WELLS REAL ESTATE FUND I - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-14463

WELLS REAL ESTATE FUND I

(Exact name of registrant as specified in its charter)

Georgia		58-1565512
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

6200 The Corners Parkway, Suite 250, Atlanta, Georgia		30092
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (770) 449-7800

(Former name, former address, and former fiscal year, if changed since last report)

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 ¨

WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)

Effective July 3, 2002, Wells Real Estate Fund I (the “Partnership”) engaged Ernst & Young LLP (“Ernst & Young”) as its principal accountants to audit the Partnership’s financial statements. In accordance with the relief granted to former auditing clients of Arthur Andersen LLP in SEC Release No. 34-45589, Ernst & Young completed its review of the unaudited financial statements of the Partnership for the quarter ended March 31, 2002 pursuant to Rule 10-01(d) of Regulation S-X within the 60-day period allowed pursuant to the SEC Release, and no material modifications to the previously reported financial information were required.

WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)

	(unaudited)
	June 30, 2002		December 31, 2001
ASSETS:
Real estate, at cost:
Land	$	1,440,608	$	1,440,608
Building and improvements, less accumulated depreciation of $6,171,413 as of June 30, 2002 and $5,874,649 as of December 31, 2001		5,358,360		5,651,798

Total real estate assets		6,798,968		7,092,406


Investments in joint ventures (Note 2)		3,754,689		6,010,879
Cash and cash equivalents		8,211,243		8,587,586
Due from affiliates		2,206,099		123,772
Deferred lease acquisition costs		179,782		197,558
Accounts receivable		180,015		145,114
Prepaid expenses and other assets		137,005		130,195

Total assets	$	21,467,801	$	22,287,510


LIABILITIES AND PARTNERS’ CAPITAL:
Liabilities:
Accounts payable	$	49,875	$	52,876
Due to affiliates (Note 3)		1,819,298		1,795,903
Refundable security deposits		126,922		111,875
Partnership distribution payable		240,286		251,701
Minority interest		41,064		44,341

Total liabilities		2,277,445		2,256,696

Partners’ capital:
Limited partners:
Class A—98,716 units		19,190,356		19,831,902
Class B—42,568 units		0		198,912

Total partners’ capital		19,190,356		20,030,814

Total liabilities and partners’ capital	$	21,467,801	$	22,287,510

The accompanying notes are an integral part of these balance sheets.

WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)

	(unaudited)						(unaudited)
	Three Months Ended						Six Months Ended
	June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001
REVENUES:
Rental income	$	270,109		$	181,293		$	532,952		$	410,046
Interest income		65,031			87,817			77,374			189,849
Equity in income of joint ventures (Note 2)		33,476			75,184			64,843			150,492
Gain on sale of real estate		0			0			0			1,161,788

		368,616			344,294			675,169			1,912,175

EXPENSES:
Depreciation		148,383			146,866			296,764			309,079
Operating costs—rental properties, net of tenant reimbursements		32,121			97,054			222,612			260,120
Legal and accounting		227,323			10,935			273,092			25,595
Management and leasing fees		14,981			13,837			29,865			36,689
Partnership administration		63,812			34,447			100,970			53,650
Lease acquisition costs		22,806			9,322			33,999			15,716
Computer expenses		2,623			10,231			5,885			11,431

		512,049			322,692			963,187			712,280

(LOSS) INCOME BEFORE MINORITY INTEREST		(143,433	)		21,602			(288,018	)		1,199,895
MINORITY INTEREST		1,705			(730	)		1,607			(4,697	)

NET (LOSS) INCOME	$	(141,728	)	$	20,872		$	(286,411	)	$	1,195,198

NET (LOSS) INCOME ALLOCATED TO CLASS A LIMITED PARTNERS	$	(91,197	)	$	20,872		$	(87,499	)	$	758,312

NET (LOSS) INCOME ALLOCATED TO CLASS B LIMITED PARTNERS	$	(50,531	)	$	0.00		$	(198,912	)	$	436,886

NET (LOSS) INCOME PER CLASS A LIMITED PARTNER UNIT	$	(0.92	)	$	(0.21	)	$	(2.01	)	$	7.68

NET (LOSS) INCOME PER CLASS B LIMITED PARTNER UNIT	$	(1.19	)	$	0.00		$	(4.67	)	$	10.26

CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT	$	2.50		$	2.50		$	5.61		$	5.16

The accompanying notes are an integral part of these statements.

WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)

FOR THE YEAR ENDED DECEMBER 31, 2001

AND FOR THE SIX MONTHS ENDED JUNE 30, 2002 (UNAUDITED)

	Limited Partners								Total Partners’ Capital
	Class A				Class B
	Units	Amounts			Units	Amounts
BALANCE, December 31, 2000	98,716	$	19,184,478		42,568	$	114,132		$	19,298,610
Net income	0		1,649,997		0		84,780			1,734,777
Partnership distributions	0		(1,002,573	)	0		0			(1,002,573	)

BALANCE, December 31, 2001	98,716		19,831,902		42,568		198,912			20,030,814
Net loss	0		(87,499	)	0		(198,912	)		(286,411	)
Partnership distributions	0		(554,047	)	0		0			(554,047	)

BALANCE, June 30, 2002 (unaudited)	98,716	$	19,190,356		42,568	$	0		$	19,190,356

The accompanying notes are an integral part of these statements.

WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)

		(unaudited)
		Six Months Ended

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Balance Sheets—June 30, 2002 (unaudited) and December 31, 2001	4

	Statements of Income for the Three Months and Six Months ended June 30, 2002 (unaudited) and 2001 (unaudited)	5

	Statements of Partners’ Capital for the Year Ended December 31, 2001 and the Six Months Ended June 30, 2002 (unaudited)	6

	Statements of Cash Flows for the Six Months Ended June 30, 2002 (unaudited) and 2001 (unaudited)	7

	Condensed Notes to Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

PART II. OTHER INFORMATION		16

Exhibit Index		18

Exhibit 99.1—Certification of Chief Executive Officer

Exhibit 99.2—Certification of Chief Financial Officer

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