(Mark One) | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2013 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______ |
Georgia | 58-2126622 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
6200 The Corners Pkwy., Norcross, Georgia | 30092-3365 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code | (770) 449-7800 |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page No. | ||||
PART I. | ||||
Item 1. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
PART II. | ||||
Item 1. | ||||
Item 1A. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 5. | ||||
Item 6. |
PART I. | FINANCIAL INFORMATION |
ITEM 1. | FINANCIAL STATEMENTS |
(Unaudited) | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Assets: | |||||||
Investment in joint venture | $ | 1,676,178 | $ | 4,109,865 | |||
Cash and cash equivalents | 6,435,671 | 3,246,678 | |||||
Due from joint venture | — | 27,074 | |||||
Other assets | 13,339 | 12,226 | |||||
Total assets | $ | 8,125,188 | $ | 7,395,843 | |||
Liabilities: | |||||||
Accounts payable and accrued expenses | $ | 5,235 | $ | 11,092 | |||
Due to affiliates | 4,457 | 7,539 | |||||
Total liabilities | 9,692 | 18,631 | |||||
Commitments and Contingencies | |||||||
Partners' Capital: | |||||||
Limited partners: | |||||||
Class A – 3,273,890 units issued and outstanding | 7,300,870 | 7,376,545 | |||||
Class B – 226,110 units issued and outstanding | 814,626 | — | |||||
General partners | — | 667 | |||||
Total partners' capital | 8,115,496 | 7,377,212 | |||||
Total liabilities and partners' capital | $ | 8,125,188 | $ | 7,395,843 |
(Unaudited) | (Unaudited) | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Equity in Income (Loss) of Joint Venture | $ | (54,507 | ) | $ | 79,832 | $ | 830,896 | $ | 155,646 | ||||||
Interest and Other Income | 3,108 | 1,785 | 4,453 | 5,210 | |||||||||||
General and Administrative Expenses | 35,546 | 44,127 | 97,065 | 101,710 | |||||||||||
Net Income (Loss) | $ | (86,945 | ) | $ | 37,490 | $ | 738,284 | $ | 59,146 | ||||||
Net Income (Loss) Allocated To: | |||||||||||||||
Class A Limited Partners | $ | — | $ | (110,819 | ) | $ | (75,675 | ) | $ | (31,642 | ) | ||||
Class B Limited Partners | $ | (86,945 | ) | $ | 147,934 | $ | 814,626 | $ | 90,196 | ||||||
General Partners | $ | — | $ | 375 | $ | (667 | ) | $ | 592 | ||||||
Net Income (Loss) Per Weighted-Average Limited Partner Unit: | |||||||||||||||
Class A | $ | 0.00 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
Class B | $ | (0.38 | ) | $ | 0.65 | $ | 3.60 | $ | 0.40 | ||||||
Weighted-Average Limited Partner Units Outstanding: | |||||||||||||||
Class A | 3,273,890 | 3,273,890 | 3,273,890 | 3,273,890 | |||||||||||
Class B | 226,110 | 226,110 | 226,110 | 226,110 |
Limited Partners | General Partners | Total Partners' Capital | |||||||||||||||||||
Class A | Class B | ||||||||||||||||||||
Units | Amount | Units | Amount | ||||||||||||||||||
BALANCE, December 31, 2011 | 3,263,890 | $ | 10,731,553 | 236,110 | $ | 166,839 | $ | 887 | $ | 10,899,279 | |||||||||||
Class B conversion elections | 10,000 | 7,066 | (10,000 | ) | (7,066 | ) | — | — | |||||||||||||
Net income (loss) | (112,043 | ) | 90,196 | (220 | ) | (22,067 | ) | ||||||||||||||
Distributions of Net Sale Proceeds ($0.99 and $1.11 per weighted-average for Class A Unit and Class B Unit, respectively) | (3,250,031 | ) | (249,969 | ) | — | (3,500,000 | ) | ||||||||||||||
BALANCE, December 31, 2012 | 3,273,890 | 7,376,545 | 226,110 | — | 667 | 7,377,212 | |||||||||||||||
Net income (loss) | — | (75,675 | ) | — | 814,626 | (667 | ) | 738,284 | |||||||||||||
BALANCE, June 30, 2013 | 3,273,890 | $ | 7,300,870 | 226,110 | $ | 814,626 | $ | — | $ | 8,115,496 |
(Unaudited) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2013 | 2012 | ||||||
Cash Flows from Operating Activities: | |||||||
Net income | $ | 738,284 | $ | 59,146 | |||
Operating distributions received from joint venture | 27,074 | 168,227 | |||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||
Equity in income of joint venture | (830,896 | ) | (155,646 | ) | |||
Changes in assets and liabilities: | |||||||
Increase in other assets | (1,113 | ) | (3,577 | ) | |||
Decrease in accounts payable and accrued expenses | (5,857 | ) | (4,215 | ) | |||
Decrease in due to affiliates | (3,082 | ) | (2,573 | ) | |||
Net cash (used in) provided by operating activities | (75,590 | ) | 61,362 | ||||
Cash Flows from Investing Activities: | |||||||
Net sale proceeds received from joint venture | 3,562,821 | — | |||||
