ITEM 1. BUSINESS - ------------------
General
Wells Real Estate Fund XII, L.P. (the "Partnership") is a Georgia public limited partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia non-public limited partnership, as General Partners. The Partnership was formed on September 15, 1998, for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing and otherwise managing for investment purposes income-producing commercial or industrial properties.
On March 22, 1999, the Partnership commenced a public offering of up to $70,000,000 of limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations on June 1, 1999, when it received and accepted subscriptions for 125,000 units. As of December 31, 2000, the Partnership had sold 1,881,142 Cash Preferred Units, and 617,434 Tax Preferred Units, held by a total of 1068 and 90 Limited Partners respectively, for total Limited Partner capital contributions of $24,985,760. After payment of $874,502 in acquisition and advisory fees and expenses, payment of $3,123,220 in selling commissions and organization and offering expenses, the investment of $5,300,000 in the Fund XI-XII-REIT Joint Venture and the investment of $15,687,245 in the Fund XII-REIT Joint Venture, as of December 31, 2000, the Partnership was holding net offering proceeds of $793 available for investment in properties.
The Partnership owns its interest in properties through equity ownership in the following joint ventures: (i) Fund XI-XII-REIT Associates (the "Fund XI-XII-REIT Joint Venture"), a joint venture among the Partnership, Wells Real Estate Fund XI, L.P. and Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership having Wells Real Estate Investment Trust, Inc. (the "Wells REIT"), as its General Partner; and (ii) the Fund XII-REIT Joint Venture, a joint venture among the Partnership and Wells OP, (the "Fund XII-REIT Joint Venture").
As of December 31, 2000, the Partnership owned interests in the following properties through its ownership of the foregoing ventures: (i) a two-story manufacturing and office building located in Fountain Inn, South Carolina (the "EBYL CarTex Building"), which is owned by the Fund XI-XII-REIT Joint Venture; (ii) a three-story office building located in Leawood, Johnson County, Kansas (the "Sprint Building"), which is owned by the Fund XI-XII-REIT Joint Venture; (iii) a one-story office building and warehouse located in Tredyffin Township, Chester County, Pennsylvania (the "Johnson Matthey Building"), which is owned by the Fund XI-XII-REIT Joint Venture; (iv) a two story office building located in Ft. Myers, Lee County, Florida, (the "Gartner Building"), which is owned by the Fund XI-XII-REIT Joint Venture; (v) a three-story office building located in Troy, Oakland County, Michigan, (the "Siemens Building"), which is owned by the Fund XII-REIT Joint Venture; and (vi) a one-story office building and a two-story office building located in Oklahoma City, Oklahoma County, Oklahoma (the "AT&T Oklahoma Building"), which are owned by the Fund VII-REIT Joint Venture.
Employees
The Partnership has no direct employees. The employees of Wells Capital, Inc., the sole general partner of Wells Partners, L.P., perform a full range of real estate services including leasing and property management, accounting, asset management and investor relations for the Partnership.
Insurance
Wells Management Company, Inc., an affiliate of the General Partners, carries comprehensive liability and extended coverage with respect to all the properties owned directly or indirectly by the Partnership. In the opinion of management of the registrant, the properties are adequately insured.
Competition
The Partnership will experience competition for tenants from owners and managers of competing projects which may include the General Partners and their affiliates. As a result, the Partnership may be required to provide free rent, reduced charges for tenant improvements and other inducements, all of which may have an adverse impact on the results of operations. At the time the Partnership elects to dispose of its properties, the Partnership will also be in competition with sellers of similar properties to locate suitable purchasers for its properties.
ITEM 2.
ITEM 2. PROPERTIES. - --------------------
The Partnership owns interests in six buildings through its ownership in two joint ventures. The Partnership does not have control over the operations of the joint ventures; however, it does exercise significant influence. Accordingly, investment in joint venture is recorded using the equity method. As of December 31, 2000, the Partnership was holding approximately $793 to invest in properties.
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:
(1). Average monthly gross rent over the life of the lease, annualized (2). Expiration of Sprint lease, Leawood, Kansas and Johnson Matthey lease, Chester County, Pennsylvania (3). Expiration of Gartner lease, Ft. Myers, Florida and EYBL Cartex lease, Fountain Inn, South Carolina, and Jordan Associates lease, Oklahoma City, Oklahoma. (4). Expiration of AT&T lease, Oklahoma City, Oklahoma and Siemens lease in Troy, Michigan
The following describes additional information about the properties in which the Partnership owns interests as of December 31, 2000:
Fund XI-XII-REIT Joint Venture - ------------------------------
On June 21, 1999, the Partnership was admitted to the Wells Fund XI - Fund XII - REIT Associates Joint Venture (the "Fund XI-XII-REIT Joint Venture").
The Fund XI-XII-REIT Joint Venture is a joint venture partnership among the Partnership, Wells Real Estate Fund XI, L.P. ("Wells Fund XI"), an affiliated Georgia limited partnership, and Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership formed to acquire, own, lease, operate, and manage real properties on behalf of Wells Real Estate Investment Trust, Inc. (the "Wells REIT"), an affiliated Maryland corporation. This joint venture was originally formed on May 1, 1999, as a joint venture between Wells Fund XI and the Wells OP pursuant to a Joint Venture Partnership Agreement, which was amended and restated on June 21, 1999, to admit the Partnership as a joint venture partner. The Fund XI-XII-REIT Joint Venture was formed for the purpose of acquisition, ownership, development, leasing, operation, sale and management of real properties.
