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, 2000 or
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[_] 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 ____________________ to _____________________
Commission file number 0-25739
WELLS REAL ESTATE INVESTMENT TRUST, INC.
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(Exact name of registrant as specified in its charter)
Maryland 58-2328421
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
6200 The Corners Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
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Securities registered pursuant to Section 12 (b)
of the Act:
Title of each class Name of exchange on which registered
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NONE NONE
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Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK
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(Title of Class)
COMMON STOCK
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(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 ___
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Aggregate market value of the voting stock held by nonaffiliates: ____________
While there is no established market for the Registrant's shares of voting
stock, the Registrant has offered and sold shares of its voting stock pursuant
to a Form S-11 Registration Statement under the Securities Act of 1933 at a
price of $10 per share. The number of shares of common stock outstanding as of
February 28, 2001 was 35,055,988.
Documents Incorporated by Reference:
Registrant incorporates by reference portions of the Wells Real Estate
Investment Trust, Inc. Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders (Items 10, 11, 12 and 13 of Part III) to be filed no later than
April 30, 2001.
PART I
ITEM 1. BUSINESS
General
Wells Real Estate Investment Trust, Inc. (the "Company") is a Maryland
corporation formed on July 3, 1997. The Company is the sole general partner of
Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership
organized for the purpose of acquiring, developing, owning, operating,
improving, leasing, and otherwise managing for investment purposes, income
producing commercial properties on behalf of the Company.
On January 30, 1998, the Company commenced a public offering of up to 16,500,000
shares of common stock at $10 per share pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933. The Company commenced active
operations on June 5, 1998, when it received and accepted subscriptions for
125,000 shares. The Company terminated its initial public offering on December
19, 1999. The Company received gross proceeds of approximately $132,181,919 from
the sale of approximately 13,218,192 shares from its initial public offering.
The Company commenced its second public offering of shares of common stock of
the Company on December 20, 1999, which was terminated on December 19, 2000. The
Company received gross proceeds of approximately $175,229,193 from the sale of
approximately 17,522,919 shares from the second public offering. The Company
commenced its third public offering of the shares of common stock on December
20, 2000. As of December 31, 2000, the Company had received gross proceeds of
approximately $7,686,958 from the sale of approximately 768,696 shares from its
third public offering. Accordingly, as of December 31, 2000, the Wells REIT had
received aggregate gross offering proceeds of approximately $315,098,070 from
the sale of 31,509,807 shares of its common stock to 7,422 investors. After
payment of $10,978,981 in Acquisition and Advisory Fees and Acquisition
Expenses, payment of $39,209,638 in selling commissions and organization and
offering expenses, and capital contributions and acquisition expenditures by
Wells OP of $262,118,082 in property acquisitions and common stock redemptions
of $1,412,969 pursuant to the Company's share repurchase program, the Company
was holding net offering proceeds of $1,378,400 available for investment in
properties as of December 31, 2000.
Wells OP owns interests in properties through equity ownership in the following
joint ventures: (i) The Fund IX-X-XI-REIT Joint Venture, a joint venture among
Wells OP and Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P.,
and Wells Real Estate Fund XI, L.P. (the "Fund IX-X-XI-REIT Joint Venture"),
(ii) Wells/Fremont Associates (the "Fremont Joint Venture"), a joint venture
between Wells OP and Fund X and Fund XI Associates, which is a joint venture
between Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P. (the
"Fund X-XI Joint Venture"), (iii) Wells/Orange County Associates (the "Cort
Joint Venture"), a joint venture between Wells OP and the Fund X-XI Joint
Venture, (iv) the Fund XI-XII-REIT Joint Venture, a joint venture among Wells
OP, Wells Real Estate Fund XI, L.P., and Wells Real Estate Fund XII, L.P. (the
"Fund XI-XII-REIT Joint Venture"), (v) the Fund XII-REIT Joint Venture, a joint
venture between Wells OP and Wells Real Estate Fund XII, L.P. (the "Fund
XII-REIT Joint Venture"), and (vi) the Fund VIII-IX-REIT Joint Venture, a joint
venture between Wells OP and the Fund VII-IX Joint Venture.
As of December 31, 2000, Wells OP owned interests in the following properties
either directly or through its interest in joint ventures: (i) a three-story
office building in Knoxville, Tennessee (the "Alstom Power-Knoxville Building");
(ii) a two-story office building in Louisville, Colorado (the "Ohmeda
Building"); (iii) a three-story office building in Broomfield, Colorado (the
"360 Interlocken
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Building"); (iv) a one-story office building in Oklahoma City, Oklahoma (the
"Avaya Building"); (v) a one-story warehouse and office building in Ogden, Utah
(the "Iomega Building"), all five of which are owned by the Fund IX-X-XI-REIT
Joint Venture; (vi) a two-story warehouse office building in Fremont, California
(the "Fremont Building"), which is owned by the Fremont Joint Venture; (vii) a
one-story warehouse and office building in Fountain Valley, California (the
"Cort Building"), which is owned by the Cort Joint Venture; (viii) a four-story
office building in Tampa, Florida (the "PWC Building"); (ix) a four-story office
building in Harrisburg, Pennsylvania (the "AT&T-Harrisburg Building"), which are
owned directly by Wells OP; (x) a two-story manufacturing and office building
located in Fountain Inn, South Carolina (the "EYBL CarTex Building"); (xi) a
three-story office building located in Leawood, Kansas (the "Sprint Building");
(xii) a one-story office building and warehouse in Tredyffrin Township,
Pennsylvania (the "Johnson Matthey Building"); (xiii) a two-story office
building in Ft. Meyers, Florida (the "Gartner Building), all four of which are
owned by Fund XI-XII-REIT Joint Venture; (xiv) a two-story office building
located in Lake Forest, California (the "Matsushita Building"); (xv) a four-
story office building in Richmond, Virginia (the "Alstom Power-Richmond
Building"); (xvi) a two-story office building and warehouse in Wood Dale,
Illinois (the "Marconi Building"); and (xvii) a five-story office building in
Plano, Texas (the "Cinemark Building"); (xviii) a three-story office building in
Tulsa, Oklahoma (the "Metris Building"); (xix) a two-story office building in
Scottsdale, Arizona (the "Dial Building"); (xx) a two-story office building in
Tempe, Arizona (the "ASML Building"); (xxi) a two-story office building in
Tempe, Arizona (the "Motorola-Arizona Building"); (xxii) a two-story office
building in Tempe, Arizona (the "Avnet Building"); (xxiii) a three-story office
building in Troy, Michigan (the "Delphi Building"); all ten of which are owned
directly by Wells OP; (xxiv) a three-story office building in Troy, Michigan
(the "Siemens Building"), which is owned by the Fund XII-REIT Joint Venture;
(xxv) a two-story office building in Orange County, California (the "Quest
Building"), formerly the Bake Parkway Building, previously owned by Fund VIII-IX
Joint Venture, which is now owned by Fund VIII-IX-REIT Joint Venture; (xxvi) a
three-story office building in South Plainfield, New Jersey (the "Motorola-New
Jersey Building"); (xxvii) a nine-story office building in Minnetonka, Minnesota
(the "Metris Minnetonka Building"); (xxviii) a six-story office building in
Houston, Texas (the "Stone and Webster Building") all three of which are owned
directly by Wells OP; and (xxix) a one-story and a two-story office building
(the "AT&T-Oklahoma Buildings"), which is owned by the Fund XII-REIT Joint
Venture.
Employees
The Company has no direct employees. The employees of Wells Capital, Inc. (the
"Advisor"), the Company's Advisor, perform a full range of real estate services
including leasing and property management, accounting, asset management and
investor relations for the Company.
Insurance
Wells Management Company, Inc., an affiliate of the Company and the Advisor,
carries comprehensive liability and extended coverage with respect to all the
properties owned directly or indirectly by the Company. In the opinion of
management of the registrant, the properties are adequately insured.
Competition
The Company will experience competition for tenants from owners and managers of
competing projects which may include its affiliates. As a result, the Company
may be required to 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 Company elects to dispose of its properties, the
Company will also be in competition with sellers of similar properties to locate
suitable purchasers for its properties.
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ITEM 2. PROPERTIES
The Company owns interest in 29 office buildings through its ownership in Wells
OP which owns properties directly or through its interest in six joint ventures.
The Company does not have control over the operations of the joint ventures;
however, it does exercise significant influence. Accordingly, investment in
joint venture is recorded on the equity method. As of December 31, 2000, these
properties were 100% occupied.
The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 2000, assuming no exercise of renewal options
or termination rights:
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
- ------------- ---------- ----------- ------------- -------------- -------- -------------
2001 0 0 $ 0 $ 0 0.0% 0.0%
2002 5 33,610 174,909 6,524 1.2 0.4
2003 (2) 2 69,146 1,078,252 358,188 2.4 2.7
2004 (3) 3 126,011 2,154,042 891,529 4.4 5.4
2005 (4) 2 239,975 3,070,161 2,004,452 8.4 7.6
2006 (5) 2 197,159 3,390,906 3,390,906 7.0 8.4
2007 (6) 5 460,150 6,149,746 4,487,277 16.2 15.3
2008 (7) 7 737,250 9,337,356 8,065,780 26.0 23.3
2009 (8) 2 174,105 2,098,188 1,427,305 6.1 5.2
2010 (9) 5 804,428 12,754,545 11,940,654 28.3 31.7
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33 2,841,834 $40,208,105 $32,572,615 100.0% 100.0%
========== =========== ============== =============== ========= =============
(1) Average monthly gross rent over the life of the lease, annualized.
(2) Expiration of Cort Building lease--52,000 square feet.
(3) Expiration of Fairchild Building lease--58,424 square feet and
expiration of Quest Building lease--65,006 square feet.
(4) Expiration of Ohmeda Building lease--106,750 square feet and
expiration of Motorola-Arizona Building lease--133,225 square feet.
(5) Expiration of Coca-Cola lease at the Cinemark Building--52,253
square feet and expiration of Matsushita Building lease--144,906
square feet.
(6) Expiration of Johnson Matthey Building lease--130,000 square feet;
expiration of Alstom-Knoxville Building )formerly the ABB Building)
lease--55,000 square feet; expiration of Sprint Building
lease--68,900 square feet; expiration of Alstom-Richmond Building
lease--99,057 square feet; and expiration of Delphi Building
lease--107,193 square feet.
(7) Expiration of PWC Building lease--130,090 square feet; expiration of
Gartner Building lease--62,400 square feet; expiration of EYBL
CarTex Building lease--169,510 square feet; expiration of Avaya
Building (formerly the Lucent Building) lease--57,186 square feet;
expiration of AT&T Building lease--81,859 square feet; expiration of
Dial Building lease--129,689 square feet; and expiration of SYSCO
lease-Stone & Webster Building--106,516 square feet.
(8) Expiration of Iomega Building lease--108,250 square feet and
expiration of Cinemark Building lease--65,855 square feet.
(9) Expiration of Metris Building lease--101,100 square feet; expiration
of Avnet Building lease--132,070 square feet; expiration of SYSCO
lease--Stone and Webster
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Building--206,048 square feet; expiration of Motorola-New Jersey
Building lease--236,710 square feet; and expiration of AT&T-Oklahoma
Building lease--128,500 square feet.
The following describes the properties in which the Company owns an interest as
of December 31, 2000:
Fund IX-X-XI-REIT Joint Venture
On June 11, 1998, Fund IX and Fund X Associates (the "Joint Venture"), a
joint venture between the Wells Real Estate Fund IX, L.P. ("Wells Fund
IX"), a Georgia public limited partnership, and Wells Real Estate Fund
X, L.P. ("Wells Fund X"), a Georgia public limited partnership, was
amended and restated to admit Wells Real Estate Fund XI, L.P. ("Wells
Fund XI") a Georgia public limited partnership, and Wells OP. Wells Fund
IX, Wells Fund X and Wells Fund XI are all Affiliates of the Company and
the Advisor.
The Joint Venture, which changed its name to the Fund IX-X-XI-REIT Joint
Venture, had previously acquired and owned the following three
properties: (i) the ABB-Knoxville Building located in Knoxville, Knox
County, Tennessee, (ii) the Ohmeda Building located in Louisville,
Boulder County, Colorado, and (iii) the 360 Interlocken Building located
in Broomfield, Boulder County, Colorado. On June 24, 1998, the Fund
IX-X-XI-REIT Joint Venture purchased the Avaya Building, formerly the
Lucent Technologies Building, located in Oklahoma City, Oklahoma County,
Oklahoma. On July 1, 1998, Wells Fund X contributed the Iomega Building
located in Ogden, Weber County, Utah to the Fund IX-X-XI-REIT Joint
Venture.
As of December 31, 2000, Wells OP had contributed approximately
$1,421,466 for an approximate 3.7% equity interest in the Fund
IX-X-XI-REIT Joint Venture. As of December 31, 2000, Wells Fund IX had
an approximate 39.1% equity interest, Wells Fund X had an approximate
48.3% equity interest, and Wells Fund XI had an approximate 8.9% equity
interest in the Fund IX-X-XI-REIT Joint Venture.
The Alstom Power-Knoxville Building
On March 20, 1997, the Fund IX-X Joint Venture began construction on a
three-story office building containing approximately 84,404 rentable
square feet (the "Alstom Power-Knoxville Building") on a 5.62-acre tract
of real property in Knoxville, Knox County, Tennessee. The land purchase
and construction costs totaling approximately $8,137,994 were funded by
capital contributions of $4,177,711 by Wells Fund IX and $3,835,000 by
Wells Fund X.
Alstom Power Inc. successor in interest to ABB Environmental Systems, a
subsidiary of ABB, Inc., occupied its lease space of 56,012 rentable
square feet comprising approximately 67% of the building in December
1997. The initial term of the lease is 9 years and 11 months commencing
in December 1997. Alstom Power has the option under its lease to extend
the initial term of the lease for two consecutive five-year periods. The
annual base rent payable during the initial term is $646,250 payable in
equal monthly installments of $53,854 during the first five years and
$728,750 payable in equal monthly installments of $60,729 during the
last four years and 11 months of the initial term. The annual base rent
for each extended term will be at market rental rates. In addition to
the base rent, Alstom Power is required to pay additional rent equal to
its share of operating expenses during the lease term.
Commencing December 1, 1999, ABB Environmental exercised its right of
first refusal to lease an additional 23,992 square feet of space vacated
by the Associates in September 1999. This addition increased their
rentable floor area from 57,831 square feet to 81,823 square feet. On
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May 19, 2000 Alstom Power, Inc. executed the third amendment to the
lease agreement for the remaining 2,581 square feet of rentable floor
area on the second floor of the building. Accordingly, Alstom Power now
occupies 100% of the building, and will pay base rent at the same terms
and conditions of their original lease.
The average effective annual rental per square foot at the Alstom Power
Building was $14.05 for 2000, $11.82 for 1999, $9.97 for 1998 and $8.16
for 1997, the first year of occupancy. The occupancy rate at year-end
was 100% for 2000, 98% for 1999 and 95% for 1998.
Ohmeda Building
On February 13, 1998, the Fund IX-X Joint Venture acquired a two-story
office building that was completed in 1988 with approximately 106,750
rentable square feet (the "Ohmeda Building") on a 15-acre tract of land
located in Louisville, Boulder County, Colorado. The purchase price for
the Ohmeda Building was $10,325,000. The Fund IX-X Joint Venture also
incurred additional acquisition expenses in connection with the purchase
of the Ohmeda Building, including attorneys' fees, recording fees and
other closing costs. As of December 31, 2000, Wells Fund IX had
contributed $3,460,192 and Wells Fund X had contributed $6,900,878 to
this project.
The entire 106,750 rentable square feet of the Ohmeda Building is
currently under a net lease date February 26, 1987, as amended by First
Amendment to Lease dated December 3, 1987, as amended by Second
Amendment to Lease dated October 20, 1997 (the "Lease") with Ohmeda,
Inc., a Delaware corporation. The lease was assigned to the Joint
Venture at the closing. The lease currently expires in January 2005,
subject to (i) Ohmeda's right to effectuate an early termination of the
lease under the terms and conditions described below, and (ii) Ohmeda's
right to extend the lease for two additional five year periods of time
at the then current market rental rates.
The monthly base rental payable under the lease is $83,709.79 through
January 31, 2003; $87,890.83 from February 1, 2003 through January 31,
2004; and $92,249.79 from February 1, 2004 through January 31, 2005.
Under the lease, Ohmeda is responsible for all utilities, taxes,
insurance and other operating costs with respect to the Ohmeda Building
during the term of the lease. In addition, Ohmeda shall pay a $21,000
per year management fee for maintenance and administrative services of
the Ohmeda Building. The Fund IX-X-XI-REIT Joint Venture, as landlord,
is responsible for maintenance of the roof, exterior and structural
walls, foundations, other structural members and floor slab, provided
that the landlord's obligation to make repairs specifically excludes
items of cosmetic and routine maintenance such as the painting of walls.
The average effective annual rental per square foot at the Ohmeda
Building was $9.62 for 2000, 1999 and 1998, the first year of occupancy.
The occupancy rate at year-end was 100% for 2000, 1999 and 1998.
360 Interlocken Building
On March 20, 1998, the Fund IX-X Joint Venture acquired a three-story
multi-tenant office building containing approximately 51,974 rentable
square feet (the "360 Interlocken Building") on a 5.1 acre tract of land
in Broomfield, Boulder County, Colorado for a purchase price of
$8,275,000. excluding acquisition costs. The project was funded by
capital contributions of $6,642,466 by Wells Fund IX and $1,674,271 by
Wells Fund X.
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The 360 Interlocken Building was completed in December 1996. The first
floor has multiple tenants and contains 15,599 rentable square feet; the
second floor is leased to ODS Technologies, L.P. and contains 17,146
rentable square feet; and the third floor is leased to Transecon, Inc.
and contains 19,229 rentable square feet. As stated, the entire third
floor of the Interlocken Building containing 19,229 rentable square feet
is currently under lease to Transecon and expires in October 2001,
subject to Transecon's right to extend for one additional term of five
years upon 180 days notice. The monthly lease rent payable under the
Transecon lease is approximately $24,000 for the initial term of the
lease. Under the lease, Transecon is responsible for its share of
utilities, taxes, insurance and other operating expenses with respect to
the Interlocken building. In addition, Transecon has a right of first
refusal under the lease for any second floor space proposed to be leased
by the landlord.
The entire second floor of the Interlocken building containing 17,146
rentable square feet is currently under lease to ODS and expires in
September 2003 subject to ODS's right to extend for one additional term
of three years. The monthly base rent payable under the ODS lease is
$22,100 through January 1998; $22,150 through January 1999; $22,600
through January 2000; $23,100 through January 2001; $23,550 through
January 2002; $24,050 through January 2003 and $24,550 through September
2003. The rental payments to be made by the tenant under the ODS lease
are also secured by the assignment of a $275,000 letter of credit which
may be drawn upon by the landlord in the event of a tenant default under
the lease. Under the lease, ODS is responsible for its share of
utilities, taxes, insurance and other operating costs with respect to
the Interlocken building.
The average effective annual rental per square foot at the 360
Interlocken Building was $16.23 for 2000 and $15.97 for 1999 and 1998,
the first year of occupancy. The occupancy rate at year-end was 100% for
2000, 1999 and 1998.
Avaya Building (formerly the Lucent Technologies Building)
On May 30, 1997, the Fund IX-X Joint Venture entered into an agreement
for the purchase and sale of real property with Wells Development
Corporation ("Wells Development"), an affiliate of the Company and the
Advisor, for the acquisition and development of a one-story office
building containing 57,186 net rentable square feet on 5.3 acres of land
(the "Avaya Building"). On June 24, 1998, the Fund IX-X-XI-REIT Joint
Venture purchased this property for a purchase price of $5,504,276. The
purchase price was funded by capital contributions of $1,421,466 by the
Company, $657,804 by Wells Fund IX, $950,392 by Wells Fund X and
$2,482,810 by Wells Fund XI.
Avaya has occupied the entire Avaya Building. The initial term of the
lease is ten years commencing January 5, 1998. Avaya has the option to
extend the initial term of the lease for two additional five-year
periods. The annual base rent payable during the initial term is
$508,383 payable in equal monthly installments of $42,365 during the
first five years and $594,152 payable in equal monthly installments of
$49,513 during the second five years of the lease term. The annual base
rent for each extendable term will be at market rental rates. In
addition to the base rent, Avaya will be required to pay additional rent
equal to its share of operating expenses during the lease term.
The average effective annual rental per square foot at the Avaya
Building was $10.19 for 2000, 1999 and 1998, the first year of
occupancy. The occupancy rate at year-end was 100% for 2000, 1999 and
1998.
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Iomega Building
On July 1, 1998, Wells Fund X contributed a single story warehouse and
office building with 108,250 rentable square feet (the "Iomega
Building") and was credited with making a capital contribution to the
IX-X-XI-REIT Joint Venture in the amount of $5,050,425, which represents
the purchase price of $5,025,000 plus acquisition expenses of $25,425
originally paid by the Partnership for the Iomega Building on April 1,
1998.
The building is 100% occupied by one tenant with a ten-year lease term
that expires on July 31, 2006. The monthly base rent payable under the
lease is $40,000 through November 12, 1999. Beginning on the 40th and
80th months of the lease term, the monthly base rent payable under the
lease will be increased to reflect an amount equal to 100% of the
increase in the Consumer Price Index (as defined in the lease) during
the preceding 40 months; provided however, that in no event shall the
base rent be increased with respect to any one year by more than 6% or
by less than 3% per annum, compounded annually, on a cumulative basis
from the beginning of the lease term. The lease is a triple net lease,
whereby the terms require the tenant to reimburse the IX-X-XI-REIT Joint
Venture for certain operating expenses, as defined in the lease, related
to the building.
On March 22, 1999, the Fund IX-X-X-REIT Joint Venture purchased a
four-acre tract of vacant land adjacent to the Iomega Corporation
Building located in Ogden, Utah. This site is being used for additional
parking and a loading-dock area, which includes at least 400 new parking
stalls and new site work for truck maneuver space, in accordance with
the requirements of the tenants and the city of Ogden. The project was
completed on July 31, 1999. The tenant, Iomega Corporation, has agreed
to extend the term of its lease to April 30, 2009 and will pay an
additional base rent, an amount equal to 13% per annum payable in
monthly installments of the direct and indirect cost of acquiring the
property and construction of improvements. This additional base rent
commenced on May 1, 1999.
The land was purchased at a cost of $212,000 excluding acquisition
costs. The funds used to acquire the land and for the improvements are
funded entirely out of capital contributions made by Wells Fund XI to
the Fund IX-X-XI-REIT Joint Venture in the amount of $874,625. The
project was completed at a total cost of $874,625.
The average effective annual rental per square foot at the Iomega
Building was $5.18 for 2000 and 1999 and $4.60 for 1998, the first year
of occupancy. The occupancy rate at year-end was 100% for 2000, 1999 and
1998.
Wells/Fremont Joint Venture - Fairchild Building
On July 15, 1998, Wells OP entered into a joint venture agreement known
as Wells/Fremont Associates ("Fremont Joint Venture") with Wells
Development Corporation, a Georgia Corporation ("Wells Development").
Wells Development is an affiliate of the Company and the Advisor. On
July 21, 1998, the Fremont Joint Venture acquired the Fairchild
Building, a 58,424 square-foot warehouse and office building located in
Fremont, California (the "Fairchild Building"), for a purchase price of
$8,900,000 plus acquisition expenses of approximately $60,000. The
purchase was funded by capital contributions of $6,900,000 by the
Company, $1,000,000 by Wells Fund X and $1,000,000 by Wells Fund XI.
The Fairchild Building is 100% occupied by one tenant with a seven-year
lease term that commenced on December 1, 1997 (with an early possession
date of October 1, 1997) and expires
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on November 30, 2004. The monthly base rent payable under the lease is
$68,128 with a 3% increase on each anniversary of the commencement date.
The lease is a triple net lease, whereby the terms require the tenant to
reimburse the landlord for certain operating expenses, as defined in the
lease, related to the building.
On July 17,1998 a joint venture between Wells Fund X and Wells Fund XI
(the "Fund X-XI Joint Venture") entered into an Agreement for the
Purchase and Sale of Joint Venture Interest (the "Fremont JV Contract")
with Wells Development. Pursuant to the Fremont JV Contract, the Fund
X-XI Joint Venture contracted to acquire Wells Development's interest in
the Fremont Joint Venture. On October 8, 1998, the Fund X-XI Joint
Venture exercised its rights under the Fremont Joint Venture Contract
and purchased Wells Development's interest in the Fremont Joint Venture
and became a joint venture partner with Wells OP in the ownership of the
Fairchild Building.
As of December 31, 2000, Wells OP had contributed $6,983,111 and held an
approximate 78% equity percentage interest in the Fremont Joint Venture,
and the Fund X-XI Joint Venture held an approximate 22% equity
percentage interest in the Fremont Joint Venture.
The average effective annual rental per square foot at the Fairchild
Building was $15.46 for 2000, 1999 and 1998, the first year of
occupancy. The occupancy rate at year-end was 100% for 2000, 1999 and
1998.
Wells/Cort Joint Venture
In July of 1998, Wells OP entered into a joint venture agreement known
as Wells/Orange County Associates ("Cort Joint Venture") with Wells
Development Corporation. On July 31, 1998, the Cort Joint Venture
acquired the Cort Furniture Building for a purchase price of $6,400,000
plus acquisition expenses of approximately $150,000. The Company
contributed $2,871,430, Wells Fund X contributed $2,296,233 and Wells
Fund XI contributed $1,398,767 toward the purchase of this building.
The Cort Furniture Building is a 52,000 square-foot warehouse and office
building located in Fountain Valley California. The building is 100%
occupied by one tenant with a 15-year lease term that commenced on
November 1, 1988 and expires on October 31, 2003. The monthly base rent
payable under the lease is $63,247 through April 30, 2001, at which time
the monthly base rent will be increased 10% to $69,574 for the remainder
of the lease term. The lease is a triple net lease, whereby the terms
require the tenant to reimburse the Cort Joint Venture for certain
operating expenses, as defined in the lease, related to the building.
On July 30, 1998, the Fund X-XI Joint Venture entered into the Agreement
for the Purchase and Sale of Joint Venture Interest (the "Cort JV
Contract") with Wells Development. Pursuant to the Cort JV Contract, the
Fund X-XI Joint Venture contracted to acquire Wells Development's
interest in the Cort Joint Venture. On September 1, 1998, the Fund X-XI
Joint Venture exercised its rights under the Cort JV Contract and
purchased Wells Development's interest in the Cort Joint Venture and
became a joint venture partner with Wells OP in the ownership of the
Cort Furniture Building.
As of December 31, 2000, Wells OP had made total capital contributions
of $2,871,430 and held an approximate 44% equity percentage interest in
the Cort Joint Venture, and the Fund X-XI Joint Venture held an
approximate 56% equity percentage interest in the Cort Joint Venture.
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The average effective annual rental per square foot at the Cort Building
was $15.30 for 2000, 1999 and 1998, the first year of occupancy. The
occupancy rate at year-end was 100% for 2000, 1999 and 1998.
The PWC Building
On December 31, 1998, Wells OP acquired a four-story office building
containing approximately 130,090 rentable square feet (the "PWC
Building") which was recently developed and constructed on an
approximate 9 acre tract of real property located in Tampa, Hillsborough
County, Florida. The total purchase price for the PWC Building pursuant
to the Purchase Agreement was $21,127,854. At the closing, Wells OP paid
a purchase price of $20,707,854 to the Seller plus $98,609 for closing
costs.
On December 31, 1998, the Seller assigned all of its rights pursuant to
the Lease Agreement dated as of March 30, 1998 between the Seller, as
landlord, and Price Waterhouse LLP, which has subsequently merged with
Coopers & Lybrand to form PricewaterhouseCoopers ("PWC"), as tenant
(such agreement, as assigned, is referred to herein as the "PWC Lease").
The PWC lease currently expires in December 2008, subject to PWC's right
to extend the lease for two additional five-year periods of time.