Investment in joint venture | (298,238 | ) | — | ||||
Net cash provided by investing activities | 3,264,583 | — | |||||
Cash Flows from Financing Activities: | |||||||
Distributions of net sale proceeds to limited partners | — | (3,500,000 | ) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents | 3,188,993 | (3,438,638 | ) | ||||
Cash and Cash Equivalents, beginning of period | 3,246,678 | 6,535,295 | |||||
Cash and Cash Equivalents, end of period | $ | 6,435,671 | $ | 3,096,657 |
1. | ORGANIZATION AND BUSINESS |
Joint Venture | Joint Venture Partners | Ownership % | Properties |
Fund VIII and Fund IX Associates ("Fund VIII-IX Associates") | • Wells Real Estate Fund VIII, L.P. • Wells Real Estate Fund IX, L.P. | 54.8% 45.2% | 1. US Cellular Building(1) A four-story office building located in Madison, Wisconsin 2. 305 Interlocken Parkway A two-story office building located in Broomfield, Colorado |
The Fund IX, Fund X, Fund XI and REIT Joint Venture ("Fund IX-X-XI-REIT Associates")(2) | • Wells Real Estate Fund IX, L.P. • Wells Real Estate Fund X, L.P. • Wells Real Estate Fund XI, L.P. • Piedmont Operating Partnership, LP | 39.0% 48.5% 8.8% 3.7% | No properties owned during the periods presented. |
(1) | This property sold in March 2013. |
(2) | This joint venture wound up its affairs in 2011 and was terminated in the first quarter of 2012. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
• | First, to all limited partners holding Class A Units on a per-unit basis until such limited partners have received distributions equal to a 10% per annum return on their respective net capital contributions, as defined; |
• | Second, to the General Partners until the General Partners have received distributions equal to 10% of the total cumulative distributions paid by the Partnership; and |
• | Third, to the limited partners holding Class A Units on a per-unit basis and the General Partners allocated on a basis of 90% and 10%, respectively. |
• | In the event that the particular property sold is sold for a price that is less than its original property purchase price, to the limited partners holding Class A Units until they have received an amount equal to the excess of the original property purchase price over the price for which the property was sold, limited to the amount of depreciation, amortization, and cost recovery deductions taken by the limited partners holding Class B Units with respect to such property; |
• | To limited partners holding units which at any time have been treated as Class B Units, until such limited partners have received an amount necessary to equal the net cash available for distribution previously received by the limited partners holding Class A Units on a per-unit basis; |
• | To all limited partners on a per-unit basis until the limited partners have received 100% of their respective net capital contribution, as defined; |
• | To all limited partners on a per-unit basis until the limited partners have received a cumulative 10% per annum return on their respective net capital contribution, as defined; |
• | To limited partners on a per-unit basis until the limited partners have received an amount equal to their respective preferential limited partner return (defined as the sum of a 10% per annum cumulative return on net capital contributions for all periods during which the units were treated as Class A Units and a 15% per annum cumulative return on net capital contributions for all periods during which the units were treated as Class B Units); |
• | To all General Partners until they have received 100% of their capital contributions; in the event that limited partners have received aggregate cash distributions from the Partnership over the life of their investment in excess of a return of their net capital contributions plus their preferential limited partner return, then the General Partners shall receive an additional sum equal to 25% of such excess; and |
• | Thereafter, 80% to the limited partners on a per-unit basis and 20% to the General Partners. |
3. | INVESTMENT IN JOINT VENTURE |
Total Revenues | Income (Loss) From Continuing Operations | Income From Discontinued Operations | Net Income (Loss) | ||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Fund VIII-IX Associates | $ | — | $ | 207,814 | $ | (121,932 | ) | $ | 98,857 | $ | 1,348 | $ | 77,751 | $ | (120,584 | ) | $ | 176,608 |
Total Revenues | Income (Loss) From Continuing Operations | Income From Discontinued Operations | Net Income | ||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Fund VIII-IX Associates | $ | — | $ | 393,365 | $ | (276,516 | ) | $ | 183,920 | $ | 2,114,646 | $ | 160,405 | $ | 1,838,130 | $ | 344,325 |