As of December 31, 2000, the Partnership had contributed $5,300,000 for an approximate 17.1% equity interest in the Fund XI-XII-REIT Joint Venture, Wells Fund XI had made capital contributions of $8,131,351 for an approximate 26.1% equity interest in the Fund XI-XII-REIT Joint Venture, and Wells OP had contributed $17,585,310 for an approximate 56.8% equity interest in the Fund XI-XII-REIT Joint Venture.
The Sprint Building - -------------------
On July 2, 1999, the XI-XII-REIT Joint Venture acquired a three story office building with approximately 68,900 rentable square feet, on a 7.12 acre tract of land, located in Leawood, Johnson County, Kansas (the "Sprint Building") from Bridge Information Systems America, Inc.
The purchase price for the Sprint Building was $9,500,000. The Joint Venture also incurred additional acquisition expenses in connection with the purchase of the Sprint Building, including attorneys' fees, recording fees and other closing costs, of approximately $46,210. As of December 31, 2000, the Partnership had contributed $1,000,000, Wells Fund XI had contributed $3,000,000 and Wells OP had contributed $5,500,000 towards the purchase of this building.
The entire 68,900 rentable square feet of the Sprint Building is currently under a net lease agreement with Sprint dated February 14, 1997. The landlord's interest in the lease was assigned to the X-XI-
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.
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 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 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 XI-XII-REIT Joint Venture a termination payment equal to $6.53 per square foot, or $450,199.
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.
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 "EBYL 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 Wells Capital, Inc., an affiliate of the Partnership and 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 purchase costs were funded by capital contributions of $1,530,000 by Wells Fund XI and $3,591,827 by Wells OP.
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 EBYL CarTex Building is currently under an Agreement of Lease (the "Lease") with EYBL CarTex, Inc., a South Carolina corporation ("EBYL 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 exercised 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 CarTex Building during the term of the Lease. In addition, EYBL CarTex is responsible for all routine maintenance and repairs to the EBYL CarTex Building. Wells LLC, as landlord, is responsible for maintenance for 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 EBYL 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 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 purchase of the building was funded by capital contributions of $1,500,000 by the Partnership, $3,494,727 by Wells Fund XI and $3,061,594 by Wells OP.
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 multi-tenant facility. It was subsequently converted into a single-tenant facility in 1998. The site consists of a 10.0 acre tract of land located at 434-436 Devon Park Drive in 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 closing with the result that the joint venture is now the landlord under the lease. 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. 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.
Under its 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 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 on a 4.9 acre tract of land located at 12600 Gateway Blvd. in Fort Meyers, Lee County, Florida (the "Gartner Building") from Hogan Triad Ft. Meyers 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 XI-XII-REIT Joint Venture at closing. The purchase price for the Gartner Building was $8,320,000. The 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 project was funded by capital contributions of $2,800,000 by the Partnership, $106,554 by Wells Fund XI and $5,441,064 by Wells OP.
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 "Lease"). The landlord's interest in the Lease was assigned to the XI-XII-REIT Joint Venture at the closing.
The initial term of the Lease is ten years which commenced on February 1, 1998 and expires on January 31, 2008. Gartner has the right to extend the Lease for two additional five year periods of time. The yearly base rent payable for the remainder of the Lease term is $642,798 through January 2000, $790,642 though January, 2001, and thereafter will increase by 2.5 percent through the remainder of the lease.
Under the 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 Lease. In addition, Gartner is responsible for all routine maintenance and repairs to the Gartner Building. The 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 Lease. The two option plans are described in the 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 XI-XII-REIT Joint Venture. Gartner may exercise its expansion right for the Small Option Building by providing notice in writing to the 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 XI-XII-REIT Joint Venture. Gartner may exercise its expansion right for the Small Option Building by providing notice in writing to the 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.
Fund XII-REIT Joint Venture - ---------------------------
On April 10, 2000, the Partnership and Wells OP, the operating partnership for Wells Real Estate Investment Trust, Inc., 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, the Partnership 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 10, 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 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 the Partnership 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 90/th/ month of the term if Siemens (a) provides written notice of such cancellation on or before the last day of the 78/th/ 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 additional information regarding the Siemens Building, refer to Supplement No. 5 dated July 25, 2000 to the Prospectus of Wells Real Estate Fund XII, L.P. dated March 22, 1999, contained in Post-Effective Amendment No. 3 to the Form S- 11 Registration Statement of Wells Real Estate Fund XII, L.P., which was filed with the Commission on July 25, 2000 (Commission File No. 33-66657).
AT&T Oklahoma Building - ----------------------
On December 28, 2000, the Wells Fund XII-REIT Joint Venture 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 purchase of the AT&T Building including attorney's fees, recording fees and other closing costs of approximately $27,554. The purchase of the building was funded by capital contributions of $8,591,000 by the Partnership 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 world'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 term of the lease 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 $1,437,750 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, 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 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 net lease agreement. The landlord's interest in the Jordan lease was also assigned to the Fund XII-REIT Joint Venture at 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 & BlueSheild of Oklahoma, Kraft Food 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 AT&T Oklahoma Buildings. 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, 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 AT&T Call Center Buildings.
For additional information regarding the AT&T Oklahoma Buildings, refer to Supplement No. 6 dated February 5, 2001 to the Prospectus of Wells Real Estate Fund XII, L.P. dated March 22, 1999, contained in Post-Effective Amendment No. 4 to the Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., which was filed with the Commission on February 9, 2001 (Commission File No. 33-66657).