The annual base rent payable under the PWC Lease is $1,915,741.13 during
the first year of the initial lease term. The base rent escalates at the
rate of 3% per year throughout the ten-year lease term. In addition, PWC
is required to pay a "reserve " of all property taxes, operating
expenses, and other repair and maintenance work relating to the PWC
Building. PWC is also required to reimburse the landlord the cost of
casualty insurance for the property. Wells OP, as landlord, is
responsible for all maintenance, repairs and replacements to the roof
and structural components of the PWC Building, including without
limitation, the roof system, exterior walls, load bearing walls,
foundations, glazing and curtain wall systems.
The average effective annual rental per square foot at the PWC Building
was $16.98 for 2000, 1999 and 1998. The occupancy rate at year-end was
100% for 2000, 1999 and 1998.
AT&T-Harrisburg Building
On February 4, 1999, Wells OP acquired a four-story office building
containing approximately 81,859 rentable square feet (the
"AT&T-Harrisburg Building"), on approximately 10.5 acre tract of real
property located in Harrisburg, Pennsylvania for a purchase price of
$12,291,200 excluding closing costs.
Wells OP expended cash proceeds in the amount of $6,332,100 and obtained
a loan in the amount of $6,450,000 from Bank of America, the net
proceeds of which were used to fund the remainder of the purchase price
of the AT&T-Harrisburg Building. The Bank of America Loan matures on
January 4, 2002. The interest rate on the Bank of America Loan is a
fixed rate equal to the rate appearing on Telerate Page 3750 as the
London InterBank Offered Rate plus 200 basis points over a six-month
period. A principal installment in the amount of $6,150,000 was paid by
Wells OP on July 22, 1999. Thereafter, Wells OP is required to make
quarterly installments of principal in an amount to one-ninth of the
outstanding principal balance which began October 1, 1999. The balance
of this loan is $112,937 at December 31, 2000.
The AT&T Building is leased to Pennsylvania Cellular Telephone Corp., a
North Carolina corporation. At the closing of the AT&T-Harrisburg
Building, the seller assigned all of its right
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to the AT&T Lease to Wells OP. The initial term of the AT&T Lease is ten
years which commenced on November 17, 1998.
Pennsylvania Telephone has the option to extend the initial term of the
AT&T Lease for three additional five-year periods and one additional
four-year and eleven-month period. The first annual base rent payable
under the lease is $880,264. The second year annual base rent payable is
$1,390,833. The base rent escalates at the rate of 2% per year
throughout the remainder of the ten-year lease term.
Under the AT&T Lease, Pennsylvania Telephone is required to pay as
additional rent all real estate taxes, special assessments, water rates
and charges, sewer rates and charges, public utilities, insurance
premiums, street lighting, excise levies, licenses, permits,
governmental inspection fees and other governmental charges and all
other charges incurred in the use, occupancy, operation, leasing, or
possession of the AT&T-Harrisburg Building. In addition, Pennsylvania
Telephone is responsible for all routine maintenance and repairs
relating to the AT&T-Harrisburg Building. Wells OP, as landlord, is
responsible for (i) maintenance, repairs and replacements to the
structural components of the AT&T-Harrisburg Building, including without
limitations, the roof, floor slabs, foundation walls, and footing,
structural steel, exterior walls, driveways, roadways, sidewalks, curbs,
parking areas, and loading areas, and (ii) making necessary capital
replacements of heating, ventilation and air conditioning systems,
electrical, plumbing, fire protection, and other mechanical systems in
the building.
The average effective annual rental per square foot at the
AT&T-Harrisburg Building was $18.21 for 2000 and 1999. The occupancy
rate at year end was 100% for 2000 and 1999, the first year of
ownership.
The Marconi Building
On September 10, 1999, Wells OP acquired an office, assembly, and
manufacturing building containing approximately 250,354 rentable square
feet (the "Marconi Building") on a 15.3-acre tract of land located in
Wood Dale, DuPage County, Illinois. Wells OP acquired the Marconi
Building from Sun-Pla, a California limited partnership. The cash
purchase price for the Marconi Building was $32,630,940. In addition,
Wells OP paid brokerage commissions of $500,000 at closing. Wells OP
incurred acquisition expenses in connection with the purchase of the
Marconi Building, including attorneys' fees, appraisers' fees,
environmental consultants' fees, and other closing costs, of
approximately $27,925.
The Marconi Building is a two-story corporate headquarters facility with
128,247 square feet of office space and 122,107 square feet of assembly
and distribution space. The Marconi Building was completed in 1991 and
is located at 1500 Mittel Boulevard in the Chancellory Business Park in
Wood Dale, Illinois.
The entire Marconi Building is currently under a net lease agreement
with Marconi dated May 31, 1991 (the "Marconi Lease"). The initial term
of the Marconi Lease is 20 years which commenced in November 1991 and
expires November 2011. Marconi has the right to extend the Marconi Lease
for one additional five-year period of time. The extension option must
be exercised by giving notice to the landlord at least 365 days prior to
the expiration date of the current lease term. The annual base rent
payable for the remainder of the Marconi Lease term is $2,838,952
through November 2001, then $3,376,746 thereafter.
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Under its lease, Marconi is responsible for repairs and maintenance of
the roof, walls, structure and foundation landscaping, and the heating,
ventilating, air conditioning, mechanical, electrical, plumbing, and
other systems, and all other operating costs, including, but not limited
to, real estate taxes, special assessments, utilities, and insurance.
The average effective annual rental per square foot at the Marconi
Building was $13.18 for 2000 and 1999. The occupancy rate at year end
was 100% for 2000 and 1999, the first year of ownership.
The Cinemark Building
On December 21, 1999, Wells OP purchased a five-story office building
with approximately 118,108 rentable square feet (the "Cinemark
Building") located on a 3.52 acre tract of land in Plano, Collin County,
Texas from CNMRK HQ Investors, L.P., a Texas limited partnership.
The purchase price paid for the Cinemark Building was $21,800,000. Wells
OP also incurred additional acquisition expenses in connection with the
purchase of the Cinemark Building, including attorneys' fees, appraisal
fees, and other closing costs, of approximately $26,900.
The entire 118,108 rentable square feet of the Cinemark Building is
currently leased to two tenants. Cinemark USA, Inc. ("Cinemark")
occupies 66,024 rentable square feet of the Cinemark Building, and The
Coca-Cola Company ("Coca-Cola") occupies the remaining 52,084 rentable
square feet of the Cinemark Building.
The initial term of the Cinemark lease is ten years which commenced on
December 21, 1999 and expires on December 20, 2009. Cinemark has the
right to renew the lease for two additional periods of time upon 180
days notice. The first renewal term shall be for five years and the
second renewal term shall be for ten years. The annual base rent payable
for the Cinemark lease is $1,366,491 for the first seven years and
$1,481,738 thereafter.
Under the Cinemark lease, Cinemark is required to pay as additional
monthly rent its pro rata share of all electricity costs and all
operating costs, including, but not limited to, garbage and waste
disposal, janitorial service, security, insurance premiums, real estate
taxes, assessments and other governmental levies, and such other
operating costs with respect to the Cinemark Building as are consistent
with other owners of first-class office buildings in Plano, Texas. In
addition, Cinemark is responsible for all routine maintenance and
repairs to its portion of the Cinemark Building.
The initial term of the Coca-Cola lease is seven years which commenced
on December 1, 1999 and expires on November 30, 2006. Coca-Cola has the
right to renew the lease for one additional five-year period of time.
Coca-Cola must give written notice of its intention to exercise the
renewal option at least 240 days before the expiration of the lease
term.
The base rent payable for the Coca-Cola lease term is $1,250,016 for the
first year with an increase of $52,084 each year thereafter.
Under the Coca-Cola lease, Coca-Cola is required to pay as additional
monthly rent its pro rata share of all electricity costs and all
operating costs, including, but not limited to, garbage and waste
disposal, janitorial service, security, insurance premiums, real estate
taxes, assessments and other governmental levies, and such other
operating costs with respect to the Cinemark Building as are consistent
with other owners of first-class office buildings in Plano, Texas. In
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addition, Coca-Cola is responsible for all routine maintenance and
repairs to its portion of the Cinemark Building.
Fund XI-XII-REIT Joint Venture
On June 21, 1999, Fund XI-REIT Joint Venture, a joint venture between
Wells OP and Wells Real Estate Fund XI, L.P. ("Wells Fund XI") a
Delaware limited partnership, was amended and restated to admit the
Wells Real Estate Fund XII, L.P. ("Wells Fund XII"), a Georgia public
limited partnership. Wells Fund XI and Wells Fund XII are all affiliates
of the Company and its advisors. The Joint Venture which changed its
name to Wells Fund XI-XII-REIT Joint Venture had previously acquired and
owned the EYBL CarTex Building located in Greenville, South Carolina. As
of December 31, 2000, the Company had contributed $17,585,310 for an
approximate 56.8% equity interest in the Fund XI-XII-REIT Joint Venture,
Wells Fund XII has made capital contributions of $5,300,000 for an
approximate 17.1% equity interest, and Wells Fund XI contributed
$8,131,351 for an approximate 26.1% interest in the Fund XI-XII-REIT
Joint Venture.
EYBL CarTex Building
On May 18, 1999, Wells Real Estate, LLC-SC I ("Wells LLC"), a Georgia
limited liability company wholly owned by the Wells Fund XI-XII-REIT
Joint Venture, acquired a manufacturing and office building located in
Fountain Inn, unincorporated Greenville County, South Carolina (the
"EYBL CarTex Building"). Wells LLC purchased the EYBL CarTex Building
from Liberty Property Limited Partnership, a Pennsylvania limited
partnership.
The rights under the Contract were assigned by the Advisor, the original
purchaser under the Contract, to Wells LLC at closing. The purchase
price for the EYBL CarTex Building was $5,085,000. Wells LLC also
incurred additional acquisitions expenses in connection with the
purchase of the EYBL CarTex Building, including attorney's fees,
recording fees and other closing costs, of approximately $37,000.
The EYBL CarTex Building is a manufacturing and office building
consisting of a total of 169,510 square feet comprised of approximately
140,580 square feet of manufacturing space, 25,300 square feet of
two-story office space, and 3,360 square feet of cafeteria/training
space. An addition was constructed to the EYBL CarTex Building in 1989,
which consisted of an additional 64,000 square feet of warehouse space.
The entire 169,510 rentable square feet of the EYBL CarTex Building is
currently under an Agreement of Lease (the "Lease") with EYBL CarTex,
Inc., a South Carolina corporation ("EYBL CarTex"). The Lease was
assigned to Wells LLC at the closing. The initial term of the Lease is
ten years which commenced on March 1, 1998 and expires in February 2008.
EYBL CarTex has the right to extend the Lease for two additional
five-year periods of time. Each extension option must be excercised by
giving notice to the landlord at least 12 months prior to the expiration
date of the then current lease term.
The annual lease rent payable during the first four years of the lease
is $508,530 in equal monthly installments of $42,377.50. The annual
lease rent for years five and six is $550,907.50, year seven and eight
is $593,285, and years nine and ten is $610,236.
Under the lease, EYBL CarTex is required to pay as additional rent all
real estate taxes, special assessments, utilities, taxes, insurance, and
other operating costs with respect to the EYBL
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CarTex Building during the term of the Lease. In addition, EYBL CarTex
is responsible for all routine maintenance and repairs to the EYBL
CarTex Building. Wells LLC, as landlord, is responsible for maintenance
of the footings and foundations and the structural steel columns and
girders associated with the building.
Pursuant to a lease commission agreement dated February 12, 1998 between
the seller and the McNamara Company, Inc., Wells LLC is required to pay
on or before March 1 of each year an amount equal to $13,787 as a
brokerage fee to the McNamara Company, Inc. through March 1, 2007.
The average effective annual rental per square foot at the EYBL CarTex
Building was $3.31 for 2000 and 1999, the first year of occupancy. The
occupancy rate at year end was 100% for 2000 and 1999.
The Sprint Building
On July 2, 1999, the Fund XI-XII-REIT Joint Venture acquired a
three-story office building with approximately 68,900 rentable square
feet (the "Sprint Building") on a 7.12-acre tract of land located in
Leawood, Johnson County, Kansas, from Bridge Information Systems
America, Inc.
The purchase price for the Sprint Building was $9,500,000. The Fund
XI-XII-REIT Joint Venture also incurred additional acquisition expenses
in connection with the purchase of the Sprint Building, including
attorney's fees, recording fees, and other closing costs, of
approximately $46,210.
The entire 68,900 rentable square feet of the Sprint Building is
currently under a net lease agreement with Sprint Communications, Inc.
("Sprint") dated February 14, 1997. The landlord's interest in the lease
was assigned to the Fund XI-XII-REIT Joint Venture at the closing. The
initial term of the lease is ten years which commenced on May 19, 1997
and expires on May 18, 2007. Sprint has the right to extend the lease
for two additional five-year periods of times. The monthly base rent
payable under the lease is $83,254.17 through May 18, 2002 and
$91,866.67 for the remainder of the lease term. The monthly base rent
payable for each extended term of the lease will be equal to 95% of the
then "current market rate" which is calculated as a full-service rental
rate less anticipated annual operating expenses on a rentable square
foot basis charged for space of comparable location, size, and
conditions in comparable office buildings in the suburban south Kansas
City, Missouri, and south Johnson County, Kansas, areas.
Under the lease, Sprint is required to pay as additional rent all real
estate taxes, special assessments, utilities, taxes, insurance, and
other operating costs with respect to the Sprint Building during the
term of the lease. In addition, Sprint is responsible for all routine
maintenance and repairs including the interior mechanical and electrical
systems, the HVAC system, the parking lot, and the landscaping to the
Sprint Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
responsible for repair and replacement of the exterior, roof,
foundation, and structure.
The lease contains a termination option which may be exercised by Sprint
effective as of May 18, 2004 provided that Sprint has not exercised
either expansion option, as described below. Sprint must provide notice
to the Fund XI-XII-REIT Joint Venture of its intent to exercise its
termination option on or before August 21, 2003. If Sprint exercises its
termination option, it will be required to pay the Fund XI-XII-REIT
Joint Venture a termination payment equal to $6.53 per square foot, or
$450,199.
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Sprint also has an expansion option for an additional 20,000 square feet
of office space which may be exercised in two expansion phases. Sprint's
expansion rights involve building on unfinished ground-level space that
is currently used as covered parking within the existing building
footprint and shell. At each exercise of an expansion option, the
remaining lease term will be extended to be a minimum of an additional
five years from the date of the completion of such expansion space.
The average effective annual rental per square foot at the Sprint
Building was $15.44 for 2000 and 1999, the first year of occupancy. The
occupancy rate at year end was 100% for 2000 and 1999.
Johnson Matthey Building
On August 17, 1999, the Fund XI-XII-REIT Joint Venture acquired a
research and development office and warehouse building (the "Johnson
Matthey Building") located in Chester County, Pennsylvania, from
Alliance Commercial Properties Ltd.
The purchase price paid for the Johnson Matthey Building was $8,000,000.
The Fund XI-XII-REIT Joint Venture also incurred additional acquisition
expenses in connection with the purchase of the Johnson Matthey
Building, including attorneys' fees, recording fees, and other closing
costs, of approximately $50,000.
The Johnson Matthey Building is a 130,000 square foot research and
development office and warehouse building that was first constructed in
1973 as a multitenant facility. It was subsequently converted into a
single-tenant facility in 1998. The site consists of a ten-acre tract of
land located at 434-436 Devon Park Drive in the Tredyffrin Township,
Chester County, Pennsylvania.
The entire 130,000 rentable square feet of the Johnson Matthey Building
is currently leased to Johnson Matthey. The Johnson Matthey lease was
assigned to the Fund XI-XII-REIT Joint Venture at the closing with the
result that the joint venture is now the landlord under the lease. The
annual base rent payable under the Johnson Matthey lease for the
remainder of the lease term is as follows: year three--$789,750, year
four--$809,250, year five--$828,750, year six--$854,750, year
seven--$874,250, year eight--$897,000, year nine--$916,500, and year
ten--$939,250.
The current lease term expires in June 2007. Johnson Matthey has the
right to extend the lease for two additional three-year periods of time.
Under the lease, Johnson Matthey is required to pay as additional rent
all real estate taxes, special assessments, utilities, taxes, insurance,
and other operating costs with respect to the Johnson Matthey Building
during the term of the lease. In addition, Johnson Matthey is
responsible for all routine maintenance and repairs to the Johnson
Matthey Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
responsible for maintenance of the footings and foundations and the
structural steel columns and girders associated with the building.
Johnson Matthey has a right of first refusal to purchase the Johnson
Matthey Building in the event that the Fund XI-XII-REIT Joint Venture
desires to sell the building to an unrelated third party. The joint
venture must give Johnson Matthey written notice of its intent to sell
the Johnson Matthey Building, and Johnson Matthey will have ten days
from the date of such notice to provide written notice of its intent to
purchase the building. If Johnson Matthey exercises its
-15-
right of first refusal, it must purchase the Johnson Matthey Building on
the same terms contained in the offer.
The average effective annual rental per square foot at the Johnson
Matthey Building was $6.67 for 2000 and 1999, the first year of
occupancy. The occupancy rate at year end was 100% for 2000 and 1999.
The Gartner Building
On September 20, 1999, the Fund XI-XII-REIT Joint Venture acquired a
two-story office building with approximately 62,400 rentable square feet
(the "Gartner Building") on a 4.9-acre tract of land located at 12600
Gateway Boulevard in Fort Myers, Lee County, Florida, from Hogan Triad
Ft. Myers I, Ltd., a Florida limited partnership.
The rights under the contract were assigned by Wells Capital, Inc., the
original purchaser under the contract, to the Fund XI-XII-REIT Joint
Venture at closing. The purchase price for the Gartner Building was
$8,320,000. The Fund XI-XII-REIT Joint Venture also incurred additional
acquisition expenses in connection with the purchase of the Gartner
Building, including attorneys' fees, recording fees, and other closing
costs, of approximately $27,600.
The entire 62,400 rentable square feet of the Gartner Building is
currently under a net lease agreement with Gartner dated July 30, 1997
(the "Gartner Lease"). The landlord's interest in the Gartner Lease was
assigned to the Fund XI-XII-REIT Joint Venture at the closing.
The initial term of the Gartner Lease is ten years which commenced on
February 1, 1998 and expires on January 31, 2008. Gartner has the right
to extend the Gartner Lease for two additional five-year periods of
time. The yearly base rent payable for the remainder of the Gartner
Lease term is $642,798 through January 2000, $790,642 through January
2001, and thereafter will increase by 2.5% through the remainder of the
Gartner Lease.
Under the Gartner Lease, Gartner is required to pay as additional rent
all real estate taxes, special assessments, utilities, taxes, insurance,
and other operating costs with respect to the Gartner Building during
the term of the Gartner Lease. In addition, Gartner is responsible for
all routine maintenance and repairs to the Gartner Building. The Fund
XI-XII-REIT Joint Venture, as landlord, is responsible for repair and
replacement of the roof, structure, and paved parking areas.
Gartner also has two expansion options for additional buildings under
the Gartner Lease. The two option plans are described in the Gartner
Lease as the "Small Option Building" and the "Large Option Building."
The "Small Option Building" expansion option allows Gartner the ability
to expand into a separate, free-standing facility on the property
containing between 30,000 and 32,000 rentable square feet to be
constructed by the Fund XI-XII-REIT Joint Venture. Gartner may exercise
its expansion right for the "Small Option Building" by providing notice
in writing to the Fund XI-XII-REIT Joint Venture on or before February
15, 2002.
The "Large Option Building" expansion option allows Gartner the ability
to expand into a separate, free-standing facility on the property
containing between 60,000 and 75,000 rentable square feet to be
constructed by the Fund XI-XII-REIT Joint Venture. Gartner may exercise
its
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expansion right for the "Small Option Building" by providing notice in
writing to the Fund XI-XII-REIT Joint Venture on or before February 15,
2002.
The average effective annual rental per square foot at the Gartner
Building was $13.68 for 2000 and 1999, the first year of occupancy. The
occupancy rate at year end was 100% for 2000 and 1999.
The Matsushita Building
The Matsushita Building is a two-story office building containing
144,906 rentable square feet. Wells OP purchased an 8.8-acre tract of
land on March 15, 1999, for a purchase price of $4,450,230. Wells OP
completed construction of the Matsushita Building on January 4, 2000 at
an aggregate cost of approximately $18,400,000, including the cost of
the land.
The site is located in the Pacific Commercentre, which is a 33-acre
master-planned business park positioned near the Irvine Spectrum in the
heart of Southern California's Technology Coast. Pacific Commercentre is
a nine building complex featuring office, technology, and light
manufacturing uses, and is located in the city of Lake Forest in
southern Orange County.
The Matsushita Building is leased to Matsushita Avionics Systems
Corporation ("Matsushita Avionics"). Matsushita Avionics is a wholly
owned subsidiary of Matsushita Electric Corporation of America
("Matsushita Electric"). Matsushita Avionics manufactures and sells
audio-visual products to the airline industry for passenger use in
airplanes. Matsushita Electric is a wholly owned subsidiary of
Matsushita Electric Industrial Co., Ltd. ("Matsushita Industrial"), a
Japanese company which is the world's largest consumer electronics
manufacturer. Matsushita electric has guaranteed the obligations of
Matsushita Avionics under the Matsushita lease.
The initial term of the Matsushita lease is seven years which commenced
on January 4, 2000 and expires in January 2007. Matsushita Avionics has
the option to extend the initial term of the Matsushita lease for two
successive five-year periods. Each extension option must be exercised
not more than 19 months and not less than 15 months prior to the
expiration of the then-current lease term. The base rent payable under
the Matsushita lease is as follows:
Monthly
------------------------ ------------ ----------
Lease Years Annual Rent Rent
------------------------ ------------ ----------
Years 1-2 $1,830,000 $152,500
Years 3-4 1,947,120 162,260
Years 5-6 2,064,240 172,020
Year 7 2,181,360 181,780
The monthly base rent payable during the option term shall be 95% of the
stated rental rate at which, as of the commencement of the option term,
tenants are leasing non-expansion, non-affiliated, non-sublease,
non-encumbered, non-equity space comparable in size, location, and
quality to the Matsushita project for a term of five years in the Lake
Forest and Irvine area of Southern California. The monthly base rent
during the option term shall be adjusted upward during the option term
at the beginning of the 24th and 48th month of each option term by an
amount equal to 6% of the monthly base rent payable immediately
preceding such period. Within 30 days of tenant providing written notice
of its intent to exercise a renewal option, Wells OP shall deliver to
Matsushita Avionics notice containing the proposed rent for the option
term. If, after reasonable good faith efforts, landlord and tenant are
unable to agree upon the
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option rent before the 13th month prior to the expiration of the
appropriate lease term, option rent shall be determined by arbitration.
The Metris Building
On February 11, 2000, Wells OP purchased a three-story office building
with approximately 101,100 rentable square feel (the "Metris Building")
on a 14.6-acre tract of land located in Tulsa, Tulsa County, Oklahoma
from Meridian Tulsa, L.L.C., an Oklahoma limited company ("Meridian").
The purchase price paid for the Metris Building was $12,700,000
excluding closing costs. The $12,740,000 required to close the Metris
Building consisted of $4,740,000 in cash funded from a capital
contribution by the Company and $8,000,000 in loan proceeds from an
existing revolving credit facility ("Metris Loan"). The Metris Loan was
originally established by Meridian with Richter-Schroeder Company, Inc.
on April 8, 1999. Wells OP assumed and extended the original three-year
term loan entered into by Meridian. The Metris Loan requires monthly
payments of interest only and matures on February 3, 2003. The interest
rate on the Metris Loan is an annual variable rate equal to the London
InterBank offered rate for a 30-day period plus 175 basis points. The
current interest rate under the Metris Loan is 8.53% per annum. The
Metris Loan is secured by a first mortgage against the Metris Building,
which was granted in connection with Meridian's original purchase of the
Metris Building, and assumed by Wells OP on the date of closing.
Metris occupies all 101,100 square feet of the Metris Building pursuant
to a lease agreement dated March 3, 1999, as amended on January 21,
2000. The initial term of the Metris lease is ten years, which commenced
on February 1, 2000 and expires on January 31, 2010. Metris has the
right to renew the lease for two additional five-year periods upon one
year's advance notice.
Metris is a principal subsidiary of Metris Companies, Inc. a publicly
traded company on the New York Stock Exchange and guarantor of the
Metris lease. Metris Companies is an information-based direct marketer
of consumer credit products and fee-based services primarily to moderate
income consumers. Metris Companies consumer credit products are
primarily unsecured credit cards issued by its subsidiary, Direct
Merchants Credit Card Bank.
The annual base rent payable for the Metris lease is $1,187,925 for the
first five years and $1,306,718 thereafter. The monthly base rent
payable for the renewal terms of the Metris lease shall be equal to the
current market rate based on the then existing rates for comparable
space of equivalent quality in suburban Tulsa, Oklahoma taking into
account location, quality, age of the office value rental rate
determination as of twelve months prior to commencement of the renewal
term. If the parties are unable to agree upon the market rate within
eleven months prior to commencement of the renewal term, the market rate
shall then be determined by arbitration.
Under the Metris lease, Metris is required to pay as additional monthly
rent all electricity costs and all operating costs and the repair and
replacement of the roof, foundation, exterior windows, load bearing
items, exterior surface walls, plumbing, pipes and conduits located in
the common and service areas, central heating ventilation and air
conditioning systems, and electrical, mechanical and plumbing systems of
the Metris Building.
For further information regarding the acquisition of the Metris
Building, refer to Supplement No. 2 dated March 15, 2000 to the
Prospectus of Wells Real Estate Investment Trust, Inc. dated December
20, 1999, which was filed with the Commission in Post-Effective
Amendment No. 1
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to the Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc. on March 15, 2000 (Commission File No. 333-83933).
The Dial Building
On March 29, 2000, Wells OP purchased a two-story office building with
approximately 129,689 rentable square feet on an 8.8-acre tract of land
located at 15501 N. Dial Boulevard, Scottsdale, Maricopa County, Arizona
(the "Dial Building") from Ryan Companies US, Inc. The purchase price
for the Dial Building was $14,250,000, excluding closing costs.
The entire 129,689 rentable square feet of the Dial Building is
currently under a net lease agreement with Dial Corporation ("Dial").
The landlord's interest in the lease was assigned to Wells OP at the
closing. The lease commenced on August 14, 1997, and the initial term
expires on August 31, 2008. Dial has the right to extend the lease for
two additional five-year periods of time at 95% of the then-current
"fair market rental rate." The annual rent payable for the initial term
of the lease is $1,387,672.
Dial, a publicly traded company which is currently headquartered in the
Dial Building, is one of the leading consumer product manufacturers in
the United States.
For further information regarding the acquisition of the Dial Building,
refer to the Form 8-K of Wells Real Estate Investment Trust, Inc. dated
March 29, 2000, which was filed with the Commission on April 12, 2000
(Commission File No. 0-25739).
The ASML Building
On March 29, 2000, Wells OP purchased a two-story office building with
approximately 95,133 rentable square on a 9.51-acre tract of land
located at 8555 South River Parkway, Tempe, Maricopa County, Arizona
(the "ASML Building") from Ryan Companies US, Inc. The purchase price of
the ASML Building was $17,355,000, excluding closing costs.
The land upon which the ASML building is situated is subject to a
long-term ground lease (the "ASML Ground Lease") with Price-Elliott
Research Park, Inc. and, at closing, Wells OP was assigned and assumed
all the tenant's rights, duties, and obligations under the ASML Ground
Lease. The ASML Ground Lease commenced August 22, 1997 and expires on
December 31, 2082. The annual ground lease payment for the first 15
years of the ASML Ground Lease term is $186,368.
The entire 95,133 rentable square feet of the ASML Building is currently
under a net lease agreement (the "ASML Lease") with ASM Lithography,
Inc. ("ASML"). The landlord's interest in the ASML Lease was assigned to
Wells OP at the closing. The ASML Lease commenced on June 4, 1998, and
expires on June 30, 2013. ASML has the right to extend the ASML Lease
for two additional five year periods of time at the prevailing "market
rental rate," but in no event less than the rate in force at the end of
the preceding lease term. The current annual rent payable under the ASML
Lease is $1,927,788, out of which Wells OP will be required to make the
annual ground lease payment described above.