Six Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||
Operating Income | Gain on Sale | Total | Operating Income | Gain on Sale | Total | ||||||||||||||||||
Fund VIII-IX Associates | $ | 88,243 | $ | 2,026,403 | $ | 2,114,646 | $ | 160,405 | $ | — | $ | 160,405 |
4. | RELATED-PARTY TRANSACTIONS |
5. | COMMITMENTS AND CONTINGENCIES |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Fundraising phase |
• | Investing phase |
• | Holding phase |
• | Positioning-for-sale phase |
• | Disposition-and-liquidation phase |
• | The 15253 Bake Parkway property was sold on December 2, 2004. |
• | The Alstom Power – Knoxville Building was sold on March 15, 2005. |
• | The 1315 West Century Drive property was sold on December 22, 2006. |
• | The Iomega Building was sold on January 31, 2007. |
• | The 14079 Senlac Drive property was sold on November 29, 2007. |
• | The Avaya Building was sold on October 15, 2010. |
• | The 360 Interlocken Building was sold on June 2, 2011. |
• | The US Cellular Building, located in Madison, Wisconsin was sold on March 22, 2013. |
• | The 305 Interlocken Parkway property, located in the Broomfield submarket of Denver, Colorado, is currently vacant. We are currently marketing the property for lease and sale. |
Property Sold | Net Sale Proceeds | Partnership's Approximate Ownership % | Net Sale Proceeds Allocated to the Partnership | Use of Net Sale Proceeds | Net Sale Proceeds Distributed to Partners as of June 30, 2013 | Undistributed Net Sale Proceeds as of June 30, 2013 | ||||||||||||||||||
Amount | Purpose | |||||||||||||||||||||||
305 Interlocken Parkway (early termination in 2004) | $ | 800,000 | (1) | 45.2% | $ | 361,626 | $ | — | — | $ | 361,626 | $ | — | |||||||||||
15253 Bake Parkway (sold in 2004) | $ | 11,892,035 | 38.1% | 4,526,770 | 237,910 | Re-leasing 15253 Bake Parkway (2004) | 4,288,860 | — | ||||||||||||||||
Alstom Power –Knoxville Building (sold in 2005) | $ | 11,646,089 | 39.0% | 4,545,538 | — | — | 4,545,538 | — | ||||||||||||||||
1315 West Century Drive (sold in 2006) | $ | 8,059,625 | 39.0% | 3,145,720 | — | — | 3,145,720 | — | ||||||||||||||||
Iomega Building (sold in 2007) | $ | 4,685,151 | 39.0% | 1,828,642 | — | — | 1,828,642 | — | ||||||||||||||||
14079 Senlac Drive (sold in 2007) | $ | 5,107,237 | 45.2% | 2,308,640 | — | — | 2,308,640 | — | ||||||||||||||||
Avaya Building (sold in 2010) | $ | 5,107,662 | 39.0% | 1,993,551 | — | — | 1,993,551 | — | ||||||||||||||||
360 Interlocken Building (sold in 2011) | $ | 8,686,166 | 39.0% | 3,389,872 | — | — | 727,424 | 2,662,448 | ||||||||||||||||
US Cellular Building (sold in 2013) | $ | 7,881,771 | 45.2% | 3,562,821 | — | — | — | 3,562,821 | ||||||||||||||||
Total | $ | 25,663,180 | $ | 237,910 | $ | 19,200,001 | $ | 6,225,269 |
(1) | The Partnership continues to own this property. The net sale proceeds represents payment received for unamortized tenant improvements in connection with the Cirrus Logic, Inc. lease termination. |
Buildings | 40 years |
Building improvements | 5-25 years |
Land improvements | 20 years |
Tenant improvements | Shorter of lease term or economic life |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
PART II. | OTHER INFORMATION |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) | We did not sell any equity securities that were not registered under the Securities Act during the quarter ended June 30, 2013. |
(b) | Not applicable. |
(c) | We did not redeem any securities during the quarter ended June 30, 2013. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
(a) | We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended June 30, 2013. |
(b) | Not applicable. |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
(a) | During the quarter ended June 30, 2013, there was no information required to be disclosed in a report on Form |
(b) | Not applicable. |
ITEM 6. | EXHIBITS |
WELLS REAL ESTATE FUND IX, L.P. (Registrant) | ||
By: | WELLS PARTNERS, L.P. (General Partner) | |
By: | WELLS CAPITAL, INC. (Corporate General Partner) | |
August 13, 2013 | /s/ BRIAN M. DAVIS | |
Brian M. Davis | ||
On behalf of the registrant and as Senior Vice President and Principal Financial Officer of Wells Capital, Inc. |
Exhibit Number | Description of Document | |||
31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
101.INS | * | XBRL Instance Document. | ||
101.SCH | * | XBRL Taxonomy Extension Schema. | ||
