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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

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

 

For the fiscal year ended March 31, 2004

 

OR

 

¨   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 0-49633

 

 

WELLS REAL ESTATE FUND XIII, L.P.

(Exact name of registrant as specified in its charter)

 

 

Georgia   58-2438244
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification Number)
6200 The Corners Pkwy.,
Norcross, 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 ¨

 

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements contained in this Form 10-Q of Wells Real Estate Fund XIII, L.P. (the “Partnership”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward looking statements can generally be identified by our use of forward looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission. Neither the Partnership nor the general partners make any representations or warranties (expressed or implied) about the accuracy of any such forward-looking statements. Actual results could differ materially from any forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Any such forward-looking statements are subject to known and unknown risks, uncertainties and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations; provide distributions to limited partners; and maintain the value of our real estate properties, may be significantly hindered. Following are some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in certain forward-looking statements:

 

General economic risks

 

  • Adverse changes in general economic conditions or local conditions;

 

  • Adverse economic conditions affecting the particular industry of one or more of our tenants;

 

Real estate risks

 

  • Our ability to achieve appropriate occupancy levels resulting in sufficient rental amounts;

 

  • Supply of or demand for similar or competing rentable space, which may adversely impact our ability to retain or obtain new tenants at lease expiration at acceptable rental amounts;

 

  • Tenant ability or willingness to satisfy obligations relating to our existing lease agreements;

 

  • Our potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow;

 

  • Increases in property operating expenses, including property taxes, insurance, and other costs at our properties;

 

  • Our ability to secure adequate insurance at reasonable and appropriate rates to avoid uninsured losses or losses in excess of insured amounts;

 

  • Discovery of previously undetected environmentally hazardous or other undetected adverse conditions at our properties;

 

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  • Unexpected costs of capital expenditures related to tenant build-out projects or other unforeseen capital expenditures;

 

  • Our ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any continuing obligations to us;

 

Other operational risks

 

  • Our dependency on Wells Capital, Inc., our corporate General Partner, its key personnel, and its affiliates for various administrative services;

 

  • Wells Capital, Inc.’s ability to attract and retain high-quality personnel who can provide acceptable service levels to us and generate economies of scale for us over time;

 

  • Increases in our administrative operating expenses, including increased expenses associated with operating as a public company;

 

  • Changes in governmental, tax, real estate, environmental, and zoning laws and regulations and the related costs of compliance;

 

  • Our ability to prove compliance with any governmental, tax, real estate, environmental, and zoning in the event that any such position is questioned by the respective authority; and

 

  • Actions of our joint venture partners including potential bankruptcy, business interests differing from ours, or other actions that may adversely impact the operations of joint ventures.

 

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TABLE OF CONTENTS

 

     Page No.
PART I.    FINANCIAL INFORMATION     
    Item 1    Financial Statements     
     Balance Sheets – March 31, 2004 (unaudited) and December 31, 2003    5
     Statements of Operations for the Three Months Ended March 31, 2004 (unaudited) and 2003 (unaudited)    6
     Statements of Partners’ Capital for the Year Ended December 31, 2003 and the Three Months Ended March 31, 2004 (unaudited)    7
     Statements of Cash Flows for the Three Months Ended March 31, 2004 (unaudited) and 2003 (unaudited)    8
     Condensed Notes to Financial Statements (unaudited)    9
    Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    16
    Item 3    Quantitative and Qualitative Disclosures about Market Risks    22
    Item 4.    Controls and Procedures    22
PART II.    OTHER INFORMATION    22

 

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WELLS REAL ESTATE FUND XIII, L.P.

 

BALANCE SHEETS

 

ASSETS

 

     (unaudited)
March 31,
2004
    December 31,
2003

Investment in joint ventures

    $ 31,594,160    $ 29,046,985

Due from joint ventures

      517,493      546,654

Cash and cash equivalents

      132,632      2,804,796

Deferred project costs

      0      118,219
    
  

Total assets

    $ 32,244,285    $ 32,516,654
    
  
LIABILITIES AND PARTNERS’ CAPITAL

Liabilities:

              

Partnership distributions payable

    $ 616,766    $ 501,122

Accounts payable

      31,837      26,786
    
  

Total liabilities

      648,603      527,908
    
  

Partners’ capital:

              

Limited partners:

              

Cash Preferred –3,083,828 units outstanding as of March 31, 2004 and December 31, 2003

      26,883,327      26,958,308

Tax Preferred – 688,220 units outstanding as of March 31, 2004 and December 31, 2003

      4,712,355      5,030,438

General partners

      0      0
    
  

Total partners’ capital

      31,595,682      31,988,746
    
  

Total liabilities and partners’ capital

    $ 32,244,285    $ 32,516,654
    
  

 

See accompanying notes.

 

 

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WELLS REAL ESTATE FUND XIII, L.P.

