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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q


(Mark One)

  x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

    For the quarterly period ended September 30, 2002

OR

  o 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 0-27888


WELLS REAL ESTATE FUND VIII, L.P.
(Exact name of registrant as specified in its charter)


  Georgia
(State or other jurisdiction of incorporation or organization)
   58-2126618
(I.R.S. Employer Identification Number)		  

  6200 The Corners Pkwy., Atlanta, Georgia
(Address of principal executive offices)
   30092
(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 o


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FORM 10-Q

WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

INDEX

        Page No.
           
PART I.   FINANCIAL INFORMATION  
           
    Item 1.   Financial Statements  
           
        Balance Sheets—September 30, 2002 (unaudited) and December 31, 2001 3
           
        Statements of Income for the Three Months and Nine Months Ended September 30, 2002 (unaudited) and 2001 (unaudited) 4
           
        Statements of Partners’ Capital for the Year Ended December 31, 2001 and the Nine Months Ended September 30, 2002 (unaudited) 5
           
        Statements of Cash Flows for the Nine Months Ended September 30, 2002 (unaudited) and 2001 (unaudited) 6
           
        Condensed Notes to Financial Statements (unaudited) 7
           
    Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
           
    Item 4.   Controls and Procedures 14
           
           
           
PART II.   OTHER INFORMATION 15

 
   
Exhibit Index 18
   
Exhibit 99.1 — Certification of Chief Executive Officer 19
   
Exhibit 99.2 — Certification of Chief Financial Officer 20
   

 

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WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

BALANCE SHEETS

(unaudited)
September 30,
2002		 December 31,
2001
             
ASSETS:              
   Investments in joint ventures (Note 2)   $ 20,834,629   $ 21,861,005  
   Cash and cash equivalents     35,716     28,901  
   Due from affiliates     718,781     804,064  
         Total assets   $ 21,589,126   $ 22,693,970  
             
LIABILITIES AND PARTNERS’ CAPITAL:              
   Liabilities:              
     Partnership distributions payable   $ 676,452   $ 684,141  
     Accounts payable     10,515     6,527  
         Total liabilities     686,967     690,668  
   Partners’ capital:              
     Limited partners:              
       Class A—2,848,218 units and 2,806,519 units as of September 30, 2002
            and December 31, 2001, respectively		     20,902,159     22,003,302  
       Class B—355,051 units and 396,750 units as of September 30, 2002 and
            December 31, 2001, respectively		     0     0  
         Total partners’ capital     20,902,159     22,003,302  
         Total liabilities and partners’ capital   $ 21,589,126   $ 22,693,970  

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

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WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

STATEMENTS OF INCOME

(unaudited) (unaudited)
Three Months Ended Nine Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
                         
REVENUES:                          
   Equity in earnings of joint ventures
       (Note 2)		   $ 364,325   $ 395,386   $ 981,349   $ 1,043,019  
   Interest income     251     0     1,327     1,576  
    364,576     395,386     982,676     1,044,595  
EXPENSES:                          
   Legal and accounting     793     2,185     11,617     11,577  
   Partnership administration     19,133     12,372     53,107     43,138  
   Computer costs     2,082     2,997     6,276     8,504  
    22,008     17,554     71,000     63,219  
NET INCOME   $ 342,568   $ 377,832   $ 911,676   $ 981,376  
                         
NET INCOME ALLOCATED TO CLASS A
    LIMITED PARTNERS		   $ 342,568   $ 377,832   $ 911,676   $ 981,376  
                         
NET LOSS ALLOCATED TO CLASS B
    LIMITED PARTNERS		   $ 0   $ 0   $ 911,676   $ 0  
                         
NET INCOME PER WEIGHTED
    AVERAGE CLASS A LIMITED
    PARTNER UNIT		   $ 0.12   $ 0.14   $ 0.32   $ 0.35  
                         
NET LOSS PER WEIGHTED AVERAGE
    CLASS B LIMITED PARTNER UNIT		   $ 0.00   $ 0.00   $ 0.00   $ 0.00  
                         
CASH DISTRIBUTION PER CLASS A
    LIMITED PARTNER UNIT		   $ 0.24   $ 0.24   $ 0.71   $ 0.69  

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The accompanying notes are an integral part of these statements.