101.CAL | * | XBRL Taxonomy Extension Calculation Linkbase. | ||
101.DEF | * | XBRL Taxonomy Extension Definition Linkbase. | ||
101.LAB | * | XBRL Taxonomy Extension Label Linkbase. | ||
101.PRE | * | XBRL Taxonomy Extension Presentation Linkbase. |
1. | I have reviewed this quarterly report on Form 10-Q of Wells Real Estate Fund IX, L.P. (the “Registrant”) for the quarter ended June 30, 2013; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of and for the periods presented in this report; |
4. | The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the Financial Oversight Committee of the corporate general partner (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
August 13, 2013 | By: | /s/ LEO F. WELLS, III | |
Leo F. Wells, III Principal Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Wells Real Estate Fund IX, L.P. (the “Registrant”) for the quarter ended June 30, 2013; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the Registrant as of and for the periods presented in this report; |
4. | The Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | The Registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the Financial Oversight Committee of the corporate general partner (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize, and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
August 13, 2013 | By: | /s/ BRIAN M. DAVIS | |
Brian M. Davis Principal Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ LEO F. WELLS, III |
Leo F. Wells, III |
Principal Executive Officer |
August 13, 2013 |
/s/ BRIAN M. DAVIS |
Brian M. Davis |
Principal Financial Officer |
August 13, 2013 |
Investment in Joint Venture
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Joint Venture | INVESTMENT IN JOINT VENTURE Summary of Financial Information Condensed financial information for the joint venture in which the Partnership held direct interests for the three months and six months ended June 30, 2013 and 2012, respectively, is presented below:
The Partnership allocates its share of net income, net loss, and gain on sale generated by the properties owned by Fund VIII-IX Associates to its Class A and Class B limited partners pursuant to the partnership agreement provisions outlined in Note 2. The components of income from discontinued operations recognized by Fund VIII-IX Associates are provided below:
Due from Joint Venture As presented in the accompanying balance sheets, due from joint venture as of December 31, 2012 represents operating cash flow generated by Fund VIII-IX Associates for the three months ended December 31, 2012, which is attributable to the Partnership. |
Investment in Joint Venture (Schedule of Financial Information for Joint Ventures) (Details) (Fund VIII-IX Associates, USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Fund VIII-IX Associates
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Schedule of Equity Method Investments [Line Items] | ||||
Total Revenues | $ 0 | $ 207,814 | $ 0 | $ 393,365 |
Income (Loss) From Continuing Operations | (121,932) | 98,857 | (276,516) | 183,920 |
Income From Discontinued Operations | 1,348 | 77,751 | 2,114,646 | 160,405 |
Net Income | $ (120,584) | $ 176,608 | $ 1,838,130 | $ 344,325 |
Statements of Partners' Capital Parenthetical (USD $)
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12 Months Ended |
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Dec. 31, 2012
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Class A Units
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Distributions of Net Sale Proceeds (in dollars per unit) | $ 0.99 |
Class B Units
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Distributions of Net Sale Proceeds (in dollars per unit) | $ 1.11 |
Organization and Business
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6 Months Ended | ||||||||||||||||||||||||||||
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Organization and Business | ORGANIZATION AND BUSINESS Wells Real Estate Fund IX, L.P. (the "Partnership") is a Georgia public limited partnership with Leo F. Wells, III and Wells Partners, L.P. ("Wells Partners"), a Georgia nonpublic limited partnership, serving as its general partners (collectively, the "General Partners"). Wells Capital, Inc. ("Wells Capital") serves as the corporate general partner of Wells Partners. Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. ("WREF"). Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of WREF. The Partnership was formed on August 15, 1994 for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing, and managing income-producing commercial properties for investment purposes. Upon subscription, limited partners elected to have their units treated as Class A Units or 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 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; (c) add or remove a general partner; (d) elect a new general partner; (e) dissolve the Partnership; (f) authorize a merger or a consolidation of the Partnership; and (g) approve a sale involving all or substantially all of the Partnership's assets, subject to certain limitations. 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 January 5, 1996, the Partnership commenced a public offering of up to $35,000,000 of Class A or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act. The offering was terminated on December 30, 1996, at which time the Partnership had sold approximately 2,935,931 Class A Units and 564,069 Class B Units representing total limited partner capital contributions of $35,000,000. The Partnership owns interests in all of its real estate assets through joint ventures with other entities affiliated with the General Partners and Piedmont Operating Partnership, LP ("Piedmont OP"), formerly known as Wells Operating Partnership, L.P. Piedmont OP is a Delaware limited partnership with Piedmont Office Realty Trust, Inc. ("Piedmont REIT"), formerly known as Wells Real Estate Investment Trust, Inc., serving as its general partner. Piedmont REIT is a Maryland corporation that has elected to be taxed as a real estate investment trust. During the periods presented, the Partnership owned interests in the following joint ventures (the "Joint Ventures") and properties:
Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund XI, L.P. are affiliated with the Partnership through common general partners. Wells Real Estate Fund X, L.P. was affiliated with the Partnership through one or more common general partners prior to its dissolution. Each of the properties described above was acquired on an all-cash basis. For further information regarding Fund VIII and Fund IX Associates and foregoing properties, refer to the Partnership's Annual Report on Form 10-K for the year ended December 31, 2012. |
Related-Party Transactions
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6 Months Ended |
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Jun. 30, 2013
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Related Party Transactions [Abstract] | |
Related-Party Transactions | RELATED-PARTY TRANSACTIONS Management and Leasing Fees The Partnership entered into a property management and leasing agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of the General Partners. In accordance with the property management and leasing agreement, Wells Management receives compensation for the management and leasing of the Partnership's properties owned through the Joint Ventures, equal to (a) 3% for management services and 3% for leasing services of the gross revenues collected monthly, 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, which is assessed periodically based on market studies, or (b) in the case of commercial properties 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. Management and leasing fees are paid by the Joint Ventures and, accordingly, are included in equity in income (loss) of joint ventures in the accompanying statements of operations. The Partnership's share of management and leasing fees and lease acquisition costs incurred through Fund VIII and Fund IX Associates and payable to Wells Management is $0 and $14,595 for the three months ended June 30, 2013 and 2012, respectively, and $4,992 and $25,902 for the six months ended June 30, 2013 and 2012, respectively. Administrative Reimbursements Wells Capital, the corporate general partner of Wells Partners, one of the Partnership's General Partners, and Wells Management perform certain administrative services for the Partnership, relating to accounting and other partnership administration, and incur the related expenses. Such expenses are allocated among other entities affiliated with the General Partners based on estimates of the amount of time dedicated to each fund by individual administrative personnel. In the opinion of the General Partners, this allocation is a reasonable estimation of such expenses. The Partnership incurred administrative expenses payable to Wells Capital and Wells Management of $13,942 and $19,856 for the three months ended June 30, 2013 and 2012, respectively, and $31,136 and $43,338 for the six