ASML is a wholly owned subsidiary of ASM Lithography Holdings NV ("ASML
Holdings"), a Dutch multi-national corporation that supplies lithography
systems used for printing integrated circuit designs onto very thin
disks of silicon, commonly referred to as wafers.
-19-
For further information regarding the acquisition of the ASML Building,
refer to the Form 8-K of Wells Real Estate Investment Trust, Inc. dated
March 29, 2000, which was filed with the Commission on April 12, 2000
(Commission File No. 0-25739).
The Motorola-Arizona Building
On March 29, 2000, Wells OP purchased a two-story office building with
approximately 133,225 rentable square feet on a 12.44-acre tract of land
located at 8075 South River Parkway, Tempe, Maricopa County, Arizona
(the "Motorola-Arizona Building") from Ryan Companies US, Inc. The
purchase price for the Motorola-Arizona Building was $16,000,000,
excluding closing costs.
The land upon which the Motorola-Arizona Building is situated is subject
to a long-term ground lease (the "Motorola Ground Lease") with the
Research Park and, at closing, Wells OP was assigned and assumed all the
tenant's rights, duties and obligations under the Motorola Ground Lease.
The Motorola Ground Lease commenced November 19, 1997 and expires on
December 31, 2082. The annual ground lease payment for the first 15
years of the Motorola Ground Lease term is $243,825.
The entire 133,225 rentable square feet of the Motorola-Arizona Building
is currently under a net lease agreement (the "Motorola Lease") with
Motorola, Inc. ("Motorola"). The landlord's interest in the Motorola
Lease was assigned to Wells OP at the closing. The initial term of the
Motorola Lease is seven years, which commenced on August 17, 1998, and
expires on August 31, 2005. Motorola has the right to extend the
Motorola Lease for four additional five-year periods of time at the
prevailing "market rental rate." The current annual rent payable under
the Motorola Lease is $1,843,834, out of which Wells OP will be required
to make the annual ground lease payment described above.
The building is occupied by Motorola's Satellite Communications Division
("SATCOM"). SATCOM is a worldwide developer and manufacturer of space
and ground communications equipment and systems.
For further information regarding the acquisition of the Motorola
Building, refer to the Form 8-K of Wells Real Estate Investment Trust,
Inc. dated March 29, 2000, which was filed with the Commission on April
12, 2000 (Commission File No. 0-25739).
Fund XII-REIT Joint Venture
On April 10, 2000, Wells OP and Wells Fund XII entered into a Joint
Venture Partnership Agreement for the purpose of acquiring, owning,
leasing, operating, and managing real properties. The Joint Venture is
known as the Fund XII-REIT Joint Venture Partnership ("Fund XII-REIT
Joint Venture").
As of December 31, 2000, Wells Fund XII had contributed approximately
$15,687,245 for an approximate 53.2% equity interest in the Fund
XII-REIT Joint Venture. Wells OP had made capital contributions of
$13,832,779 for an approximate 46.8% equity interest in the Fund
XII-REIT Joint Venture.
Siemens
On May 20, 2000, the Fund XII-REIT Joint Venture acquired a three-story
office building containing approximately 77,054 rentable square feet
(the "Siemens Building") on a 5.3-acre
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tract of land located in Troy, Oakland County, Michigan. The purchase
price for the Siemens Building was $14,265,000 excluding acquisition
costs. The purchase price was funded by capital contributions of
$7,096,245 by Wells Fund XII and $7,096,245 by Wells OP.
The entire Siemens Building is currently under a net lease agreement
with Siemens and expires on August 31, 2010. Siemens has the right to
extend the lease for two additional five-year periods of time at 95% of
the then current fair market rental rates.
The monthly lease rent payable under the Siemens lease for the remainder
of the lease term is $109,160 for year 1; $111,857 for year 2; $114,554
for year 3; $117,251 for year 4; $119,947 for year 5; $122,644 for year
6; $125,341 for year 7; $128,038 for year 8; $130,735 for year 9; and
$133,432 for year 10 and the first six months of year 11.
Under the lease, Siemens is required to pay as additional monthly rent
its gas, water, and electricity costs and all operating expenses
including, but not limited to, garbage and waste disposal, telephone,
sprinkler service, janitorial service, security, insurance premiums, all
taxes, assessments and other governmental levies and such other
operating expenses with respect to the Siemens Building. In addition,
Siemens is responsible for all routine maintenance and repairs to its
portion of the Siemens Building. Siemens is responsible for maintaining
the common and service areas and the central heating, ventilation and
air conditioning systems of the building.
The Fund XII-REIT Joint Venture, as landlord, is responsible for the
repair and replacement of the roof, foundation, load bearing items,
exterior surface walls, plumbing, pipes, conduits and electrical
mechanical and plumbing systems of the Siemens Building. Siemens must
obtain written consent from the Fund XII-REIT Joint Venture before
making alterations to the premises in excess of $100,000 in the
aggregate within any 12 month period.
Under the terms of the Siemens lease, the Fund XII-REIT Joint Venture is
required to reimburse Siemens for tenant improvement costs in the amount
of $1,954,516. The Fund XII-REIT Joint Venture received a credit at
closing in an amount equal to this tenant improvement allowance.
Siemens has a one-time right to cancel the Siemens lease effective after
the 90th month of the term if Siemens (a) provides written notice of
such cancellation on or before the last day of the 78th month, and (b)
pays a cancellation fee to the Fund XII-REIT Joint Venture currently
calculated to be approximately $1,234,160.
The average effective annual rental per square foot at the Siemens
Building was $12.65 for 2000, the first year of occupancy. The occupancy
rate at year end was 100% for 2000.
For further information regarding the acquisition of the Siemens
Building, refer to Supplement No. 4 dated July 21, 2000 to the
Prospectus of Wells Real Estate Investment Trust, Inc. dated December
20, 1999, which was filed with the Commission in Post-Effective
Amendment No. 3 to the Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc. on September 8, 2000 (Commission File No.
333-83933).
The Avnet Building
On June 12, 2000, Wells OP purchased a two-story office building with
approximately 130,070 rentable square feet on a 9.63-acre tract of land
located at 8700 Price Road, Tempe, Maricopa County, Arizona (the "Avnet
Building") from Ryan Companies US, Inc. The purchase price for the Avnet
Building was $13,250,000, excluding closing costs
-21-
The land upon which the Avnet Building is situated is subject to a
long-term ground lease (the "Avnet Ground Lease") with the Research Park
and, at closing, Wells OP was assigned and assumed all the tenant's
rights, duties and obligations under the Avnet Ground Lease which
commenced November 19, 1997 and expires on December 31, 2082. The annual
ground lease payment for the first 15 years of the Avnet Ground Lease
term is $230,777.
The entire Avnet Building is currently under a net lease agreement (the
"Avnet Lease") with Avnet, Inc. ("Avnet"). The landlord's interest in
the Avnet Lease was assigned to Wells OP at the closing. The initial
term of the Avnet Lease is ten years, which expires on May 31, 2010.
Avnet has the right to extend the Avnet Lease for two additional
five-year periods of time. The current annual rent payable under the
Avnet Lease is $1,516,164, out of which Wells OP will be required to
make the annual ground lease payment described above.
The Avnet Building is occupied by Avnet Inc., a worldwide industrial
distributor of electronic components and computer products.
For additional information regarding the Avnet Building, refer to
Supplement No. 4 dated July 21, 2000 to the Prospectus of Wells Real
Estate Investment Trust, Inc. dated December 20, 1999, which was filed
with the Commission in Post-Effective Amendment No. 3 to the Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc. on
September 8, 2000 (Commission File No. 333-83933).
The Delphi Building
On June 29, 2000, Wells OP acquired a 107,193 square-foot, three-story,
single-tenant office property (the "Delphi Building") fully leased
long-term to a subsidiary of Delphi Automotive Systems Corporation (the
"Delphi Lease). The Delphi Building is located on a 5.52-acre tract of
land in Troy, Michigan.
The $19,800,000 acquisition is 100% owned by the Wells OP and is 100%
occupied. The tenant has signed a ten-year lease. The tenant is a
subsidiary of Delphi Automotive Systems Corporation, a diversified
supplier of automotive parts and components. Delphi employs over 216,000
people in more than 36 countries and sells its products to every major
manufacturer of light automotive vehicles in the world.
The landlord's interest in the Delphi Lease was assigned to Wells OP at
the closing. The initial term of the Delphi Lease is ten years, which
expires on December 31, 2010. The current annual rent payment under the
Delphi Lease is $1,715,088.
For additional information regarding the Delphi Building, refer to
Supplement No. 4, dated July 21, 2000 to the Prospectus of Wells Real
Estate Investment Trust, Inc. dated December 20, 1999, which was filed
with the Commission in Post-Effective Amendment No. 3 to the Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc. on
September 8, 2000 (Commission File No. 333-83933).
Fund VIII-IX-REIT Joint Venture
On January 10, 1997, the Fund VIII-Fund IX Joint Venture acquired a
two-story office building containing approximately 65,006 rentable
square feet on a 4.4-acre tract of land located at 15253 Bake Parkway,
in the Irvine Spectrum planned business community in metropolitan Orange
-22-
County, California (the "Quest Building"), formerly the Bake Parkway
Building. The total consideration paid for the building was $7,193,000
excluding acquisition expenses.
The funds used by the Fund VIII-Fund IX Joint Venture to acquire the
Quest Building were derived entirely from capital contributions made to
the Fund VIII-Fund IX Joint Venture by Wells Fund IX and Wells Fund
VIII. Wells Fund IX and Wells Fund VIII made capital contributions of
approximately $3,608,109 and $3,620,316, respectively, to fund the
purchase of the building, for total capital contributions to the Fund
VIII-Fund IX Joint Venture with respect to the Quest Building of
approximately $7,228,425.
On June 15, 2000, the Fund VIII-IX-REIT Joint Venture was formed between
Wells OP and Fund VIII and Fund IX Associates, a Georgia joint venture
partnership between Wells Real Estate Fund VIII, L.P. and Wells Real
Estate Fund IX, L.P. (the "Fund VIII-IX Joint Venture"). On July 1,
2000, the Fund VIII-IX Joint Venture contributed its interest in the
Bake Parkway Property to the Fund VIII-IX-REIT Joint Venture.
A 42-month lease for the entire Bake Parkway Building has been signed by
Quest Software, Inc. Occupancy occurred on August 1, 2000. Quest is a
publicly traded corporation that provides software database management
and disaster recovery services for its clients.
Construction of tenant improvements required under the Quest lease cost
approximately $1,231,000 and was funded by Wells OP. As of December 31,
2000, Wells OP held a 15.7% equity interest in the Fund VIII-IX-REIT
Joint Venture.
On February 18, 1999, Wells Op entered into a Rental Income Guaranty
Agreement with Fund VIII and Fund IX Associates, whereby Wells OP
guaranteed the VIII-IX Joint Venture that it would receive rental income
on the Bake Parkway Building previously leased to Matsushita Avionics at
least equal to the rental and building expenses that the VIII-IX Joint
Venture would have received over the remaining term of its original
lease with Matsushita Avionics. Under the Rental Income Guaranty
Agreement, Wells OP also guaranteed that, if a joint venture such as the
VIII-IX-REIT Joint Venture was ever formed by the parties for the
ownership and operation of the Bake Parkway Building, Wells OP would
guarantee to the VIII-IX Joint Venture that it would receive monthly
cash flow distributions from such joint venture at least equal to the
rent and building expenses guaranteed under the Rental Income Guaranty
Agreement. Wells OP had paid approximately $595,000 in rental income
guaranty payments to the VIII-IX Joint Venture through December 31,
2000, but has since ceased making such payments since the Bake Parkway
Building is now fully leased to Quest. Our maximum liability exposure to
the VIII-IX Joint Venture for rental income and building expenses
potentially payable under this Rental Income Guaranty Agreement of
approximately $3,000,000 was taken into account in the economic analysis
performed in making the determination to go forward with the development
of the Matsushita Building. Although the lease of the Bake Parkway
Building by Quest has, at least temporarily, relieved Wells OP of its
obligations under the Rental Income Guaranty Agreement, we cannot, at
this time, determine the amount Wells OP continues to guaranty payment
under the Rental Income Guaranty Agreement and, consequently, continues
to bear some risk, even though their risk has been substantially
minimized by the lease with Quest. Any payment made to the VIII-IX Joint
Venture under the Rental Income Guaranty Agreement will be made from
investor proceeds of the Company.
The average effective rental per square foot at the Quest Building is
$13.72 for 2000, $10.11 for 1999, and $10.32 for 1998. The occupancy
rate at year end was 100% in 2000, 1999, 1998 and 1997.
-23-
The Alstom Power-Richmond Building
The Alstom Power-Richmond Building (formerly known as the ABB-Richmond
Building) is a four-story brick office building containing 99,057 gross
square feet located in Midlothian, Virginia. Wells REIT, LLC-VA I
("Wells LLC-VA"), a limited liability company wholly owned by Wells OP,
purchased a 7.49-acre tract of land on July 22, 1999 for a purchase
price of $936,250. Wells LLC-VA completed construction of the Alstom
Power-Richmond Building in July 2000 at an aggregate cost of
approximately $11,300,000, including the cost of the land.
The Alstom Power-Richmond Building is leased to Alstom Power, Inc.
("Alstom Power"). Alstom Power is the result of the December 30, 1999
merger between ABB Power Generation, Inc. ("ABB Power") and ABB Alstom
Power, Inc. As of June 22, 2000, ABB Alstom Power, Inc. changed its name
to Alstom Power, Inc. ABB Power was a subsidiary of Asea Brown Boveri,
Inc. a large multi-national engineering and construction company
headquartered in Switzerland.
The initial term of the Alstom Power-Richmond lease is seven years which
commenced on July 24, 2000 and expires on July 23, 2007. Alstom Power
has the right to extend the lease for two additional five-year periods
of time. Each extension option must be exercised by giving notice to the
landlord at least 12 months prior to the expiration of the then-current
lease term. The annual base rent payable under the Alstom Power lease is
$1,183,731 for the first year with an escalation of 2.5% each year
thereafter.
The monthly base rent payable for each extended term of the Alstom Power
lease will be equal to the "Market Rate" for new leases of office space
in that portion of the Richmond, Virginia market that is located south
of the James River and west of I-95 for space similar to the premises.
In the event the parties are unable to agree upon the Market Rate, then
each party shall appoint a real estate appraiser. If the appraisers are
unable to agree upon the Market Rate, they shall appoint a third
appraiser and each shall make a determination of the Market Rate. The
appraisal that is farthest from the middle appraisal shall be
disregarded and the remaining two appraisals shall be averaged to
establish the Market Rate.
Alstom Power has a one-time option to terminate the Alstom
Power-Richmond lease as to a portion of the premises containing between
12,500 and 13,000 rentable square feet as of the third anniversary of
the rental commencement date. If Alstom Power elects to exercise this
termination option, Alstom Power is required to pay a termination fee
equal to eight times the sum of the next due installments of rent plus
the unamortized portions of the base improvement allowance, additional
allowance and broker commission, each being amortized in equal monthly
installments of principal and interest over the initial term of the
lease at a rate of ten percent (10%) per annum. Alstom Power must give
notice of its intent to exercise such option to terminate at least seven
months in advance of the third anniversary; provided, however, that
Alstom Power may pay a penalty, as stipulated in the lease, to provide
less than seven months notice.
In the event that Alstom Power exercises its termination option as of
the third anniversary of the rental commencement date, Alstom Power has
a one-time option to terminate the Alstom Power Richmond lease as to a
portion of the premises containing between 12,500 and 13,000 rentable
square feet as of the fifth anniversary of the rental commencement date.
If Alstom Power elects to exercise this termination option, Alstom Power
is required to pay a termination fee equal to six times the sum of the
next due installments of rent plus the unamortized portions of the base
improvement allowance, additional allowance and broker commission, each
being amortized in
-24-
equal monthly installments of principal and interest over the initial
term of the lease at a rate of ten percent (10%) per annum. Alstom Power
must give notice of its intent to exercise such option to terminate at
lease seven months in advance of the fifth anniversary; provided,
however, that Alstom Power may pay a penalty, as stipulated in the
lease, to provide less than seven months notice.
In the event that Alstom Power does not exercise its termination option
as of the third anniversary of the rental commencement date, Alstom
Power has a one-time option to terminate the Alstom Power lease as to a
portion of the premises containing between 24,500 and 25,500 rentable
square feet as of the fifth anniversary of the rental commencement date.
If Alstom Power elects to exercise this termination option, Alstom Power
is required to pay a termination fee equal to six times the sum of the
next due installments of rent plus the unamortized portions of the base
improvement allowance, additional allowance and broker commission, each
being amortized in equal monthly installments of principal and interest
over the initial term of the lease at a rate of ten percent (10%) per
annum. Alstom Power must give notice of its intent to exercise such
option to terminate at least nine months in advance of the fifth
anniversary; provided, however, that Alstom Power may pay a penalty, as
stipulated in the lease, to provide less than nine months notice.
The average effective annual rental per square foot at the Alstom
Power-Richmond Building was $13.53 the first year of occupancy. The
occupancy rate at year end was 100% for 2000.
The Motorola-New Jersey Building
The Motorola-New Jersey Building is a three-story office building
containing approximately 236,710 rentable square feet on a 34.5 acre
tract of land. Wells OP purchased the Motorola-New Jersey Building on
November 1, 2000 for a purchase price of $33,648,156. In consideration
for a reduction of the purchase price and immediate occupancy of the
Motorola-New Jersey Building, Wells OP agreed to assume a liability in
the amount of $424,760 in the form of a rental guaranty from Motorola,
Inc. ("Motorola") for the remainder of Motorola's previous lease.
The Motorola-New Jersey Building is located near Rutgers University in
Middlesex County, partially in the Borough of South Plainfield and in
the Township of Edison.
The Motorola-New Jersey Building is leased to Motorola. Motorola is a
global leader in providing integrated communications solutions and
embedded electronic solutions, including software-enhanced wireless
telephones, two-way radios and digital and analog systems and set-top
terminals for broadband cable television operators. The initial term of
the Motorola lease is ten years which commenced on November 1, 2000 and
expires on October 31, 2010. Motorola has the right to extend the
Motorola lease for two additional five-year periods of time for a base
rent equal to the greater of (i) the last year's rent, or (ii) 95% of
the then-current "fair market rental rate." The annual base rent payable
for the initial lease term is as $3,324,428 for years 1 through 5 and
$3,557,819 thereafter.
The Motorola lease grants Motorola a right of first refusal to purchase
the Motorola-New Jersey Building if Wells OP attempts to sell the
property during the term of the lease.
Additionally, upon giving written notice to Wells OP, Motorola has an
expansion right for an additional 143,000 rentable square feet. Upon
completion of the expansion, the term of the Motorola lease shall be
extended an additional ten years after Motorola occupies the expansion
space. The base rent for the expansion space shall be determined by the
construction costs and
-25-
fees for the expansion. The base rent for the original building for the
extended ten-year period shall be the greater of (i) the then-current
base rent, or (ii) 95% of the then-current "fair market rental rate."
The average effective annual rental per square foot at the Motorola-New
Jersey Building was $14.54 for the first year of occupancy. The
occupancy rate at year end was 100% for 2000.
For additional information regarding the Motorola-New Jersey Building,
refer to Supplement No. 6 dated December 5, 2000 to the Prospectus of
Wells Real Estate Investment Trust, Inc. dated December 20, 1999
contained in the Post Effective Amendment No. 4 to Form S-11
Registration Statement of Wells Real Estate Investment Trust, Inc. which
was filed with the Commission on December 8, 2000 (Commission File No.
333-83933).
The Metris Minnetonka Building
On December 21, 2000, Wells OP purchased a nine-story office building
with approximately 300,633 rentable square feet located at 10900 Wayzara
Boulevard, Minnetonka, Minnesota. Wells OP purchased the Metris
Minnetonka Building from Opus Northwest, L.L.C. ("Opus"), pursuant to
that certain Purchase Agreement dated October 31, 2000 ("Metris
Agreement") between Opus and the Advisor. Opus is not in any way
affiliated with the Wells REIT or the Advisor.
The rights under the Metris Agreement were assigned by the Advisor, the
original purchaser under the Metris Agreement, to Wells OP at closing.
The purchase price for the Metris Minnetonka Building was $52,800,000.
Wells OP also incurred additional acquisition expenses in connection
with the purchase of the Metris Minnetonka Building, including
attorneys' fees, recording fees, loan fees, and other closing costs, of
approximately $100,000. In order to finance the acquisition of the
Metris Minnetonka Building, Wells OP obtained $52,800,000 in loan
proceeds by drawing down on an existing line of credit with SouthTrust
Bank, N.A.
The Metris Minnetonka Building was completed in August 2000 and is
leased to Metris as its corporate headquarters. Metris is a principal
subsidiary of Metris Companies, Inc. ("Metris Companies"), a publicly
traded company listed on the New York Stock Exchange which has
guaranteed the Metris lease. Metris occupies all 300,633 rentable square
feet of the Metris Minnetonka Building pursuant to that certain
Multitenant Office Lease Agreement dated March 29, 1999. The Metris
lease commenced on September 1, 2000 and has an expiration date of
December 31, 2011. Metris has the right to renew the Metris lease for an
additional five-year term with not less than 18 months notice prior to
the expiration of the initial term at fair market rent, but in no event
less than the basic rent payable in the immediate preceding period. In
the event that the parties cannot agree upon the fair market rent for
the renewal term, the fair market rent will be determined in accordance
with the appraisal provisions of the Metris lease.
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Rental income for the initial 136-month term is summarized as follows:
------------------------------------- ----------
Annual
------------------------------------- ----------
Dates Net Rent
------------------------------------- ----------
September 2000 - December 2006 $4,960,445
January 2007 - December 2009 5,576,742
January 2010 - December 2010 6,178,008
January 2011 - December 2011 6,478,641
While Metris was granted certain rental concessions under the Metris
lease, Opus, the seller, has agreed to cover the free rent, so as to
yield the above net effective rates to Wells OP. In addition, Metris is
required to pay annual parking and storage fees of $132,384 through
December 2006 and $164,052 payable on a monthly basis for the remainder
of the lease term.
Pursuant to the Metris lease, Metris is required to pay 100% of
operating costs incurred by the landlord in maintaining and operating
the Metris Minnetonka Building, including all property taxes, insurance
premiums, maintenance and repair costs, steam, electricity, water,
sewer, gas and other utility charges, fuel, lighting, window washing,
janitorial services, and reasonable management fees (not to exceed 1.75%
of gross revenues from the Metris Minnetonka Building), Wells OP, as the
landlord, will be responsible for repair and maintenance of the
foundations, exterior walls and roof of the Metris Minnetonka Building
and the electrical, mechanical, plumbing, heating and air conditioning
systems.
The Metris lease also contains a construction warranty pursuant to which
the landlord has warranted to Metris that the tenant improvements and
related materials, equipment and installation shall be free from defects
in workmanship and shall conform to the plans and specifications. The
landlord is obligated to repair, correct or replace, as necessary, any
defective item occasioned by a breach of such warranty if notified by
Metris within one year from the commencement date of the Metris lease.
Pursuant to the Metris Agreement, however, Opus has assumed the
obligation for any such repairs so long as Wells OP notifies Opus of any
claims by Metris under the construction warranty no later than January
20, 2002.
The average effective annual rental per square foot at the Metris
Minnetonka Building was $17.89 the first year of occupancy. The
occupancy rate at year end was 100% for 2000.
For additional information regarding the Metris Minnetonka Building,
refer to Supplement No. 1 dated February 5, 2001 to the Prospectus of
Wells Real Estate Investment Trust, Inc. dated December 20, 2000, which
was filed with the Commission in Post-Effective Amendment No. 1 to the
Form S-11 Registration Statement of Wells Real Estate Investment Trust,
Inc. on February 9, 2001 (Commission File No. 333-44900).
The Stone and Webster Building
On December 21, 2000, Wells OP purchased a six-story office building
with approximately 312,564 rentable square feet located at 1430 Enclave
Parkway, Houston, Harris County, Texas (the "Stone and Webster
Building"). Wells OP purchased this building from Cardinal Paragon, Inc.
("Cardinal") pursuant to that certain Agreement of Purchase and Sale of
Property between Cardinal and Wells OP. Cardinal purchased the Stone and
Webster Building in a sale-leaseback transaction from Enclave Parkway
Realty Inc., an affiliate of Stone and Webster, Inc. ("Stone
-27-
and Webster"), on December 21, 2000. Cardinal is not in any way
affiliated with the Wells REIT or our Advisor, Wells Capital, Inc.
The purchase price of the Stone and Webster Building was $44,970,000.
Wells OP also incurred additional acquisition expenses in connection
with the purchase of the Stone and Webster Building, including
attorneys' fees, recording fees, structural report and environmental
report fees, and other closing costs, of approximately $45,000. In order
to finance part of the acquisition of the Stone and Webster Building,
Wells OP obtained an acquisition loan of $35,900,000 from Guaranty
Federal Bank, F.S.B. ("Guaranty Federal Loan") and $3,000,000 in seller
financing from Cardinal ("Seller Financing").
The Guaranty Federal Loan in the amount of $35,900,000 requires monthly
payments of interest only and matures on December 20, 2001. In the event
that the principal balance of the loan is not repaid in full by March
31, 2001, Wells OP is required to make a principal payment of $6,000,000
on such date. The interest rate on the Guaranty Federal Loan is an
annual variable rate equal to the London InterBank Offered Rate
("LIBOR") for a 30-day period plus 250 basis points if the principal
balance of the loan is in excess of $25,900,000; 200 basis points if the
principal balance of the loan is between $24,195,001 and $25,900,000;
and 180 basis points if the principal balance of the loan is less or
equal to $24,195,000. As of December 31, 2000, the principal balance of
the Guaranty Federal Loan was $32,400,000. The Guaranty Federal Loan is
secured by a first priority mortgage against the Stone and Webster
Building.
The Seller Financing consists of a $3,000,000 loan to Wells OP from
Cardinal. The Seller Financing requires the payment of the full
principal balance plus accrued interest on the earlier of: (i) December
20, 2001, or (ii) the date that the Guaranty Federal Loan is repaid in
full. The interest rate on the Seller Financing is 6% per annum. The
Seller Financing is secured by a second priority mortgage against the
Stone and Webster Bulding.
The Stone and Webster Bulding, which was completed in 1994, is a
six-story office building containing approximately 312,564 rentable
square feet located on a 9.96-acre tract of land. In addition, this site
includes 4.34 acres of unencumbered land available for expansion. The
first four floors of the Stone and Webster Building are occupied by
Stone and Webster, and the fifth and sixth floors are occupied by SYSCO
Corporation ("SYSCO").
Stone and Webster occupies 206,048 rentable square feet (floors one
through four) of the Stone and Webster Building under a lease between
Wells OP and Stone and Webster entered into at closing. The current term
of the Stone and Webster lease is ten years, which commenced on December
21, 2000, and expires on December 20, 2010. Stone and Webster has the
right to extend the Stone and Webster lease for two additional five-year
periods of time for a base rent equal to the greater of (i) the last
year's rent, or (ii) the then-current fair market rental value. In the
event that the parties cannot agree upon the fair market rental value,
such value shall be determined in accordance with the appraisal
procedure contained in the Stone and Webster lease. Stone and Webster is
a full-service engineering and construction company offering managerial
and technical resources for solving complex energy, environmental,
infrastructure and industrial challenges. Stone and Webster, which was
founded in 1987 as an electrical testing laboratory and consulting firm,
has evolved into a global organization employing more than 5,000 people
worldwide. The Stone and Webster lease is guaranteed by The Shaw Group,
Inc., the parent company of Stone and Webster. The Shaw Group, Inc. is
the largest supplier of fabricated piping systems and services in the
world. The annual base rent payable under the Stone and Webster lease is
$4,533,056 for the first five years of the lease term and $5,213,014 for
the remainder of the lease term.
