SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A (AMENDMENT NO. 1) CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 4, 1999 ------------------------------ Wells Real Estate Investment Trust, Inc. - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland - ------------------------------------------------------------------------------ (State or other jurisdiction of incorporation) 333-32099 58-2328421 - ------------------------------- -------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 3885 Holcomb Bridge Road, Norcross, Georgia 30092 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (770) 449-7800 ---------------------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report)
INFORMATION TO BE INCLUDED IN THE REPORT Wells Real Estate Investment Trust, Inc. (the "Registrant") hereby amends its Current Report on Form 8-K, dated February 15, 1999 to provide the required financial statements of the Registrant relating to the acquisition by the Registrant of the Vanguard Cellular Building located in Harrisburg, Dauphin County, Pennsylvania, as described in such Current Report. Item 7. Financial Statements and Exhibits. (a) Audited Financial Statements. The following audited financial ---------------------------- statements of the Registrant relating to the real property acquired are submitted at the end of this Amendment No. 1 to Current Report and are filed herewith and incorporated herein by reference: Page ---- Report of Independent Public Accountants I-1 Statement of Revenues Over Certain Operating Expenses for the Period from Inception (November 16, 1998) to December 31, 1998 I-2 Notes to Statement of Revenues Over Certain Operating Expenses for the Period from Inception (November 16, 1998) to December 31, 1998 I-3 (b) Pro Forma Financial Information. The following unaudited pro forma ------------------------------- financial statements of the Registrant relating to the real property acquired are submitted at the end of this Amendment No. 1 to Current Report and are filed herewith and incorporated herein by reference: Page ---- Summary of Unaudited Pro Forma Financial Statements I-5 Pro Forma Balance Sheet as of December 31, 1998 (Unaudited) I-6 Pro Forma Income Statement for Period from Inception (November 16, 1998) to December 31, 1998 (Unaudited) I-7 2
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to Current Report to be signed on its behalf by the undersigned hereunto duly authorized. WELLS REAL ESTATE INVESTMENT TRUST, INC. Registrant By: /s/ Brian M. Conlon ----------------------------------- Brian M. Conlon Executive Vice President Date: April 12, 1999 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Wells Real Estate Investment Trust, Inc.: We have audited the accompanying statement of revenues over certain operating expenses for the VANGUARD CELLULAR BUILDING for the period from inception (November 16, 1998) to December 31, 1998. This financial statement is the responsibility of management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues over certain operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of revenues over certain operating expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain expenses that would not be comparable with those resulting from the operations of the Vanguard Cellular Building after acquisition by Wells Operating Partnership, L.P. (on behalf of Wells Real Estate Investment Trust, Inc.). The accompanying statement of revenues over certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Vanguard Cellular Building's revenues and expenses. In our opinion, the statement of revenues over certain operating expenses presents fairly, in all material respects, the revenues over certain operating expenses of the Vanguard Cellular Building for the period from inception (November 16, 1998) to December 31, 1998 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP /s/ Arthur Andersen LLP Atlanta, Georgia February 26, 1999 I-1
VANGUARD CELLULAR BUILDING STATEMENT OF REVENUES OVER CERTAIN OPERATING EXPENSES FOR THE PERIOD FROM INCEPTION (NOVEMBER 16, 1998) TO DECEMBER 31, 1998 RENTAL REVENUES $171,855 OPERATING EXPENSES, NET OF REIMBURSEMENTS 0 -------- REVENUES OVER CERTAIN OPERATING EXPENSES $171,855 -------- The accompanying notes are an integral part of this statement. I-2
VANGUARD CELLULAR BUILDING NOTES TO STATEMENT OF REVENUES OVER CERTAIN OPERATING EXPENSES FOR THE PERIOD FROM INCEPTION (NOVEMBER 16, 1998) TO DECEMBER 31, 1998 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Description of Real Estate Property Acquired On February 4, 1999, Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership, formed to acquire and hold real estate properties on behalf of Wells Real Estate Investment Trust, Inc. (the "Registrant"), acquired a four-story office building (the "Vanguard Cellular Building") containing approximately 81,859 rentable square feet, for the price of $12,291,200 plus acquisition expenses, including legal fees, of approximately $240,900. Wells OP paid $6,382,100 in cash and obtained a loan in the amount of $6,450,000 from NationsBank, N. A. (the "NationsBank Loan"). As of February 4, 1999, $6,150,000 was outstanding on the NationsBank Loan. The NationsBank Loan gives Wells OP the option of extending the term of the loan after the initial six months. The interest rate for the initial six months of the NationsBank Loan is fixed at 7%. On August 1, 1999, Wells OP may extend the NationsBank Loan at a rate of LIBOR plus 200 basis points for up to 29 additional