months ended June 30, 2013 and 2012, respectively. In addition, Wells Capital and Wells Management pay for certain operating expenses of the Partnership ("bill-backs") directly and invoice the Partnership for the reimbursement thereof on a quarterly basis. As presented in the accompanying balance sheets, due to affiliates as of June 30, 2013 and December 31, 2012 represents administrative reimbursements and bill-backs due to Wells Capital and/or Wells Management. Operational Dependency The Partnership has engaged Wells Capital and Wells Management to provide certain essential services, including supervision of the management and leasing of its properties, asset acquisition and disposition services, as well as other administrative responsibilities, including accounting services and investor communications and relations. These agreements are terminable by either party upon 60 days' written notice. As a result of these relationships, the Partnership's operations are dependent upon Wells Capital and Wells Management. Wells Capital and Wells Management are owned and controlled by WREF. The operations of Wells Capital, Wells Investment Securities, Inc., Wells Management, Wells Core Office Income REIT Advisory Services, LLC, and their affiliates represent substantially all of the business of WREF. Accordingly, we focus on the financial condition of WREF when assessing the financial condition of Wells Capital and Wells Management. In the event that WREF were to become unable to meet its obligations as they become due, we might be required to find alternative service providers. Future net income generated by WREF will be largely dependent upon the amount of fees earned by Wells Capital and Wells Management based on, among other things, the management of assets for WREF-sponsored programs and the volume of future acquisitions and dispositions of real estate assets by WREF-sponsored programs, as well as distribution income earned from its holdings of common stock of Piedmont REIT, which was acquired in connection with the Piedmont REIT internalization transaction. As of June 30, 2013, the Partnership has no reason to believe that WREF does not have access to adequate liquidity and capital resources, including cash flow generated from operations, cash on hand, other investments, and borrowing capacity, necessary to meet its current and future obligations as they become due. Modifying service agreements between WREF, or its affiliates, and the Partnership, or other WREF-sponsored programs, could impact WREF's future net income and future access to liquidity and capital resources. For example, a large portion of WREF's income is derived under agreements with Columbia Property Trust, Inc. ("Columbia"), formerly known as Wells Real Estate Investment Trust II, Inc. Effective February 28, 2013, Columbia transitioned to self-management and indicated that it does not expect to rely on WREF for the same level of services beyond December 31, 2013. As such, WREF does not expect to receive significant compensation from Columbia beyond December 31, 2013. |
Summary of Significant Accounting Policies
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of the Partnership have been prepared in accordance with rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly and consistently present the results for these periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and footnotes included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2012. Investment in Joint Venture The Partnership has evaluated Fund VIII-IX Associates and concluded that it is not a variable interest entity. The Partnership does not have control over the operations of Fund VIII-IX Associates; however, it does exercise significant influence. Approval by the Partnership as well as the other joint venture partners is required for any major decision or any action that would materially affect Fund VIII-IX Associates or its real property investments. Accordingly, the Partnership accounts for its investments in Fund VIII-IX Associates using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreement, all income (loss) and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on a quarterly basis. Evaluating the Recoverability of Real Estate Assets The Partnership continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets owned through the Partnership's investment in Fund VIII-IX Associates may not be recoverable. When indicators of potential impairment are present which suggest that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to