WELLS REAL ESTATE FUND XIV LP - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2004

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 000-50647

WELLS REAL ESTATE FUND XIV, L.P.

(Exact name of registrant as specified in its charter)


Georgia		01-0748981
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

6200 The Corners Parkway, Norcross, GA		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 ¨

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Fund XIV, 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 raise sufficient funds in our public offering to be able to acquire a diversified portfolio of real estate investments;

•

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;

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•

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

•

Our ability to acquire properties in a timely manner at appropriate amounts that provide acceptable returns;

•

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	15

	Item 3.	Quantitative and Qualitative Disclosures about Market Risks	21

	Item 4.	Controls and Procedures	21

PART II.	OTHER INFORMATION		22

Page 4

WELLS REAL ESTATE FUND XIV, L.P.

BALANCE SHEETS


ASSETS
	(unaudited) March 31, 2004		December 31, 2003
Investment in joint venture	$	13,656,206	$	9,419,352
Cash and cash equivalents		842,053		3,795,008
Due from joint venture		240,681		98,488
Deferred project costs		36,391		155,759
Accounts receivable		2,093		0

Total assets	$	14,777,424	$	13,468,607


LIABILITIES AND PARTNERS’ CAPITAL

Liabilities:
Partnership distributions payable	$	172,242	$	74,525
Commissions payable		19,068		50,517
Due to affiliates		12,870		26,146
Accounts payable		7,377		3,730

Total liabilities		211,557		154,918

Partners’ capital:
Limited partners:
Original		0		0
Cash Preferred – 1,099,811 units and 962,441 units outstanding as of March 31, 2004 and December 31, 2003, respectively		9,595,166		8,433,881
Tax Preferred – 590,304 units and 568,246 units outstanding as of March 31, 2004 and December 31, 2003, respectively		4,970,701		4,879,808
General partners		0		0

Total partners’ capital		14,565,867		13,313,689

Total liabilities and partners’ capital	$	14,777,424	$	13,468,607

See accompanying notes.

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WELLS REAL ESTATE FUND XIV, L.P.

STATEMENT OF OPERATIONS


	(unaudited) Three Months Ended March 31, 2004
REVENUES:
Equity in income of joint venture	$	71,634
Interest income		8,941

		80,575

EXPENSES:
Legal and accounting		41,835
Partnership administration		9,275
Other general and administrative		33

		51,143

NET INCOME	$	29,432

NET INCOME ALLOCATED TO CASH PREFERRED LIMITED PARTNERS	$	131,903

NET LOSS ALLOCATED TO TAX PREFERRED LIMITED PARTNERS	$	(102,471	)

NET LOSS ALLOCATED TO GENERAL PARTNERS	$	0

NET INCOME PER WEIGHTED-AVERAGE CASH PREFERRED LIMITED PARTNER UNIT	$	0.13

NET LOSS PER WEIGHTED-AVERAGE TAX PREFERRED LIMITED PARTNER UNIT	$	(0.18	)

CASH DISTRIBUTIONS PER WEIGHTED-AVERAGE CASH PREFERRED LIMITED PARTNER UNIT	$	0.17

WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:
CASH PREFERRED LIMITED PARTNER UNITS		1,020,057

TAX PREFERRED LIMITED PARTNER UNITS		578,866

See accompanying notes.

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WELLS REAL ESTATE FUND XIV, L.P.

STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2003

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


	Limited Partners															Total Partners’ Capital
				Cash Preferred					Tax Preferred				General Partners
	Original			Units		Amounts			Units	Amounts			General Partners
BALANCE, December 31, 2002	$	100		0		$	0		0	$	0		$	461		$	561
Return of original partner contributions		(100	)	0			0		0		0			0			(100	)
Sale commissions and discounts		0		0			(914,319	)	0		(539,834	)		0			(1,454,153	)
Partnership distributions		0		0			(74,525	)	0		0			0			(74,525	)
Limited partner contributions		0		962,441			9,624,406		568,246		5,682,464			0			15,306,870
Offering costs		0		0			(259,073	)	0		(152,962	)		0			(412,035	)
Net income (loss)		0		0			57,392		0		(109,860	)		(461	)		(52,929	)

BALANCE, December 31, 2003	$	0		962,441		$	8,433,881		568,246	$	4,879,808		$	0		$	13,313,689
Limited partner contributions		0		138,370			1,383,700		21,058		210,571			0			1,594,271
Net income (loss)		0		0			131,903		0		(102,471	)		0			29,432
Partnership distributions		0		0			(172,242	)	0		0			0			(172,242	)
Sales commissions and discounts		0		0			(131,451	)	0		(20,004	)		0			(151,455	)
Offering costs		0		0			(41,511	)	0		(6,317	)		0			(47,828	)
Class conversions		0		(1,000	)		(9,114	)	1,000		9,114			0			0

BALANCE, March 31, 2004	$	0		1,099,811		$	9,595,166		590,304	$	4,970,701		$	0		$	14,565,867

See accompanying notes.

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WELLS REAL ESTATE FUND XIV, L.P.

STATEMENT OF CASH FLOWS


	(unaudited) Three Months Ended March 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	29,432
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in income of joint venture		(71,634	)
Changes in assets and liabilities:
Accounts receivable		(2,093	)
Due from joint venture		(26,702	)
Accounts payable		3,647

Net cash used in operating activities		(67,350	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Contributions to joint venture		(4,204,031	)
Distributions received from joint venture		98,488
Deferred project costs paid		(62,948	)

Net cash used in investing activities		(4,168,491	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distributions		(74,525	)
Limited partners’ contributions		1,575,199
Sales commissions		(163,833	)
Offering costs paid		(53,955	)

Net cash provided by financing activities		1,282,886

NET DECREASE IN CASH AND CASH EQUIVALENTS		(2,952,955	)
CASH AND CASH EQUIVALENTS, beginning of period		3,795,008

CASH AND CASH EQUIVALENTS, end of period	$	842,053

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Due from joint venture	$	213,979

Deferred project costs contributed to joint venture	$	175,168

Deferred project costs due to affiliate	$	6,930

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