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS - --------------------------
There were no material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during 2000.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. - -------------------------------------------------------------
No matters were submitted to a vote of the Limited Partners during the year of 2000.
PART II -------
ITEM 5.
ITEM 5. MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS. - ----------------------------------------------------------------------------
As of February 28, 2001, the Partnership had 2,261,987 outstanding Cash Preferred Units held by a total of 1119 Limited partners and 694,334 Tax Preferred Units held by a total of 94 Limited partners. The capital contribution per unit is $10.00. There is no established public trading for the Partnerships limited partnership units, and it is not anticipated that a public trading market for the units will develop. Under the Partnership Agreement, the General Partners have the right to prohibit transfers of units.
Pursuant to Section 15.2 of the Partnership Agreement, for the first three fiscal years following the termination of the offering of units in the Partnership, the per unit value shall be deemed to be $10.00 per unit. After the expiration of this three year period, the General Partners shall determine a per unit value by estimating the amount a holder of Partnership units would receive if the Partnership's properties were sold as of the close of the Partnership's fiscal year and the proceeds from such sales (without reduction for selling expenses), together with any other funds of the Partnership, were distributed in a liquidation of the Partnership.
Cash Preferred Status Limited Partners are entitled to a distribution from Net Cash from Operations, as defined in the Partnership Agreement to mean cash flow, less adequate cash reserves for other obligations of the Partnership for which there is no provision, on a per Unit basis until they have received distributions in each fiscal year of the Partnership equal to 10% of their adjusted capital contributions. After this preference is satisfied, the General Partners will receive an amount of Net Cash From Operations equal to 10% of the total amount of Net Cash From Operations distributed. Thereafter, the Limited Partners holding Cash Preferred Status Units will receive 90% of Net Cash From Operations and the General Partners will receive 10%. No Net Cash from Operations will be distributed to Limited Partners holding Tax Preferred Status Units. Holders of Cash Preferred Status Units will, except in limited circumstances, be allocated none of the Partnership's net loss, depreciation and amortization deductions. These deductions will be allocated to the Tax Preferred Status Units, until their capital account balances have been reduced to zero. No distributions have been made to the General Partners as of December 31, 2000.
Cash available for distribution to the Limited Partners is distributed on a quarterly basis unless Limited Partners select to have their cash distributed monthly. Cash distributions made to Cash Preferred Status Limited Partners during 2000 and 1999 were as follows:
The fourth quarter distribution was accrued for accounting purposes in 2000, and was not actually paid to Limited Partners until February, 2001. Although there is no assurance, the General Partners anticipate that cash distributions to Limited Partners holding Cash Preferred Status Units will continue in 2001 at a level at least comparable with 2000 cash distributions on an annual basis.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA. - ---------------------------------
The following sets forth a summary of the selected financial data for the fiscal year ended December 31, 2000 and the seven months ended December 31, 1999.
(1) The weighted average unit is calculated by averaging units over the period they are outstanding during the time units are still being purchased by Limited Partners in the Partnership.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS - -------------------------------------------------------------------------------- OF OPERATION. - ------------
The following discussion and analysis should be read in conjunction with the Selected Financial Data and the accompanying financial statements of the Partnership and notes thereto.
This Report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including discussion and analysis of the financial condition of the Partnership, anticipated capital expenditures required to complete certain projects, amounts of cash distributions anticipated to be distributed to Limited Partners in the future and certain other matters. Readers of this Report should be aware that there are various factors that could cause actual results to differ materially from any forward-looking statement made in the Report, which include construction costs which may exceed estimates, construction delays, lease-up risks, inability to obtain new tenants upon the expiration of existing leases, and the potential need to fund tenant improvements or other capital expenditures out of operating cash flow.
Results of Operations and Changes in Financial Conditions - ---------------------------------------------------------
General - -------
The Partnership commenced active operations on June 1, 1999, when it received and accepted subscriptions for 125,000 units. As of December 31, 2000, the Partnership had sold 1,881,142 Cash Preferred Status Units and 617,434 Tax Preferred Status Units, held by a total of 1068 and 90 Limited Partners, respectively, for total Limited Partner contributions of $24,985,760. After payment of $874,502 in acquisition and advisory fees and acquisition expenses, payment of $3,123,220 in selling commissions and organization and offering expenses, the investment of $5,300,000 in the Fund XI-XII-REIT Joint Venture, and the investment of $15,687,245 in the Fund XII-REIT Joint Venture, as of December 31, 2000, the Partnership was holding net offering proceeds of $793 available for investment in properties.
Gross revenues of the Partnership of $929,868 for year ended December 31, 2000 and $160,379 for the year ended December 31, 1999, were attributable primarily to interest income earned on funds held by the Partnership prior to the investment in joint ventures, and equity in earnings of joint ventures. The increase was due primarily to increased investments in joint ventures.
Expenses for the Partnership were $73,640 for the year ended December 31, 2000 and $37,562 for the year ended December 31, 1999, and consisted primarily of legal, accounting and partnership administrative costs. Net income of the Partnership was $856,228 and $122,817 for the years ended December 31, 2000 and 1999, respectively. The Partnership's cash distribution to the Cash Preferred Status Limited Partners was $0.77 and $0.55 for the years ended December 31, 2000 and 1999. No cash distributions have been paid to Tax Preferred Status Limited Partners or to the General Partners.
