ---------- -------- -------- Net cash provided by operating activities 723,376 849,955 732,732 ---------- -------- -------- Cash flows from investing activities: Net proceeds from the sale of real estate 8,434,089 0 0 Investment in real estate (6,275) 0 (14,148) ---------- -------- -------- Net cash provided by (used in) investing activities 8,427,814 0 (14,148) ---------- -------- -------- Cash flows from financing activities: Distributions to joint venture partners (910,822) (841,555) (734,858) ---------- -------- -------- Net increase (decrease) in cash and cash equivalents 8,240,368 8,400 (16,274) Cash and cash equivalents, beginning of year 214,940 206,540 222,814 ---------- -------- -------- Cash and cash equivalents, end of year $8,455,308 $214,940 $206,540 ========== ======== ========
F-14 Fund II, III, VI, and VII Associates On January 1, 1995, the Partnership entered into a joint venture agreement with Fund II and III Associates--Brookwood Grill and Fund VII. The joint venture, Fund II, III, VI, and VII Associates, was formed for the purpose of acquiring, developing, operating, and selling real properties. During 1995, Fund II and III Associates--Brookwood Grill contributed a 4.3-acre tract of land to the Fund II, III, VI, and VII Associates joint venture. Development on this property of two buildings containing a total of approximately rentable 49,500 square feet was substantially completed in 1996. The following are the financial statements for Fund II, III, VI, and VII Associates: Fund II, III, VI, and VII Associates (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ---------- ---------- Real estate assets, at cost: Land $1,325,242 $1,325,242 Building and improvements, less accumulated depreciation of $1,969,078 in 2001 and $1,654,520 in 2000 3,749,081 4,063,639 ---------- ---------- Total real estate assets 5,074,323 5,388,881 Cash and cash equivalents 151,109 88,044 Accounts receivable 27,391 151,886 Prepaid expenses and other assets, net 86,575 158,872 ---------- ---------- Total assets $5,339,398 $5,787,683 ========== ========== Liabilities and Partners' Capital Liabilities: Accounts payable and accrued expenses $ 47,605 $ 82,072 Partnership distributions payable 136,570 154,874 ---------- ---------- 184,175 236,946 ---------- ---------- Partners' capital: Fund II and III Associates--Brookwood Grill 1,210,117 1,305,317 Wells Real Estate Fund VI 1,350,182 1,456,417 Wells Real Estate Fund VII 2,594,924 2,789,003 ---------- ---------- Total partners' capital 5,155,223 5,550,737 ---------- ---------- Total liabilities and partners' capital $5,339,398 $5,787,683 ========== ==========
F-15 Fund II, III, VI, and VII Associates (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 -------- -------- -------- Revenues: Rental income $845,597 $869,390 $953,952 Other income 0 0 23,843 Interest income 2,566 0 0 -------- -------- -------- 848,163 869,390 977,795 -------- -------- -------- Expenses: Depreciation 314,558 355,293 415,165 Operating costs, net of reimbursements 77,354 70,693 68,691 Management and leasing fees 103,277 111,567 129,798 Legal and accounting 12,389 4,513 4,952 Partnership administration 21,691 22,646 19,891 Bad debt expense 55,802 74,145 0 -------- -------- -------- 585,071 638,857 638,497 -------- -------- -------- Net income $263,092 $230,533 $339,298 ======== ======== ======== Net income allocated to Fund II and III Associates-- Brookwood Grill $ 63,326 $ 55,489 $ 81,669 ======== ======== ======== Net income allocated to Wells Real Estate Fund VI $ 70,667 $ 61,921 $ 91,135 ======== ======== ======== Net income allocated to Wells Real Estate Fund VII $129,099 $113,123 $166,494 ======== ======== ========
Fund II, III, VI, and VII Associates (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999
Fund II and III Associates-- Wells Wells Total Brookwood Real Estate Real Estate Partners' Grill Fund VI Fund VII Capital ----------- ----------- ----------- ----------- Balance, December 31, 1998 $ 1,507,807 $ 1,682,380 $ 3,201,805 $ 6,391,992 Net income 81,669 91,135 166,494 339,298 Partnership distributions (182,885) (204,085) (372,836) (759,806) ----------- ----------- ----------- ----------- Balance, December 31, 1999 1,406,591 1,569,430 2,995,463 5,971,484 Net income 55,489 61,921 113,123 230,533 Partnership distributions (156,763) (174,934) (319,583) (651,280) ----------- ----------- ----------- ----------- Balance, December 31, 2000 1,305,317 1,456,417 2,789,003 5,550,737 Net income 63,326 70,667 129,099 263,092 Partnership distributions (158,526) (176,902) (323,178) (658,606) ----------- ----------- ----------- ----------- Balance, December 31, 2001 $ 1,210,117 $ 1,350,182 $ 2,594,924 $ 5,155,223 =========== =========== =========== ===========
F-16 Fund II, III, VI, and VII Associates (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 --------- --------- --------- Cash flows from operating activities: Net income $ 263,092 $ 230,533 $ 339,298 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 314,558 355,293 415,165 Changes in assets and liabilities: Accounts receivable 124,495 10,578 (51,004) Prepaid expenses and other assets, net 72,297 54,571 20,522 Accounts payable and accrued expenses (34,467) (5,854) (104,146) --------- --------- --------- Total adjustments 476,883 414,588 280,537 --------- --------- --------- Net cash provided by operating activities 739,975 645,121 619,835 Cash flows from investing activities: Investment in real estate 0 0 (19,772) Cash flows from financing activities: Distributions to joint venture partners (676,910) (746,481) (719,447) --------- --------- --------- Net increase (decrease) in cash and cash equivalents 63,065 (101,360) (119,384) Cash and cash equivalents, beginning of year 88,044 189,404 308,788 --------- --------- --------- Cash and cash equivalents, end of year $ 151,109 $ 88,044 $ 189,404 ========= ========= =========