sell, for assets held for sale. In the event that the expected undiscounted future cash flows for assets held for use, or the estimated fair value, less costs to sell, for assets held for sale do not exceed the respective asset carrying value, management adjusts the real estate assets to their respective estimated fair values, pursuant to the provisions of the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognizes an impairment loss. Estimated fair values are determined based on the following information, dependent upon availability: (i) recently quoted market price(s) for the subject property, or highly comparable properties, under sufficiently active and normal market conditions, or (ii) the present value of future cash flows, including estimated residual value. The Partnership has determined that there have been no additional impairments in the carrying value of its real estate assets to date; however, certain of the Partnership's assets may be carried at an amount more than could be realized in a current disposition transaction. While various techniques and assumptions can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair value measurements and disclosures describes three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as little, if any, related market activity or information is available. Examples of Level 3 inputs include estimated holding periods, discount rates, market capitalization rates, expected lease rental rates, timing of new leases, and sales prices; additionally, the Partnership may assign an estimated probability-weighting to more than one fair value estimate based on the Partnership's assessment of the likelihood of the respective underlying assumptions occurring as of the evaluation date. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and consideration of factors specific to the asset or liability. Projections of expected future cash flows require that the Partnership estimate future market rental income, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's future cash flows and fair value, and could result in the misstatement of the carrying value of real estate assets held by Fund VIII-IX Associates and net income (loss) of the Partnership. Distribution of Net Cash from Operations Net cash from operations, if available and unless reserved, is generally distributed quarterly to the limited partners as follows:
No distributions of net cash from operations will be made to limited partners holding Class B Units. Distribution of Net Sale Proceeds Upon sales of properties, unless reserved, net sale proceeds will be distributed in the following order:
Allocations of Net Income, Net Loss, and Gain on Sale For the purpose of determining allocations per the partnership agreement, net income is defined as net income recognized by the Partnership, excluding deductions for depreciation, amortization, cost recovery, and the gain on the sale of assets. 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 holding Class A Units and the General Partners. To the extent the Partnership's net income in any year exceeds net cash from operations, such excess net income 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 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 made, if applicable: (i) allocations made pursuant to the qualified income offset provisions of the partnership agreement; (ii) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero; and (iii) allocations to limited partners holding Class B Units in amounts equal to the deductions for depreciation and amortization previously allocated to them with respect to the specific 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. Recent Accounting Pronouncement In April 2013, the Financial Accounting Standards Board issued Accounting Standards Update 2013-07, Presentation of Financial Statements Topic Liquidation Basis of Accounting ("ASU 2013-07"). ASU 2013-07 requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent. Liquidation is considered imminent when the likelihood is remote that the organization will return from liquidation and either: (a) a plan for liquidation is approved by the person or persons with the authority to make such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties; or (b) a plan for liquidation is being imposed by other forces. ASU 2013-07 will be effective for the Partnership beginning on January 1, 2014. The Partnership expects that the adoption of ASU 2013-07 will not have a material impact on its financial statements or disclosures. |