-28-
Pursuant to the Stone and Webster lease, Stone and Webster is required
to pay its proportionate share of taxes relating to the Stone and
Webster Building and all operating costs incurred by the landlord in
maintaining and operating the Stone and Webster Building, including
garbage and waste disposal, janitorial service and window cleaning,
security, insurance, water and sewer charges, wages, salaries and
employee benefits of all employees engaged in the operation, maintenance
and management of the building, indoor and outdoor landscaping,
utilities and repairs, replacements and general maintenance. Wells OP,
as the landlord, will be responsible for maintaining the common areas of
the building, the roof, foundation, exterior walls and windows, load
bearing items and central heating, ventilation and air conditioning,
electrical, mechanical and plumbing systems of the building.
SYSCO currently occupies 106,516 rentable square feet of the Stone and
Webster Building. The landlord's interest in the SYSCO lease was
assigned to Wells OP at the closing. The initial term of the SYSCO lease
is ten years, which commenced on October 1, 1998, and expires on
September 30, 2008. The annual base rent payable under the SYSCO lease
is $2,130,320 for the first five years of the lease term and $2,236,836
for the remainder of the lease term.
SYSCO is the largest marketer and distributor of food service products
in North America. SYSCO operates from 101 distribution facilities and
provides its products and services to about 356,000 restaurants and
other users across the United States and portions of Canada.
Pursuant to the SYSCO lease, SYSCO is required to pay its proportionate
share of taxes and operating costs incurred by the landlord in
maintaining and operating the Stone and Webster Building, including
supplies and materials, utilities, insurance and repairs, replacements,
general maintenance and wages and salaries (including management fees
not to exceed 3% of gross revenues attributable to the building) of all
employees engaged in maintaining and operating the Stone and Webster
Building. Wells OP, as the landlord, will be responsible for maintaining
the common areas of the building, the roof, foundation, exterior walls
and windows, load bearing items and the central heating, ventilation and
air conditioning, electrical, mechanical and plumbing systems of the
building.
The average effective annual rental per square foot at the Stone and
Webster Building was $22.56 the first year of occupancy. The occupancy
rate at year end was 100% for 2000.
For additional information regarding the acquisition of the Stone and
Webster Building, refer to Supplement No. 1 dates February 5, 2001 to
the Prospectus of Wells Real Estate Investment Trust, Inc. dates
December 20, 2000, which was filed with the Commission in Post-Effective
Amendment No. 1 to the Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc. on February 9, 2001 (Commission File No.
333-44900).
AT&T-Oklahoma Buildings
On December 28, 2000, the Wells Fund XII-REIT Joint Venture Partnership
acquired a one-story office building and a two-story office building
containing an aggregate of approximately 128,500 rentable square feet
(the "AT&T-Oklahoma Buildings") on a 11.34 acre tract of land located in
Oklahoma City, Oklahoma County, Oklahoma from OKC Real Estate
Investments, Inc.
Wells Capital, Inc., as original purchaser under the agreement, assigned
its rights under the agreement to the Fund XII-REIT Joint Venture at
closing. The purchase price for the AT&T-Oklahoma Buildings was
$15,300,000. The Fund XII-REIT Joint Venture also incurred additional
acquisition expenses in connection with the purchase of the
AT&T-Oklahoma
-29-
Buildings, including attorney's fees, recording fees, and other closing
costs of approximately $25,554. The purchase of the building was funded
by capital contributions of $8,591,000 by Wells Fund XII and $6,736,554
by Wells OP.
The entire 78,500 rentable square feet of the two-story office building
and 25,000 rentable square feet of the one-story office building are
currently under a net lease agreement with AT&T Corp. ("AT&T"). The
landlord's interest in the AT&T lease was assigned to the Fund XII-REIT
Joint Venture at the closing. The AT&T lease commenced on April 1, 2000,
and the initial term expires on November 30, 2010. AT&T has the right to
extend the AT&T lease for two additional five-year periods of time at
the then-current fair market rental rate upon delivering written notice
within 240 days prior to expiration of the lease.
AT&T is among the word's leading voice and data communications
companies, serving consumers, businesses and governments worldwide. AT&T
has one of the largest digital wireless networks in North America and is
one of the leading suppliers of data and internet services for
businesses. In addition, AT&T offers outsourcing, consulting and
networking-integration to large businesses and is one of the largest
direct internet access service providers for consumers in the United
States.
The base rent payable for the initial lease term of the AT&T lease is as
follows: Months 1 to 8--$300,000; months 9 to 35--$1,242,000, months 36
to 65--$1,293,750, months 66 to 95--$1,345,500, and months 96 to
125--$1,437,50, all payable in equal monthly installments.
Under the AT&T lease, AT&T is required to pay, as additional monthly
rent, its gas, water and electricity costs and all operating expenses,
including but not limited to, garbage and waste disposal, telephone,
sprinkler service, janitorial service, security, insurance premiums, all
taxes, assessments and other governmental levies and such other
operating expenses with respect to its portion of the AT&T-Oklahoma
Buildings. In addition, AT&T is responsible for all routine maintenance
and repairs to its portion of the AT&T-Oklahoma Buildings. The Fund
XII-REIT Joint Venture, as landlord, will be responsible for the repair
and replacement of the roof, foundation, load bearing items, exterior
surface walls, plumbing, pipes, conduits and electrical, mechanical and
plumbing systems of the AT&T-Oklahoma Buildings. AT&T must obtain
written consent from the Fund XII-REIT Joint Venture before making any
alterations to the premises in excess of $10,000.
AT&T has a right of first offer for the space occupied by Jordan
Associates, Inc. ("Jordan"), as described below, if Jordan vacates the
premises before the Fund XII-REIT Joint Venture can lease the space to a
third party.
Jordan currently occupies the remaining 25,000 rentable square feet
contained in the one-story office building under a new lease agreement.
The landlord's interest in the Jordan lease was also assigned to the
Fund XII-REIT Joint Venture at the closing. The Jordan lease commenced
on April 1, 1998, and the initial term expires on March 31, 2008. Jordan
has the right to extend the Jordan lease for one additional five-year
period of time at the then-current fair market rental rate upon
delivering written notice within 240 days prior to expiration of the
initial lease term.
Jordan provides businesses with advertising and related services
including public relations, research, direct marketing, and sales
promotion. Through this corporate office and other offices in Tulsa, St.
Louis, Indianapolis, and Wausau, Wisconsin, Jordan provides services to
major clients such as Bank One, Oklahoma, N.A., BlueCross & BlueShield
of Oklahoma, Kraft Food
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Services, Inc., Logix Communications, and the American Dental
Association. Jordan employs approximately 100 employees and has been in
business for over 35 years.
The base rent payable for the initial lease term of the Jordan lease is
as follows: months 1 to 60--$294,500 and months 61 to 120--$332,000
payable in equal monthly installments.
Under the Jordan lease, Jordan is required to pay as additional monthly
rent its gas, water and electricity costs and all operating expenses,
including, but not limited to, garbage and waste disposal, telephone,
sprinkler service, janitorial service, security, insurance premiums, all
taxes, assessments and other governmental levies and such other
operating expenses with respect to its portion of the one-story
building. In addition, Jordan is responsible for all routine maintenance
and repairs to its portion of the one-story building. The Fund XII-REIT
Joint Venture, as landlord, will be responsible for the repair and
replacement of the roof, foundation, load bearing items, exterior
surface walls, plumbing, pipes, conduits and electrical, mechanical and
plumbing systems of the AT&T-Oklahoma Buildings.
For additional information regarding the acquisition of the
AT&T-Oklahoma Buildings, refer to Supplement No. 1 dated February 5,
2001 to the Prospectus of Wells Real Estate Investment Trust, Inc. dated
December 20, 2000, which was filed with the Commission in Post-Effective
Amendment No. 1 to the Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc. on February 9, 2001 (Commission File No.
333-44900).
-31-
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
As of February 28, 2001, the Company had 35,055,988 shares of common stock
outstanding held by a total of 8,318 shareholders. The current offering price
per share is $10. There is no established public trading mark for the Company's
common stock. Under the Company's Articles of Incorporation, restrictions are
imposed on ownership and transfer of shares.
As set forth in the "ERISA Considerations--Annual Valuation" section of the
Company's Prospectus currently effective with the SEC, until December 31, 2002,
the per share net asset value shall be deemed to be the offering price of our
shares, which is currently $10.00 per share. This valuation is supported by the
fact that the Company is currently selling shares to the public at a price of
$10.00 per share.
The Company will make distributions each taxable year (not including a return of
capital for federal income tax purposes) equal to at least 95% of its real
taxable income for taxable years prior to 2001 and 90% of its taxable income for
all future years beginning with the year 2001. The Company intends to make
regular quarterly dividend distributions to holders of the shares. Dividends
will be made to those shareholders who are shareholders as of daily record dates
selected by the Directors. Dividends will be paid on a quarterly basis.
Dividend distributions made to the shareholders during 2000 and 1999 were as
follows:
Total Investment Return of
Cash ---------- ---------
Distribution for Quarter Ended Distributed Income Capital
------------------------------------ ------------ ----------- --------
March 31, 1999 $ 628,385 $0.174 $0.00
June 30, 1999 1,121,457 0.175 0.00
September 30, 1999 1,646,751 0.175 0.00
December 31, 1999 2,168,330 0.175 0.00
March 31, 2000 2,634,251 0.175 0.00
June 30, 2000 3,321,189 0.181 0.00
September 30, 2000 4,477,865 0.188 0.00
December 31, 2000 5,396,113 0.188 0.00
Distribution
The fourth quarter dividend distributions, through December 15, for 2000 were
paid to shareholders in December 2000. Dividends for the period from December
16, 2000 to year-end will be paid to shareholders in March 2001. Although there
is no assurance, management of the Company anticipates that dividend
distributions to shareholders will continue in 2001 at a level at least
comparable with 2000 dividend distributions.
-32-
ITEM 6. SELECTED FINANCIAL DATA
The Company commenced active operations when it received and accepted
subscriptions for a minimum of 125,000 shares on June 5, 1998.
The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 2000, 1999 and 1998.
2000 1999 1998
---------------- --------------- --------------
Total assets $398,550,346 $143,852,290 $42,832,573
Total revenues 23,373,206 6,495,395 395,178
Net income 8,552,967 3,884,649 334,034
Net income allocated to Shareholders 8,552,967 3,884,649 334,034
Earning per share:
Basic and diluted $0.40 $0.50 $0.40
Cash distributions 0.73 0.70 0.31
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying financial statements of the Company
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
Company, anticipated capital expenditures required to complete certain projects,
amounts of cash distributions anticipated to be distributed to shareholders in
the future and certain other matters. Readers of this Report should be aware
that there are various factors that could cause actual results to differ
materially from any forward-looking statement made in the Report, which include
changes in general economic conditions, charges in real estate conditions
construction costs which may exceed estimates, construction delays, increases in
interest rates, 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.
Liquidity and Capital Resources
General
On January 30, 1998, the Company commenced a public offering of up to 16,500,000
shares of common stock at $10 per share pursuant to a Registration Statement on
Form S-11 filed under the Securities Act of 1933. The Company commenced active
operations on June 5, 1998, when it received and accepted subscription for
125,000 shares. The Company terminated its initial public offering on December
19, 1999. The Company received gross proceeds of approximately $132,181,919 from
the sale of approximately 13,218,192 shares from its initial public offering.
The Company commenced its second public offering of shares of common stock of
the Wells REIT on December 20, 1999, which was terminated on December 19, 2000.
The Company received gross proceeds of approximately $175,229,193 from the sale
of approximately 17,522,919 shares from the second public offering. The Company
commenced its third public offering of the shares of common stock on December
20, 2000. As of December 31, 2000, the Company has received gross proceeds of
approximately $7,686,958 from the
-33-
sale of approximately 768,696 shares from its third public offering.
Accordingly, as of December 31, 2000, the Company has received aggregate gross
offering proceeds of approximately $315,098,070 from the sale of 31,509,807
shares of its common stock to 7,422 investors. After payment of $10,978,981 in
Acquisition and Advisory Fees and Expenses, payment of $39,209,638 in selling
commissions and organization and offering expenses, capital contributions to
joint ventures and acquisitions expenditures by Wells OP of $262,118,082 in
property acquisitions, and common stock redemptions of $1,412,969 pursuant to
the Company's share redemption program, the Company was holding net offering
proceeds of $1,378,400 available for investment in properties, as of December
31, 2000.
Gross revenues of the Company of $23,373,206 for the year ended December 31,
2000 were attributable to rental income, interest income earned on funds held by
the Company prior to the investment in properties, and income earned from joint
ventures. Expenses of the Company were $14,820,239 for the year ended December
31, 2000, and consisted primarily of depreciation, rental expenses,
administrative, accounting fees, and printing expenses.
Net increase in cash and cash equivalents is primarily the result of raising
$180,387,220 in common stock capital contributions offset by acquisition and
advisory fees and expenses, commissions, offering costs, capital contributions
to joint ventures, and distributions received from joint ventures.
Operating cash flows are expected to increase as additional properties are added
to the Company's investment portfolio. Dividends to be distributed to the
shareholders are determined by the Board of Directors and are dependent upon a
number of factors relating to the Company, including funds available for payment
of dividends, financial condition, capital expenditure requirements and annual
distribution requirements in order to maintain our status as a REIT under the
Internal Revenue Code of 1986, as amended (the "Code").
The Company has made an election under Section 856 (c) of the Code be taxed as a
REIT under the Code beginning with its taxable year ended December 31, 1999. As
a REIT for federal income tax purposes, the Company generally will not be
subject to Federal income tax on income that it distributes to its stockholders.
If the Company fails to qualify as a REIT in any taxable year, it will be
subject to federal income tax on its taxable income at regular corporate rates
and will not be permitted to qualify for treatment as a REIT for federal income
tax purposes for four years following the year during which qualification is
lost. Such an event could materially adversely affect the Company's net income.
However, the Company believes that it is organized and operates in such a manner
as to qualify for treatment as a REIT for the year ended December 31, 2000. In
addition, the Company intends to continue to operate the Company so as to remain
qualified as a REIT for federal income tax purposes.
As of December 31, 2000, the Company had acquired an interest in 29 real estate
properties. These properties are generating sufficient cash flow to cover the
Company's operating expenses and pay dividends. The Company pays dividends on a
quarterly basis regardless of the frequency with which such distributions are
declared. Dividends will be paid to investors who are shareholders as of the
record dates selected by the Board of Directors. The Company currently
calculates quarterly dividends based upon daily record and dividend declaration
dates so shareholders will be entitled to be paid dividends immediately upon
their purchase of shares. Dividends declared during 2000 and 1999 totaled $.73
per share and $.70 per share, respectively.
On February 18, 1999, Wells OP entered into a Rental Income Guaranty Agreement
with the Fund VIII-IX Joint Venture (the "VIII-IX Joint Venture"). The Rental
Income Guaranty Agreement provided for a guarantee by Wells OP to the VIII-IX
Joint Venture that it would receive rental income on the Quest Building
(formerly the Bake Parkway Building) previously leased to Matsushita Avionics at
least equal to the rental and building expenses that the VIII-IX Joint Venture
would have received over the
-34-
remaining term of its original lease with Matsushita Avionics. Matsushita
Avionics vacated the Quest Building in December 1999, with the existing lease
term ending in September 2003, in order to occupy the Matsushita Building
developed and constructed by Wells OP. On June 15, 2000, the Wells Fund VIII-
Fund IX-REIT Joint Venture (the "VIII-IX-REIT Joint Venture") was formed between
Wells OP and the VIII-IX Joint Venture for purposes of owning and operating the
Quest Building. On July 1, 2000, the VIII-IX Joint Venture transferred the Quest
Building to the VIII-IX-REIT Joint Venture as its capital contribution. Under
the Rental Income Guaranty Agreement, Wells OP also guaranteed that, if a joint
venture such as the VIII-IX-REIT Joint Venture was ever formed by the parties
for the ownership and operation of the Quest Building, Wells OP would guaranty
to the VIII-IX Joint Venture that it would receive monthly cash flow
distributions from such joint venture at least equal to the rent and building
expenses guaranteed under the Rental Income Guaranty Agreement. Currently the
Quest Building is leased by Quest Software, Inc. (Quest) pursuant to a 42 month
lease that expires on December 31, 2003.
Wells OP had paid approximately $595,000 in rental income guaranty payments to
the VIII-IX Joint Venture through December 31, 2000, and will continue making
payments in the amount of $6,656 per month through January 2001 to cover initial
rental concessions granted to Quest in order to induce Quest to rent the Quest
Building. The Company's maximum liability exposure to the VIII-IX Joint Venture
for rental income and building expenses potentially payable under this Rental
Income Guaranty Agreement of approximately $3,000,000 was taken into account in
the economic analysis performed in making the determination to go forward with
the development of the Matsushita Building. Although the lease of the Quest
Building by Quest has substantially reduced the Company's financial exposure
under the Rental Income Guaranty Agreement, the Company cannot, at this time,
determine the amount of any future liability if Quest defaults or otherwise
fails to make the required payments under its lease. Wells OP continues to
guaranty payment under the Rental Income Guaranty Agreement and, consequently,
continues to bear some risk, even though their risk has been substantially
minimized by the lease with Quest. Payments made to the VIII-IX Joint Venture
under the Rental Income Guaranty Agreement are made from capital proceeds raised
and are being capitalized over the term of the lease with Matsushita Avionics
for the Matsushita Building.
Cash Flows From Operating Activities
The Company's net cash provided by operating activities was $7,319,639 in 2000,
$4,008,275 in 1999 and $(275,549). The increase in net cash provided by
operating activities was due primarily to the purchase of additional properties
during 1999 and 2000.
Cash Flows From Investing Activities
The Company's net cash used in investing activities was $249,316,460 in 2000,
$105,394,956 in 1999 and $33,500,807 in 1998. The increase in net cash used in
investing activities was due primarily to the raising of additional capital and
funds that have been invested in real property acquisitions.
Cash Flows From Financing Activities
The Company's net cash provided by financing activities was $243,365,318 in
2000, $96,337,082 in 1999 and $41,554,759 in 1998. The increase in net cash
provided by financing activities was due primarily to the raising of additional
capital and the corresponding increase in funds borrowed to purchase real
properties. The Company raised $180,387,220 in offering proceeds for fiscal year
ended December 31, 2000, as compared to $103,169,490 for fiscal year ended
December 31, 1999 and $31,540,360 for fiscal year ended December 31, 1998. In
addition, the Company received loan proceeds from financing secured by
properties of $187,633,130 and repaid notes payable in the amount of $83,899,171
for fiscal year ended December 31, 2000.
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Results of Operations
As of December 31, 2000, the Company's real estate properties were 100% occupied
by tenants. Gross revenues were $23,373,206 for fiscal year ended December 31,
2000, $6,495,395 for fiscal year ended December 31, 1999 and $395,178 for fiscal
year ended December 31, 1998. The increase in revenues was due to the purchase
of additional properties during 1999 and 2000. The purchase of additional
properties also resulted in an increase in operating expenses, management and
leasing fees, and depreciation expense. The Company's net income also increased
from $334,034 for fiscal year ended December 31, 1998 to $3,884,649 for fiscal
year ended December 31, 1999 to $8,552,967 for fiscal year ended December 31,
2000.
Property Operations
As of December 31, 2000, the Company owned interests in the following
operational properties:
The Alstom Power-Knoxville Building (formerly the ABB Building)/
IX-X-XI-REIT Joint Venture
For the Years Ended
---------------------------------------------------
2000 1999 1998
----------------- ---------------- -------------
Revenues:
Rental income $ 1,185,573 $ 987,327 $836,746
Interest income 73,676 58,768 20,192
------------ ----------- --------
1,259,249 1,046,095 856,938
------------ ----------- --------
Expenses:
Depreciation 394,998 537,799 475,020
Management and leasing expenses 149,378 120,325 107,338
Operating costs, net of reimbursements (77,526) (2,532) (40,641)
------------ ----------- --------
466,850 655,592 541,717
------------ ----------- --------
Net income $ 792,399 $ 390,503 $315,221
============ =========== ========
Occupied percentage 100% 98% 95%
============ =========== ========
Company's ownership percentage 3.7% 3.7% 3.8%
============ ========== ========
Cash distributed to the Company $ 43,995 $ 34,965 $ 21,965
============ =========== ========
Net income allocated to the Company $ 29,445 $ 14,673 $ 9,453
============ =========== ========
Rental income increased in 2000 over 1999 and 1998 due primarily to the
increased occupancy level of the property. Other operating expenses were
negative for 2000, 1999 and 1998 due to an offset of tenant reimbursements in
operating costs, as well as management and leasing reimbursements. Tenants are
billed an estimated amount for current year common area maintenance which is
then reconciled the following year and the difference billed to the tenant.
Total expenses decreased in 2000 due to a decrease in depreciation expense but
increased for 1999 over 1998 due to increased depreciation and management and
leasing fees as the building was leased up. The decrease in depreciation
resulted from an accelerated depreciation on tenant improvement for a short-term
lease in 1999 for 23,092 square feet.
-36-
Cash distributions and net income allocated to the Company increased in 2000
over prior year levels due to a combination of increased rental income and
decreased operating expenses. The Alstom Power-Knoxville Building incurred
property taxes of $63,198 for 2000, $47,616 for 1999 and $36,771 for 1998.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 3. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
The Ohmeda Building/Fund IX-X-XI-REIT Joint Venture
Eleven Months
For the Years Ended Ended
December 31 December 31,
--------------------------- ----------------
2000 1999 1998
----------- --------- ----------------
Revenues:
Rental income $1,027,314 $1,027,314 $898,901
---------- ---------- --------
Expenses:
Depreciation 326,305 326,304 299,112
Management and leasing expenses 54,482 46,911 41,688
Operating expenses, net of reimbursements 65,152 (15,183) 2,863
---------- ---------- --------
445,939 358,032 343,663
---------- ---------- --------
Net income $ 581,375 $ 669,282 $555,238
========== ========== ========
Occupied percentage 100% 100% 100%
========== ========== ========
Company's ownership percentage 3.7% 3.7% 3.8%
========== ========== ========
Cash distribution to the Company $ 32,878 $ 36,488 $ 21,824
========== ========== ========
Net income allocated to the Company $ 21,600 $ 25,103 $ 14,691
========== ========== ========
Rental income remained stable in 2000 as compared to 1999. Operating expenses
increased significantly due in part to a significant rise in real estate taxes,
which stemmed from the revaluation of the property by Boulder County authorities
in 1999. A later reduction in taxes resulting from an appeal in 2000 was offset
by a common area maintenance reimbursement credit to the tenant. The Ohmeda
Building incurred property taxes of $227,495 for 2000, $249,707 for 1999 and
$143,962 for 1998.
Cash distributions and net income allocated to the Company decreased in 2000, as
compared to 1999, due to decreased net income which resulted from the increase
in expenses discussed above.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
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The 360 Interlocken Building/Fund IX-X-XI-REIT Joint Venture
Ten Months
For the Years Ended Ended
December 31 December 31,
2000 1999 1998
--------- -------- -----------
Revenues:
Rental income $843,675 $829,827 $655,405
Interest income 0 0 246
-------- -------- --------
843,675 829,827 655,651
-------- -------- --------
Expenses:
Depreciation 286,680 286,680 238,299
Management and leasing expenses 108,275 73,129 55,130
Operating costs, net of reimbursements (75,208) 42,431 (65,654)
-------- -------- --------
319,747 402,240 227,775
-------- -------- --------
Net income $523,928 $427,587 $427,876
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Company ownership percentage 3.7% 3.7% 3.8%
======== ======== ========
Cash distribution to the Company $ 30,291 $ 26,570 $ 18,126
======== ======== ========
Net income allocated to the Company $ 19,468 $ 16,041 $ 12,577
======== ======== ========
Rental income increased due to a tenant occupying additional space previously
leased to another tenant at a lower rate. Other operating expenses are negative
due to an offset of tenant reimbursements in operating costs as well as
management and leasing fee reimbursements. Tenants are billed an estimated
amount for current year common area maintenance which is then reconciled the
following year and the difference billed to the tenants. Management and leasing
expenses increased in 2000, as compared to 1999, due to differences in
adjustments for prior year billings to tenants. The 360 Interlocken Building
incurred property taxes of $268,744 for 2000, $244,025 for 1999 and $96,747 for
1998.
Net income and cash distributions allocated to the Company increased in 2000, as
compared to 1999, due primarily to the increase in net income.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-38-
The Avaya Building (formerly the Lucent Technologies Building)/
Fund IX-X-XI-REIT Joint Venture
For the Years Ended Seven Months
December 31 Ended
------------------- December 31,
2000 1999 1998
-------- -------- ------------
Revenues:
Rental income $583,009 $583,009 $291,508
-------- -------- --------
Expenses:
Depreciation 183,204 183,204 106,871
Management and leasing expenses 21,479 21,479 11,281
Operating expenses, net of reimbursements 12,753 15,809 9,883
-------- -------- --------
217,436 220,492 128,035
-------- -------- --------
Net income $365,573 $362,517 $163,473
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Company's ownership percentage 3.7% 3.7% 3.8%
======== ======== ========
Cash distribution to the Company $ 18,718 $ 18,746 $ 15,279
======== ======== ========
Net income allocated to the Company $ 13,583 $ 13,600 $ 6,313
======== ======== ========
Rental income, depreciation, and management and leasing fees remained stable in
2000, as compared to 1999, while other operating expenses are slightly lower,
due primarily to a one-time charge for consulting fees in 1999, which did not
occur in 2000. The tenant is responsible for property taxes. Since the Avaya
Building was purchased in June 1998, comparative income and expense figures are
available for only seven months of 1998.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc., refer to Item 2, Properties, page 3.
-39-
The Iomega Building/Fund IX-X-XI-REIT Joint Venture
For the Years Ended Nine Months
December 31 Ended
--------------------- December 31,
2000 1999 1998
-------- -------- -------------
Revenues:
Rental income $673,000 $560,906 $373,420
-------- -------- --------
Expenses:
Depreciation 220,248 204,925 145,975
Management and leasing expenses 29,159 24,295 16,808
Operating expenses, net of reimbursements 17,725 9,368 (4,579)
-------- -------- --------
267,132 238,588 158,204
-------- -------- --------
Net income $405,868 $322,318 $215,216
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Company's ownership percentage 3.7% 3.7% 3.8%
======== ======== ========
Cash distribution to the Company $ 22,546 $ 19,188 $ 9,048
======== ======== ========
Net income allocated to the Company $ 15,081 $ 12,085 $ 5,838
======== ======== ========
Rental income increased in 2000, as compared to 1999, due to completion of the
parking lot complex in the second quarter of 1999. Total expenses increased in
2000, over 1999, due to an increase in depreciation and real estate tax expenses
relating to the new parking lot. Other operating expenses for 1998 are negative
due to tenant reimbursement reflected in this category which includes management
and leasing expense reimbursements. The Iomega Building incurred property taxes
of $76,754 for 2000, $73,020 for 1999, and $44,559 for 1998, the first year of
occupancy.
Net income and cash distribution allocated to the Company increased in 2000, as
compared to 1999, due primarily to the increase in net income.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc., refer to Item 2, Properties, page 3.
-40-
Wells/Orange County Joint Venture (Cort)
For the Years Ended Five Months
December 31 Ended
---------------------- December 31,
2000 1999 1998
-------- -------- ------------
Revenues:
Rental income $795,545 $795,545 $331,477
Interest income 0 0 448
-------- -------- --------
795,545 795,545 331,925
-------- -------- --------
Expenses:
Depreciation 186,564 186,565 92,087
Management and leasing expenses 30,915 30,360 12,734
Interest expense 0 0 29,472
Other operating expenses, net of
reimbursements 9,104 27,667 6,218
-------- -------- --------
226,583 244,592 140,511
-------- -------- --------
Net income $568,962 $550,953 $191,414
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Company's ownership percentage 43.7% 43.7% 43.7%
======== ======== ========
Cash distribution to the Company $313,953 $306,090 $124,435
======== ======== ========
Net income allocated to the Company $248,449 $240,585 $ 91,978
======== ======== ========
Rental income remained stable in 2000 as compared to 1999. Other operating
expense decreased for the year ended December 31, 2000, as compared to 1999, due
to a billing to the tenant for 2000 and 1999 insurance. Since the Cort Building
was purchased in July 1998, comparable income and expense figures for the prior
year are available for only five months. The tenant is responsible for property
taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc., refer to Item 2, Properties, page 3.