Fund V and VI Associates On December 27, 1993, the Partnership entered into a joint venture agreement with Wells Real Estate Fund V, L.P. ("Fund V"), known as Fund V and VI Associates, for the purpose of investing in commercial real properties. In December 1993, the joint venture purchased a 71,000-square foot, four-story office building known as the Hartford Building in Southington, Connecticut. On June 26, 1994, Fund V contributed its interest in a parcel of land, the Stockbridge Village II property, to the joint venture. The Stockbridge Village II property consists of two separate restaurants and began operations during 1995. During 1999, the Partnership made additional capital contributions to Fund V and VI Associates. Ownership interests were recomputed accordingly. Following are the financial statements for Fund V and VI Associates: F-17 Fund V and VI Associates (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ---------- ---------- Real estate assets, at cost: Land $1,622,733 $1,622,733 Building and improvements, less accumulated depreciation of $2,769,703 in 2001 and $2,372,711 in 2000 6,013,993 6,410,985 Construction in progress 85,550 0 ---------- ---------- Total real estate assets 7,722,276 8,033,718 Cash and cash equivalents 120,054 197,279 Accounts receivable 95,299 109,677 Prepaid expenses and other assets, net 36,095 45,685 ---------- ---------- Total assets $7,973,724 $8,386,359 ========== ========== Liabilities and Partners' Capital Liabilities: Accounts payable $ 28,030 $ 18,615 Partnership distributions payable 147,840 197,717 ---------- ---------- Total liabilities 175,870 216,332 ---------- ---------- Partners' capital: Wells Real Estate Fund V 3,618,438 3,791,137 Wells Real Estate Fund VI 4,179,416 4,378,890 ---------- ---------- Total partners' capital 7,797,854 8,170,027 ---------- ---------- Total liabilities and partners' capital $7,973,724 $8,386,359 ========== ==========
F-18 Fund V and VI Associates (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 ---------- ---------- ---------- Revenues: Rental income $ 990,117 $1,029,287 $1,028,611 Interest income 5,848 750 0 ---------- ---------- ---------- 995,965 1,030,037 1,028,611 ---------- ---------- ---------- Expenses: Depreciation 396,992 396,990 396,993 Operating costs, net of reimbursements 21,877 18,330 30,325 Management and leasing fees 62,264 67,354 65,167 Legal and accounting 12,000 7,677 7,400 Partnership administration 22,896 14,185 17,194 ---------- ---------- ---------- 516,029 504,536 517,079 ---------- ---------- ---------- Net income $ 479,936 $ 525,501 $ 511,532 ========== ========== ========== Net income allocated to Wells Real Estate Fund V $ 222,705 $ 243,848 $ 237,527 ========== ========== ========== Net income allocated to Wells Real Estate Fund VI $ 257,231 $ 281,653 $ 274,005 ========== ========== ==========
Fund V and VI Associates (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999 Wells Real Wells Real Total Estate Estate Partners' Fund V Fund VI Capital ----------- ----------- ----------- Balance, December 31, 1998 $ 4,159,768 $ 4,789,883 $ 8,949,651 Net income 237,527 274,005 511,532 Partnership contributions 0 14,524 14,524 Partnership distributions (416,596) (480,571) (897,167) ----------- ----------- ----------- Balance, December 31, 1999 3,980,699 4,597,841 8,578,540 Net income 243,848 281,653 525,501 Partnership distributions (433,410) (500,604) (934,014) ----------- ----------- ----------- Balance, December 31, 2000 3,791,137 4,378,890 8,170,027 Net income 222,705 257,231 479,936 Partnership distributions (395,404) (456,705) (852,109) ----------- ----------- ----------- Balance, December 31, 2001 $ 3,618,438 $ 4,179,416 $ 7,797,854 =========== =========== =========== F-19 Fund V and VI Associates (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 --------- --------- --------- Cash flows from operating activities: Net income $ 479,936 $ 525,501 $ 511,532 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 396,992 396,990 396,993 Changes in assets and liabilities: Accounts receivable 14,378 25,552 (38,399) Prepaid expenses and other assets, net 9,590 9,589 (5,675) Accounts payable 9,415 321 1,817 Due to affiliates 0 (1,775) (5,034) --------- --------- --------- Total adjustments 430,375 430,677 349,702 --------- --------- --------- Net cash provided by operating activities 910,311 956,178 861,234 --------- --------- --------- Cash flows from investing activities: Investment in real estate (85,550) 0 (8,235) --------- --------- --------- Cash flows from financing activities: Contributions from joint venture partners 0 0 14,524 Distributions to joint venture partners (901,986) (936,556) (903,049) --------- --------- --------- Net cash used in financing activities (901,986) (936,556) (888,525) --------- --------- --------- Net (decrease) increase in cash and cash equivalents (77,225) 19,622 (35,526) Cash and cash equivalents, beginning of year 197,279 177,657 213,183 --------- --------- --------- Cash and cash equivalents, end of year $ 120,054 $ 197,279 $ 177,657 ========= ========= =========
Fund V, VI, and VII Associates On September 8, 1994, the Partnership entered into a joint venture agreement with Fund V and Fund VII. The joint venture, Fund V, VI, and VII Associates, was formed for the purpose of investing in commercial real properties. In September 1994, Fund V, VI, and VII Associates purchased a 75,000-square foot, three-story office building known as the Marathon Building in Appleton, Wisconsin. F-20 Following are the financial statements for Fund V, VI, and VII Associates: Fund V, VI, and VII Associates (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ---------- ---------- Real estate assets, at cost: Land $ 314,591 $ 314,591 Building and improvements, less accumulated depreciation of $2,392,085 in 2001 and $2,057,369 in 2000 5,975,819 6,310,535 ---------- ---------- Total real estate assets 6,290,410 6,625,126 Cash and cash equivalents 238,016 238,242 Accounts receivable 94,746 103,696 ---------- ---------- Total assets $6,623,172 $6,967,064 ========== ========== Liabilities and Partners' Capital Liabilities: Partnership distributions payable $ 235,695 $ 236,743 Due to affiliates 6,112 5,648 ---------- ---------- Total liabilities 241,807 242,391 ---------- ---------- Partners' capital: Wells Real Estate Fund V 1,050,146 1,106,655 Wells Real Estate Fund VI 2,669,167 2,812,772 Wells Real Estate Fund VII 2,662,052 2,805,246 ---------- ---------- Total partners' capital 6,381,365 6,724,673 ---------- ---------- Total liabilities and partners' capital $6,623,172 $6,967,064 ========== ==========