 

STATEMENTS OF OPERATIONS

 

    

(unaudited)

Three Months Ended

March 31,

  
     2004
     2003
  

REVENUES:

                 

Equity in income of joint ventures

    $ 245,335     $ 252,950  

Other income

      9,472       27,212  
    
 
       254,807       280,162  
    
 

EXPENSES:

                 

Partnership administration

      17,947       42,317  

Legal and accounting

      12,868       8,992  

Other general and administrative

      290       1,307  
    
 
       31,105       52,616  
    
 

NET INCOME

    $ 223,702     $ 227,546  
    
 

NET INCOME ALLOCATED TO CASH PREFERRED LIMITED PARTNERS

    $ 541,785     $ 378,354  
    
 

NET LOSS ALLOCATED TO TAX PREFERRED LIMITED PARTNERS

    $ (318,083 )   $ (150,808 )
    
 

NET INCOME PER WEIGHTED-AVERAGE CASH PREFERRED LIMITED PARTNER UNIT

    $ 0.18     $ 0.16  
    
 

NET LOSS PER WEIGHTED-AVERAGE TAX PREFERRED LIMITED PARTNER UNIT

    $ (0.46 )   $ (0.27 )
    
 

CASH DISTRIBUTIONS PER WEIGHTED-AVERAGE CASH PREFERRED LIMITED PARTNER UNIT

    $ 0.20     $ 0.12  
    
 

WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:

                 

CASH PREFERRED LIMITED PARTNER UNITS

      3,083,828       2,445,726  
    
 

TAX PREFERRED LIMITED PARTNER UNITS

      688,220       564,119  
    
 

 

See accompanying notes.

 

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WELLS REAL ESTATE FUND XIII, L.P.

 

STATEMENTS OF PARTNERS’ CAPITAL

 

FOR THE YEAR ENDED DECEMBER 31, 2003

AND THE THREE MONTHS ENDED MARCH 31, 2004 (unaudited)

 

     Limited Partners
    

General

Partners

   

Total

Partners’

Capital

  
     Cash Preferred
     Tax Preferred
       
     Units
     Amounts
     Units
     Amounts
       

BALANCE, December 31, 2002

    2,201,817     $ 19,215,466     521,472     $ 4,252,654     $             0    $ 23,468,120  

Net income (loss)

    0       1,627,786     0       (739,383 )     0      888,403  

Partnership distributions

    0       (1,547,417 )   0       0       0      (1,547,417 )

Limited partner contributions

    807,053       8,070,543     241,706       2,417,058       0      10,487,601  

Sales commissions and discounts

    0       (763,616 )   0       (229,687 )     0      (993,303 )

Offering costs

    0       (242,136 )   0       (72,522 )     0      (314,658 )

Tax Preferred conversion elections

    76,172       608,320     (76,172 )     (608,320 )     0      0  

Cash Preferred conversion elections

    (1,214 )     (10,638 )   1,214       10,638       0      0  

Return of capital

    0       0     0       0       0      0  
    
 
 
 
 
  

BALANCE, December 31, 2003

    3,083,828       26,958,308     688,220       5,030,438       0      31,988,746  

Net income (loss)

    0       541,785     0       (318,083 )     0      223,702  

Partnership distributions

    0       (616,766 )   0       0       0      (616,766 )
    
 
 
 
 
  

BALANCE, March 31, 2004

    3,083,828     $ 26,883,327     688,220     $ 4,712,355     $ 0    $ 31,595,682  
    
 
 
 
 
  

 

See accompanying notes.

 

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WELLS REAL ESTATE FUND XIII, L.P.

 

STATEMENTS OF CASH FLOWS

 

    

(unaudited)

Three Months Ended

March 31,

  
     2004
     2003
  

CASH FLOWS FROM OPERATING ACTIVITIES:

                 

Net income

    $ 223,702     $ 227,546  

Adjustments to reconcile net income to net cash used in operating activities:

                 

Equity in income of joint ventures

      (245,335 )     (252,950 )

Changes in assets and liabilities:

                 

Accounts payable

      5,051       (69,665 )
    
 

Net cash used in operating activities

      (16,582 )     (95,069 )
    
 

CASH FLOWS FROM INVESTING ACTIVITIES:

                 

Investments in joint ventures

      (2,836,444 )     0  

Distributions received from joint ventures

      681,984       201,131  

Deferred project costs paid

      0       (273,841 )
    
 

Net cash used in investing activities

      (2,154,460 )     (72,710 )
    
 

CASH FLOW FROM FINANCING ACTIVITIES:

                 

Distributions paid to limited partners

      (501,122 )     (253,697 )

Contributions from limited partners

      0       10,440,789  

Sales commissions

      0       (775,483 )

Offering costs paid

      0       (234,721 )
    
 

Net cash provided by financing activities

      (501,122 )     9,176,888  
    
 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

      (2,672,164 )     9,009,109  

CASH AND CASH EQUIVALENTS, beginning of period

      2,804,796       6,296,043  
    
 

CASH AND CASH EQUIVALENTS, end of period

    $ 132,632     $ 15,305,152  
    
 

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:

                 

Due from joint ventures

    $ 517,493     $ 365,082