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WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2001

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2002 (UNAUDITED)

Limited Partners
Class A Class B
Units Amounts Units Amounts Total
Partners’
Capital
                               
BALANCE, December 31, 2000     2,764,087   $ 23,180,147     439,182   $ 0   $ 23,180,147  
                               
   Net income     0     1,433,706     0     0     1,433,706  
   Partnership distributions     0     (2,610,551 )   0     0     (2,610,551 )
   Class B conversion elections     42,432     0     (42,432 )   0     0  
BALANCE, December 31, 2001     2,806,519     22,003,302     396,750     0     22,003,302  
                               
   Net income     0     911,676     0     0     911,676  
   Partnership distributions     0     (2,012,819 )   0     0     (2,012,819 )
   Class B conversion elections     41,699     0     (41,699 )   0     0  
BALANCE, September 30, 2002 (unaudited)     2,848,218   $ 20,902,159     355,051   $ 0   $ 20,902,159  

The accompanying notes are an integral part of these statements.

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WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

STATEMENTS OF CASH FLOWS

(unaudited)
Nine Months Ended
September 30,
2002		 September 30,
2001
             
CASH FLOWS FROM OPERATING ACTIVITIES:              
   Net income   $ 911,676   $ 981,376  
   Adjustments to reconcile net income to net cash used in operating activities:              
       Equity in income of joint ventures     (981,349 )   (1,043,019 )
   Changes in assets and liabilities:              
     Prepaid expenses and other assets     0     992  
     Accounts payable     3,988     (8,173 )
         Net cash used in operating activities     (65,685 )   (68,824 )
CASH FLOWS FROM INVESTING ACTIVITIES:              
   Distributions received from joint ventures     2,093,008     1,891,673  
CASH FLOWS FROM FINANCING ACTIVITIES:              
   Distributions to partners from accumulated earnings     (1,021,440 )   (1,623,625 )
   Distributions to partners in excess of accumulated earnings     (999,068 )   (204,585 )
         Net cash used in financing activities     (2,020,508 )   (1,828,210 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     6,815     (5,361 )
             
CASH AND CASH EQUIVALENTS, beginning of year     28,901     18,722  
CASH AND CASH EQUIVALENTS, end of period   $ 35,716   $ 13,361  

The accompanying notes are an integral part of these statements.

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WELLS REAL ESTATE FUND VIII, L.P.

(A Georgia Public Limited Partnership)

CONDENSED NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2002 (UNAUDITED)

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a)  Organization and Business

  Wells Real Estate Fund VIII, L.P. (the “Partnership”) is a Georgia public limited partnership with Leo Wells III and Wells Partners, L.P. (“Wells Partners”), a Georgia nonpublic limited partnership, serving as the General Partners. The Partnership was formed on August 15, 1994, for the purpose of acquiring, developing, owning, operating, improving, leasing, and otherwise managing income-producing commercial properties for investment purposes. The Partnership has two classes of limited partnership interests, Class A and Class B units. Limited partners have the right to change their prior elections to have some or all of their units treated as Class A units or Class B units one time during each quarterly accounting period. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c ) remove a general partner. A majority vote on any of the above described matters will bind the Partnership, without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of class.

  On January 6, 1995, the Partnership commenced a public offering of up to $35,000,000 of Class A or Class B limited partnership units pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations on February 24, 1995 upon receiving and accepting subscriptions for 125,000 units. The Partnership terminated this offering on January 4, 1996 upon receiving gross proceeds of $32,042,689, representing subscriptions for approximately 2,613,534 Class A units and 590,735 Class B units held by 1,939 and 302 limited partners, respectively. In March 1997, the Partnership repurchased 1,000 limited partners units.