F-21 Fund V, VI, and VII Associates (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 -------- -------- -------- Revenues: Rental income $971,051 $971,050 $971,051 Interest income 8,135 0 0 -------- -------- -------- 979,186 971,050 971,051 -------- -------- -------- Expenses: Depreciation 334,716 350,585 350,585 Management and leasing fees 9,442 9,442 39,659 Legal and accounting 4,500 5,750 5,750 Partnership administration 18,044 13,536 12,302 Operating costs 1,648 1,505 1,389 -------- -------- -------- 368,350 380,818 409,685 -------- -------- -------- Net income $610,836 $590,232 $561,366 ======== ======== ======== Net income allocated to Wells Real Estate Fund V $100,544 $ 97,152 $ 92,401 ======== ======== ======== Net income allocated to Wells Real Estate fund VI $255,513 $246,894 $234,819 ======== ======== ======== Net income allocated to Wells Real Estate fund VII $254,779 $246,186 $234,146 ======== ======== ========
Fund V, VI, and VII Associates (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Wells Real Total Estate Estate Estate Partners' Fund V Fund VI Fund VII Capital ----------- ----------- ----------- ----------- Balance, December 31, 1998 $ 1,224,896 $ 3,113,259 $ 3,104,872 $ 7,443,027 Net income 92,401 234,819 234,146 561,366 Partnership distributions (151,521) (385,063) (383,959) (920,543) ----------- ----------- ----------- ----------- Balance, December 31, 1999 1,165,776 2,963,015 2,955,059 7,083,850 Net income 97,152 246,894 246,186 590,232 Partnership distributions (156,273) (397,137) (395,999) (949,409) ----------- ----------- ----------- ----------- Balance, December 31, 2000 1,106,655 2,812,772 2,805,246 6,724,673 Net income 100,544 255,513 254,779 610,836 Partnership distributions (157,053) (399,118) (397,973) (954,144) ----------- ----------- ----------- ----------- Balance, December 31, 2001 $ 1,050,146 $ 2,669,167 $ 2,662,052 $ 6,381,365 =========== =========== =========== ===========
F-22 Fund V, VI, and VII Associates (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 --------- --------- --------- Cash flows from operating activities: Net income $ 610,836 $ 590,232 $ 561,366 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 334,716 350,585 350,585 Changes in assets and liabilities: Accounts receivable 8,950 8,949 8,949 Due from affiliates 0 2,450 (2,450) Due to affiliates 464 1,142 (358) --------- --------- --------- Total adjustments 344,130 363,126 356,726 --------- --------- --------- Net cash provided by operating activities 954,966 953,358 918,092 Cash flows from financing activities: Distributions to joint venture partners (955,192) (950,366) (918,833) --------- --------- --------- Net (decrease) increase in cash and cash equivalents (226) 2,992 (741) Cash and cash equivalents, beginning of year 238,242 235,250 235,991 --------- --------- --------- Cash and cash equivalents, end of year $ 238,016 $ 238,242 $ 235,250 ========= ========= =========
Fund VI and VII Associates On December 9, 1994, the Partnership entered into a joint venture agreement with Fund VII. The joint venture, Fund VI and VII Associates, was formed for the purpose of investing in commercial properties. In December 1994, the Partnership contributed its interest in a parcel of land, the Stockbridge Village III Retail Center property located in Stockbridge, Georgia, to the joint venture. The Stockbridge Village III Retail Center property is comprised of two separate out parcel buildings totaling approximately 18,500 square feet. One of the out parcel buildings began operations during 1995. The other out parcel building began operations during 1996. On June 7, 1995, Fund VI and VII Associates purchased an additional 3.38 acres of real property located in Stockbridge, Georgia. The retail center expansion, the Stockbridge Expansion, consists of a multitenant shopping center containing approximately 29,000 square feet. During 2000, the Partnership made additional capital contributions to Fund VI and VII Associates; during 1999, the Partnership and Fund VII made additional capital contributions to the joint venture. Ownership percentage interests were recomputed accordingly. F-23 Following are the financial statements for Fund VI and VII Associates: Fund VI and VII Associates (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ---------- ---------- Real estate assets, at cost: Land $1,812,447 $1,812,447 Building and improvements, less accumulated depreciation of $1,289,653 in 2001 and $1,065,513 in 2000 3,130,758 3,354,898 ---------- ---------- Total real estate assets 4,943,205 5,167,345 Cash and cash equivalents 140,092 118,152 Accounts receivable 52,292 130,094 Prepaid expenses and other assets, net 109,796 106,422 ---------- ---------- Total assets $5,245,385 $5,522,013 ========== ========== Liabilities and Partners' Capital Liabilities: Accounts payable $ 52,686 $ 38,969 Partnership distributions payable 138,667 143,693 ---------- ---------- Total liabilities 191,353 182,662 ---------- ---------- Partners' capital: Wells Real Estate Fund VI 2,264,192 2,392,014 Wells Real Estate Fund VII 2,789,840 2,947,337 ---------- ---------- Total partners' capital 5,054,032 5,339,351 ---------- ---------- Total liabilities and partners' capital $5,245,385 $5,522,013 ========== ==========
F-24 Fund VI and VII Associates (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 --------- --------- --------- Revenues: Rental income $ 677,831 $ 659,932 $ 624,453 Interest income 4,694 0 0 --------- --------- --------- 682,525 659,932 624,453 --------- --------- --------- Expenses: Depreciation 224,140 233,212 235,591 Operating costs, net of reimbursements 16,475 4,652 (9,718) Management and leasing fees 80,783 84,684 80,064 Partnership administration 25,911 23,259 33,090 Legal and accounting 31,695 25,075 15,247 Bad debt expense 88,493 0 0 --------- --------- --------- 467,497 370,882 354,274 --------- --------- --------- Net income $ 215,028 $ 289,050 $ 270,179 ========= ========= ========= Net income allocated to Wells Real Estate Fund VI $ 96,332 $ 127,466 $ 118,073 ========= ========= ========= Net income allocated to Wells Real Estate Fund VII $ 118,696 $ 161,584 $ 152,106 ========= ========= =========