-41-
Wells/Fremont Joint Venture (Fairchild)
For the Years Ended Six Months
December 31, Ended
---------------------- December 31,
2000 1999 1998
------- --------- ------------
Revenues:
Rental income $902,946 $902,946 $401,058
Interest income 0 0 3,896
-------- -------- --------
902,946 902,946 404,954
-------- -------- --------
Expenses:
Depreciation 285,527 285,526 142,720
Management and leasing expenses 36,787 37,355 16,726
Interest expense 0 0 73,919
Other operating expenses, net of
reimbursements 17,499 20,891 9,670
-------- -------- --------
339,813 343,772 243,035
-------- -------- --------
Net income $563,133 $559,174 $161,919
======== ======== ========
Occupied percentage 100% 100% 100%
======== ======== ========
Company's ownership percentage 77.5% 77.5% 77.5%
======== ======== ========
Cash distribution to the Company $633,374 $611,855 $229,864
======== ======== ========
Net income allocated to the Company $436,452 $433,383 $122,470
======== ======== ========
Rental income, net income, and cash distributions to the Partnership are
relatively stable for the year ended December 31, 2000 as compared to 1999.
Since the Fremont Building was purchased in July 1998, comparable income and
expense figures are available for only six months of 1998. Real estate taxes and
all operational expenses for the building are the responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-42-
PWC Building
For the Years Ended One Month
December 31, Ended
------------------------- December 31,
2000 1999 1998
---------- ---------- ------------
Revenues:
Rental income $2,209,192 $2,209,205 $20,994
Interest income 0 0 14,518
---------- ---------- -------
2,209,192 2,209,205 35,512
---------- ---------- -------
Expenses:
Depreciation 842,152 821,492 0
Management and leasing expenses 153,903 156,471 0
Other operating expenses, net of
reimbursements (193,902) (75,426) 11,033
Interest expense 0 158,497 0
---------- ---------- -------
802,153 1,061,034 11,033
---------- ---------- -------
Net income $1,407,039 $1,148,171 $24,479
========== ========== =======
Occupied percentage 100% 100% 100%
========== ========== =======
Company's ownership percentage 100% 100% 100%
========== ========== =======
Cash generated to the Company $2,014,048 $1,706,048 $24,479
========== ========== =======
Net income generated to the Company $1,407,039 $1,148,171 $24,479
========== ========== =======
Rental income has remained stable in 2000 as compared to 1999. Other operating
expenses are negative due to increased common area maintenance billings in 2000.
Management and leasing fee reimbursement is also included in other operating
expenses. Tenants are billed an estimated amount for current year common area
maintenance which is then reconciled the following year, and the difference
billed to the tenants. There was no interest in 2000, as compared to 1999, as
the note related to this building was paid in the first quarter of 1999.
Since the PWC Building was purchased in December 1998, comparable income and
expense figures are available for only one month of 1998. The PWC Building
incurred property taxes of $289,281 for 2000 and $295,146 for 1999.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-43-
AT&T-Harrisburg Building
Year Ended
--------------- Eleven Months
December 31, Ended
--------------- December 31,
2000 1999
--------------- ------------
Revenues:
Rental income $1,366,503 $1,366,504
---------- ----------
Expenses:
Depreciation 482,981 442,724
Management and leasing expenses 72,526 48,716
Other operating expenses 117 13,510
Interest expense 11,878 209,643
---------- ----------
567,502 714,593
---------- ----------
Net income $ 799,001 $ 651,911
========== ==========
Occupied percentage 100% 100%
========== ==========
Company's ownership percentage 100% 100%
========== ==========
Cash generated to the Company $1,270,121 $ 886,439
========== ==========
Net income generated to the Company $ 799,001 $ 651,911
========== ==========
Since the AT&T Building was purchased in February 1999, comparable income and
expense figures for the prior year are available for only 11 months of 1999.
Under the terms of the lease, the tenant is responsible for all utilities,
property taxes, and other operating expenses.
For comments on the general competitive conditions to which the property may
been subject, see Item 1, Business, page 2. For additional information on
tenants, etc. refer to Item 2, Properties, page 3.
-44-
EYBL CarTex Building/Fund XI-XII-REIT Joint Venture
Year Ended
--------------- Eight Months
December 31, Ended
--------------- December 31,
2000 1999
--------------- -------------
Revenues:
Rental income $560,355 $350,221
Interest income 2,814 0
-------- --------
563,169 350,221
-------- --------
Expenses:
Depreciation 199,602 133,072
Management and leasing expenses 36,896 20,384
Operating expenses, net of reimbursements 21,243 10,868
-------- --------
257,741 164,324
-------- --------
Net income $305,428 $185,897
======== ========
Occupied percentage 100% 100%
======== ========
Company's ownership percentage 56.8% 56.8%
======== ========
Cash distributed to the Company $258,252 $169,278
======== ========
Net income allocated to the Company $173,369 $109,724
======== ========
Since the EYBL CarTex Building was purchased in May 1999, comparative income and
expense figures was available for only eight months of 1999.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-45-
The Sprint Building/Fund XI-XII-REIT Joint Venture
Year Ended
--------------- Six Months
December 31 Ended
--------------- December 31,
2000 1999
--------------- -------------
Revenues:
Rental income $1,063,988 $531,993
---------- --------
Expenses:
Depreciation 327,114 163,553
Management and leasing expenses 44,957 18,732
Operating expenses, net of reimbursements 20,095 6,069
---------- --------
392,166 188,354
---------- --------
Net income $ 671,822 $343,639
========== ========
Occupied percentage 100% 100%
========== ========
Company's ownership percentage 56.8% 56.8%
========== ========
Cash distributed to the Company $ 530,165 $269,824
========== ========
Net income allocated to the Company $ 381,346 $196,425
========== ========
Real estate taxes and primarily all operational expenses for the building are
the responsibility of the tenant.
Since the Sprint Building was purchased in July 1999, comparative income and
expense figures are available for only six months of 1999.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc refer to Item 2, Properties, page 3.
-46-
Johnson Matthey Building/Fund XI-XII-REIT Joint Venture
Year Ended
--------------- Five Months
December 31, Ended
--------------- December 31,
2000 1999
--------------- ---------------
Revenues:
Rental income $867,646 $325,368
-------- --------
Expenses:
Depreciation 255,475 106,461
Management and leasing expenses 36,194 11,846
Operating expenses, net of reimbursements 12,926 4,841
-------- --------
304,595 123,148
-------- --------
Net income $563,051 $202,220
======== ========
Occupied percentage 100% 100%
======== ========
Company's ownership percentage 56.8% 56.8%
======== ========
Cash distributed to the Company $425,937 $169,381
======== ========
Net income allocated to the Company $319,604 $113,483
======== ========
Since the Johnson Matthey Building was purchased in August 1999, comparative
income and expense figures are available for only five months of 1999. Real
estate taxes are the responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc refer to Item 2, Properties, page 3.
-47-
The Gartner Building/Fund XI-XII-REIT Joint Venture
Year Ended
--------------- Four Months
December 31, Ended
--------------- December 31,
2000 1999
--------------- --------------
Revenues:
Rental income $853,943 $235,863
-------- --------
Expenses:
Depreciation 310,490 103,496
Management and leasing expenses 39,189 8,268
Other operating expenses, net of reimbursements (33,991) 2,783
-------- --------
315,688 114,547
-------- --------
Net income $538,255 $121,316
======== ========
Occupied percentage 100% 100%
======== ========
Company's ownership percentage 56.8% 56.8%
======== ========
Cash distribution to the Company $438,852 $ 95,307
======== ========
Net income allocated to the Company $305,529 $ 68,863
======== ========
Other operating expenses are negative due to an offset of tenant reimbursements
in operating costs both for 2000 as well as the fourth quarter of 1999. Since
the Gartner Building was purchased in September 1999, the Company could not
estimate the amount to be billed for 1999 until the first quarter of 2000. The
Gartner Building incurred property taxes of $7,260 on the undeveloped lot for
2000.
Since the Gartner Building was purchased in September 1999, comparative income
and expense figures are available for only four months of 1999.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc refer to Item 2, Properties, page 3.
-48-
Marconi Building
Year Ended
--------------- Four Months
December 31, Ended
--------------- December 31,
2000 1999
--------------- -------------
Revenues:
Rental income $3,300,464 $1,090,425
---------- ----------
Expenses:
Depreciation 1,173,404 391,134
Management and leasing expenses 145,295 52,295
Other operating expenses 23,738 6,695
---------- ----------
1,342,437 450,124
---------- ----------
Net income $1,958,027 $ 640,301
========== ==========
Occupied percentage 100% 100%
========== ==========
Company's generated percentage 100% 100%
========== ==========
Cash generated to the Company $2,687,460 $ 829,259
========== ==========
Net income generated to the Company $1,958,027 $ 640,301
========== ==========
Since the Marconi Building was purchased in September 1999, comparable income
and expense figures are available for only four months of 1999. Under the terms
of the lease, the tenant is responsible for all utilities, property taxes, and
other operating expenses.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-49-
The Matsushita Building
Year Ended
-----------------
December 31,
-----------------
2000
-----------------
Revenues:
Rental income $2,001,867
----------
Expenses:
Depreciation 995,939
Management and leasing expenses 188,066
Other operating expenses 73,882
----------
1,257,887
----------
Net income $ 743,980
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $1,592,171
==========
Net income generated to the Company $ 743,980
==========
Construction of the Matsushita Building is complete, and the aggregate of all
costs and expenses incurred by Wells OP with respect to the acquisition and
construction of the Matsushita Building was $18,576,701. The monthly base rent
for the Matsushita Building is $154,602.
Since the Matsushita Building opened in January 2000, comparable income and
expense figures for the prior period are not available. The Matsushita Building
incurred property taxes of $105,533 for 2000.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-50-
Cinemark Building
Year Ended
--------------- One Month
December 31, Ended
--------------- December 31,
2000 1999
--------------- -------------
Revenues:
Rental income $2,805,393 $ 82,059
Interest income 8,863 0
---------- ---------
2,814,256 82,059
---------- ---------
Expenses:
Depreciation 848,962 70,753
Management and leasing expenses 137,311 262
Other operating expenses 669,855 35,222
---------- ---------
1,656,128 106,237
---------- ---------
Net income (loss) $1,158,128 $ (24,178)
========== =========
Occupied percentage 100% 100%
========== =========
Company's ownership percentage 100% 100%
========== =========
Cash generated to the Company $1,818,281 $ 42,467
========== =========
Net income (loss) generated to the Company $1,158,128 $ (24,178)
========== =========
Since the Cinemark Building was purchased in December 1999, comparable income
and expense figures are available for only one month of 1999. The Cinemark
Building incurred property taxes of $447,485 for 2000 and $6,181 for 1999.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-51-
The Metris Tulsa Building
Eleven Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $1,098,961
----------
Expenses:
Depreciation 439,093
Management and leasing expenses 47,466
Other operating expenses 15,345
----------
501,904
----------
Net income $ 597,057
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $ 998,096
==========
Net income generated to the Company $ 597,057
==========
Since the Metris Tulsa Building was purchased in February 2000, comparable
income and expense figures for the prior year are not available. Under the terms
of the lease, the tenant is responsible for property taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-52-
The Dial Building
Ten Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $1,051,945
----------
Expenses:
Depreciation 371,685
Management and leasing expenses 47,338
Other operating expenses 50,304
----------
469,327
----------
Net income $ 582,618
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $ 994,263
==========
Net income generated to the Company $ 582,618
==========
Since the Dial Building was purchased in March 2000, comparable income and
expense figures for the prior year are not available. Under the terms of the
lease, the tenant is responsible for property taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-53-
The ASML Building
Ten Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $1,776,174
----------
Expenses:
Depreciation 589,600
Management and leasing expenses 81,737
Other operating expenses 201,202
----------
872,539
----------
Net income $ 903,635
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $1,242,267
==========
Net income generated to the Company $ 903,635
==========
Since the ASML Building was purchased in March 2000, comparable income and
expense figures for the prior year are not available. Under the terms of the
ground lease, Price-Elliott Research Park is responsible for the property taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-54-
The Motorola Tempe Building
Ten Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $1,472,371
----------
Expenses:
Depreciation 550,166
Management and leasing expenses 65,377
Other operating expenses 230,156
----------
845,699
----------
Net income $ 626,672
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $1,134,678
==========
Net income generated to the Company $ 626,672
==========
Since the Motorola Building was purchased in March 2000, comparable income and
expense figures for the prior year are not available. Under the terms of the
ground lease, Price-Elliott Research Park is responsible for the property taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-55-
Siemens Building/Fund XII-REIT Joint Venture
Nine Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $974,796
Interest income 2,069
--------
976,865
--------
Expenses:
Depreciation 324,732
Management and leasing expenses 32,756
Operating costs, net of reimbursements 5,127
--------
362,615
--------
Net income $614,250
========
Occupied percentage 100%
========
Company's ownership percentage 46.8%
========
Cash distributed to the Company $401,330
========
Net income allocated to the Company $305,060
========
Since the Siemens Building was purchased in May 2000, comparative income and
expense figures are not available for the prior year.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-56-
The Avnet Building
Seven Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $975,485
--------
Expenses:
Depreciation 315,153
Management and leasing expenses 38,711
Other operating expenses 138,921
--------
492,785
--------
Net income $482,700
========
Occupied percentage 100%
========
Company's ownership percentage 100%
========
Cash generated to the Company $661,454
========
Net income generated to the Company $482,700
========
Since the Avent Building was purchased in June 2000, comparable income and
expense figures for the prior year are not available. Under the terms of the
ground lease, Price-Elliott Research Park is responsible for property taxes.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-57-
The Delphi Building
Seven Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $1,049,151
----------
Expenses:
Depreciation 458,563
Management and leasing expenses 43,852
Other operating expenses 12,633
----------
515,048
----------
Net income $ 534,103
==========
Occupied percentage 100%
==========
Company's ownership percentage 100%
==========
Cash generated to the Company $ 918,010
==========
Net income generated to the Company $ 534,103
==========
Since the Delphi Building was purchased in June 2000, comparable income and
expense figures for the prior year are not available. The Delphi Building
incurred property taxes of $175,966 for 2000.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-58-
The Quest Building (formerly the Bake Parkway Building)
Fund VIII-IX-REIT Joint Venture
Six Months
--------------
Ended
--------------
December 31,
--------------
2000
--------------
Revenues:
Rental income $563,049
--------
Expenses:
Depreciation 187,891
Management and leasing expenses 54,396
Other operating expenses 10,869
--------
235,156
--------
Net income $309,893
========
Occupied percentage 100.0%
========
Company's ownership percentage 15.7%
========
Cash distributed to the Company $ 30,447
========
Net income allocated to the Company $ 24,887
========
On June 15, 2000, the Fund VIII-IX-REIT Joint Venture was formed between Wells
OP and Fund VIII and Fund IX Associates, a Georgia joint venture partnership
between Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.
(the "Fund VIII-IX Joint Venture"). On July 1, 2000, the Fund VIII-IX Joint
Venture contributed its interest in the Quest Building (formerly the Bake
Parkway Building) to the Fund VIII-IX-REIT Joint Venture. The Quest Building is
a two-story office building containing approximately 65,006 rentable square feet
on a 4.4 acre tract of land in Irvine, California.
A 42-month lease for the entire Quest Building has been signed by Quest
Software, Inc. Occupancy occurred on August 1, 2000. Quest is a publicly traded
corporation that provides software database management and disaster recovery
services for its clients.
Construction of tenant improvements required under the Quest lease cost
approximately $1,231,000 and was funded by the Company. The Company began
participating in cash distributions and net income on July 1, 2000. Property
taxes are the responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-59-
The Alstom Power Richmond Building
Six Months
----------------
Ended
----------------
September 30,
----------------
2000
----------------
Revenues:
Rental income $533,309
--------
Expenses:
Depreciation 302,713
Management and leasing expenses 81,049
Other operating expenses (9,678)
--------
374,084
--------
Net income $159,225
========
Occupied percentage 100%
========
Company's ownership percentage 100%
========
Cash generated to the Company $497,469
========
Net income generated to the Company $159,225
========
Since the Alstom Building was completed in July 2000, comparable income and
expense figures for the prior period are not available. The Alstom Building
incurred property taxes of $27,037 for 2000.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-60-
The Motorola-New Jersey Building
Two Months
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $573,520
--------
Expenses:
Depreciation 114,250
Management and leasing expenses 24,933
Other operating expenses 14,608
--------
153,791
--------
Net income $419,729
========
Occupied percentage 100%
========
Company's ownership percentage 100%
========
Cash generated to the Company $523,264
========
Net income generated to the Company $419,729
========
Since the Motorola building was purchased in November 2000, comparable income
and expense figures for the prior year are not available. Property taxes are the
responsibility of the tenant.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-61-
The Metris Minnetonka Building
One Month
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $146,680
--------
Expenses:
Depreciation 150,507
Other operating expenses (38,450)
--------
112,057
--------
Net income $ 34,623
========
Occupied percentage 100%
========
Company's ownership percentage 100%
========
Cash generated to the Company $195,487
========
Net income generated to the Company $ 34,623
========
Since the Metris Minnetonka Building was purchased in December 2000, comparable
income and expense figures for the prior year are not available. The Metris
Minnetonka Building incurred property taxes of $1,669 for 2000.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-62-
The Stone and Webster Building
One Month
----------------
Ended
----------------
December 31,
----------------
2000
----------------
Revenues:
Rental income $197,035
--------
Expenses:
Depreciation 126,383
Other operating expenses 6,389
--------
132,772
--------
Net income $ 64,263
========
Occupied percentage 100%
========
Company's ownership percentage 100%
========
Cash generated to the Company $197,035
========
Net income generated to the Company $ 64,263
========
Since the Stone and Webster Building was purchased in December 2000, comparable
income and expense figures for the prior year are not available. The Stone and
Webster Building incurred property taxes of $6,389 for 2000.
For comments on the general competitive conditions to which the property may be
subject, see Item 1, Business, page 2. For additional information on tenants,
etc. refer to Item 2, Properties, page 3.
-63-
Inflation
The real estate market has not been affected significantly by inflation in the
past three years due to the relatively low inflation rate. There are provisions
in the majority of tenant leases to protect the Company from the impact of
inflation. These leases contain common area maintenance charges (CAM charges),
real estate tax and insurance reimbursements on a per square foot bases, or in
some cases, annual reimbursement of operating expenses above a certain per
square foot allowance. These provisions should reduce the Company's exposure to
increases in costs and operating expenses resulting from inflation.
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 Company's accountants or other reportable
events during 2000.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 27, 2001.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 27, 2001.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 27, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's Definitive Proxy Statement to be filed with the Commission for its
annual stockholders' meeting to be held on June 27, 2001.
-64-
PART III
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The financial statements are contained on pages F-2 through F-34 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. Financial statement Schedule III
Information with respect to this item begins on page S-1 of this Annual
Report on Form 10-K.
(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed
on the Exhibit Index attached hereto.
(b) The Company filed a Current Report on Form 8-K dated December 21, 2000
and an Amendment No. 1 to Current Report on Form 8-K/A dated December 21,
2000, reporting the acquisitions of the Stone &Webster Building located
in Houston, Texas and the Metris Minnetonka Building located in
Minnetonka, Minnesota.
(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.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
-65-
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 28th day of March
2001.
Wells Real Estate Investment Trust, Inc.
(Registrant)
By: /s/Leo F. Wells, III
---------------------------
Leo F. Wells, III
President and Director
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
- ------------------------------
Leo F. Wells, III President and Director March 28, 2001
(Principal Executive Officer)
/s/Walter W. Sessoms
- ------------------------------
Walter W. Sessoms Director March 28, 2001
/s/John L. Bell
- ------------------------------
John L. Bell Director March 28, 2001
/s/Richard W. Carpenter
- ------------------------------
Richard W. Carpenter Director March 28, 2001
/s/Bud Carter
- ------------------------------
Bud Carter Director March 28, 2001
/s/Donald S. Moss
- ------------------------------
Donald S. Moss Director March 28, 2001
/s/Neil H. Strickland
- ------------------------------
Neil H. Strickland Director March 28, 2001
/s/Williams H. Keogler, Jr.
- ------------------------------
William H. Keogler, Jr. Director March 28, 2001
/s/Douglas P. Williams
- ------------------------------
Douglas P. Williams Executive Vice President March 28, 2001
(Principal Financial and Accounting
Officer)
-66-
INDEX TO FINANCIAL STATEMENTS
Financial Statements Page
- ------------------------------------------------------------------------------- --------
Independent Auditors' Report F2
Balance Sheets as of December 31, 2000 and 1999 F3
Statements of Income for the Years ended December 31, 2000, 1999 and 1998 F4
Statements of Partners' Capital for the Years Ended December 31, 2000, 1999 and
1998 F5
Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998 F6
Notes to Financial Statements for December 31, 2000, 1999 and 1998 F7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Investment Trust, Inc.:
We have audited the accompanying consolidated balance sheets of WELLS REAL
ESTATE INVESTMENT TRUST, INC. (a Maryland corporation) AND SUBSIDIARY as of
December 31, 2000 and 1999 and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements and schedule
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 and
schedule 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Wells Real Estate
Investment Trust, Inc. and subsidiary as of December 31, 2000 and 1999 and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III--Real Estate Investments and
Accumulated Depreciation as of December 31, 2000 is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 30, 2001
F-2
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS
2000 1999
------------ ------------
REAL ESTATE ASSETS, at cost:
Land $ 46,237,812 $ 14,500,822
Building, less accumulated depreciation of $9,469,653 and
$1,726,102 at December 31, 2000 and 1999, respectively 287,862,655 81,507,040
Construction in progress 3,357,720 12,561,459
------------ ------------
Total real estate assets 337,458,187 108,569,321
INVESTMENT IN JOINT VENTURES 44,236,597 29,431,176
CASH AND CASH EQUIVALENTS 4,298,301 2,929,804
ACCOUNTS RECEIVABLE 3,356,428 898,704
DEFERRED LEASE ACQUISITION COSTS 1,890,332 0
DEFERRED OFFERING COSTS 1,291,376 964,941
DEFERRED PROJECT COSTS 550,256 28,093
DUE FROM AFFILIATES 734,286 648,354
PREPAID EXPENSES AND OTHER ASSETS, net 4,734,583 381,897
------------ ------------
Total assets $398,550,346 $143,852,290
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Notes payable $127,663,187 $ 23,929,228
Accounts payable and accrued expenses 2,166,387 224,721
Deferred rental income 381,194 236,579
Dividends payable 1,025,010 2,166,701
Due to affiliate 1,772,956 1,079,466
------------ ------------
Total liabilities 133,008,734 27,636,695
------------ ------------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST OF UNIT HOLDER IN OPERATING PARTNERSHIP 200,000 200,000
------------ ------------
SHAREHOLDERS' EQUITY:
Common shares, $.01 par value; 125,000,000 shares
authorized, 31,509,807 shares issued and 31,368,510
shares outstanding at December 31, 2000, and
13,471,085 shares issued and
outstanding at December 31, 1999 315,097 134,710
Additional paid-in capital 266,439,484 115,880,885
Treasury stock, at cost, 141,297 shares at December 31, 2000
and 0 shares at December 31, 1999 (1,412,969) 0
------------ ------------
Total shareholders' equity 265,341,612 116,015,595
------------ ------------
Total liabilities and shareholders' equity $398,550,346 $143,852,290
============ ============
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
----------- ---------- ---------
REVENUES:
Rental income $20,505,000 $4,735,184 $ 20,994
Equity in income of joint ventures 2,293,873 1,243,969 263,315
Interest income 520,924 502,993 110,869
Other income 53,409 13,249 0
----------- ---------- ---------
23,373,206 6,495,395 395,178
----------- ---------- ---------
EXPENSES:
Depreciation 7,743,551 1,726,103 0
Interest expense 3,966,902 442,029 11,033
Amortization of deferred financing costs 232,559 8,921 0
Operating costs, net of reimbursements 888,091 (74,666) 0
Management and leasing fees 1,309,974 257,744 0
General and administrative 426,680 123,776 29,943
Legal and accounting 240,209 115,471 19,552
Computer costs 12,273 11,368 616
----------- ---------- ---------
14,820,239 2,610,746 61,144
----------- ---------- ---------
NET INCOME $ 8,552,967 $3,884,649 $ 334,034
=========== ========== =========
EARNINGS PER SHARE:
Basic and diluted $ 0.40 $ 0.50 $ 0.40
=========== ========== =========
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Common Stock Additional Treasury Stock Total
--------------------- Paid-In Retained ---------------------- Shareholders'
Shares Amount Capital Earnings Shares Amount Equity
---------- --------- ------------- ----------- --------- ---------- -------------
BALANCE, December 31, 1997 100 $ 1 $ 999 $ 0 $ 0 $ 0 $ 1,000
Issuance of common stock 3,154,036 31,540 31,508,820 0 0 0 31,540,360
Net income 0 0 0 334,034 0 0 334,034
Dividends ($.31 per share) 0 0 (511,163) 0 0 0 (511,163)
Sales commissions 0 0 (2,996,334) 0 0 0 (2,996,334)
Other offering expenses 0 0 (946,210) 0 0 0 (946,210)
---------- ---------- ------------- ----------- --------- ----------- -------------
BALANCE, December 31, 1998 3,154,136 31,541 27,056,112 334,034 0 0 27,421,687
Issuance of common stock 10,316,949 103,169 103,066,321 0 0 0 103,169,490
Net income 0 0 0 3,884,649 0 0 3,884,649
Dividends ($.70 per share) 0 0 (1,346,240) (4,218,683) 0 0 (5,564,923)
Sales commissions 0 0 (9,801,197) 0 0 0 (9,801,197)
Other offering expenses 0 0 (3,094,111) 0 0 0 (3,094,111)
---------- ---------- ------------- ----------- --------- ----------- -------------
BALANCE, December 31, 1999 13,471,085 134,710 115,880,885 0 0 0 116,015,595
Issuance of common stock 18,038,722 180,387 180,206,833 0 0 0 180,387,220
Treasury stock purchased 0 0 0 0 (141,297) (1,412,969) (1,412,969)
Net income 0 0 0 8,552,967 0 0 8,552,967
Dividends ($.73 per share) 0 0 (7,276,452) (8,552,967) 0 0 (15,829,419)
Sales commissions 0 0 (17,002,554) 0 0 0 (17,002,554)
Other offering expenses 0 0 (5,369,228) 0 0 0 (5,369,228)
---------- ---------- ------------- ----------- --------- ----------- -------------
BALANCE, December 31, 2000 31,509,807 $ 315,097 $ 266,439,484 $ 0 $(141,297) $(1,412,969) $ 265,341,612
========== ========== ============= =========== ========= =========== =============
The accompanying notes are an integral part of these consolidated statements.