Property Operations - --------------------
As of December 31, 2000, the Partnership owned interests in the following operational properties:
EYBL CarTex Building/Fund XI-XII-REIT Joint Venture - ---------------------------------------------------
Real estate taxes and primarily all operational expenses for the building are the responsibility of the tenant.
Since the EBYL CarTex Building was purchased in May of 1999, comparative income and expense figures are 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.
The Sprint Building / Fund X-XII-REIT Joint Venture - ---------------------------------------------------
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.
Johnson Matthey Building / Fund XI-XII-REIT Joint Venture - ---------------------------------------------------------
Real estate taxes and primarily all operational expenses for the building are the responsibility of the tenant.
Since the Johnson Matthey Building was purchased in August 1999, comparative income and expense figures are available for only five 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.
The Gartner Building / Fund XI-XII-REIT Joint Venture - -----------------------------------------------------
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 of 1999, the Partnership 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. Real estate taxes and primarily all operational expenses for the building are the responsibility of the tenant.
Since the Gartner Building was purchased in September 1999, comparative income and expense figures are available for only five 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.
Siemens Building / Fund XII-REIT Joint Venture - ----------------------------------------------
The Siemens Building incurred property taxes of $126,883 in 2000.
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.
Liquidity and Capital Resources - -------------------------------
The Partnership commenced active operations on June 1, 1999, when it received and accepted subscriptions for 125,000 Units.
After payment of $874,502 in acquisition and advisory fees and acquisition expenses, payment of $3,123,220 in selling commissions and organizational and offering expenses, the investment of $5,300,000 in the Fund XI-XII-REIT Joint Venture, and the investment of $15,687,245 in the Fund XII-REIT Joint Venture, as of December 31, 2000, the Partnership was holding net offering proceeds of $793 available for investment in the Partnership.
The Partnership's net cash provided by operating activities increased to $234,619 in 2000, as compared to $3,782 for 1999. This increase was due primarily to equity earnings of joint ventures and interest income earned on funds held by the Partnership prior to investment in properties. Net cash used in investing activities increased to $15,496,594 in 2000, up from $5,553,776 in 1999. This was primarily the result of increased investment in joint ventures. Net cash provided by financing activities of $12,885,560 in 2000 and $8,134,128 in 1999 is the result of raising $15,617,575 and $9,368,186 respectively in Limited Partners contributions less commissions and organizational and offering expenses.
The Partnership's distributions to holders of Cash Preferred Status Units for the 4/th/ quarter ended December 31, 2000 were paid in February, 2001 from net cash from operations February, 2001. Although there is no assurance, the Partnership anticipates that distributions will continue to be paid on a quarterly basis from such sources on a level at least consistent with 2000. No cash distributions were paid to holders of Tax Preferred Status Units in 2000.
The Partnership expects to continue to meet its short-term liquidity requirements generally through net cash provided by operations which the Partnership believes will continue to be adequate to meet both operating requirements and distributions to limited partners. At this time, given the nature of the joint ventures and properties in which the Partnership has invested, there are no known improvements or renovations to the properties expected to be funded from cash flow from operations.
The Partnership expects to make future real estate investments, directly or through investments in joint ventures, from Limited Partners Capital contributions until the termination of its offering on March 21, 2001. As of December 31, 2000, the Partnership was holding net offering proceeds of $793 for this purpose.
Since properties are acquired on an all-cash basis, the Partnership has no permanent long-term liquidity requirements.
Inflation - ---------
The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. There are provisions in the majority of tenant leases to protect the Partnership from the impact of inflation. Most leases contain common area maintenance charges (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 Partnership's exposure to increases in costs and operating expenses resulting from inflation.
ITEM 8.
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND - ------------------------------------------------------------------------ FINANCIAL DISCLOSURE. - --------------------
There were no disagreements with the Partnership's accountants or other reportable events during 2000.
PART III --------
Item 10.
Item 10. General Partners of the Partnership. - ---------------------------------------------
Wells Partners, L.P. Wells Partners, L.P. is a private Georgia limited -------------------- partnership formed on October 25, 1990. The sole General Partner of Wells Partners, L.P. is Wells Capital, Inc., a Georgia corporation. The executive offices of Wells Capital, Inc. are located at 6200 The Corners Parkway Suite 250, Norcross, Georgia 30092.
Leo F. Wells, III. Mr. Wells is a resident of Atlanta, Georgia, is 57 ----------------- years of age and holds a Bachelor of Business Administration Degree in Economics from the University of Georgia. Mr. Wells is the President and sole Director of Wells Capital, Inc. Mr. Wells is the President of Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which he serves as principal broker. He is also the President, sole Director and sole shareholder of Wells Real Estate Investment Funds, Inc., the parent corporation of Wells Capital, Inc. Mr. Wells is also currently the sole Director and President of Wells Management Company, Inc., a property management company he founded in 1983. In addition, Mr. Wells is the President and Chairman of the Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells Management Company, Inc. which are all affiliates of the General Partners. From 1980 to February 1985, Mr. Wells served as vice-president of Hill-Johnson, Inc., a Georgia corporation engaged in the construction business. From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he was a real estate salesman and property manager for Roy D. Warren & Company, an Atlanta real estate company.
Item 11.
Item 11. Compensation of General Partners and Affiliates. - ---------------------------------------------------------
The following table summarizes the compensation and fees (including reimbursement of expenses) paid to the General Partners and their affiliates during the year ended December 31, 2000.