Fund VI and VII Associates (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Total Estate Estate Partners' Fund VI Fund VII Capital ----------- ----------- ----------- Balance, December 31, 1998 $ 2,511,074 $ 3,234,873 $ 5,745,947 Net income 118,073 152,106 270,179 Partnership distributions (230,711) (297,212) (527,923) ----------- ----------- ----------- Balance, December 31, 1999 2,398,436 3,089,767 5,488,203 Net income 127,466 161,584 289,050 Partnership contributions 105,723 0 105,723 Partnership distributions (239,611) (304,014) (543,625) ----------- ----------- ----------- Balance, December 31, 2000 2,392,014 2,947,337 5,339,351 Net income 96,332 118,696 215,028 Partnership distributions (224,154) (276,193) (500,347) ----------- ----------- ----------- Balance, December 31, 2001 $ 2,264,192 $ 2,789,840 $ 5,054,032 =========== =========== ===========
F-25 Funds VI and VII Associates (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 --------- --------- --------- Cash flows from operating activities: Net income $ 215,028 $ 289,050 $ 270,179 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 224,140 233,212 235,591 Changes in assets and liabilities: Accounts receivable 77,802 (3,112) 6,152 Prepaid expenses and other assets, net (3,374) 9,321 14,940 Accounts payable 13,717 3,734 (2,165) Due to affiliates 0 0 (5,338) --------- --------- --------- Total adjustments 312,285 243,155 249,180 --------- --------- --------- Net cash provided by operating activities 527,313 532,205 519,359 --------- --------- --------- Cash flows from investing activities: Investment in real estate 0 (103,099) (497) --------- --------- --------- Cash flows from financing activities: Contributions from joint venture partners 0 105,723 0 Distributions to joint venture partners (505,373) (530,298) (465,500) --------- --------- --------- Net cash used in financing activities (505,373) (424,575) (465,500) --------- --------- --------- Net increase in cash and cash equivalents 21,940 4,531 53,362 Cash and cash equivalents, beginning of year 118,152 113,621 60,259 --------- --------- --------- Cash and cash equivalents, end of year $ 140,092 $ 118,152 $ 113,621 ========= ========= =========
Fund VI, VII, and VIII Associates On April 17, 1995, the Partnership entered into a joint venture with Fund VII and Wells Real Estate Fund VIII, L.P. ("Fund VIII"). The joint venture, Fund VI, VII, and VIII Associates, was formed to acquire, develop, operate, and sell real properties. On April 25, 1995, the joint venture purchased a 5.55-acre parcel of land in Jacksonville, Florida. A 92,964-square foot office building, known as the BellSouth property, was completed and commenced operations in 1996. On May 31, 1995, the joint venture purchased a 14.683-acre parcel of land located in Clemmons, Forsyth County, North Carolina. A retail shopping center, Tanglewood Commons, was developed and was substantially completed at December 31, 1997. F-26 Following are the financial statements for Fund VI, VII, and VIII Associates: Fund VI, VII, and VIII Associates (A Georgia Joint Venture) Balance Sheets December 31, 2001 and 2000
Assets 2001 2000 ----------- ----------- Real estate assets, at cost: Land $ 4,461,819 $ 4,461,819 Building and improvements, less accumulated depreciation of $3,707,449 in 2001 and $3,031,152 in 2000 9,398,120 10,074,417 Construction in progress 3,797 3,797 ----------- ----------- Total real estate assets 13,863,736 14,540,033 Cash and cash equivalents 747,198 606,802 Accounts receivable 192,807 346,018 Prepaid expenses and other assets, net 428,052 471,658 ----------- ----------- Total assets $15,231,793 $15,964,511 =========== =========== Liabilities and Partners' Capital Liabilities: Accounts payable $ 76,639 $ 65,442 Partnership distributions payable 446,315 408,291 Due to affiliates 15,590 15,407 ----------- ----------- Total liabilities 538,544 489,140 ----------- ----------- Partners' capital: Wells Real Estate Fund VI 5,032,488 5,300,368 Wells Real Estate Fund VII 4,906,826 5,168,016 Wells Real Estate Fund VIII 4,753,935 5,006,987 ----------- ----------- Total partners' capital 14,693,249 15,475,371 ----------- ----------- Total liabilities and partners' capital $15,231,793 $15,964,511 =========== ===========
F-27 Fund VI, VII, and VIII Associates (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 ---------- ---------- ---------- Revenues: Rental income $2,424,385 $2,364,871 $2,294,016 Interest income 25,294 3,985 14,937 Other income 360 360 360 ---------- ---------- ---------- 2,450,039 2,369,216 2,309,313 ---------- ---------- ---------- Expenses: Depreciation 676,297 715,402 701,885 Operating costs, net of reimbursements 362,796 371,191 444,156 Management and leasing fees 277,863 273,632 259,352 Legal and accounting 16,296 7,650 10,286 Partnership administration 42,469 30,330 27,804 Computer costs 2,985 1,585 1,043 Bad debt expense 22,111 0 0 ---------- ---------- ---------- 1,400,817 1,399,790 1,444,526 ---------- ---------- ---------- Net income $1,049,222 $ 969,426 $ 864,787 ========== ========== ========== Net income allocated to Wells Real Estate Fund VI $ 359,362 $ 332,032 $ 296,193 ========== ========== ========== Net income allocated to Wells Real Estate Fund VII $ 350,389 $ 323,741 $ 288,796 ========== ========== ========== Net income allocated to Wells Real Estate Fund VIII $ 339,471 $ 313,653 $ 279,798 ========== ========== ==========
Fund VI, VII, and VIII Associates (A Georgia Joint Venture) Statements of Partners' Capital for the Years Ended December 31, 2001, 2000, and 1999