  The Partnership owns interests in all of its real estate assets through joint ventures with other Wells Real Estate Funds. As of September 30, 2002, the Partnership owned interests in the following 8 properties through the affiliated joint ventures listed below:

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Joint Venture Joint Venture Partners   Properties
Fund VI - VII - VIII Associates - Wells Real Estate Fund VI,
     L.P.
- Wells Real Estate Fund VII,		 1. BellSouth Building
  A four-story office building located
  in Jacksonville, Florida
       L.P.
- Wells Real Estate Fund VIII,
     L.P.		 2. Tanglewood Commons
  A retail center in Clemmons, North
  Carolina
Fund VII - Fund VIII Associates - Wells Real Estate Fund VII,
     L.P.
- Wells Real Estate Fund VIII,		 3. Hannover Center
  A retail center located in
  Stockbridge, Georgia
       L.P. 4. CH2M Hill at Gainesville Property
An office building located in Gainesville, Florida
Fund VIII - Fund IX Associates - Wells Real Estate Fund VIII,
     L.P.
- Wells Real Estate Fund IX,		 5. US Cellular Building
A four-story office building located in Madison, Wisconsin
       L.P. 6. AT&T-TX Building
  A one-story office building located in
  Boulder County, Colorado
    7. Cirrus Logic Building
  A two-story office building lacated in
  Boulder County, Colorado
Fund VIII - IX - REIT Associates - Fund VIII - Fund IX
     Associates.
- Wells Operating Partnership,
     L.P.*		 8. Quest Building
  A two-story office building located in
  Orange County, California
    *   Wells Operating Partnership, L.P. is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (“Wells REIT”) serving as its general partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.

  Each of the aforementioned properties was acquired on an all cash basis. For further information regarding the foregoing joint ventures and properties, refer to the report filed for the Partnership Form 10-K for the year ended December 31, 2001.

  (b)  Basis of Presentation

  The financial statements of the Partnership have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial statements. The quarterly statements included herein have not been examined by independent accountants. However, in the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments, which are of a normal and recurring nature and necessary to fairly present the results for these periods. For further information, refer to the financial statements and footnotes included in the report filed for the Partnership on Form 10-K for the year ended December 31, 2001

  (c)  Distributions of Net Cash From Operations

  As defined by the partnership agreement, cash available for distributions is distributed quarterly on a cumulative non-compounded basis to the limited partners as follows:

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  •  
First, to all Class A limited partners until such limited partners have received distributions equal to a 10% per annum return on their respective adjusted capital contributions, as defined.

  •  
Second, to the General Partners until each general partner has received distributions equal to 10% of the total distributions declared by the Partnership per annum.

  •  
Third, to the Class A limited partners and the General Partners allocated on a basis of 90% and 10%, respectively.

  No distributions will be made to the limited partners holding Class B units.

  (d)  Impairment of Real Estate Assets

  On January 1, 2002, the Partnership adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Under the new guidance, management reviews each of the properties in which it holds an interest for impairment when there is an event or change in circumstances that indicates the carrying amount of the asset may not be recoverable and the future undiscounted cash flows expected to be generated by the asset are less than its carrying amount. If such assets are considered to be impaired, the Partnership records impairment losses and reduces the carrying amount of impaired assets to an amount that reflects the fair value of the assets at the time impairment is evident.

  Management also reviews estimated selling prices of assets held for sale and records impairment losses to reduce the carrying amount of assets held for sale when the carrying amounts exceed the estimated selling prices less costs to sell. Also, material long-lived assets held for sale are separately identified in the balance sheets and their related net operating income is segregated as income from discontinued operations in the statements of income. In addition, depreciation of long-lived assets held for sale is not recorded. If an asset held for sale reverts to an asset used in operations, the asset will be measured at the lower of the original carrying cost, adjusted for the forgone depreciation, or the fair value at the date of the decision to hold the asset. Neither the Partnership nor its joint ventures have recognized impairment losses to date.