months. During the term of the extension, Wells OP is required to make quarterly principal installments in an amount equal to one- ninth of the outstanding principal balance as of October 1, 1999. The NationsBank Loan is secured by a first mortgage against the Vanguard Cellular Building. Legal fees, loan origination costs, and appraisal fees incurred from obtaining the NationsBank Loan totaled approximately $29,000. The Vanguard Cellular Building is 100% occupied by one tenant with a ten-year lease term that commenced on November 16, 1998 and expires on November 15, 2008. Construction of the building was completed in November 1998. Under the terms of the lease agreement, monthly base rent payable is subject to escalations of 2% per annum and certain lease inception discounts. The lease is a triple net lease, whereby the terms require the tenant to reimburse Wells OP for certain operating expenses, as defined in the lease, related to the building. All of the operating expenses for the period from lease inception (November 16, 1998) to December 31, 1998 have been passed through to the tenant. I-3
Rental Revenues Rental income from the lease is recognized on a straight-line basis over the life of the lease. 2. BASIS OF ACCOUNTING The accompanying statement of revenues over certain operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired. Accordingly, the statement excludes certain historical expenses, such as interest, depreciation, and management fees, not comparable to the operations of the Vanguard Cellular Building after acquisition by Wells OP. I-4
WELLS REAL ESTATE INVESTMENT TRUST, INC. (Unaudited Pro Forma Financial Statements) The following unaudited pro forma balance sheet as of December 31, 1998 and the pro forma statement of income for the year ended December 31, 1998 have been prepared to give effect to Wells Real Estate Investment Trust, Inc.'s acquisition (through Wells Operating Partnership, L.P.) of the Vanguard Cellular Building as if it had occurred as of December 31, 1998 with respect to the balance sheet and on November 16, 1998 (lease inception date) with respect to the income statement. Wells Operating Partnership, L.P. is a Delaware limited partnership that was organized to own and operate properties on behalf of the Wells Real Estate Investment Trust, Inc. Wells Real Estate Investment Trust, Inc. is the general partner of the Wells Operating Partnership, L.P. These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisition been consummated at the beginning of the period presented. I-5
WELLS REAL ESTATE INVESTMENT TRUST, INC. PRO FORMA BALANCE SHEET DECEMBER 31, 1998 (Unaudited) Wells Real Estate Investment Pro Forma Trust, Inc. Adjustments Total ----------- ----------- ----- ASSETS: Cash $ 7,979,403 $ (6,382,100)(a) $ 1,597,329 Due to affiliate 262,345 0 262,345 Investment in JV 11,568,677 0 11,568,677 Prepaid and other assets 504,807 0 504,807 Deferred project costs 335,420 (265,896)(b) 69,498 Deferred offering costs 548,729 0 548,729 Loan origination costs, net 0 29,205 29,205 Tenant receivable 35,512 0 35,512 Land 1,520,834 689,584(a)(b) 2,210,418 Building, net 20,076,846 12,079,207(a)(b) 32,156,053 ----------- ------------ ----------- Total assets $42,832,573 $ 6,150,000 $48,982,573 ----------- ------------ ----------- LIABILITIES: Notes payable $14,059,930 $ 6,150,000(a) $20,209,930 Due to affiliates 554,953 0 554,953 Partnership distribution payable 408,176 0 408,176 Accounts payable 84,941 0 84,941 Commission payable 102,886 0 102,886 Minority interest 200,000 0 200,000 ----------- ------------ ----------- TotaL Liabilities 15,410,886 6,150,000 21,560,886 ----------- ------------ ----------- SHAREHOLDERS' EQUITY: Common stock 31,541 0 31,541 Additional paid-in capital 27,056,112 0 27,056,112 Retained earnings 334,034 0 334,034 ----------- ------------ ----------- Total shareholders' equity 27,421,687 0 27,421,687 ----------- ------------ ----------- Total liabilities and shareholders' equity $42,832,573 $ 6,150,000 $48,982,573 =========== ============ =========== (a) Reflects Wells Real Estate Investment Trust Inc.'s purchase price related to the Vanguard Cellular Building. (b) Reflects the deferred project costs allocated to the Vanguard Cellular Building. I-6
WELLS REAL ESTATE INVESTMENT TRUST, INC. PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998 (UNAUDITED) Wells Real Estate Investment Pro Forma Trust, Inc. Adjustments Total ----------- ----------- ----- REVENUE: Rental income $ 20,994 $171,855(a) $192,849 Equity in earnings of investment in joint ventures 263,315 0 263,315 Interest income 110,869 0 110,869 -------- -------- -------- Total revenue 395,178 171,855 567,033 -------- -------- -------- EXPENSES: Legal and accounting 19,552 0 19,552 Management and leasing fees 0 1,167 1,167 Partnership administration 17,861 0 17,861 Computer costs 616 0 616 Other operating 23,114 0 23,114 -------- -------- -------- Total operating expenses 61,143 1,167 62,310 -------- -------- -------- NET OPERATING INCOME 334,035 170,688 504,723 -------- -------- -------- DEPRECIATION EXPENSE 0 60,896(b) 60,896 AMORTIZATION EXPENSE 0 1,217 1,217 INTEREST EXPENSE 0 54,255(c) 54,255 -------- -------- -------- Net income $334,035 $ 54,320 $388,355 ======== ======== ======== (a) Rental income recognized on a straight-line basis. (b) Depreciation expense on the Vanguard Cellular Building based on the straight-line method and a 25 year life. (c) Interest expense on the $6,150,000 note payable which bears interest at 7%. I-7