F-5
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,552,967 $ 3,884,649 $ 334,034
-------------- ------------- ------------
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Equity in income of joint ventures (2,293,873) (1,243,969) (263,315)
Depreciation 7,743,551 1,735,024 0
Amortization of deferred financing costs 232,559 0 0
Changes in assets and liabilities:
Accounts receivable (2,457,724) (898,704) 0
Due from affiliates (435,600) 0 0
Prepaid expenses and other assets, net (6,475,577) 149,501 (540,319)
Accounts payable and accrued expenses 1,941,666 36,894 187,827
Deferred rental income 144,615 236,579 0
Due to affiliates 367,055 108,301 6,224
-------------- ------------- ------------
Total adjustments (1,233,328) 123,626 (609,583)
-------------- ------------- ------------
Net cash provided by (used in)
operating activities 7,319,639 4,008,275 (275,549)
-------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate (231,518,138) (85,514,506) (21,299,071)
Investment in joint ventures (15,063,625) (17,641,211) (11,276,007)
Deferred project costs paid (6,264,098) (3,610,967) (1,103,913)
Distributions received from joint ventures 3,529,401 1,371,728 178,184
-------------- ------------- ------------
Net cash used in investing
activities (249,316,460) (105,394,956) (33,500,807)
-------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 187,633,130 40,594,463 14,059,930
Repayments of notes payable (83,899,171) (30,725,165) 0
Dividends paid to shareholders (16,971,110) (3,806,398) (102,987)
Issuance of common stock 180,387,220 103,169,490 31,540,360
Treasury stock purchased (1,412,969) 0 0
Sales commissions paid (17,002,554) (9,801,197) (2,996,334)
Other offering costs paid (5,369,228) (3,094,111) (946,210)
-------------- ------------- ------------
Net cash provided by financing
activities 243,365,318 96,337,082 41,554,759
-------------- ------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,368,497 (5,049,599) 7,778,403
CASH AND CASH EQUIVALENTS, beginning of year 2,929,804 7,979,403 201,000
-------------- ------------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 4,298,301 $ 2,929,804 $ 7,979,403
============== ============= ============
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Deferred project costs applied to real
estate assets $ 5,114,279 $ 3,183,239 $ 298,608
============== ============= ============
Deferred project costs contributed to
joint ventures $ 627,656 $ 735,056 $ 469,884
============== ============= ============
Deferred offering costs due to affiliate $ 326,435 $ 416,212 $ 0
============== ============= ============
The accompanying notes are an integral part of these consolidated statements.
F-6
WELLS REAL ESTATE INVESTMENT TRUST, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000,1999, AND 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Wells Real Estate Investment Trust, Inc. (the "Company") is a Maryland
corporation that qualifies as a real estate investment trust ("REIT"). The
Company is conducting an offering for the sale of a maximum of 125,000,000
(exclusive of 10,000,000 shares available pursuant to the Company's
dividend reinvestment plan) shares of common stock, $.01 par value per
share, at a price of $10 per share. The Company will seek to acquire and
operate commercial properties, including, but not limited to, office
buildings, shopping centers, business and industrial parks, and other
commercial and industrial properties, including properties which are under
construction, are newly constructed, or have been constructed and have
operating histories. All such properties may be acquired, developed, and
operated by the Company alone or jointly with another party. The Company is
likely to enter into one or more joint ventures with affiliated entities
for the acquisition of properties. In connection with this, the Company may
enter into joint ventures for the acquisition of properties with prior or
future real estate limited partnership programs sponsored by Wells Capital,
Inc. (the "Advisor") or its affiliates.
Substantially all of the Company's business is conducted through Wells
Operating Partnership, L.P. (the "Operating Partnership"), a Delaware
limited partnership. During 1997, the Operating Partnership issued 20,000
limited partner units to the Advisor in exchange for $200,000. The Company
is the sole general partner in the Operating Partnership and possesses full
legal control and authority over the operations of the Operating
Partnership; consequently, the accompanying consolidated financial
statements of the Company include the amounts of the Operating Partnership.
The Operating Partnership owns the following properties directly: (i) the
PricewaterhouseCoopers property (the "PwC Building"), a four-story office
building located in Tampa, Florida; (ii) the AT&T Building, a four-story
office building located in Harrisburg, Pennsylvania; (iii) the Marconi Data
Systems property (the "Marconi Building"), a two-story office building
located in Wood Dale, Illinois; (iv) the Cinemark Building, a five-story
office building located in Plano, Texas; (v) the Matsushita Building, a
two-story office building located in Lake Forest, California; (vi) the ASML
Building, a two-story office building located in Tempe, Arizona; (vii) the
Motorola Tempe Building, a two-story office building located in Tempe,
Arizona; (viii) the Dial Building, a two-story office building located in
Scottsdale, Arizona; (ix) the Delphi Building, a three-story office
building located in Troy, Michigan; (x) the Avnet Building, a two-story
office building located in Tempe, Arizona; (xi) the Metris Oklahoma
Building, a three-story office building located in Tulsa, Oklahoma; (xii)
the Alstom Power-Richmond Building, a four-story office building located in
Richmond, Virginia; (xiii) the Motorola Plainfield Building, a three-story
office building located in South Plainfield, New Jersey; (xiv) the Stone &
Webster Building, a six-story office building located in Houston, Texas;
and (xv) the Metris Minnetonka Building, a nine-story office building
located in Minnetonka, Minnesota.
The Company owns an interest in one property through a joint venture
between the Operating Partnership, Wells Real Estate Fund VIII, L.P.
("Wells Fund VIII"), and Wells Real Estate Fund IX, L.P. ("Wells Fund IX"),
which is referred to as the Fund VIII, IX, and REIT Joint Venture. The
Company also owns interests in several properties through a joint venture
between the Operating Partnership, Wells Fund IX, Wells Real Estate Fund X,
L.P. ("Wells Fund X"), and Wells Real Estate Fund XI, L.P. ("Wells Fund
XI"). This joint venture is referred to as the Fund IX, Fund X, Fund XI,
and REIT Joint Venture ("Fund IX, X, XI, and REIT Joint Venture"). The
Company owns two properties through joint venture
F-7
between the Operating Partnership and Fund X and XI Associates, a joint
venture between Wells Fund X and Wells Fund XI. In addition, the Company
owns an interest in several properties through a joint venture between
Wells Fund XI, Wells Real Estate Fund XII, L.P. ("Wells Fund XII"), and the
Operating Partnership, which is referred to as the Fund XI, XII, and REIT
Joint Venture. The Company also owns two properties through a joint venture
between Wells Fund XII and the Operating Partnership, which is referred to
as the Fund XII and REIT Joint Venture.
Through its investment in the Fund VIII, IX, and REIT Joint Venture, the
Company owns an interest in a two-story office building in Orange County,
California (the "Quest Building").
The following properties are owned by the Company through its investment in
the Fund IX, X, XI, and REIT Joint Venture: (i) a three-story office
building in Knoxville, Tennessee (the "Alstom Power Building," formerly the
ABB Building), (ii) a two-story office building in Louisville, Colorado
(the "Ohmeda Building"), (iii) a three-story office building in Broomfield,
Colorado (the "360 Interlocken Building"), (iv) a one-story warehouse
facility in Ogden, Utah (the "Iomega Building"), and (v) a one-story office
building in Oklahoma City, Oklahoma (the "Avaya Building," formerly the
Lucent Technologies Building).
Through its investment in joint ventures with Fund X and XI Associates, the
Company owns interests in the following properties: (i) a one-story office
and warehouse building in Fountain Valley, California (the "Cort Furniture
Building") owned by Wells/Orange County Associates and (ii) a warehouse and
office building in Fremont, California (the "Fairchild Building") owned by
Wells/Fremont Associates.
The following properties are owned by the Company through its investment in
the Fund XI, XII, and REIT Joint Venture: (i) a two-story manufacturing and
office building in Greenville County, South Carolina (the "EYBL CarTex
Building"), (ii) a three-story office building Leawood, Kansas (the "Sprint
Building"), (iii) an office and warehouse building in Chester County,
Pennsylvania (the "Johnson Matthey Building"), and (iv) a two-story office
building in Ft. Myers, Florida (the "Gartner Building").
Through its investment in the Fund XII and REIT Joint Venture, the Company
owns interests in the following properties: (i) a three-story office
building in Troy, Michigan (the "Siemens Building"), and (ii) a one-story
office building and a two-story office building in Oklahoma City, Oklahoma
(collectively referred to as the "AT&T Call Center Buildings").
Use of Estimates and Factors Affecting the Company
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles 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 carrying values of real estate are based on management's current intent
to hold the real estate assets as long-term investments. The success of the
Company's future operations and the ability to realize the investment in
its assets will be dependent on the Company's ability to maintain rental
rates, occupancy, and an appropriate level of operating expenses in future
years. Management believes that the steps it is taking will enable the
Company to realize its investment in its assets.
Income Taxes
The Company has elected to be taxed as a REIT under the Internal Revenue
Code of 1986, as amended (the "Code"), commencing with the taxable year
ended December 31, 1998. As a result, the Company generally will not be
subject to federal income taxation at the corporate level to the extent it
distributes annually at least 95% (90% beginning in 2001) of its REIT
taxable income, as defined in the Code, to its shareholders and satisfies
certain other requirements. Additionally, the Operating Partnership is not
subject to federal or state income taxes. Accordingly, no provision has
been made for federal or state
F-8
income taxes in the accompanying consolidated financial statements for the
years ended December 31, 2000 and 1999.
Real Estate Assets
Real estate assets held by the Company and joint ventures are stated at
cost less accumulated depreciation. Major improvements and betterments are
capitalized when they extend the useful life of the related asset. All
repair and maintenance 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 Company or the joint ventures as of December 31, 2000.
Depreciation of building 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
All leases on real estate assets held by the Company or 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.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Company 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.
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.
Earnings Per Share
Earnings per share is calculated based on the weighted average number of
common shares outstanding during each period. The weighted average number
of common shares outstanding is identical for basic and fully diluted
earnings per share, as there is no dilutive impact created from the
Company's stock option plan (Note 10) using the treasury stock method.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
current year financial statement presentation.
F-9
Investment in Joint Ventures
Basis of Presentation
The Operating Partnership does not have control over the operations of
the joint ventures; however, it does exercise significant influence.
Accordingly, the Operating Partnership's investment in the joint
ventures is recorded using the equity method of accounting.
Partners' Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to
the Operating 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 from the joint ventures to the
Operating Partnership on a quarterly basis.
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.
2. DEFERRED PROJECT COSTS
The Company paid a percentage of shareholder contributions to the Advisor
for acquisition and advisory services. These payments, as stipulated in the
prospectus, can be up to 3.5% of shareholder contributions, subject to
certain overall limitations contained in the prospectus. Aggregate fees
paid through December 31, 2000 were $10,978,981 and amounted to 3.5% of
shareholders' contributions received. These fees are allocated to specific
properties as they are purchased or developed and are included in
capitalized assets of the joint ventures or real estate assets. Deferred
project costs at December 31, 2000 and 1999 represent fees not yet applied
to properties.
3. DEFERRED OFFERING COSTS
Offering expenses, to the extent they exceed 3% of gross offering proceeds,
will be paid by the Advisor and not by the Company. Offering expenses do
not include sales or underwriting commissions but do include such costs as
legal and accounting fees, printing costs, and other offering expenses.
As of December 31, 2000, the Advisor paid offering expenses on behalf of
the Company in the aggregate amount of $10,700,925, of which the Advisor
was reimbursed $9,409,549, which did not exceed the 3% limitation. The
unpaid portion of deferred offering costs is $1,291,376 and is included in
due to affiliate in the accompanying balance sheet.
F-10
4. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 2000 represents the Operating
Partnership's share of the cash to be distributed from its joint venture
investments for the fourth quarter of 2000 and 1999 as follows:
2000 1999
--------- ---------
Fund VIII, IX, and REIT Joint Venture $ 21,605 $ 0
Fund IX, X, XI, and REIT Joint Venture 12,781 32,079
Wells/Orange County Associates 24,583 75,953
Wells/Fremont Associates 53,974 152,681
Fund XI, XII, and REIT Joint Venture 136,648 387,641
Fund XII and REIT Joint Venture 49,094 0
The Advisor 10,995 0
Cinemark Building 424,606 0
--------- ---------
$ 734,286 $ 648,354
========= =========
The Company entered into a property management agreement with Wells Management
Company, Inc. ("Wells Management"), an affiliate of the Advisor. In
consideration for supervising the management and leasing of the Operating
Partnership's properties, the Operating Partnership will pay Wells Management
management and leasing fees equal to the lesser of (a) 4.5% of the gross
revenues generally paid over the life of the lease, or (b) 0.6% of the net asset
value of the properties (excluding vacant properties) owned by the Company,
calculated on an annual basis plus a separate competitive fee for the one-time
initial lease-up of newly constructed properties generally paid in conjunction
with the receipt of the first month's rent.
The Operating Partnership's portion of the management and leasing fees and lease
acquisition costs paid to Wells Management, both directly and at the joint
venture level, were $1,111,748, $336,517, and $0 for the years ended December
31, 2000, 1999, and 1998, respectively.
The Advisor performs certain administrative services for the Operating
Partnership, such as accounting and other partnership administration, and incurs
the related expenses. Such expenses are allocated among the Operating
Partnership and 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 basis for allocating such expenses.
The Advisor is a general partner in various Wells Real Estate Funds. As such,
there may exist conflicts of interest where the Advisor, while serving in the
capacity as general partner for Wells Real Estate Funds, may be in competition
with the Operating Partnership for tenants in similar geographic markets.
F-11
5. INVESTMENT IN JOINT VENTURES
The Operating Partnership's investment and percentage ownership in joint
ventures at December 31, 2000 and 1999 are summarized as follows:
2000 1999
------------------------ ----------------------
Amount Percent Amount Percent
------------ ---------- ----------- ---------
Fund VIII, IX, and REIT Joint Venture $ 1,276,551 16% $ 0 0%
Fund IX, X, XI, and REIT Joint Venture 1,339,636 4 1,388,884 4
Wells/Orange County Associates 2,827,607 44 2,893,112 44
Wells/Fremont Associates 6,791,287 78 6,988,210 78
Fund XI, XII, and REIT Joint Venture 17,688,615 57 18,160,970 57
Fund XII and REIT Joint Venture 14,312,901 47 0 0
------------ -----------
$ 44,236,597 $29,431,176
============ ===========
The following is a rollforward of the Operating Partnership's investment in
joint ventures for the years ended December 31, 2000 and 1999:
2000 1999
----------- -----------
Investment in joint ventures, beginning of year $29,431,176 $11,568,677
Equity in income of joint ventures 2,293,873 1,243,969
Contributions to joint ventures 15,691,281 18,376,267
Distributions from joint ventures (3,179,733) (1,757,737)
----------- -----------
Investment in joint ventures, end of year $44,236,597 $29,431,176
----------- -----------
Fund VIII, IX, and REIT Joint Venture
On June 15, 2000, Fund VIII and IX Associated entered into a joint venture with
Wells Operating Partnership, L.P. (the "Operating Partnership"), a Delaware
limited partnership having Wells Real Estate Investment Trust, Inc. ("Wells
REIT"), a Maryland corporation, as its general partner. The joint venture, Fund
VIII, IX, and REIT Joint Venture, was formed to acquire, develop, operate, and
sell real properties.
On July 1, 2000, Fund VIII and IX contributed the Quest Building to the joint
venture. The Quest Building is a two-story office building containing
approximately 65,006 rentable square feet on a 4.4 acre trace of land in Irvine,
California.
F-12
Following are the financial statements for Fund VIII, IX, and REIT Joint
Venture:
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheet
December 31, 2000
Assets
Real estate assets, at cost:
Land $2,220,993
Building and improvements, less accumulated depreciation of $187,891 5,408,892
------------
Total real estate assets 7,629,885
Cash and cash equivalents 170,664
Accounts receivable 197,802
Prepaid expenses and other assets 283,864
------------
Total assets $8,282,215
============
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 170,664
------------
Partners' capital:
Fund VIII and IX Associates 6,835,000
Wells Operating Partnership, L.P. 1,276,551
------------
Total partners' capital 8,111,551
------------
Total liabilities and partners' capital $8,282,215
============
F-13
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Income
for the Six Months Ended December 31, 2000
Revenues:
Rental income $563,049
----------
Expenses:
Depreciation 187,891
Management and leasing fees 54,395
Property administration expenses 5,692
Operating costs, net of reimbursements 5,178
----------
253,156
----------
Net income $309,893
==========
Net income allocated to Fund VIII and IX Associates $285,006
==========
Net income allocated to Wells Operating Partnership, L.P. $ 24,887
==========
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Partners' Capital
for the Six Months Ended December 31, 2000
Fund VIII Wells Total
and IX Operating Partners'
Associates Partnership, L.P. Capital
------------ ----------------- ----------
$ $
Balance, July 1, 2000 0 $ 0 0
Net income 285,006 24,887 309,893
Partnership contributions 6,857,889 1,282,111 8,140,000
Partnership distributions (307,895) (30,447) (338,342)
------------ ------------ ----------
Balance, December 31, 2000 $6,835,000 $1,276,551 $8,111,551
============ ============ ==========
F-14
Fund VIII, IX, and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Cash Flows
for the Six Months Ended December 31, 2000
Cash flows from operating activities:
Net income $ 309,893
-----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 187,891
Changes in assets and liabilities:
Accounts receivable (197,802)
Prepaid expenses and other assets (283,864)
-----------
Total adjustments (293,775)
-----------
Net cash provided by operating activities 16,118
-----------
Cash flows from investing activities:
Investment in real estate (959,887)
Cash flows from financing activities: -----------
Contributions from joint venture partners 1,282,111
Distributions to joint venture partners (167,678)
-----------
Net cash provided by financing activities 1,114,433
-----------
Net increase in cash and cash equivalents 170,664
Cash and cash equivalents, beginning of period 0
-----------
Cash and cash equivalents, end of year $ 170,664
===========
Supplemental disclosure of noncash activities:
Real estate contribution received from joint venture partner $ 6,857,889
===========
Fund IX, X, XI, and REIT Joint Venture
On March 20, 1997, Wells Fund IX and Wells Fund X entered into a joint venture
agreement. The joint venture, Fund IX and X Associates, was formed to acquire,
develop, operate, and sell real properties. On March 20, 1997, Wells Fund IX
contributed a 5.62-acre tract of real property in Knoxville, Tennessee, and
improvements thereon, known as the Alstom Power Building, to the Fund IX and X
Associates joint venture. A 84,404-square-foot, three-story building was
constructed and commenced operations at the end of 1997.
On February 13, 1998, the joint venture purchased a two-story office building,
known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, the
joint venture purchased a three-story office building, known as the 360
Interlocken Building, in Broomfield, Colorado. On June 11, 1998, Fund IX and X
Associates was amended and restated to admit Wells Fund XI and the Operating
Partnership. The joint venture was renamed the Fund IX, X, XI, and REIT Joint
Venture. On June 24, 1998, the new joint venture purchased a one-story office
building, known as the Avaya Building, in Oklahoma City, Oklahoma. On April 1,
1998, Wells Fund X purchased a one-story warehouse facility, known as the Iomega
Building, in Ogden, Utah. On July 1, 1998, Wells Fund X contributed the Iomega
Building to the Fund IX, X, XI, and REIT Joint Venture.
F-15
Following are the financial statements for the Fund IX, X, XI, and REIT Joint
Venture:
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
------------ ------------
Real estate assets, at cost:
Land $ 6,698,020 $ 6,698,020
Building and improvements, less accumulated depreciation
of $4,203,502 in 2000 and $2,792,068 in 1999 28,594,768 29,878,541
------------ ------------
Total real estate assets 35,292,788 36,576,561
Cash and cash equivalents 1,500,044 1,146,874
Accounts receivable 422,243 554,965
Prepaid expenses and other assets 487,276 526,409
------------ ------------
Total assets $ 37,702,351 $ 38,804,809
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued liabilities $ 568,517 $ 613,574
Refundable security deposits 99,279 91,340
Due to affiliates 9,595 6,379
Partnership distributions payable 931,151 804,734
------------ ------------
Total liabilities 1,608,542 1,516,027
------------ ------------
Partners' capital:
Wells Real Estate Fund IX 14,117,803 14,590,626
Wells Real Estate Fund X 17,445,277 18,000,869
Wells Real Estate Fund XI 3,191,093 3,308,403
Wells Operating Partnership, L.P. 1,339,636 1,388,884
------------ ------------
Total partners' capital 36,093,809 37,288,782
------------ ------------
Total liabilities and partners' capital $ 37,702,351 $ 38,804,809
============ ============
F-16
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Revenues:
Rental income $4,198,388 $3,932,962 $ 2,945,980
Other income 116,129 61,312 0
Interest income 73,676 58,768 20,438
------------ ------------ ------------
4,388,193 4,053,042 2,966,418
------------ ------------ ------------
Expenses:
Depreciation 1,411,434 1,538,912 1,216,293
Management and leasing fees 362,774 286,139 226,643
Operating costs, net of reimbursements (154,001) (43,501) (140,506)
Property administration expense 78,420 63,311 34,821
Legal and accounting 20,423 35,937 15,351
------------ ------------ ------------
1,719,050 1,880,798 1,352,602
------------ ------------ ------------
Net income $2,669,143 $2,172,244 $ 1,613,816
============ ============ ============
Net income allocated to Wells Real Estate Fund IX $1,045,094 $ 850,072 $ 692,116
============ ============ ============
Net income allocated to Wells Real Estate Fund X $1,288,629 $1,056,316 $ 787,481
============ ============ ============
Net income allocated to Wells Real Estate Fund XI $ 236,243 $ 184,355 $ 85,352
============ ============ ============
Net income allocated to Wells Operating Partnership, L.P. $ 99,177 $ 81,501 $ 48,867
============ ============ ============
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells
Wells Real Wells Real Wells Real Operating Total
Estate Estate Estate Partnership, Partners'
Fund IX Fund X Fund XI L.P. Capital
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 $ 3,702,793 $ 3,662,803 $ 0 $ 0 $ 7,365,596
Net income 692,116 787,481 85,352 48,867 1,613,816
Partnership contributions 11,771,312 15,613,477 2,586,262 1,480,741 31,451,792
Partnership distributions (1,206,121) (1,356,622) (150,611) (86,230) (2,799,584)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 14,960,100 18,707,139 2,521,003 1,443,378 37,631,620
Net income 850,072 1,056,316 184,355 81,501 2,172,244
Partnership contributions 198,989 0 911,027 0 1,110,016
Partnership distributions (1,418,535) (1,762,586) (307,982) (135,995) (3,625,098)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 14,590,626 18,000,869 3,308,403 1,388,884 37,288,782
Net income 1,045,094 1,288,629 236,243 99,177 2,669,143
Partnership contributions 46,122 84,317 0 0 130,439
Partnership distributions (1,564,039) (1,928,538) (353,553) (148,425) (3,994,555)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 $14,117,803 $17,445,277 $ 3,191,093 $ 1,339,636 $36,093,809
=========== =========== =========== =========== ===========
F-17
The Fund IX, X, XI, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, and 1999, and 1998
2000 1999 1998
------------ ------------ ------------
Cash flows from operating activities:
Net income $ 2,669,143 $ 2,172,244 $ 1,613,816
------------ ------------ ------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,411,434 1,538,912 1,216,293
Changes in assets and liabilities:
Accounts receivable 132,722 (421,708) (92,745)
Prepaid expenses and other assets 39,133 (85,281) (111,818)
Accounts payable, accrued liabilities
and refundable security deposits (37,118) 295,177 29,967
Due to affiliates 3,216 1,973 1,927
------------ ------------ ------------
Total adjustments 1,549,387 1,329,073 1,043,624
------------ ------------ ------------
Net cash provided by operating
activities 4,218,530 3,501,317 2,657,440
------------ ------------ ------------
Cash flows from investing activities:
Investment in real estate (127,661) (930,401) (24,788,070)
------------ ------------ ------------
Cash flows from financing activities:
Distributions to joint venture partners (3,868,138) (3,820,491) (1,799,457)
Contributions received from partners 130,439 1,066,992 24,970,373
------------ ------------ ------------
Net cash (used in) provided by
financing activities (3,737,699) (2,753,499) 23,170,916
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents 353,170 (182,583) 1,040,286
Cash and cash equivalents, beginning of year 1,146,874 1,329,457 289,171
------------ ------------ ------------
Cash and cash equivalents, end of year $ 1,500,044 $ 1,146,874 $ 1,329,457
============ ============ ============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint
venture $ 0 $ 43,024 $ 1,470,780
============ ============ ============
Contribution of real estate assets to joint
venture $ 0 $ 0 $ 5,010,639
============ ============ ============
Wells/Orange County Associates
On July 27, 1998, the Operating Partnership entered into a joint venture
agreement with Wells Development Corporation, referred to as Wells/Orange County
Associates. On July 31, 1998, Wells/Orange County Associates acquired a
52,000-square-foot warehouse and office building located in Fountain Valley,
California, known as the Cort Furniture Building.
On September 1, 1998, Fund X and XI Associates acquired Wells Development
Corporation's interest in Wells/Orange County Associates which resulted in Fund
X and XI Associates becoming a joint venture partner with the Operating
Partnership in the ownership of the Cort Furniture Building.
F-18
Following are the financial statements for Wells/Orange County Associates:
Wells/Orange County Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
2000 1999
Assets ---------- ----------
Real estate assets, at cost:
Land $2,187,501 $2,187,501
Building, less accumulated depreciation of $465,216 in 2000
and $278,652 in 1999 4,198,899 4,385,463
---------- ----------
Total real estate assets 6,386,400 6,572,964
Cash and cash equivalents 119,038 176,666
Accounts receivable 99,154 49,679
---------- ----------
Total assets $6,604,592 $6,799,309
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 1,000 $ 0
Partnership distributions payable 128,227 173,935
---------- ----------
Total liabilities 129,227 173,935
---------- ----------
Partners' capital:
Wells Operating Partnership, L.P. 2,827,607 2,893,112
Fund X and XI Associates 3,647,758 3,732,262
---------- ----------
Total partners' capital 6,475,365 6,625,374
---------- ----------
Total liabilities and partners' capital $6,604,592 $6,799,309
========== ==========
F-19
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
-------- -------- --------
Revenues:
Rental income $795,545 $795,545 $331,477
Interest income 0 0 448
-------- -------- --------
795,545 795,545 331,925
-------- -------- --------
Expenses:
Depreciation 186,564 186,565 92,087
Management and leasing fees 30,915 30,360 12,734
Operating costs, net of reimbursements 5,005 22,229 2,288
Interest 0 0 29,472
Legal and accounting 4,100 5,439 3,930
-------- -------- --------
226,584 244,593 140,511
-------- -------- --------
Net income $568,961 $550,952 $191,414
======== ======== ========
Net income allocated to Wells Operating Partnership, L.P. $248,449 $240,585 $ 91,978
======== ======== ========
Net income allocated to Fund X and XI Associates $320,512 $310,367 $ 99,436
======== ======== ========
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells
Operating Fund X Total
Partnership, and XI Partners'
L.P. Associates Capital
------------ ------------ ------------
Balance, December 31, 1997 $ 0 $ 0 $ 0
Net income 91,978 99,436 191,414
Partnership contributions 2,991,074 3,863,272 6,854,346
Partnership distributions (124,435) (145,942) (270,377)
------------ ------------ ------------
Balance, December 31, 1998 2,958,617 3,816,766 6,775,383
Net income 240,585 310,367 550,952
Partnership distributions (306,090) (394,871) (700,961)
------------ ------------ ------------
Balance, December 31, 1999 2,893,112 3,732,262 6,625,374
Net income 248,449 320,512 568,961
Partnership distributions (313,954) (405,016) (718,970)
------------ ------------ ------------
Balance, December 31, 2000 $ 2,827,607 $ 3,647,758 $ 6,475,365
============ ============ ============
F-20
Wells/Orange County Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---------- ---------- -----------
Cash flows from operating activities:
Net income $ 568,961 $ 550,952 $ 191,414
---------- ---------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 186,564 186,565 92,087
Changes in assets and liabilities:
Accounts receivable (49,475) (36,556) (13,123)
Accounts payable 1,000 (1,550) 1,550
---------- ---------- -----------
Total adjustments 138,089 148,459 80,514
---------- ---------- -----------
Net cash provided by operating activities 707,050 699,411 271,928
---------- ---------- -----------
Cash flows from investing activities:
Investment in real estate 0 0 (6,563,700)
---------- ---------- -----------
Cash flows from financing activities:
Issuance of note payable 0 0 4,875,000
Payment of note payable 0 0 (4,875,000)
Distributions to partners (764,678) (703,640) (93,763)
Contributions received from partners 0 0 6,566,430
---------- ---------- -----------
Net cash (used in) provided by financing
activities (764,678) (703,640) 6,472,667
---------- ---------- -----------
Net (decrease) increase in cash and cash equivalents (57,628) (4,229) 180,895
Cash and cash equivalents, beginning of year 176,666 180,895 0
---------- ---------- -----------
Cash and cash equivalents, end of year $ 119,038 $ 176,666 $ 180,895
========== ========== ===========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 287,916
========== ========== ===========
Wells/Fremont Associates
On July 15, 1998, the Operating Partnership entered into a joint venture
agreement with Wells Development Corporation, referred to as Wells/Fremont
Associates. On July 21, 1998, Wells/Fremont Associates acquired a
58,424-square-foot warehouse and office building located in Fremont, California,
known as the Fairchild Building.