CASH COMPENSATION TABLE -----------------------
(1) This amount includes all selling commissions paid or payable to Wells Investment Securities, Inc., a substantial portion of which were reallocated to other broker-dealers.
(2) These fees are not paid directly by the Partnership but are paid by the joint venture entities which own the properties for which the property management and leasing services relate and include management and leasing fees.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. - -------------------------------------------------------------------------
No Limited Partner is known by the Partnership to own beneficially more than 5% of the outstanding units of the Partnership.
Set forth below is the security ownership of management as of February 29, 2001.
No arrangements exist which would, upon operation, result in a change in control of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. - --------------------------------------------------------
The compensation and fees paid or to be paid by the Partnership to the General Partners and their affiliates in connection with the operation of the Partnership are as follows:
Interest in Partnership Cash Flow and Net Sales Proceeds. The General -------------------------------------------------------- Partners will receive a subordinated participation in net cash flow from operations equal to 10% of net cash flow after the Limited Partners holding Cash Preferred Status Units have received preferential distributions equal to 10% of their adjusted capital accounts in each fiscal year. The General Partners will also receive a subordinated participation in net sales proceeds and net financing proceeds equal to 20% of residual proceeds available for distribution after Limited Partners holding Cash Preferred Status Units have received a return of their adjusted capital contributions plus a 10% cumulative return on their adjusted capital contributions and Limited Partners holding Tax Preferred Units have received a return of their adjusted capital contributions plus a 15% cumulative return on their adjusted capital contributions; provided, however, that in no event shall the General Partners receive in the aggregate in excess of 15% of net sales proceeds and net financing proceeds remaining after payments to Limited Partners from such proceeds of amounts equal to the sum of their adjusted capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners did not receive any distributions from net cash flow from operations or net sales proceeds for the year ended December 31, 2000.
Property Management and Leasing Fees. Wells Management Company, Inc., an ------------------------------------ affiliate of the General Partners, will receive compensation for lessor of (a) fees that would be paid to a comparable outside firm or (b) 4.5% of the gross revenues generally paid over the life of the lease 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. In the case of commercial properties which are leased on a long-term (ten or more years) net lease basis, the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term.
Management and leasing fees are not paid directly by the Partnership but by the joint venture entities which own the properties. The Partnership's share of these fees was $42,873 for the year ended December 31, 2000.
Real Estate Commissions. In connection with the sale of Partnership ----------------------- properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (A) 50% of the commissions customarily charged by other brokers in arm's-length transactions involving comparable properties in the same geographic area or (B) 3% of the gross sales price of the property, and provided that payments of such commissions will be made only after Limited Partners have received prior distributions totaling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. No real estate commissions were paid to the General Partners or affiliates for the year ended December 31, 2000.
Deferred Project Costs ----------------------
The Partnership pays Acquisition and Advisory Fees and Acquisition Expenses to Wells Capital, Inc., the General Partner of Wells Partners, L.P., for acquisition and advisory services as a reimbursement for acquisition expenses. These payments, as provided by the Partnership Agreement, may not exceed 3.5% of the Limited Partners' capital contributions. Acquisition and Advisory Fees and Acquisition Expenses paid as of December 31, 2000, amounted to $874,501 and represented approximately 3.5% of the Limited Partners' capital contributions. These fees are allocated to specific properties as they are purchased.
Deferred Offering Costs -----------------------
Wells Capital, Inc. (the "Company"), the General Partner of Wells Partners, L.P., pays all the offering expenses for the Partnership. The Company may be reimbursed by the Partnership to the extent that such offering expenses do not exceed 3% of total Limited Partners' capital contributions. As of December 31, 2000, the Partnership had reimbursed the Company an aggregate of $749,573 in offering expenses, which amounted to approximately 3% of Limited Partners' capital contributions.
PART IV -------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. - --------------------------------------------------------------------------
(a) 1. Financial Statements The Financial Statements are contained on pages through of this Annual Report on Form 10-K, and the list of the Financial Statements contained herein is set forth on page, which is hereby incorporated by reference.
(a) 2. The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
(b) The Partnership filed a Current Report on Form 8-K dated December 28, 2000 and an Amendment No. 1 to Current Report on Form 8-K/A dated December 28, 2000 reporting the acquisition of an interest in the AT&T Oklahoma Buildings located in Oklahoma City, Oklahoma.
(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.
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 27/th/ day of March, 2001.
Wells Real Estate Fund XII, L.P. (Registrant)
By: /s/ Leo F. Wells, III ------------------------------------------- Leo F. Wells, III Individual General Partner and as President and Chief Financial Officer of Wells Capital, Inc., the General Partner of Wells Partners, L.P.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity as and on the date indicated.
Signature Title - --------- -----
/s/ Leo F. Wells, III Individual General Partner, March 27, 2001 - --------------------------- Leo F. Wells, III President and Sole Director of Wells Capital, Inc., the General Partner of Wells Partners, L.P.
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO SECTION 12 OF THE ACT.
No annual report or proxy material relating to an annual or other meeting of security holders has been sent to security holders.
-----------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund XII, L.P.:
We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND XII, L.P. (a Georgia public limited partnership) as of December 31, 2000 and 1999, the related statements of income for the years then ended, and the related statements of partners' capital and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wells Real Estate Fund XII, L.P. as of December 31, 2000 and 1999, the results of its operations for the years then ended, and its 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.
