WELLS REAL ESTATE FUND V L P - 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 September 30, 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 0-21580

WELLS REAL ESTATE FUND V, L.P.

(Exact name of registrant as specified in its charter)


Georgia		58-1936904
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6200 The Corners Parkway, Norcross, GA		30092-3365
(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 ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Fund V, 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. Specifically, among others, we consider statements concerning projections of future operating results and cash flows, our ability to meet future obligations, and the amount and timing of future distributions to limited partners to be forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that 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. 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 follow:

General economic risks

•

Adverse changes in general or local economic conditions; and

•

Adverse economic conditions affecting the particular industry of one or more tenants in properties owned by our joint ventures.

Real estate risks inherent in properties owned through joint ventures

•

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 retaining or obtaining new tenants upon lease expiration at acceptable rental amounts;

•

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

•

Potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow or net sale proceeds;

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•

Increases in property operating expenses, including property taxes, insurance, and other costs not recoverable from tenants;

•

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;

•

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

•

Ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any and all closing conditions.

Other operational risks

•

Dependency on Wells Capital, Inc. (“Wells Capital”), the corporate general partner of one of our General Partners, its key personnel, and its affiliates for various administrative services;

•

Wells Capital’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 in the current regulatory environment;

•

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

•

Ability to demonstrate compliance with any governmental, tax, real estate, environmental, and zoning law or regulation 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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WELLS REAL ESTATE FUND V, L.P.

TABLE OF CONTENTS


			Page No.
PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Balance Sheets—September 30, 2004 (unaudited) and December 31, 2003	5

		Statements of Operations for the Three and Nine Months Ended September 30, 2004 (unaudited) and 2003 (unaudited)	6

		Statements of Partners’ Capital for the Year Ended December 31, 2003 and the Nine Months Ended September 30, 2004 (unaudited)	7

		Statements of Cash Flows for the Nine Months Ended September 30, 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	13

	Item 3.	Quantitative and Qualitative Disclosures about Market Risks	21

	Item 4.	Controls and Procedures	21

PART II.	OTHER INFORMATION		22

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WELLS REAL ESTATE FUND V, L.P.

BALANCE SHEETS

ASSETS


	(unaudited) September 30, 2004		December 31, 2003
Investments in joint ventures	$	6,095,181	$	6,058,674
Cash and cash equivalents		4,918,504		6,605,558
Due from joint ventures		87,997		107,010

Total assets	$	11,101,682	$	12,771,242


LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Accounts payable and accrued expenses	$	14,917	$	2,815

Partners’ capital:
Limited partners:
Class A—1,571,566 and 1,567,566 units outstanding as of September 30, 2004 and December 31, 2003, respectively		11,004,766		12,289,864
Class B—129,036 and 133,036 units outstanding as of September 30, 2004 and December 31, 2003, respectively		81,999		478,563
General partners		0		0

Total partners’ capital		11,086,765		12,768,427

Total liabilities and partners’ capital	$	11,101,682	$	12,771,242

See accompanying notes.

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WELLS REAL ESTATE FUND V, L.P.

STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2004			2003		2004			2003
EQUITY IN INCOME (LOSS) OF JOINT VENTURES (Note 2)	$	(62,594	)	$	2,373,260	$	(84,898	)	$	2,538,381

EXPENSES:
Partnership administration		29,524			20,046		94,084			64,039
Legal and accounting		13,137			2,948		32,384			11,075
Other general and administrative		734			2,903		1,834			6,474

Total expenses		43,395			25,897		128,302			81,588

OTHER INCOME		12,926			0		38,540			330

NET INCOME (LOSS)	$	(93,063	)	$	2,347,363	$	(174,660	)	$	2,457,123

NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS	$	0		$	2,347,363	$	96,367		$	2,457,123

NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS	$	(93,063	)	$	0	$	(271,027	)	$	0

NET INCOME (LOSS) PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT:
CLASS A	$	0.00		$	1.50	$	0.06		$	1.57

CLASS B	$	(0.72	)	$	0.00	$	(2.08	)	$	0.00

DISTRIBUTION OF OPERATING CASH PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT:
CLASS A	$	0.00		$	0.05	$	0.00		$	0.18

CLASS B	$	0.00		$	0.00	$	0.00		$	0.00

DISTRIBUTION OF NET PROPERTY SALE PROCEEDS PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT:
CLASS A	$	0.00		$	0.00	$	0.88		$	0.00

CLASS B	$	0.00		$	0.00	$	0.90		$	0.00

WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:
CLASS A		1,571,566			1,567,566		1,570,233			1,567,183

CLASS B		129,036			133,036		130,369			133,419

See accompanying notes.

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WELLS REAL ESTATE FUND V, L.P.

STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2003

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2004 (unaudited)


	Limited Partners									General Partners		Total Partners’ Capital
	Class A				Class B
	Units	Amount			Units		Amount
BALANCE, December 31, 2002	1,566,416	$	10,681,632		134,186		$	0		$	0	$	10,681,632

Net income	0		1,882,483		0			478,563			0		2,361,046
Distributions of operating cash flow	0		(274,251	)	0			0			0		(274,251	)
Class B conversion elections	1,150		0		(1,150	)		0			0		0

BALANCE, December 31, 2003	1,567,566		12,289,864		133,036			478,563			0		12,768,427

Net income (loss)	0		96,367		0			(271,027	)		0		(174,660	)
Distributions of net sale proceeds	0		(1,389,111	)	0			(117,891	)		0		(1,507,002	)
Class B conversion elections	4,000		7,646		(4,000	)		(7,646	)		0		0

BALANCE, September 30, 2004	1,571,566	$	11,004,766		129,036		$	81,999		$	0	$	11,086,765

See accompanying notes.

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WELLS REAL ESTATE FUND V, L.P.

STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended September 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(174,660	)	$	2,457,123
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Equity in loss (income) of joint ventures		84,898			(2,538,381	)
Operating distributions received from joint ventures		57,535			397,423
Changes in assets and liabilities:
Accounts payable and accrued expenses		12,102			(19,161	)

Total adjustments		154,535			(2,160,119	)

Net cash flows (used in) provided by operating activities		(20,125	)		297,004

CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in joint ventures		(1,415,337	)		(27,840	)
Net sale proceeds received from joint ventures		1,255,410			6,875,227

Net cash flows (used in) provided by investing activities		(159,927	)		6,847,387

CASH FLOWS FROM FINANCING ACTIVITIES:

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