On October 8, 1998, Fund X and XI Associates acquired Wells Development
Corporation's interest in Wells/Fremont Associates which resulted in Fund X and
XI Associates becoming a joint venture partner with the Operating Partnership in
the ownership of the Fairchild Building.
F-21
Following are the financial statements for Wells/Fremont Associates:
Wells/Fremont Associates
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
2000 1999
Assets ---------- ----------
Real estate assets, at cost:
Land $2,219,251 $2,219,251
Building, less accumulated depreciation of $713,773 in 2000
and $428,246 in 1999 6,424,385 6,709,912
---------- ----------
Total real estate assets 8,643,636 8,929,163
Cash and cash equivalents 92,564 189,012
Accounts receivable 126,433 92,979
---------- ----------
Total assets $8,862,633 $9,211,154
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 3,016 $ 2,015
Due to affiliate 7,586 5,579
Partnership distributions payable 89,549 186,997
---------- ----------
Total liabilities 100,151 194,591
---------- ----------
Partners' capital:
Wells Operating Partnership, L.P. 6,791,287 6,988,210
Fund X and XI Associates 1,971,195 2,028,353
---------- ----------
Total partners' capital 8,762,482 9,016,563
---------- ----------
Total liabilities and partners' capital $8,862,633 $9,211,154
========== ==========
F-22
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---- ---- ----
Revenues:
Rental income $902,946 $902,946 $401,058
Interest income 0 0 3,896
-------- -------- --------
902,946 902,946 404,954
======== ======== ========
Expenses:
Depreciation 285,527 285,526 142,720
Management and leasing fees 36,787 37,355 16,726
Operating costs, net of reimbursements 13,199 16,006 3,364
Interest 0 0 73,919
Legal and accounting 4,300 4,885 6,306
-------- -------- --------
339,813 343,772 243,035
-------- -------- --------
Net income $563,133 $559,174 $161,919
======== ======== ========
Net income allocated to Wells Operating Partnership, L.P. $436,452 $433,383 $122,470
======== ======== ========
Net income allocated to Fund X and XI Associates $126,681 $125,791 $ 39,449
======== ======== ========
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000, 1999, and 1998
Wells
Operating Fund X Total
Partnership, and XI Partners'
L.P. Associates Capital
---- ---------- -------
Balance, December 31, 1997 $ 0 $ 0 $ 0
Net income 122,470 39,449 161,919
Partner contributions 7,274,075 2,083,334 9,357,409
Partnership distributions (229,863) (42,628) (272,491)
------------ ---------- ----------
Balance, December 31, 1998 7,166,682 2,080,155 9,246,837
Net income 433,383 125,791 559,174
Partnership distributions (611,855) (177,593) (789,448)
------------ ---------- ----------
Balance, December 31, 1999 6,988,210 2,028,353 9,016,563
Net income 436,452 126,681 563,133
Partnership distributions (633,375) (183,839) (817,214)
------------ ---------- ----------
Balance, December 31, 2000 $ 6,791,287 $1,971,195 $8,762,482
============ ========== ==========
F-23
Wells/Fremont Associates
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000, 1999, and 1998
2000 1999 1998
---- ---- ----
Cash flows from operating activities:
Net income $ 563,133 $ 559,174 $ 161,919
---------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 285,527 285,526 142,720
Changes in assets and liabilities:
Accounts receivable (33,454) (58,237) (34,742)
Accounts payable 1,001 (1,550) 3,565
Due to affiliate 2,007 3,527 2,052
---------- ----------- -----------
Total adjustments 255,081 229,266 113,595
---------- ----------- -----------
Net cash provided by operating activities 818,214 788,440 275,514
---------- ----------- -----------
Cash flows from investing activities:
Investment in real estate 0 0 (8,983,111)
---------- ----------- -----------
Cash flows from financing activities:
Issuance of note payable 0 0 5,960,000
Payment of note payable 0 0 (5,960,000)
Distributions to partners (914,662) (791,940) (83,001)
Contributions received from partners 0 0 8,983,110
---------- ----------- -----------
Net cash (used in) provided by financing
activities (914,662) (791,940) 8,900,109
---------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (96,448) (3,500) 192,512
Cash and cash equivalents, beginning of year 189,012 192,512 0
---------- ----------- -----------
Cash and cash equivalents, end of year $ 92,564 $ 189,012 $ 192,512
========== =========== ===========
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 0 $ 374,299
========== =========== ===========
Fund XI, XII, and REIT Joint Venture
On May 1, 1999, the Operating Partnership entered into a joint venture with
Wells Fund XII and Wells Fund XI. On May 18, 1999, the joint venture purchased a
169,510-square-foot, two-story manufacturing and office building, known as EYBL
CarTex, in Fountain Inn, South Carolina. On July 21, 1999, the joint venture
purchased a 68,900 square-foot, three-story-office building, known as the Sprint
Building, in Leawood, Kansas. On August 17, 1999, the joint venture purchased a
130,000 square-foot office and warehouse building, known as the Johnson Matthey
Building, in Chester County, Pennsylvania. On September 20, 1999, the joint
venture purchased a 62,400 square-foot, two-story office building, known as the
Gartner Building, in Fort Myers, Florida.
F-24
Following are the financial statements for the Fund XI, XII, and REIT Joint
Venture:
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheets
December 31, 2000 and 1999
Assets
2000 1999
---- ----
Real estate assets, at cost:
Land $ 5,048,797 $ 5,048,797
Building and improvements, less accumulated depreciation
of $1,599,262 in 2000 and $506,582 in 1999 25,719,189 26,811,869
------------ ------------
Total real estate assets 30,767,986 31,860,666
Cash and cash equivalents 541,089 766,278
Accounts receivable 394,314 133,777
Prepaid assets and other expenses 26,486 26,486
------------ ------------
Total assets $ 31,729,875 $ 32,787,207
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 114,180 $ 112,457
Partnership distributions payable 453,395 680,294
------------ ------------
Total liabilities 567,575 792,751
------------ ------------
Partners' capital:
Wells Real Estate Fund XI 8,148,261 8,365,852
Wells Real Estate Fund XII 5,325,424 5,467,634
Wells Operating Partnership, L.P. 17,688,615 18,160,970
------------ ------------
Total partners' capital 31,162,300 31,994,456
------------ ------------
Total liabilities and partners' capital $ 31,729,875 $ 32,787,207
============ ============
F-25
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Income
for the Years Ended December 31, 2000 and 1999
2000 1999
---- ----
Revenues:
Rental income $ 3,345,932 $ 1,443,446
Interest income 2,814 0
Other income 440 57
----------- -----------
3,349,186 1,443,503
----------- -----------
Expenses:
Depreciation 1,092,680 506,582
Management and leasing fees 157,236 59,230
Operating costs, net of reimbursements (24,798) 6,433
Property administration 30,787 14,185
Legal and accounting 14,725 4,000
----------- -----------
1,270,630 590,430
----------- -----------
Net income $ 2,078,556 $ 853,073
=========== ===========
Net income allocated to Wells Real Estate Fund XI $ 543,497 $ 240,031
=========== ===========
Net income allocated to Wells Real Estate Fund XII $ 355,211 $ 124,542
=========== ===========
Net income allocated to Wells Operating Partnership, L.P. $ 1,179,848 $ 488,500
=========== ===========
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Partners' Capital
for the Years Ended December 31, 2000 and 1999
Wells
Wells Real Wells Real Operating Total
Estate Estate Partnership, Partners'
Fund XI Fund XII L.P. Capital
------- -------- ---- -------
Balance, December 31, 1998 $ 0 $ 0 $ 0 $ 0
Net income 240,031 124,542 488,500 853,073
Partnership contributions 8,470,160 5,520,835 18,376,267 32,367,262
Partnership distributions (344,339) (177,743) (703,797) (1,225,879)
----------- ----------- ------------ ------------
Balance, December 31, 1999 8,365,852 5,467,634 18,160,970 31,994,456
Net income 543,497 355,211 1,179,848 2,078,556
Partnership distributions (761,088) (497,421) (1,652,203) (2,910,712)
----------- ----------- ------------ ------------
Balance, December 31, 2000 $ 8,148,261 $ 5,325,424 $ 17,688,615 $ 31,162,300
=========== =========== ============ ============
F-26
The Fund XI, XII, and REIT Joint Venture
(A Georgia Joint Venture)
Statements of Cash Flows
for the Years Ended December 31, 2000 and 1999
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 2,078,556 $ 853,073
----------- -------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,092,680 506,582
Changes in assets and liabilities:
Accounts receivable (260,537) (133,777)
Prepaid expenses and other assets 0 (26,486)
Accounts payable 1,723 112,457
----------- -------------
Total adjustments 833,866 458,776
----------- -------------
Net cash provided by operating activities 2,912,422 1,311,849
----------- -------------
Cash flows from financing activities:
Distributions to joint venture partners (3,137,611) (545,571)
----------- -------------
Net (decrease) increase in cash and cash equivalents (225,189) 766,278
Cash and cash equivalents, beginning of year 766,278 0
----------- -------------
Cash and cash equivalents, end of year $ 541,089 $ 766,278
=========== =============
Supplemental disclosure of noncash activities:
Deferred project costs contributed to joint venture $ 0 $ 1,294,686
=========== =============
Contribution of real estate assets to joint venture $ 0 $ 31,072,562
=========== =============
Fund XII and REIT Joint Venture
On May 10, 2000, the Operating Partnership entered into a joint venture with
Wells Fund XII. The joint venture, Fund XII and REIT Joint Venture, was formed
to acquire, develop, operate, and sell real property. On May 20, 2000, the joint
venture purchased a 77,054 square-foot, three-story office building, known as
the Siemens Building in Troy, Oakland County, Michigan. On December 28, 2000,
the joint venture purchased a 50,000 square-foot one-story office building and a
78,500 square-foot two-story office building, collectively known as the AT&T
Call Center Buildings in Oklahoma City, Oklahoma County, Oklahoma.
F-27
Following are the financial statements for Fund XII and REIT Joint Venture:
Fund XII and REIT Joint Venture
(A Georgia Joint Venture)
Balance Sheet
December 31, 2000
Assets
Real estate assets, at cost:
Land $ 4,420,405
Building and improvements, less accumulated depreciation of $324,732 26,004,918
------------
Total real estate assets 30,425,323
Cash and cash equivalents 207,475
Accounts receivable 130,490
------------
Total assets $ 30,763,288
============
Liabilities and Partners' Capital
Liabilities:
Partnership distributions payable $ 208,261
------------
Partners' capital:
Wells Real Estate Fund XII 16,242,127
Wells Operating Partnership, L.P. 14,312,900
------------
Total partners' capital 30,555,027
------------
Total liabilities and partners' capital $ 30,763,288
============
Fund XII and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Income
for the Period From Inception (May 10, 2000)
Through December 31, 2000
Revenues:
Rental income $ 974,796
Interest income 2,069
-------------
976,865
-------------
Expenses:
Depreciation 324,732
Management and leasing fees 32,756
Partnership administration 3,917
Operating costs, net of reimbursements 1,210
-------------
362,615
-------------
Net income $ 614,250
=============
Net income allocated to Wells Real Estate Fund XII $ 309,190
=============
Net income allocated to Wells Operating Partnership, L.P. $ 305,060
=============
F-28
Fund XII and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Partners' Capital
for the Period From Inception (May 10, 2000)
Through December 31, 2000
Wells Real Wells Total
Estate Operating Partners'
Fund XII Parntership, L.P. Capital
-------- ----------------- -------
Balance, May 10, 2000 $ 0 $ 0 $ 0
Net income 309,190 305,060 614,250
Partnership contributions 16,340,885 14,409,170 30,750,055
Partnership distributions (407,948) (401,330) (809,278)
------------ --------------- ------------
Balance, December 31, 2000 $ 16,242,127 $ 14,312,900 $ 30,555,027
============ =============== ============
Fund XII and REIT Joint Venture
(A Georgia Joint Venture)
Statement of Cash Flows
for the Period From Inception (May 10, 2000)
Through December 31, 2000
Cash flows from operating activities:
Net income $ 614,250
-------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 324,732
Changes in assets and liabilities:
Accounts receivable (130,490)
-------------
Total adjustments 194,242
-------------
Net cash provided by operating activities 808,492
-------------
Cash flows from investing activities:
Investment in real estate (29,520,043)
-------------
Cash flows from financing activities:
Distributions to joint venture partners (601,017)
Contributions received from partners 29,520,043
-------------
Net cash provided by financing activities 28,919,026
-------------
Net increase in cash and cash equivalents 207,475
Cash and cash equivalents, beginning of year 0
-------------
Cash and cash equivalents, end of year $ 207,475
=============
Supplemental disclosure of non cash activities:
Deferred project costs contributed to joint venture $ 1,230,012
=============
F-29
6. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Operating Partnership's income tax basis net income for the years ended
December 31, 2000 and 1999 are calculated as follows:
2000 1999
------------ -----------
Financial statement net income $ 8,552,967 $ 3,884,649
Increase (decrease) in net income resulting from:
Depreciation expense for financial reporting purposes
in excess of amounts for income tax purposes 3,511,353 739,963
Rental income accrued for financial reporting purposes
in excess of amounts for income tax purposes (1,822,220) (802,309)
Expenses deductible when paid for income tax purposes,
accrued for financial reporting purposes 37,675 49,906
------------ -----------
Income tax basis net income $ 10,279,775 $ 3,872,209
============ ===========
The Operating Partnership's income tax basis partners' capital at December 31,
2000 and 1999 is computed as follows:
2000 1999
------------ -------------
Financial statement partners' capital $265,341,612 $ 116,015,595
Increase (decrease) in partners' capital resulting from:
Depreciation expense for financial reporting purposes
in excess of amounts for income tax purposes 4,543,602 822,581
Capitalization of syndication costs for income tax
purposes, which are accounted for as cost of capital
for financial reporting purposes 12,896,312 12,896,312
Accumulated rental income accrued for financial
reporting purposes in excess of amounts for income
tax purposes (2,647,246) (837,736)
Accumulated expenses deductible when paid for income
tax purposes, accrued for financial reporting
purposes 89,215 51,540
Dividends payable 1,025,010 2,166,701
1999 True-up adjustment (222,378) 0
------------ -------------
Income tax basis partners' capital $281,026,127 $ 131,114,993
============ =============
7. RENTAL INCOME
The future minimum rental income due from the Operating Partnership's
direct investment in real estate or its respective ownership interest in
the joint ventures under noncancelable operating leases at December 31,
2000 is as follows:
Year ended December 31:
2001 $ 42,753,778
2002 43,073,142
2003 43,776,297
2004 44,836,991
2005 42,926,909
Thereafter 176,795,438
-------------
$ 394,162,555
=============
F-30
One tenant contributed 13% of rental income for the year ended December 31,
2000. In addition, two tenants will contribute 13%, 16%, and 12% of future
minimum rental income.
Future minimum rental income due from Fund VIII, IX, and REIT Joint Venture
under noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $1,234,309
2002 1,287,119
2003 1,287,119
2004 107,260
----------
$3,915,807
==========
Two tenants contributed 52% and 48% of rental income for the year ended December
31, 2000. In addition, one tenant will contribute 100% of future minimum rental
income.
The future minimum rental income due from Fund IX, X, XI, and REIT Joint Venture
under noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $ 4,413,780
2002 3,724,218
2003 3,617,437
2004 3,498,478
2005 2,482,821
Thereafter 5,436,524
------------
$ 23,173,258
============
Four tenants contributed 25%, 24%, 13%, and 13% of rental income for the year
ended December 31, 2000. In addition, four tenants will contribute 38%, 21%,
20%, and 19% of future minimum rental income.
The future minimum rental income due Wells/Orange County Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $ 809,580
2002 834,888
2003 695,740
-----------
$ 2,340,208
===========
One tenant contributed 100% of rental income for the year ended December 31,
2000 and will contribute 100% of future minimum rental income.
The future minimum rental income due Wells/Fremont Associates under
noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $ 869,492
2002 922,444
2003 950,118
2004 894,832
-----------
$ 3,636,886
===========
F-31
One tenant contributed 100% of rental income for the year ended December
31, 2000 and will contribute 100% of future minimum rental income.
The future minimum rental income due from Fund XI, XII, and REIT under
noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $ 3,135,340
2002 2,598,606
2003 2,946,701
2004 3,445,193
2005 3,495,155
Thereafter 6,169,579
------------
$ 21,790,574
============
Four tenants contributed approximately 30%, 24%, 23%, and 15% of rental
income for the year ended December 31, 2000. In addition, four tenants will
contribute approximately 28%, 27%, 26%, and 19% of future minimum rental
income.
The future minimum rental income due Fund XII and REIT under noncancelable
operating leases at December 31, 2000 is as follows:
Year ended December 31:
2001 $ 2,888,084
2002 2,920,446
2003 2,952,809
2004 2,985,172
2005 3,017,534
Thereafter 13,650,288
------------
$ 28,414,333
============
One tenant contributed approximately 86% of rental income for the year
ended December 31, 2000. In addition, two tenants will contribute
approximately 49% and 45% of future minimum rental income.
8. NOTES PAYABLE
As of December 31, 2000, the Operating Partnership's notes payable included
the following:
Note payable to Bank of America; interest at LIBOR plus 200
basis points, principal and interest payable monthly; due
March 31, 2001; collateralized by the Operating Partnership's
interests in the AT&T Building, the AT&T Call Center Buildings,
the Matsushita Building, the Motorola South Plainfield Building,
and the Marconi Building $ 14,300,150
Note payable to Bank of America; interest at LIBOR plus 200
basis points; principal and interest payable monthly; due
January 4, 2002 112,937
Note payable to Guaranty Federal Bank; interest at LIBOR plus
180 basis points; principal and interest payable monthly; due
December 20, 2001; collateralized by the Operating Partnership's
interest in the Stone & Webster Building 32,400,000
F-32
Note payable to Cardinal Capital, Inc.; interest at 6%;
principal and interest payable monthly; due March 31, 2001;
collateralized by the Operating Partnership's interest in
the Stone & Webster Building $ 3,000,000
Note payable to Richter-Schroeder Company, Inc.; interest
at LIBOR plus 175 basis points; principal and interest payable
monthly; due January 31, 3003; collateralized by the Operating
Partnership's interest in the Metris Oklahoma Building 8,000,000
Note payable to SouthTrust Bank; interest at LIBOR plus 175
basis points; principal and interest payable monthly; due
June 10, 2002; collateralized by the Operating Partnership's
interests in the Cinemark Building, the Dial Building, the
ASML Building, the Alstom Power Richmond Building, the Avaya
Building, the Motorola Tempe Building, and the
PricewaterhouseCoopers Building 69,850,100
--------------
Total $ 127,663,187
==============
The contractual maturities of the Operating Partnerhip's notes payable are as
follows as of December 31, 2000:
2001 $101,472,657
2002 25,856,779
2003 333,751
------------
Total $127,663,187
============
9. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any
significant litigation or claims against the Company, the Operating
Partnership, or the Advisor. In the normal course of business, the Company,
the Operating Partnership, or the Advisor may become subject to such
litigation or claims.
10. SHAREHOLDERS' EQUITY
Common Stock Option Plan
The Wells Real Estate Investment Trust, Inc. Independent Director Stock
Option Plan ("the Plan") provides for grants of stock to be made to
independent nonemployee directors of the Company. Options to purchase 2,500
shares of common stock at $12 per share are granted upon initially becoming
an independent director of the Company. Of these shares, 20% are
exercisable immediately on the date of grant. An additional 20% of these
shares become exercisable on each anniversary following the date of grant
for a period of four years. Effective on the date of each annual meeting of
shareholders of the Company, beginning in 2000, each independent director
will be granted an option to purchase 1,000 additional shares of common
stock. These options vest at the rate of 500 shares per full year of
service thereafter. All options granted under the Plan expire no later than
the date immediately following the tenth anniversary of the date of grant
and may expire sooner in the event of the disability or death of the
optionee or if the optionee ceases to serve as a director.
The Company has adopted the disclosure provisions in SFAS No. 123,
"Accounting for Stock-Based Compensation." As permitted by the provisions
of SFAS No. 123, the Company applies Accounting Principles Board Opinion
No. 25 and the related interpretations in accounting for its stock option
plans and, accordingly, does not recognize compensation cost.
F-33
A summary of the Company's stock option activity during 2000 and 1999 is as
follows:
Exercise
Number Price
------ --------
Outstanding at December 31, 1998 0 $ 0
Granted 17,500 12
------ --------
Outstanding at December 31, 1999 17,500 12
Granted 7,000 12
------ --------
Outstanding at December 31, 2000 24,000 $ 12
====== ========
Outstanding options exercisable as of December 31,
2000 7,000 $ 12
====== ========
For SFAS No. 123 purposes, the fair value of each stock option for 2000 and
1999 has been estimated as of the date of the grant using the minimum value
method. The weighted average risk-free interest rates assumed for 2000 and
1999 were 6.45% and 5.97%, respectively. Dividend yields of 7.3% were
assumed for both years. The expected life of an option was assumed to be
four years and five years for 2000 and 1999, respectively. Based on these
assumptions, the fair value of the options granted during 2000 and 1999 is
$0.
Treasury Stock
During 1999, the Company's Board of Directors authorized a dividend
reinvestment program (the "DRP"), through which common shareholders may
elect to reinvest an amount equal to the dividends declared on their common
shares into additional shares of the Company's common stock in lieu of
receiving cash dividends. During 2000, the Company's Board of Directors
authorized a common stock repurchase plan subject to the amount reinvested
in the Company's common shares through the DRP and 3% of the average common
shares outstanding during the preceding year (the "limitations"). During
2000, the Company's Board of Directors authorized $2,436,495 in common
stock repurchases. Accordingly, the Company repurchased 142,297 of its own
common shares at an aggregate cost of $1,412,969. These transactions were
funded with cash on hand and did not exceed either of the limitations.
11. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial
information for the years ended December 31, 2000 and 1999:
2000 Quarters Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Revenues $3,710,409 $5,537,618 $ 6,586,611 $ 7,638,568
Net income 1,691,288 1,521,021 2,525,228 2,815,430
Basic and diluted earnings per
share $ 0.11 $ 0.08 $ 0.11 $ 0.10
Dividends per share 0.18 0.18 0.18 0.19
1999 Quarters Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Revenues $ 988,000 $1,204,938 $ 1,803,352 $ 2,499,105
Net income 393,438 601,975 1,277,019 1,612,217
Basic and diluted earnings per
share $ 0.10 $ 0.09 $ 0.18 $ 0.13
Dividends per share 0.17 0.17 0.18 0.18
F-34
SCHEDULE I
Page 1 of 2
WELLS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Initial Cost
--------------------------- Costs of
Ownership Buildings and Capitalized
Description Percentage Encumbrances Land Improvements Improvements
- ------------------------------------- ---------- ------------ ------------ -------------- ------------
ALSTOM POWER--KNOXVILLE PROPERTY (a) 4% None $ 582,897 $ 744,164 $ 6,744,547
AVAYA BUILDING 4 None 1,002,723 4,386,374 242,241
360 INTERLOCKEN (c) 4 None 1,570,000 6,733,500 437,266
IOMEGA PROPERTY (d) 4 None 597,000 4,674,624 876,459
OHMEDA PROPERTY (e) 4 None 2,613,600 7,762,481 528,415
FAIRCHILD PROPERTY (f) 78 None 2,130,480 6,852,630 374,300
ORANGE COUNTY PROPERTY (g) 44 None 2,100,000 4,463,700 287,916
PRICEWATERHOUSECOOPERS PROPERTY (h) 100 $ 12,573,100 1,460,000 19,839,071 825,560
EYBL CARTEX PROPERTY (i) 57 None 330,000 4,791,828 213,411
SPRINT BUILDING (j) 57 None 1,696,000 7,850,726 397,783
JOHNSON MATTHEY (k) 57 None 1,925,000 6,131,392 335,685
GARTNER PROPERTY (l) 57 None 895,844 7,451,760 347,820
AT&T--PA PROPERTY (m) 100 5,375,087 662,000 11,836,368 265,740
MARCONI PROPERTY (n) 100 9,038,000 5,000,000 28,161,665 1,381,747
CINEMARK PROPERTY (o) 100 11,176,000 1,456,000 20,376,881 908,217
MATSUSHITA PROPERTY (p) 100 None 4,577,485 0 13,860,142
ALSTOM POWER--RICHMOND PROPERTY(q) 100 7,683,500 948,401 0 9,938,308
METRIS--OK PROPERTY (r) 100 8,000,000 1,150,000 11,569,583 541,489
DIAL PROPERTY (s) 100 9,080,500 3,500,000 10,785,309 601,264
ASML PROPERTY (t) 100 11,176,000 0 17,392,633 731,685
MOTOROLA--AZ PROPERTY (u) 100 9,779,000 0 16,036,219 669,639
AVNET PROPERTY (v) 100 8,382,000 0 13,271,502 551,156
Gross Amount at Which Carried at December 31, 2000
--------------------------------------------------------
Construction
Buildings and -------------- Accumulated Date of
Description Land Improvements In Progress Total Depreciation Construction
- ------------------------------------- ----------- ------------ ----------- ------------ ------------ --------------
ALSTOM POWER--KNOXVILLE PROPERTY (a) $ 607,930 $ 7,463,678 $ 0 $ 8,071,608 $ 1,444,680 1997
AVAYA BUILDING 1,051,138 4,580,200 0 5,631,338 473,287 1998
360 INTERLOCKEN (c) 1,650,070 7,090,696 0 8,740,766 811,659 1996
IOMEGA PROPERTY (d) 641,988 5,506,095 0 6,148,083 522,164 1998
OHMEDA PROPERTY (e) 2,746,894 8,157,602 0 10,904,496 951,720 1998
FAIRCHILD PROPERTY (f) 2,219,251 7,138,159 0 9,357,410 713,773 1998
ORANGE COUNTY PROPERTY (g) 2,187,501 4,664,115 0 6,851,616 465,216 1988
PRICEWATERHOUSECOOPERS PROPERTY (h) 1,520,834 20,603,797 0 22,124,631 1,645,644 1998
EYBL CARTEX PROPERTY (i) 343,750 4,991,489 0 5,335,239 332,674 1998
SPRINT BUILDING (j) 1,766,667 8,177,842 0 9,944,509 490,667 1998
JOHNSON MATTHEY (k) 2,005,209 6,386,868 0 8,392,077 361,936 1973
GARTNER PROPERTY (l) 933,171 7,762,253 0 8,695,424 413,987 1998
AT&T--PA PROPERTY (m) 689,583 12,074,525 0 12,764,108 925,705 1998
MARCONI PROPERTY (n) 5,208,335 29,335,077 0 34,543,412 1,564,527 1991
CINEMARK PROPERTY (o) 1,516,667 21,224,431 0 22,741,098 919,715 1999
MATSUSHITA PROPERTY (p) 4,768,215 13,669,412 0 18,437,627 995,939 1999
ALSTOM POWER--RICHMOND PROPERTY(q) 987,918 9,898,791 0 10,886,709 302,713 1999
METRIS--OK PROPERTY (r) 1,197,917 12,063,155 0 13,261,072 439,093 2000
DIAL PROPERTY (s) 3,645,835 11,240,738 0 14,886,573 371,685 1997
ASML PROPERTY (t) 0 18,124,318 0 18,124,318 589,600 1995
MOTOROLA--AZ PROPERTY (u) 0 16,705,858 0 16,705,858 550,166 1998
AVNET PROPERTY (v) 0 13,822,658 0 13,822,658 315,153 2000
Life of Which
Date Depreciaton
Acquired is Compputed (dd)
---------- -------------------
ALSTOM POWER--KNOXVILLE PROPERTY (a) 12/10/96 20 to 25 years
AVAYA BUILDING 6/24/98 20 to 25 years
360 INTERLOCKEN (c) 3/20/98 20 to 25 years
IOMEGA PROPERTY (d) 7/01/98 20 to 25 years
OHMEDA PROPERTY (e) 2/13/98 20 to 25 years
FAIRCHILD PROPERTY (f) 7/21/98 20 to 25 years
ORANGE COUNTY PROPERTY (g) 7/31/98 20 to 25 years
PRICEWATERHOUSECOOPERS PROPERTY (h) 12/31/98 20 to 25 years
EYBL CARTEX PROPERTY (i) 5/18/99 20 to 25 years
SPRINT BUILDING (j) 7/2/99 20 to 25 years
JOHNSON MATTHEY (k) 8/17/99 20 to 25 years
GARTNER PROPERTY (l) 9/20/99 20 to 25 years
AT&T--PA PROPERTY (m) 2/4/99 20 to 25 years
MARCONI PROPERTY (n) 9/10/99 20 to 25 years
CINEMARK PROPERTY (o) 12/21/99 20 to 25 years
MATSUSHITA PROPERTY (p) 3/15/99 20 to 25 years
ALSTOM POWER--RICHMOND PROPERTY(q) 7/22/99 20 to 25 years
METRIS--OK PROPERTY (r) 2/11/00 20 to 25 years
DIAL PROPERTY (s) 3/29/00 20 to 25 years
ASML PROPERTY (t) 3/29/00 20 to 25 years
MOTOROLA--AZ PROPERTY (u) 3/29/00 20 to 25 years
AVNET PROPERTY (v) 6/12/00 20 to 25 years
SCHEDULE I
Page 2 of 2
Initial Cost
--------------------------- Costs of
Ownership Buildings and Capitalized
Description Percentage Encumbrances Land Improvements Improvements
- ------------------------------------- ---------- ------------ ------------ -------------- ------------
DELPHI PROPERTY (w) 100% None $ 2,160,000 $ 16,775,971 $ 1,676,956
SIEMENS PROPERTY (x) 47 None 2,143,588 12,048,902 591,358
QUEST PROPERTY (y) 16 None 2,220,993 5,545,498 51,285
MOTOROLA--NJ PROPERTY (z) 100 None 9,652,500 20,495,243 0
METRIS--MN PROPERTY (aa) 100 None 7,700,000 45,151,969 2,181
STONE & WEBSTER PROPERTY (bb) 100 35,400,000 7,100,000 37,914,954 0
AT&T--OK PROPERTY (cc) 47 None 2,100,000 13,227,555 638,651
------------ ----------- ------------ -----------
Total $127,663,187 $67,274,511 $362,272,502 $44,021,221
------------ ----------- ------------ -----------
Gross Amount at Which Carried at December 31, 2000
--------------------------------------------------------
Construction
Buildings and -------------- Accumulated Date of
Land Improvements In Progress Total Depreciation Construction
----------- ------------ ----------- ------------ ------------ --------------
DELPHI PROPERTY (w) $ 2,250,008 $ 18,362,919 $ 0 $ 20,612,927 $ 458,563 2000
SIEMENS PROPERTY (x) 2,232,905 12,550,943 0 14,783,848 324,732 2000
QUEST PROPERTY (y) 2,220,993 5,596,783 0 7,817,776 187,891 1997
MOTOROLA--NJ PROPERTY (z) 9,652,500 17,137,523 3,357,720 30,147,743 114,250 2000
METRIS--MN PROPERTY (aa) 7,700,000 45,154,150 0 52,854,150 150,507 2000
STONE & WEBSTER PROPERTY (bb) 7,100,000 37,914,954 0 45,014,954 126,383 1994
AT&T--OK PROPERTY (cc) 2,187,500 13,778,706 0 15,966,206 0 1999
----------- ------------ ---------- ------------ -----------
Total $69,032,779 $401,177,735 $3,357,720 $473,568,234 $16,964,029
=========== ============ ========== ============ ===========
Life of Which
Date Depreciaton
Acquired is Compputed (dd)
---------- -------------------
DELPHI PROPERTY (w) 6/29/00 20 to 25 years
SIEMENS PROPERTY (x) 5/10/00 20 to 25 years
QUEST PROPERTY (y) 9/10/97 20 to 25 years
MOTOROLA--NJ PROPERTY (z) 11/1/00 20 to 25 years
METRIS--MN PROPERTY (aa) 12/21/00 20 to 25 years
STONE & WEBSTER PROPERTY (bb) 12/21/00 20 to 25 years
AT&T--OK PROPERTY (cc) 12/28/00 20 to 25 years
Total
(a) The Alstom Power Knoxville Property consists of a three-story office
building located in Knoxville, Tennessee. It is owned by Fund IX-X-XI-REIT
Joint Venture.