ARTHUR ANDERSEN LLP
Atlanta, Georgia January 30, 2001
WELLS REAL ESTATE FUND XII, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
The accompanying notes are an integral part of these balance sheets.
WELLS REAL ESTATE FUND XII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND XII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND XII, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
The accompanying notes are an integral part of these statements.
WELLS REAL ESTATE FUND XII, L.P.
(A Georgia Public Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000, 1999, AND 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Wells Real Estate Fund XII, L.P. (the "Partnership") is a public limited partnership organized on September 15, 1998 under the laws of the state of Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P. The Partnership has two classes of limited partnership units. Upon subscription for units, each limited partner must elect whether to have their units treated as cash preferred units or tax preferred units. Thereafter, limited partners shall have the right to change their prior elections to have some or all of their units treated as cash preferred units or tax preferred units one time during each quarterly accounting period. Limited partners may vote to, among other things: (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, (c) remove a general partner, (d) elect a new general partner, (e) dissolve the Partnership, and (f) approve a sale of assets, subject to certain limitations. The majority vote on any of the described matters will bind the Partnership, without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of which class of unit is selected. The Partnership commenced operations as of June 1, 1999.
The Partnership was formed to acquire and operate commercial real estate properties, including properties which are either to be developed, currently under construction, newly constructed, or have operating histories. The Partnership owns an interest in several properties through a joint venture between Wells Real Estate Fund XI, L.P. ("Wells Fund XI"), the Partnership, and 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, which is referred to as the Fund XI, XII, and REIT Joint Venture. In addition, the Partnership owns an interest in two properties through a joint venture with the Operating Partnership, which is referred to as the Fund XII and REIT Joint Venture.
Through its investment in Wells Fund XI, XII, and REIT Joint Venture, the Partnership owns interests in the following properties: (i) a two-story manufacturing and office building in Greenville County, South Carolina (the "EYBL CarTex Building"), (ii) a three-story office building in 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 Fort Myers, Florida (the "Gartner Building").
The following properties are owned by the Partnership through its investment in the Fund XII and REIT Joint Venture: (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
The preparation of 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 the real estate assets are based on management's current intent to hold the real estate assets as long-term investments. The success of the Partnership's future operations and the ability to realize the investment in its assets will be dependent on the Partnership's ability to maintain an appropriate level of rental rates, occupancy, and operating expenses in future years. Management believes that the steps it is taking will enable the Partnership to realize its investment in its assets.
Income Taxes
The Partnership is not subject to federal or state income taxes, and therefore, none have been provided for in the accompanying financial statements. The partners are required to include their respective shares of profits and losses in their individual income tax returns.
Distributions of Net Cash From Operations
Cash available for distribution, as defined by the partnership agreement, will be distributed to the limited partners on a quarterly basis. In accordance with the partnership agreement, distributions are paid first to limited partners holding cash preferred units until they have received a 10% per annum return on their net capital contributions, as defined. Then, such distributions are paid to the general partners until they have received 10% of the total amount distributed thus far. Any remaining cash available for distribution is split 90% to the limited partners holding cash preferred units and 10% to the general partners. No such distributions will be made to the limited partners holding tax preferred units.
Distribution of Sale Proceeds
Upon the sale of properties, the net sale proceeds will be distributed in the following order:
. To limited partners holding units which at any time have been treated as tax preferred units until they receive an amount necessary to equal the net cash available for distribution received by the limited partners holding cash preferred units;
. To limited partners on a per unit basis until each limited partner has received 100% of their net capital contributions, as defined;
. To all limited partners on a per unit basis until they receive a cumulative 10% per annum return on their net capital contributions, as defined;
. To limited partners on a per unit basis until they receive an amount equal to their preferential limited partner return (defined as the sum of a 10% per annum cumulative return on net capital contributions for all periods during which the units were treated as cash preferred units and a 15% per annum cumulative return on net capital contributions for all periods during which the units were treated as tax preferred units);
. To the general partners until they have received 100% of their capital contributions, as defined;
. Then, if limited partners have received any excess limited partner distributions (defined as distributions to limited partners over the life of their investment in the Partnership in excess of their net capital contributions, as defined, plus their preferential limited partner return), to the general partners until they have received distributions equal to 20% of the sum of any such excess limited partner distributions plus distributions made to the general partners pursuant to this provision;
. Thereafter, 80% to the limited partners on a per unit basis and 20% to the general partners.
Allocation of Net Income, Net Loss, and Gain on Sale
Net income is defined as net income recognized by the Partnership, excluding deductions for depreciation, amortization, and cost recovery. Net income, as defined, of the Partnership will be allocated each year in the same proportion that net cash from operations is distributed to the partners. To the extent the Partnership's net income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners holding cash preferred units and 1% to the general partners.
Net loss, depreciation, amortization, and cost recovery deductions for each fiscal year will be allocated as follows: (a) 99% to the limited partners holding tax preferred units and 1% to the general partners until their capital accounts are reduced to zero; (b) then to any partner having a positive balance in his capital account in an amount not to exceed such positive balance; and (c) thereafter to the general partners.
Gain on the sale or exchange of the Partnership's properties will be allocated generally in the same manner that the net proceeds from such sale are distributed to partners after the following allocations are made, if applicable: (a) allocations made pursuant to the qualified income offset provisions of the partnership agreement; (b) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero; and (c) allocations to limited partners holding tax preferred units in amounts equal to the deductions for depreciation, amortization, and cost recovery previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property.