Wells Real Wells Real Wells Real Total Estate Estate Estate Partners' Fund VI Fund VII Fund VIII Capital ---------- ---------- ---------- ----------- Balance, December 31, 1998 $5,813,110 $5,667,955 $5,491,347 $16,972,412 Net income 296,193 288,796 279,798 864,787 Partnership distributions (549,934) (536,202) (519,493) (1,605,629) ---------- ---------- ---------- ----------- Balance, December 31, 1999 5,559,369 5,420,549 5,251,652 16,231,570 Net income 332,032 323,741 313,653 969,426 Partnership distributions (591,033) (576,274) (558,318) (1,725,625) ---------- ---------- ---------- ----------- Balance, December 31, 2000 5,300,368 5,168,016 5,006,987 15,475,371 Net income 359,362 350,389 339,471 1,049,222 Partnership distributions (627,242) (611,579) (592,523) (1,831,344) ---------- ---------- ---------- ----------- Balance, December 31, 2001 $5,032,488 $4,906,826 $4,753,935 $14,693,249 ========== ========== ========== ===========
F-28 Fund VI, VII, and VIII Associates (A Georgia Joint Venture) Statements of Cash Flows for the Years Ended December 31, 2001, 2000, and 1999
2001 2000 1999 ----------- ----------- ----------- Cash flows from operating activities: Net income $ 1,049,222 $ 969,426 $ 864,787 ----------- ----------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 676,297 715,402 701,885 Changes in assets and liabilities: Accounts receivable 153,211 (74,810) (71,269) Prepaid expenses and other assets, net 43,606 58,171 87,773 Accounts payable 11,197 (18,717) 32,133 Due to affiliates 183 (874) 6,546 ----------- ----------- ----------- Total adjustments 884,494 679,172 757,068 ----------- ----------- ----------- Net cash provided by operating activities 1,933,716 1,648,598 1,621,855 Cash flows from investing activities: Investment in real estate 0 (136,564) (64,749) Cash flows from financing activities: Distributions to joint venture partners (1,793,320) (1,641,434) (1,621,225) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents 140,396 (129,400) (64,119) Cash and cash equivalents, beginning of year 606,802 736,202 800,321 ----------- ----------- ----------- Cash and cash equivalents, end of year $ 747,198 $ 606,802 $ 736,202 =========== =========== ===========
4. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL The Partnership's income tax basis net income for the years ended December 31, 2001, 2000, and 1999 is calculated as follows:
2001 2000 1999 ----------- ----------- ----------- Financial statement net income $ 1,190,997 $ 1,027,798 $ 969,613 Increase (decrease) in net income resulting from: Depreciation expense for financial reporting purposes in excess of amounts for income tax purposes 337,333 327,267 392,268 Expenses deductible when paid for income tax purposes, accrued for financial reporting purposes 33,684 100 4,985 Rental income accrued for financial reporting purposes in excess of amounts for income tax purposes 49,647 (10,329) (44,181) Gain on sale of property for financial reporting purposes in excess of amount for income tax purposes (159,560) 0 0 ----------- ----------- ----------- Income tax basis net income $ 1,452,101 $ 1,344,836 $ 1,322,685 =========== =========== ===========
F-29 The Partnership's income tax basis partners' capital at December 31, 2001, 2000, and 1999 is computed as follows:
2001 2000 1999 ----------- ----------- ----------- Financial statement partners' capital $16,430,507 $17,118,806 $18,056,939 Increase (decrease) in partners' capital resulting from: Depreciation expense for financial reporting purposes in excess of amounts for income tax purposes 2,093,463 1,756,130 1,428,863 Joint venture change in ownership 8,730 8,730 8,730 Capitalization of syndication costs for income tax purposes, which are accounted for as cost of capital for financial reporting purposes 3,655,694 3,655,694 3,655,694 Accumulated rental income accrued for financial reporting purposes in excess of amounts for income tax purposes (230,129) (279,776) (269,447) Accumulated expenses deductible when paid for income tax purposes, accrued for financial reporting purposes 67,830 34,147 34,047 Partnership's distributions payable 461,250 481,448 476,036 Gain on sale of property for financial reporting purposes in excess of amount for income tax purposes (159,560) 0 0 ----------- ----------- ----------- Income tax basis partners' capital $22,327,785 $22,775,179 $23,390,862 =========== =========== ===========
5. RENTAL INCOME The future minimum rental income due from the Partnership's respective ownership interests in joint ventures under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 2,262,469 2003 2,046,724 2004 1,555,588 2005 1,443,772 2006 997,384 Thereafter 2,425,857 ----------- $10,731,794 =========== Four tenants contributed approximately 20%, 15%, 15%, and 13% of rental income. In addition, three tenants will contribute approximately 28%, 21%, and 18% of future minimum rental income. F-30 The future minimum rental income due Fund II, III, VI, and VII Associates under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 604,859 2003 319,952 2004 285,696 2005 167,194 2006 21,308 Thereafter 0 ----------- $ 1,399,009 =========== Three tenants contributed approximately 15%, 15%, and 14% of rental income for the year ended December 31, 2001. In addition, four tenants will contribute approximately 38%, 17%, 13%, and 11% of future minimum rental income. The future minimum rental income due Fund V and VI Associates under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 1,032,440 2003 966,018 2004 186,004 2005 96,689 2006 99,173 Thereafter 0 ----------- $ 2,380,324 =========== Two tenants contributed approximately 73% and 14% of rental income for the year ended December 31, 2001. In addition, three tenants will contribute approximately 58%, 20%, and 15% of future minimum rental income. The future minimum rental income due Fund V, VI, and VII Associates under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 990,000 2003 990,000 2004 990,000 2005 990,000 2006 990,000 Thereafter 0 ----------- $ 4,950,000 =========== One tenant contributed 100% of rental income for the year ended December 31, 2001 and will contribute 100% of future minimum rental income. F-31 The future minimum rental income due Fund VI and VII Associates under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 632,544 2003 460,691 2004 418,929 2005 392,162 2006 281,375 Thereafter 1,251,668 ----------- $ 3,437,369 =========== Two tenants contributed approximately 13% and 10% of rental income for the year ended December 31, 2001. In addition, two tenants will contribute approximately 38% and 27% of future minimum rental income. The future minimum rental income due Fund VI, VII, and VIII Associates under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 2,482,965 2003 2,405,444 2004 2,273,500 2005 2,214,804 2006 1,165,554 Thereafter 5,453,538 ----------- $15,995,805 =========== Three tenants contributed approximately 48%, 22%, and 16% of rental income for the year ended December 31, 2001. In addition, three tenants will contribute approximately 51%, 33%, and 12% of future minimum rental income. 6. QUARTERLY RESULTS (UNAUDITED) Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2001 and 2000:
2001 Quarters Ended ----------------------------------------------------- March 31 June 30 September 30 December 31 -------- -------- ------------ ----------- Revenues $244,007 $264,062 $296,046 $477,136 Net income 223,624 235,557 278,977 452,839 Net income allocated to Class A limited partners 223,624 235,557 278,977 452,839 Net income per weighted average Class A limited partner unit $0.10 $0.11 $0.13 $0.20 Distribution per weighted average Class A limited partner unit 0.22 0.21 0.21 0.21
F-32
2000 Quarters Ended ----------------------------------------------------- March 31 June 30 September 30 December 31 -------- -------- ------------ ----------- Revenues $289,216 $269,631 $265,965 $282,976 Net income 263,183 243,852 255,374 265,389 Net income allocated to Class A limited partners 263,183 243,852 255,374 265,389 Net income per weighted average Class A limited partner unit $0.12 $0.11 $0.12 $0.12 Distribution per weighted average Class A limited partner unit 0.23 0.23 0.23 0.20
7. COMMITMENTS AND CONTINGENCIES Management, after consultation with legal counsel, is not aware of any significant litigation or claims against the Partnership or Wells Partners. In the normal course of business, the Partnership or Wells Partners may become subject to such litigation or claims. F-33 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Wells Real Estate Fund V, L.P. and Wells Real Estate Fund VI, L.P.: We have audited the accompanying balance sheets of THE HARTFORD BUILDING as of December 31, 2001 and 2000 and the related statements of income, partners' capital, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the property's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The Hartford Building as of December 31, 2001 and 2000 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. Atlanta, Georgia January 25, 2002 F-34 THE HARTFORD BUILDING BALANCE SHEETS DECEMBER 31, 2001 AND 2000
ASSETS 2001 2000 ---------- ---------- REAL ESTATE ASSETS: Land $ 528,042 $ 528,042 Building and improvements, less accumulated depreciation of $2,128,853 in 2001 and $1,836,822 in 2000 4,758,900 4,965,619 ---------- ---------- Total real estate assets 5,286,942 5,493,661 CASH AND CASH EQUIVALENTS 52,579 120,872 ACCOUNTS RECEIVABLE 32,855 19,544 ---------- ---------- Total assets $5,372,376 $5,634,077 ========== ========== LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accounts payable $ 10,195 $ 1,000 Distributions payable to partners 90,021 169,716 Due to affiliate 0 0 ---------- ---------- Total liabilities 100,216 170,716 ---------- ---------- COMMITMENTS AND CONTINGENCIES (Note 4) PARTNERS' CAPITAL: Wells Real Estate Fund V, L.P. 2,782,049 2,884,693 Wells Real Estate Fund VI, L.P. 2,490,111 2,578,668 ---------- ---------- Total partners' capital 5,272,160 5,463,361 ---------- ---------- Total liabilities and partners' capital $5,372,376 $5,634,077 ========== ==========
The accompanying notes are an integral part of these balance sheets. F-35 THE HARTFORD BUILDING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 2001 2000 1999 -------- -------- -------- REVENUES: Rental income $717,499 $717,499 $717,499 Interest income 5,848 750 0 -------- -------- -------- 723,347 718,249 717,499 -------- -------- -------- EXPENSES: Depreciation 292,031 292,031 292,031 Operating costs, net of reimbursements 16,230 8,001 7,582 Management and leasing fees 29,160 29,133 28,968 Legal and accounting 6,500 4,250 3,700 -------- -------- -------- 343,921 333,415 332,281 -------- -------- -------- NET INCOME $379,426 $384,834 $385,218 ======== ======== ======== The accompanying notes are an integral part of these statements. F-36 THE HARTFORD BUILDING STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999 Wells Real Wells Real Total Estate Estate Partners' Fund V, L.P. Fund VI, L.P. Capital ----------- ----------- ----------- BALANCE, December 31, 1998 $ 3,162,033 $ 2,918,791 $ 6,080,824 Net income 178,879 206,339 385,218 Distributions (317,598) (371,351) (688,949) ----------- ----------- ----------- BALANCE, December 31, 1999 3,023,314 2,753,779 5,777,093 Net income 178,574 206,260 384,834 Distributions (317,195) (381,371) (698,566) ----------- ----------- ----------- BALANCE, December 31, 2000 2,884,693 2,578,668 5,463,361 Net income 176,065 203,361 379,426 Distributions (278,709) (291,918) (570,627) ----------- ----------- ----------- BALANCE, December 31, 2001 $ 2,782,049 $ 2,490,111 $ 5,272,160 =========== =========== =========== The accompanying notes are an integral part of these statements. F-37 THE HARTFORD BUILDING STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
2001 2000 1999 --------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 379,426 $ 384,834 $ 385,218 --------- --------- --------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 292,031 292,031 292,031 Changes in assets and liabilities: Accounts receivable (13,311) 6,701 6,703 Accounts payable 9,195 1,000 (1,550) Due to affiliate 0 0 0 --------- --------- --------- Total adjustments 287,915 299,732 297,184 --------- --------- --------- Net cash provided by operating activities 667,341 684,566 682,402 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate (85,312) 0 0 CASH FLOWS FROM FINANCING ACTIVITIES: Distributions paid to partners (650,322) (698,880) (695,749) --------- --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (68,293) (14,314) (13,347) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 120,872 135,186 148,533 --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 52,579 $ 120,872 $ 135,186 ========= ========= =========