(b) The Avaya Building consists of a one-story office building located in
Oklahoma City, Oklahoma. It is owned by Fund IX-X-XI-REIT Joint Venture.
(c) The 360 Interlocken Property consists of a three-story multi-tenant office
building located in Broomfield, Colorado. It is owned by Fund IX-X-XI-REIT
Joint Venture.
(d) The Iomega Property consists of a one-story warehouse and office building
located in Ogden, Utah. It is owned by Fund IX-X-XI-REIT Joint Venture.
(e) The Ohmeda Property consists of a two-story office building located in
Louisville, Colorado. It is owned by Fund IX-X-XI-REIT Joint Venture.
(f) The Fairchild Property consists of a two-story warehouse and office
building located in Fremont, California. It is owned by Wells/Freemont
Associates.
(g) The Orange County Property consists of a one-story warehouse and office
building located in Fountain Valley, California. It is owned by
Wells/Orange County Associates.
(h) The PriceWaterhouseCoopers Property consists of a four-story office
building located in Tampa, Florida. It is 100% owned by the Company.
(i) The EYBL CarTex Property consists of a one-story manufacturing and office
building located in Fountain Inn, South Carolina. It is owned by Fund XI-
XII-REIT Joint Venture.
(j) The Sprint Building consists of a three-story office building located in
Leawood, Kansas. It is owned by Fund XI-XII-REIT Joint Venture.
(k) The Johnson Matthey Property consists of a one-story research and
development office and warehouse building located in Chester County,
Pennsylvania. It is owned by Fund XI-XII-REIT Joint Venture.
(l) The Gartner Property consists of a two-story office building located in Ft.
Myers, Florida. It is owned by Fund XI-XII-REIT Joint Venture
(m) The AT&T--PA Property consists of a four-story office building located in
Harrisburg, Pennsylvania. It is 100% owned by the Company.
(n) The Marconi Property consists of a two-story office building located in
Wood Dale, Illinois. It is 100% owned by the Company.
(o) The Cinemark Property consists of a five-story office building located in
Plano, Texas. It is 100% owned by the Company.
(p) The Matsushita Property consists of a two-story office building located in
Lake Forest, California. It is 100% owned by the Company.
(q) The Alstom Property consists of a four-story office building located in
Midlothian, Chesterfield County, Virginia. It is 100% owned by the Company.
(r) The Metris--OK Property consists of a three-story office building located
in Tulsa, Oklahoma. It is 100% owned by the Company.
(s) The Dial Property consists of a two-story office building located in
Scottsdale, Arizona. It is 100% owned by the Company.
(t) The ASML Property consists of a two-story office building located in Tempe,
Arizona. It is 100% owned by the Company.
(u) The Motorola--AZ Property consists of a two-story office building located
in Tempe, Arizona. It is 100% owned by the Company.
(v) The Avnet Property consists of a two-story office building located in
Tempe, Arizona. It is 100% owned by the Company.
(w) The Delphi Property consists of a three-story office building located in
Troy, Michigan. It is 100% owned by the Company.
(x) The Siemens Property consists of a three-story office building located in
Troy, Michigan. It is owned by Fund XII-REIT Joint Venture.
(y) The Quest Property consists of a two-story office building located in
Orange County, California. It is owned by Fund VIII-IX-REIT Joint Venture.
(z) The Motorola--NJ Property consists of a three-story office building located
in South Plainfield, New Jersey. It is 100% owned by the Company.
(aa) The Metris--MN Property consists of a nine-story office building located in
Minnetonka, Minnesota. It is 100% owned by the Company.
(bb) The Stone & Webster Property consists of a six-story office building
located in Houston, Texas. It is 100% owned by the Company.
(cc) The AT&T--OK Property consists of a two-story office building located in
Oklahoma City, Oklahoma. It is owned by the Fund XII-REIT Joint Venture.
(dd) Depreciation lives used for buildings are 25 years. Depreciation lives used
for land improvements are 20 years.
WELLS REAL ESTATE INVESTMENT TRUST, INC. AND SUBSIDIARY
(A Georgia Public Limited Partnership)
SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Cost Accumulated
Depreciation
------------ ------------
BALANCE AT DECEMBER 31, 1998 $ 76,201,910 $ 1,487,963
1999 additions 103,916,288 4,243,688
------------ -----------
BALANCE AT DECEMBER 31, 1999 180,118,198 5,731,651
2000 additions 293,450,036 11,232,378
------------ -----------
BALANCE AT DECEMBER 31, 2000 $473,568,234 $16,964,029
============ ===========
S-3
EXHIBIT INDEX
-------------
(Wells Real Estate Investment Trust, Inc.)
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
- ------- -----------------------
*3.1 Amended and Restated Articles of Incorporation of Wells Real
Estate Investment Trust, Inc. (Exhibit 3.1 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*3.2 Bylaws of Wells Real Estate Investment Trust, Inc. (Exhibit 3.2
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*3.3 Amendment No. 1 to Bylaws of Wells Real Estate Investment Trust,
Inc. (Exhibit 3.3 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.1 Agreement of Limited Partnership of Wells Operating Partnership,
L.P. (Exhibit 10.1 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.2 Advisory Agreement dated January 30, 1999 (Exhibit 10.3 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.3 Management Agreement (Exhibit 10.4 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.4 Leasing and Tenant Coordinating Agreement (Exhibit 10.5 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.5 Amended and Restated Joint Venture Agreement of The Fund IX, Fund
X, Fund XI and REIT Joint Venture dated June 11, 1998 (Exhibit
10.4 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.6 Lease Agreement for the ABB Building dated December 10, 1996
(Exhibit 10(kk) to Form S-11 Registration Statement of Wells Real
Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P., as
amended to date, Commission File No. 33-83852)
*10.7 Agreement for the Purchase and Sale of Real Property relating to
the Ohmeda Building dated November 14, 1997 (Exhibit 10.6 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.8 Agreement for the Purchase and Sale of Property relating to the
360 Interlocken Building dated February 11, 1998 (Exhibit 10.7 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.9 Agreement for the Purchase and Sale of Real Property relating to
the Lucent Technologies Building dated May 30, 1997 (Exhibit
10(k) to Form S-11 Registration Statement of Wells Real Estate
Fund X, L.P. and Wells Real Estate Fund XI, L.P., as amended to
date, Commission File No. 333-7979)
*10.10 First Amendment to the Agreement for the Purchase and Sale of
Real Property relating to the Lucent Technologies Building dated
April 21, 1998 (Exhibit 10.8(a) to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.11 Development Agreement relating to the Lucent Technologies
Building dated May 30, 1997 (Exhibit 10(m) to Form S-11
Registration Statement of Wells Real Estate Fund X, L.P. and
Wells Real Estate Fund XI, L.P., as amended to date, Commission
File No. 333-7979)
*10.12 Net Lease Agreement for the Lucent Technologies Building dated
May 30, 1997 (Exhibit 10(l) to Form S-11 Registration Statement
on Form S-11 of Wells Real Estate Fund X, L.P. and Wells Real
Estate Fund XI, L.P., as amended to date, Commission File No.
333-7979)
*10.13 First Amendment to Net Lease Agreement for the Lucent
Technologies Building dated March 30, 1998 (Exhibit 10.10(a) to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.14 Purchase and Sale Agreement relating to the Iomega Building dated
February 4, 1998 (Exhibit 10.11 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.15 Lease Agreement for the Iomega Building dated April 9, 1996
(Exhibit 10.12 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.16 Agreement for the Purchase and Sale of Property relating to the
Fairchild Building dated June 8, 1998 (Exhibit 10.13 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.17 Restatement of and First Amendment to Agreement for the Purchase
and Sale of Property relating to the Fairchild Building dated
July 1, 1998 (Exhibit 10.14 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.18 Promissory Note for $5,960,000 from the Fremont Joint Venture to
NationsBank, N.A. relating to the Fairchild Building dated July
16, 1998 (Exhibit 10.15 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.19 Deed of Trust securing the Fairchild Building dated July 16, 1998
between the Fremont Joint Venture and NationsBank, N.A. (Exhibit
10.16 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.20 Joint Venture Agreement of Wells/Fremont Associates (the "Fremont
Joint Venture") dated July 15, 1998 between Wells Development
Corporation and Wells Operating Partnership, L.P. (Exhibit 10.17
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.21 Joint Venture Agreement of Fund X and Fund XI Associates (the
"Fund X-XI Joint Venture") dated July 15, 1998 (Exhibit 10.18 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.22 Agreement for the Purchase and Sale of Joint Venture Interest
relating to the Fremont Joint Venture dated July 17, 1998 between
Wells Development Corporation and the Fund X-XI Joint Venture
(Exhibit 10.19 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.23 Lease Agreement for the Fairchild Building dated September 19,
1997 with Fairchild Technologies USA, Inc. (Exhibit 10.20 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.24 Purchase and Sale Agreement and Joint Escrow Instructions
relating to the Cort Furniture Building dated June 12, 1998
(Exhibit 10.21 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.25 First Amendment to Purchase and Sale Agreement and Joint Escrow
Instructions relating to the Cort Furniture Building dated July
16, 1998 (Exhibit 10.22 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.26 Promissory Note for $4,875,000 from the Cort Joint Venture to
NationsBank, N.A. relating to the Cort Furniture Building dated
July 30, 1998 (Exhibit 10.23 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.27 Deed of Trust securing the Cort Furniture Building dated July 30,
1998 between the Fremont Joint Venture and NationsBank, N.A.
(Exhibit 10.24 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.28 Joint Venture Agreement of Wells/Orange County Associates (the
"Cort Joint Venture") dated July 27, 1998 between Wells
Development Corporation and Wells Operating Partnership, L.P.
(Exhibit 10.25 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.29 Agreement for the Purchase and Sale of Joint Venture Interest
relating to the Cort Joint Venture dated July 30, 1998 between
Wells Development Corporation and the Fund X-XI Joint Venture
(Exhibit 10.26 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.30 Temporary Lease Agreement for remainder of the ABB Building dated
September 10, 1998 between the IX-X-XI-REIT Joint Venture and
Associates Housing Finance, LLC (Exhibit 10.35 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.31 Amended and Restated Purchase Agreement relating to the PWC
Building dated December 4, 1998 (Exhibit 10.37 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.32 Assignment and Assumption Agreement relating to the PWC Building
dated December 4, 1998 (Exhibit 10.38 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.33 Amended and Restated Loan Agreement dated December 31, 1998
between Wells Operating Partnership, L.P. and SouthTrust Bank,
National Association (Exhibit 10.39 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.34 Amended and Restated Promissory Note for $15,500,000 from Carter
Sunforest, L.P. to SouthTrust Bank, National Association dated
December 31, 1998 (Exhibit 10.40 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-32099)
*10.35 Amendment No. 1 to Mortgage and Security Agreement and other Loan
Documents securing the PWC Building dated December 31, 1998
between Carter Sunforest, L.P. and SouthTrust Bank, National
Association (Exhibit 10.41 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.36 Lease for the PWC Building dated March 30, 1998 with Price
Waterhouse LLP (Exhibit 10.42 to Form S-11 Registration Statement
of Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.37 Promissory Note for $6,425,000 to Bank of America, N.A. relating
to the AT&T Building (formerly the Vanguard Cellular Building)
(Exhibit 10.45 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32099)
*10.38 Open-End Mortgage, Assignment of Leases and Rents, Security
Agreement and Financing Statement securing the AT&T Building
(formerly the Vanguard Cellular Building) (Exhibit 10.46 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.39 Build-to-Suit Office Lease Agreement for the AT&T Building
(formerly the Vanguard Cellular Building) (Exhibit 10.47 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.40 Amendment No. 1 to Built-To-Suite Office Lease Agreement for the
AT&T Building (formerly the Vanguard Cellular Building) (Exhibit
10.47(a) to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.41 Amendment No. 2 to Build-To-Suit Office Lease Agreement for the
AT&T Building (formerly the Vanguard Cellular Building) (Exhibit
10.47(b) to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.42 Build-To-Suit Office Lease Agreement Guaranty Payment and
Performance for the AT&T Building (formerly the Vanguard Cellular
Building) (Exhibit 10.48 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.43 Development Agreement for the Matsushita Project (Exhibit 10.50
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.44 Office Lease for the Matsushita Project (Exhibit 10.51 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.45 Guaranty of Lease for the Matsushita Project (Exhibit 10.52 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.46 Rental Income Guaranty Agreement from Wells Operating
Partnership, L.P. to Fund VIII and Fund IX Associates relating to
the Bake Parkway Building (Exhibit 10.53 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.47 Amended and Restated Joint Venture Partnership Agreement of The
Wells Fund XI - Fund XII - REIT Joint Venture (Exhibit 10.28 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-83933)
*10.48 Agreement of Sale and Purchase relating to the EYBL CarTex
Building (Exhibit 10.54 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-32099)
*10.49 Agreement of Purchase and Sale relating to the Sprint Building
(Exhibit 10.5 to Form S-11 Registration Statement of Wells Real
Estate Fund XII, L.P., as amended to date, Commission File No.
33-66657)
*10.50 Agreement of Sale and Purchase relating to the Johnson Matthey
Building (Exhibit 10.6 to Form S-11 Registration Statement of
Wells Real Estate Fund XII, L.P., as amended to date, Commission
File No. 33-66657)
*10.51 Fifth Amendment to Lease for the Johnson Matthey Building
(Exhibit 10.7 to Form S-11 Registration Statement of Wells Real
Estate Fund XII, L.P., as amended to date, Commission File No.
33-66657)
*10.52 Agreement of Purchase and Sale relating to the Gartner Building
(Exhibit 10.63 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-32009)
*10.53 Lease Agreement for the Gartner Building (Exhibit 10.64 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.54 Agreement for the Purchase and Sale of Real Property relating to
the ABB Richmond Property (Exhibit 10.58 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32099)
*10.55 Development Agreement for the ABB Richmond Project (Exhibit 10.59
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.56 Owner-Contractor Agreement for the ABB Richmond Project (Exhibit
10.60 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-32099)
*10.57 Lease Agreement for the ABB Richmond Project (Exhibit 10.61 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-32099)
*10.58 Second Amendment to Lease Agreement for the ABB Richmond Project
(Exhibit 10.34 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.59 Agreement for Purchase and Sale relating to the Marconi Building
(formerly the Videojet Building) (Exhibit 10.62 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-32009)
*10.60 Agreement for the Purchase and Sale of Property relating to the
Cinemark Building (Exhibit 10.38 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-83933)
*10.61 Lease Agreement with Cinemark USA, Inc. for a portion of the
Cinemark Building (Exhibit 10.39 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-83933)
*10.62 Lease Agreement with The Coca-Cola Company for a portion of the
Cinemark Building (Exhibit 10.40 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-83933)
*10.63 Amended and Restated Articles of Incorporation of Wells Real
Estate Investment Trust, Inc. (Exhibit 3.1 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
10.64 Agreement of Limited Partnership of Wells Operating Partnership,
L.P. as Amended and Restated as of January 1, 2000 (filed
herewith)
*10.65 Advisory Agreement dated January 30, 2000 (Exhibit 10.37 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-83933)
*10.66 Amended and Restated Property Management and Leasing Agreement
(Exhibit 10.3 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-44900)
*10.67 Lease Agreement for the Metris Building (Exhibit 10.43 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.68 Promissory Note for $26,725,000 for the Bank of America Loan
(Exhibit 10.44 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.69 Mortgage, Assignment and Security Agreement for the Marconi
Building and the AT&T Building securing the Bank of America Loan
(Exhibit 10.45 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.70 Assumption and Modification Agreement for the Metris Loan
(Exhibit 10.42 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.71 Joint Venture Partnership Agreement of Wells Fund XII-REIT Joint
Venture Partnership (Exhibit 10.11 to Form S-11 Registration
Statement of Wells Real Estate Fund XII, L.P., as amended to
date, Commission File No. 33-66657)
*10.72 Office Lease for the Siemens Building (Exhibit 10.13 to Form S-
11 Registration Statement of Wells Real Estate Fund XII, L.P.,
as amended to date, Commission File No. 33-66657)
*10.73 Lease Agreement for the Dial Building (Exhibit 10.47 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.74 First Amendment to Lease Agreement for the Dial Building
(Exhibit 10.48 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.75 Lease Agreement for the ASML Building (Exhibit 10.51 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.76 First Amendment to Lease Agreement for the ASML Building
(Exhibit 10.52 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.77 Ground Lease Agreement for the ASML Building (Exhibit 10.53 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-83933)
*10.78 First Amendment to Ground Lease Agreement for the ASML Building
(Exhibit 10.54 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-83933)
*10.79 Lease Agreement for the Motorola Tempe Building (Exhibit 10.56
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-83933)
*10.80 First Amendment to Lease Agreement for the Motorola Tempe
Building (Exhibit 10.57 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-83933)
*10.81 Ground Lease Agreement for the Motorola Tempe Building (Exhibit
10.58 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-83933)
*10.82 Joint Venture Partnership Agreement of Fund VIII-IX-REIT Joint
Venture (Exhibit 10.47 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-44900)
*10.83 Lease Agreement for the Quest Building (Exhibit 10.51 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.84 Lease Agreement for the Avnet Building (Exhibit 10.48 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.85 Ground Lease Agreement for the Avnet Building (Exhibit 10.49 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-44900)
*10.86 Lease Agreement for the Delphi Building (Exhibit 10.50 to Form S-
11 Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.87 Loan Agreement with SouthTrust Bank, N.A. for $35,000,000
revolving line of credit dated May 3, 2000 (Exhibit 10.70 to Form
S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-83933)
*10.88 Promissory Note for $35,000,000 to SouthTrust Bank, N.A. (Exhibit
10.71 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-83933)
*10.89 Deed of Trust and Security Agreement with SouthTrust, N.A.
relating to the Cinemark Building (Exhibit 10.72 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.90 Deed of Trust and Security Agreement with SouthTrust, N.A.
relating to the Dial Building (Exhibit 10.73 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.91 Leasehold Deed of Trust and Security Agreement with SouthTrust,
N.A. relating to the ASML Building (Exhibit 10.74 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-83933)
*10.92 Lease Agreement for the Motorola Building in Plainfield, New
Jersey (Exhibit 10.56 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-83933)
*10.93 First Amendment to Lease Agreement for the Motorola Building in
Plainfield, New Jersey (Exhibit 10.57 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-83933)
*10.94 Ground Lease Agreement for the Motorola Building in Plainfield,
New Jersey (Exhibit 10.58 to Form S-11 Registration Statement, as
amended to date, Commission File No. 333-83933)
*10.95 Allonge to Revolving Note relating to the SouthTrust Bank N.A.
$32,393,000 revolving line of credit (Exhibit 10.55 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.96 First Amendment to Revolving Loan Agreement and Other Loan
Documents relating to the SouthTrust Bank N.A. $32,393,000
revolving line of credit (Exhibit 10.56 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.97 Second Note Modification Agreement relating to the SouthTrust
Bank N.A. $12,844,000 revolving line of credit (Exhibit 10.57 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-44900)
*10.98 Second Amendment to Amended and Restated Loan Agreement and Other
Loan Documents relating to the SouthTrust Bank N.A. $12,844,000
revolving line of credit (Exhibit 10.58 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.99 Revolving Note relating to the SouthTrust N.A. $19,003,000
revolving line of credit (Exhibit 10.59 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.100 Revolving Loan Agreement relating to the SouthTrust Bank N.A.
$19,003,000 revolving line of credit (Exhibit 10.60 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.101 Leasehold Deed of Trust and Security Agreement with SouthTrust
Bank N.A. relating to the Motorola Tempe Building and the Avnet
Building (Exhibit 10.61 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-44900)
*10.102 Amended and Restated Revolving Note relating to the SouthTrust
Bank N.A. $7,900,000 revolving line of credit (Exhibit 10.62 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-44900)
*10.103 Amended and Restated Loan Agreement relating to the SouthTrust
Bank N.A. $7,900,000 revolving line of credit (Exhibit 10.63 to
Form S-11 Registration Statement of Wells Real Estate Investment
Trust, Inc., as amended to date, Commission File No. 333-44900)
*10.104 Credit Line Deed of Trust and Security Agreement to SouthTrust
Bank N.A. relating to the Alstom Power Richmond Building (Exhibit
10.64 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-44900)
*10.105 First Amendment to Credit Line Deed of Trust and Security
Agreement to SouthTrust Bank N.A. relating to the Alstom Power
Richmond Building (Exhibit 10.65 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.106 Agreement for Purchase and Sale of Property for the Stone &
Webster Building (Exhibit 10.66 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.107 First Amendment to Agreement for Purchase and Sale of Property
for the Stone & Webster Building (Exhibit 10.67 to Form S-11
Registration Statement of Wells Real Estate Investment Trust,
Inc., as amended to date, Commission File No. 333-44900)
*10.108 Promissory Note for $35,900,000 for the Guaranty Federal Bank
Loan (Exhibit 10.68 to Form S-11 Registration Statement of Wells
Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-44900)
*10.109 Deed of Trust, Mortgage and Security Agreement with Guaranty
Federal Bank, F.S.B., relating to the Stone & Webster Building
(Exhibit 10.69 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-44900)
*10.110 Promissory Note for $3,000,000 for the Cardinal Paragon Loan
(Exhibit 10.70 to Form S-11 Registration Statement of Wells Real
Estate Investment Trust, Inc., as amended to date, Commission
File No. 333-44900)
*10.111 Deed of Trust with Cardinal Paragon, Inc. relating to the Stone &
Webster Building (Exhibit 10.71 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.112 Lease Agreement with Stone & Webster, Inc. for a portion of the
Stone & Webster Building (Exhibit 10.72 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.113 Lease Agreement with Sysco Corporation for a portion of the Stone
& Webster Building (Exhibit 10.73 to Form S-11 Registration
Statement of Wells Real Estate Investment Trust, Inc., as amended
to date, Commission File No. 333-44900)
*10.114 Purchase Agreement for Metris Minnetonka Building (Exhibit 10.74
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-44900)
*10.115 Lease Agreement for the Metris Minnetonka Building (Exhibit 10.75
to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-44900)
*10.116 Fourth Amendment to Lease Agreement for the Metris Minnetonka
Building (Exhibit 10.76 to Form S-11 Registration Statement of
Wells Real Estate Investment Trust, Inc., as amended to date,
Commission File No. 333-44900)
*10.117 Guaranty of Lease for the Metris Minnetonka Building (Exhibit
10.77 to Form S-11 Registration Statement of Wells Real Estate
Investment Trust, Inc., as amended to date, Commission File No.
333-44900)
*10.118 Agreement for the Purchase and Sale of Property for the AT&T Call
Center Buildings in Oklahoma City, Oklahoma (Exhibit 10.14 to
Form S-11 Registration Statement of Wells Real Estate Fund XII,
L.P., as amended to date, Commission File No. 333-66657)
*10.119 First Amendment to Agreement for the Purchase and Sale of
Property for the AT&T Call Center Buildings in Oklahoma City,
Oklahoma (Exhibit 10.15 to Form S-11 Registration Statement of
Wells Real Estate Fund XII, L.P., as amended to date, Commission
File No. 333-66657)
*10.120 Lease Agreement with AT&T Corp. for a portion of the AT&T Call
Center Buildings in Oklahoma City, Oklahoma (Exhibit 10.16 to
Form S-11 Registration Statement of Wells Real Estate Fund XII,
L.P., as amended to date, Commission File No. 333-66657)
*10.121 Lease Agreement with Jordan Associates, Inc. for a portion of the
AT&T Call Center Buildings in Oklahoma City, Oklahoma (Exhibit
10.17 to Form S-11 Registration Statement of Wells Real Estate
Fund XII, L.P., as amended to date, Commission File No. 333-
66657)