Investment in Joint Ventures
Basis of Presentation
The Partnership does not have control over the operations of the joint ventures; however, it does exercise significant influence. Accordingly, the Partnership's investment in joint ventures is recorded using the equity method of accounting.
Real Estate Assets
Real estate assets held by the joint venture are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful life of the related asset. All ordinary repairs 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 that indicate the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of real estate assets by determining whether the carrying value of such real estate assets will be recovered through the future cash flows expected from the use of the asset and its eventual disposition. Management has determined that there has been no impairment in the carrying value of real estate assets held by the joint ventures as of December 31, 2000.
Depreciation for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or the life of the asset, whichever is shorter.
Revenue Recognition
All leases on real estate assets held by the joint venture are classified as operating leases, and the related rental income is recognized on a straight-line basis over the terms of the respective leases.
Partner's Distributions and Allocations of Profit and Loss
Cash available for distribution and allocations of profit and loss to the Partnership by the joint ventures are made in accordance with the terms of the 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 Partnership quarterly.
Deferred Lease Acquisition Costs
Costs incurred to procure operating leases are capitalized and amortized on a straight-line basis over the terms of the related leases.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, the Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts.
Per Unit Data
Net income per unit with respect to the partnership for the years ended December 31, 2000 and 1999 is computed based on the weighted average number of units outstanding during the period.
Reclassifications
Certain prior year amounts have been reclassified to conform with the current year financial statement presentation.
2. DEFERRED PROJECT COSTS
The Partnership paid a percentage of limited partner contributions to Wells Capital, Inc. (the "Company"), the general partner of Wells Partners, for acquisition and advisory services. These payments, as stipulated by the partnership agreement, can be up to 5% of the limited partner contributions, subject to certain overall limitations contained in the partnership agreement. Aggregate fees paid through December 31, 2000 were $874,501 and amounted to 3.5% of the limited partners' contributions received. These fees are allocated to specific properties as they are purchased or developed and are included in capitalized assets of the joint venture. Deferred project costs at December 31, 2000 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 Company and not by the Partnership. 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 Company paid offering expenses on behalf of the Partnership in the aggregate amount of $929,982, of which the Company was reimbursed $749,573, which did not exceed the 5% limitation. The unpaid portion of deferred offering costs is $180,409 and is included in due to affiliate in the accompanying balance sheet.
4. RELATED-PARTY TRANSACTIONS
Due from affiliates at December 31, 2000 represents the 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 XI, XII, and REIT Joint Venture $125,193 $116,258 Fund XII and REIT Joint Venture 159,167 0 -------- -------- $284,360 $116,258 ======== ========
The Partnership entered into a property management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of the general partners. In consideration for supervising the management and leasing of the Partnership's properties, the Partnership will pay Wells Management management and leasing fees equal to the lesser of (a) fees that would be paid to a comparable outside firm, or (b) 4.5% of the gross revenues generally paid over the life of the lease 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. In the case of commercial properties which are leased on a long-term net basis (ten or more years), the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term.
The Partnership incurred management and leasing fees and lease acquisition costs, at the joint venture level, of $42,873, $8,268, and $0 for the years ended December 31, 2000, 1999, and 1998, respectively, which were paid to Wells Management.
The Company performs certain administrative services for the Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel. In the opinion of management, such allocation is a reasonable estimation of such expenses.
The general partners are also general partners in other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in the capacity as general partners for other Wells Real Estate Funds may be in competition with the Partnership for tenants in similar geographic markets.
5. INVESTMENT IN JOINT VENTURES
The 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 XI, XII, and REIT $ 5,325,424 17% $5,467,634 17% Fund XII and REIT 16,242,127 53 0 0 ----------- ---------- $21,567,551 $5,467,634 =========== ==========
The following is a rollforward of the Partnership's investment in joint ventures for the years ended December 31, 2000 and 1999:
Fund XI, XII, and REIT Joint Venture
On May 1, 1999, the Partnership entered into a joint venture with Wells Fund XI and the Operating Partnership. 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.
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
The Fund XI, XII, and REIT Joint Venture (A Georgia Joint Venture) Statements of Income for the Years Ended December 31, 2000 and 1999
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
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
Fund XII and REIT Joint Venture
On May 10, 2000, the Partnership entered into a joint venture with the Operating Partnership. The joint venture, Fund XII and REIT Joint Venture, was formed to acquire, develop, operate, and sell real property. On May 10, 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.
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
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
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
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
6. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL
The Partnership's income tax basis net income for the year ended December 31, 2000 is recalculated as follows:
The Partnership's income tax basis partners' capital at December 31, 2000 is computed as follows:
7. RENTAL INCOME
The future minimum rental income due from the Partnership's respective ownership interest in the joint venture under noncancelable operating leases at December 31, 2000 is as follows:
Year ended December 31: 2001 $ 2,153,470 2002 2,079,811 2003 2,157,459 2004 2,260,824 2005 2,287,491 Thereafter 8,699,159 ------------ $ 19,638,214 ============
Four tenants contributed 40%, 16%, 13%, and 12% of rental income. In addition, two tenants will contribute 40% and 37% of future minimum rental income.
The future minimum rental income due Fund XI, XII and REIT under noncancellable 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 noncancellable 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. QUARTERLY RESULTS (UNAUDITED)
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2000 and 1999:
(a) The totals of the four quarterly amounts for the year ended December 31, 2000 do not equal the totals for the year. This difference results from the use of a weighted average to compute the number of units outstanding for each quarter and the year.