The accompanying notes are an integral part of these statements. F-38 THE HARTFORD BUILDING NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001, 2000, AND 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business The Hartford Building ("Hartford") is a four-story office building located in Southington, Connecticut, and is owned by Fund V and Fund VI Associates, a joint venture between Wells Real Estate Fund V, L.P. ("Fund V") and Wells Real Estate Fund VI, L.P. ("Fund VI"). As of December 31, 2001 and 2000, Fund V owned 46% and Fund VI owned 54% of The Hartford Building, respectively. Allocations of net income and distributions are made in accordance with ownership percentages. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes The Hartford Building is not deemed to be a taxable entity for federal income tax purposes. Real Estate Assets Real estate assets are stated at cost, less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful life of the related asset. All repairs and maintenance expenditures are expensed as incurred. Management continually monitors events and changes in circumstances which could indicate that carrying amounts of real estate assets may not be recoverable. When events or changes in circumstances are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of real estate assets by determining whether the carrying value of such real estate assets will be recovered through the future cash flows expected from the use of the asset and its eventual disposition. Management has determined that there has been no impairment in the carrying value of Hartford as of December 31, 2001 or December 31, 2000. Depreciation for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or the life of the asset, whichever is shorter. Revenue Recognition The lease on The Hartford Building is classified as an operating lease, and the related rental income is recognized on a straight-line basis over the term of the lease. F-39 Cash and Cash Equivalents For the purposes of the statements of cash flows, Hartford considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts. 2. RENTAL INCOME The future minimum rental income due to Hartford under noncancelable operating leases at December 31, 2001 is as follows: Year ending December 31: 2002 $ 724,400 2003 663,850 2004 0 2005 0 2006 0 Thereafter 0 ---------- $1,388,250 ========== One tenant contributed 100% of rental income for the year ended December 31, 2001 and represents 100% of the future minimum rental income above. 3. RELATED-PARTY TRANSACTIONS Fund V and Fund VI Associates entered into a property management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of Fund V and Fund VI Associates. In consideration for supervising the management of The Hartford Building, Fund V and Fund VI Associates generally pays Wells Management management and leasing fees equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm's-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term. Hartford incurred management and leasing fees of $29,160, $29,133, and $28,968 for the years ended December 31, 2001, 2000, and 1999, respectively. 4. COMMITMENTS AND CONTINGENCIES Management, after consultation with legal counsel, is not aware of any significant litigation or claims against The Hartford Building and its partners. In the normal course of business, The Hartford Building and its partners may become subject to such litigation or claims. F-40 EXHIBIT INDEX ------------- (Wells Real Estate Fund VI, L.P.) The following documents are filed as exhibits to this report. Those exhibits previously filed and incorporated herein by reference are identified below by an asterisk. For each such asterisked exhibit, there is shown below the description of the previous filing. Exhibits which are not required for this report are omitted. Exhibit Number Description of Document ------- ----------------------- *3(a) Certificate of Limited Partnership of Wells Real Estate Fund VI, L.P. (Exhibit 3(c) to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *4(a) Agreement of Limited Partnership of Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656) *10(a) Management Agreement between Wells Real Estate Fund VI, L.P. and Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656) *10(b) Leasing and Tenant Coordinating Agreement between Wells Real Estate Fund VI, L.P. and Wells Management Company, Inc. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656) *10(c) Custodial Agency Agreement dated March 25, 1993, between Wells Real Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1993, File No. 0-23656) *10(d) Fund V and Fund VI Associates Joint Venture Agreement dated December 27, 1993 (Exhibit 10(g) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(e) Sale and Purchase Agreement dated November 17, 1993, with Hartford Accident and Indemnity Company (Exhibit 10(h) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(f) Lease with Hartford Fire Insurance Company December 29, 1993 (Exhibit 10(i) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(g) Amended and Restated Custodial Agency Agreement dated April 1, 1994, between Wells Real Estate Fund VI, L.P. and NationsBank of Georgia, N.A. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656) *10(h) First Amendment to Joint Venture Agreement of Fund V and Fund VI Associates dated July 1, 1994 (Exhibit 10(x) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580) *10(i) Land and Building Lease Agreement dated March 29, 1994, between Apple Restaurants, Inc. and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund V, L.P. (Exhibit 10(y) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580) *10(j) Building Lease Agreement dated September 9, 1994, between Glenn's Open-Pit Bar-B-Que, Inc. and NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit 10(z) to Form 10-K of Wells Real Estate Fund V, L.P. for the fiscal year ended December 31, 1994, File No. 0-21580) *10(k) Joint Venture Agreement of Fund V, Fund VI and Fund VII Associates dated September 8, 1994, among Wells Real Estate Fund V, L.P., Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P. (Exhibit 10(j) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(l) Agreement for the Purchase and Sale of Property dated August 24, 1994, between Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates (Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(m) Assignment and Assumption of Agreement for the Purchase and Sale of Real Property dated September 9, 1994, between NationsBank of Georgia, N.A., as Agent for Fund V and Fund VI Associates, and NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(l) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(n) Building Lease dated February 14, 1991, between Interglobia Inc. - Appleton and Marathon Engineers/Architects/Planners, Inc. (included as 2 part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(o) Limited Guaranty of Lease dated January 1, 1993, by J. P. Finance OY and Fluor Daniel, Inc. for the benefit of Interglobia Inc. - Appleton (included as Exhibit B to Assignment, Assumption and Amendment of Lease referred to as Exhibit 10(p) below, which is included as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(p) Assignment, Assumption and Amendment of Lease dated January 1, 1993, among Interglobia Inc.- Appleton, Marathon Engineers/Architects/Planners, Inc. and Jaakko Poyry Fluor Daniel (included as part of Exhibit D to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(q) Second Amendment to Building lease dated August 15, 1994, between Interglobia Inc. - Appleton and Jaakko Poyry Fluor Daniel (successor-in-interest to Marathon Engineers/Architects/Planners, Inc.) (included as Exhibit D-1 to Exhibit 10(k) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(r) Assignment and Assumption of Lease dated September 6, 1994, between Interglobia Inc. - Appleton and NationsBank of Georgia, N.A., as Agent for Fund V, Fund VI and Fund VII Associates (Exhibit 10(q) to Post-Effective Amendment No. 6 to Registration Statement of Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., File No. 33-55908) *10(s) Agreement for the Purchase and Sale of Real Property dated April 7, 1994, between 138 Industrial Ltd. and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656) *10(t) Land and Building Lease Agreement dated August 22, 1994, between KRR Stockbridge, Inc. d/b/a Kenny Rogers Roasters and NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VI, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656) 3 *10(u) Joint Venture Agreement of Fund VI and Fund VII Associates dated December 9, 1994 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656) *10(v) Building Lease Agreement dated December 19, 1994, between Damon's of Stockbridge, LLC d/b/a Damon's Clubhouse and NationsBank of Georgia, N.A., as Agent for Fund VI and Fund VII Associates (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1994, File No. 0-23656) *10(w) Joint Venture Agreement of Fund II, III, VI and VII Associates dated January 10, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995, File No. 0-23656) *10(x) Joint Venture Agreement of Fund VI, Fund VII and Fund VIII Associates, dated April 17, 1995 (Exhibit 10(q) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(y) Agreement for the Purchase and Sale of Real Property dated February 13, 1995, between G.L. National, Inc. and Wells Capital, Inc. (Exhibit 10(r) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(z) Agreement to Lease dated February 15, 1995, between NationsBank of Georgia, N.A., as Agent for Wells Real Estate Fund VII, L.P. and BellSouth Advertising & Publishing Corporation (Exhibit 10(s) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(aa) Development Agreement dated April 25, 1995, between Fund VI, Fund VII and Fund VIII Associates and ADEVCO Corporation (Exhibit 10(t) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(bb) Owner-Contractor Agreement dated April 24, 1995, between Fund VI, Fund VII and Fund VIII Associates, as Owner, and McDevitt Street Bovis, Inc., as Contractor (Exhibit 10(u) to Post-Effective Amendment No. 3 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(cc) Architect's Agreement dated February 15, 1995, between Wells Real Estate Fund VII, L.P., as Owner, and Mayes, Suddereth & Etheredge, Inc., as Architect (Exhibit 10(v) to Post-Effective Amendment No. 3 to Form S- 4 11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(dd) First Amendment to Joint Venture Agreement of Fund VI and Fund VII Associates dated May 25, 1995, filed herewith *10(ee) First Amendment to Joint Venture Agreement of Fund VI, Fund VII and Fund VIII Associates dated May 30, 1995 (Exhibit 10(w) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(ff) Real Estate Purchase Agreement dated April 13, 1995 (Exhibit 10(x) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(gg) Lease Agreement dated February 27, 1995, between NationsBank of Georgia, N.A., as agent for Wells Real Estate Fund VII, L.P., and Harris Teeter, Inc. (Exhibit 10(y) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(hh) Development Agreement dated May 31, 1995, between Fund VI, Fund VII and Fund VIII Associates and Norcom Development, Inc. (Exhibit 10(z) to Post Effective Amendment No. 4 to Form S-11 Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., File No. 33-83852) *10(ii) Joint Venture Agreement of Fund I, II, II-OW, VI and VII Associates dated August 1, 1995 (Exhibit to Form 10-K of Wells Real Estate Fund VI, L.P. for the fiscal year ended December 31, 1995, File No. 0-23656) *10(jj) Lease Modification Agreement No. 3 with The Kroger Co. dated December 31, 1993 (Exhibit 10(k) to Form 10-K of Wells Real Estate Fund I for the fiscal year ended December 31, 1993, File No. 0-14463) *10(kk) Purchase and Sale Agreement for the sale of the Cherokee Commons Shopping Center dated August 6, 2001 (Exhibit 10(p) to the Form 10-K of Wells Real Estate Fund I for the fiscal year ended December 31, 2001, File No. 0-14463) 5