2.      INVESTMENTS IN JOINT VENTURES

  (a)  Basis of Presentation

  The Partnership owns interests in eight properties as of September 30, 2002 through its ownership in the joint ventures described in Note 1. The Partnership does not have control over the operations of these joint ventures; however, it does exercise significant influence. Accordingly, investments in joint ventures are recorded using the equity method of accounting. For further information on investments in joint ventures, see the report filed for the Partnership on Form 10-K for the year ended December 31, 2001.

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  (b)  Summary of Operations

  The following information summarizes the operations of the unconsolidated joint ventures in which the Partnership held ownership interests for the three and nine months ended September 30, 2002 and 2001:

Total Revenues Net Income Partnership’s
Share of Net Income
Three Months Ended Three Months Ended Three Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
                                     
Fund VII-Fund VIII
    Associates		   $ 194,326   $ 185,201   $ 68,150   $ 50,868   $ 43,173   $ 32,225  
Fund VI-VII-VIII
    Associates		     615,826     633,032     251,378     303,339     81,332     98,144  
Fund VIII-Fund IX
    Associates		     753,038 *   756,614 *   437,654     483,637     239,820     265,017  
  $ 1,563,190   $ 1,574,847   $ 757,182   $ 837,844   $ 364,325   $ 395,386  

Total Revenues Net Income Partnership’s
Share of Net Income
Nine Months Ended Nine Months Ended Nine Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
Fund VII-Fund VIII
    Associates		   $ 582,507   $ 568,735   $ 149,634   $ 177,723   $ 94,792   $ 112,585  
Fund VI-VII-VIII
    Associates		     1,823,659     1,806,896     700,759     698,230     226,728     225,909  
Fund VIII-Fund IX
    Associates		     2,251,913 *   2,222,563 *   1,204,141     1,285,706     659,829     704,525  
  $ 4,658,079   $ 4,598,194   $ 2,054,534   $ 2,161,659   $ 981,349   $ 1043,019  


The following information summarizes the operations of Fund VIII-IX-REIT Associates, in which the Partnership holds an ownership interest through its investment in Fund VIII-IX Associates, for the three and nine months ended September 30, 2002 and 2001:

Total Revenues Net Income Partnership’s
Share of Net Income
Three Months Ended Three Months Ended Three Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
Fund VIII-IX-REIT
    Associates		   $ 302,000   $ 313,536   $ 152,672   $ 155,976   $ 70,443 * $ 71,967 *

Total Revenues Net Income Partnership’s
Share of Net Income
Nine Months Ended Nine Months Ended Nine Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
Fund VIII-IX-REIT
    Associates		   $ 905,999   $ 894, 460   $ 461,366   $ 416,328   $ 212,874 * $ 192,094 *

    *   The Partnership’s share of income earned from its investment in Fund VIII-IX-REIT Associates is recorded by Fund VIII-IX Associates as equity in income of joint ventures, which is classified as revenue

 

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The following information summarizes the operations of the properties, which are owned by one of the above joint ventures and significant to the Partnership for the three and nine months ended September 30, 2002 and 2001. Audited financial statements of these properties are included in the report filed for the Partnership on Form 10-K filed for the year ended December 31, 2001:

Total Revenues Net Income Partnership’s
Share of Net Income
Three Months Ended Three Months Ended Three Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001
US Cellular Building   $ 324,537   $ 320,519   $ 128,946   $ 145,015   $ 70,662   $ 79,468  
Cirrus Logic Building     184,048     184,540     112,227     135,605     61,500     74,312  
  $ 508,585   $ 505,059   $ 241,173   $ 280,620   $ 132,162   $ 153,780  

Total Revenues Net Income Partnership’s
Share of Net Income
Nine Months Ended Nine Months Ended Nine Months Ended
September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001		 September 30,
2002		 September 30,
2001