(a) The totals of the four quarterly amounts for the year ended December 31, 1999 do not equal the totals for the year. This difference results from the use of a weighted average to compute the number of units outstanding for each quarter and the year.
9. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any significant litigation or claims against the Partnership or the Company. In the normal course of business, the Partnership or the Company may become subject to such litigation or claims.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wells Real Estate Fund XII, L.P. and Wells Real Estate Investment Trust, Inc.:
We have audited the accompanying balance sheet of THE SIEMENS BUILDING as of December 31, 2000 and the related statements of income, partners' capital, and cash flows for the period from inception (May 10, 2000) to December 31, 2000. These financial statements are the responsibility of the building's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Siemens Building as of December 31, 2000 and the results of its operations and its cash flows for the period from inception (May 10, 2000) to December 31, 2000 in conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Atlanta, Georgia January 30, 2001
THE SIEMENS BUILDING
BALANCE SHEET
DECEMBER 31, 2000
The accompanying notes are an integral part of this balance sheet.
THE SIEMENS BUILDING
STATEMENT OF INCOME
FOR THE PERIOD FROM INCEPTION (MAY 10, 2000)
TO DECEMBER 31, 2000
The accompanying notes are an integral part of this statement.
THE SIEMENS BUILDING
STATEMENT OF PARTNERS' CAPITAL
FOR THE PERIOD FROM INCEPTION (MAY 10, 2000)
TO DECEMBER 31, 2000
The accompanying notes are an integral part of this statement.
THE SIEMENS BUILDING
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (MAY 10, 2000)
TO DECEMBER 31, 2000
The accompanying notes are an integral part of this statement.
THE SIEMENS BUILDING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
The Siemens Building ("Siemens") is a three-story office building located in Troy, Michigan. The building is owned by Fund XII and REIT Associates, a joint venture between Wells Real Estate Fund XII, L.P. ("Fund XII") and Wells Real Estate Investment Trust, Inc. ("REIT"). Fund XII and REIT each own 50% of Siemens at December 31, 2000. Allocation of net income and distributions are made in accordance with ownership percentages.
Use of Estimates
The preparation of 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.
Income Taxes
Siemens is not deemed to be a taxable entity for federal income tax purposes.
Real Estate Assets
Real estate assets are stated at cost, less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful life of the related asset. All repairs and maintenance 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 Siemens as of December 31, 2000.
Depreciation is calculated using the straight-line method over 25 years.
Revenue Recognition
The lease on Siemens is classified as an operating lease, and the related rental income is recognized on a straight-line basis over the term of the lease.
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Cash and Cash Equivalents
For the purposes of the statements of cash flows, Siemens considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in money market accounts.
2. RENTAL INCOME
The future minimum rental income due to Siemens under noncancelable operating leases at December 31, 2000 is as follows:
Year ending December 31: 2001 $ 1,339,584 2002 1,371,946 2003 1,404,309 2004 1,436,672 2005 1,469,034 Thereafter 7,133,788 ------------ $ 14,199,333 ============
One tenant contributed 100% of rental income for the year ended December 31, 2000 and represents 100% of the future minimum rental income above.
3. RELATED-PARTY TRANSACTIONS
Fund XII and REIT Associates entered into a property management agreement with Wells Management Company, Inc. ("Wells Management"), an affiliate of Fund XII, and REIT Associates. In consideration for supervising the management of Siemens, Fund XII and REIT Associates will generally pay Wells Management management and leasing fees equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm's-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term.
Siemens incurred management and leasing fees of $32,756 for the year ended December 31, 2000, which were paid to Wells Management.
4. COMMITMENTS AND CONTINGENCIES
Management, after consultation with legal counsel, is not aware of any significant litigation or claims against Siemens and its partners. In the normal course of business, Siemens and its partners may become subject to such litigation or claims.
EXHIBIT INDEX -------------
(Wells Real Estate Fund XII, L.P.)
The following documents are filed as exhibits to this report. Those exhibits previously filed and incorporated herein by reference are identified below by an asterisk. For each such asterisked exhibit, there is shown below the description of the previous filing. Exhibits which are not required for this report are omitted.
Exhibit Number Description of Document - ------ -----------------------
*3(a) Amended and Restated Agreement of Limited Partnership of Wells Real Estate Fund XII, L.P. (Exhibit 3.1 to Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., as amended to date, Commission File No. 33-66657)
*3(b) Certificate of Limited Partnership of Wells Real Estate Fund XII, L.P. (Exhibit 3.2 to Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., as amended to date, Commission File No. 33- 66657)
*10(a) Leasing and Tenant Coordinating Agreement with Wells Management Company, Inc. (Exhibit 10.2 to Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., as amended to date, Commission File No. 33-66657)
*10(b) Management Agreement with Wells Management Company, Inc. (Exhibit 10.3 to Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., as amended to date, Commission File No. 33-66657)
*10(c) 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(d) 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(e) Agreement of Purchase and Sale for 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(f) Agreement of Sale and Purchase for 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(g) 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(h) 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(i) 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(j) 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(k) Agreement for the Purchase and Sale of Property for the Siemens Building (Exhibit 10.12 to Form S-11 Registration Statement of Wells Real Estate Fund XII, L.P., as amended to date, Commission File No. 33-66657)
*10(l) 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(m) 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(n) 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(o) 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(p) 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)