SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 28, 2002
-------------------------------
Wells Real Estate Investment Trust, Inc.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland
-------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-25739 58-2328421
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
6200 The Corners Parkway, Suite 250, 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 March 28, 2002 to provide the
required financial statements of the Registrant relating to the acquisitions by
the Registrant of the Transocean Houston Building located in Houston, Texas, the
Novartis Atlanta Building located in Duluth, Georgia, and the Dana Corporation
Buildings located in Farmington Hills, Michigan and Kalamazoo, Michigan, as
described in such Current Report.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements. The following financial statements of the
---------------------
Registrant are submitted at the end of this Amendment to Current Report and are
filed herewith and incorporated herein by reference:
Novartis Atlanta Building Page
----
Report of Independent Public Accountants F-1
Statement of Revenues Over Certain Operating Expenses F-2
for the year ended December 31, 2001 (audited)
Notes to Statement of Revenues Over Certain Operating F-3
Expenses for the year ended December 31, 2001 (audited)
Dana Corporation Buildings
Report of Independent Public Accountants F-4
Statement of Revenues over Certain Operating Expenses F-5
for the year ended December 31, 2001 (audited)
Notes to Statement of Revenues over Certain Operating F-6
Expenses for the year ended December 31, 2001 (audited)
Wells Real Estate Investment Trust, Inc. and Subsidiary
Unaudited Pro Forma Financial Statements
----------------------------------------
Summary of Unaudited Pro Forma Financial Statements F-7
Pro Forma Balance Sheet as of December 31, 2001 F-8
Pro Forma Statement of Income (Loss) for the year ended F-10
December 31, 2001
(c) Exhibits
--------
23.1 Consent of Arthur Andersen LLP (previously filed in and
incorporated by reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form S-11, Commission File
No. 333-44900, filed on April 22, 2002)
99.1 Letter regarding independent public accountants (previously filed
in and incorporated by reference to Post-Effective Amendment No. 6
to the Registrant's Registration Statement on Form S-11,
Commission File No. 333-44900, filed on April 22, 2002)
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/ Leo F. Wells, III
----------------------
Leo F. Wells, III
President
Date: May 3, 2002
2
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 NOVARTIS ATLANTA BUILDING for the year ended December 31, 2001.
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 auditing standards generally accepted
in the United States. These 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 Novartis
Atlanta Building after acquisition by the Wells Operating Partnership, L.P., a
subsidiary 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
Novartis Atlanta 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 Novartis Atlanta Building for the year ended December 31, 2001
in conformity with accounting principles generally accepted in the United
States.
/s/ Arthur Andersen LLP
Atlanta, Georgia
April 12, 2002
F-1
NOVARTIS ATLANTA BUILDING
STATEMENT OF REVENUES
OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2001
RENTAL REVENUES $650,705
OPERATING EXPENSES, NET OF REIMBURSEMENTS 4,929
--------
REVENUES OVER CERTAIN OPERATING EXPENSES $645,776
========
The accompanying notes are an integral par of this statement.
F-2
NOVARTIS ATLANTA BUILDING
NOTES TO STATEMENT OF REVENUES
OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2001
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Real Estate Property Acquired
On March 28, 2002, the Wells Operating Partnership, L.P. ("Wells OP") acquired
the Novartis Atlanta Building from Technology Park/Atlanta, Inc. ("Technology
Park"). Wells OP is a Delaware limited partnership formed to acquire, own,
lease, operate, and manage real properties on behalf of Wells Real Estate
Investment Trust, Inc., a Maryland corporation. As the sole general partner of
Wells OP, Wells Real Estate Investment Trust, Inc. possesses full legal control
and authority over the operations of Wells OP.
Novartis Opthalmics, Inc ("Novartis") currently occupies the entire 100,087
rentable square feet of the four-story office building under a net lease
agreement (the "Novartis Lease"). Novartis is a wholly owned subsidiary of
Novartis Corporation, which is the guarantor of the Novartis Lease. Novartis
Corporation is a public entity traded on the New York Stock Exchange. Technology
Park's interest in the Novartis Lease was assigned to Wells OP at the closing.
The initial term of the Novartis Lease commenced on August 1, 2001 and expires
on July 31, 2011. Novartis has the right to extend the Novartis Lease for up to
three consecutive renewal terms of five years each at a rate equal to the then
current fair market rental rate. Under the Novartis Lease, Novartis is required
to pay, as additional monthly rent, all operating costs, including but not
limited to water, sewer, heating, air conditioning, lighting, property and
personal insurance and property taxes. In addition, Novartis is responsible for
all supplies, materials, wages and salaries and all attributable overhead
expenses related to routine maintenance and repairs to the Novartis Atlanta
Building. Wells OP will be responsible for the repair and replacement of the
structural portions of the building, including, roof, exterior walls, window
frames, foundation, irrigation, parking lots, roads, walkways and landscaping of
the Novartis Atlanta Building.
Rental Revenues
Rental income is recognized on a straight-line basis over the terms of the
respective lease.
2. BASIS OF ACCOUNTING
The accompanying statement of revenues over certain operating expenses is
presented in conformity with accounting principles generally accepted in the
United States and in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, this statement excludes certain historical expenses, such as
depreciation, interest, and management fees. Therefore, this statement is not
comparable to the operations of the Novartis Atlanta Building after acquisition
by Wells OP.
F-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 DANA CORPORATION BUILDINGs for the year ended December 31,
2001. 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 auditing standards generally accepted
in the United States. These 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 Dana
Corporation Buildings after acquisition by the Wells Operating Partnership,
L.P., a subsidiary 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
Dana Corporation Buildings' 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 Dana Corporation Buildings for the year ended December 31, 2001
in conformity with accounting principles generally accepted in the United
States.
/s/ Arthur Andersen LLP
Atlanta, Georgia
April 12, 2002
F-4
DANA CORPORATION BUILDINGS
STATEMENT OF REVENUES
OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2001
RENTAL REVENUES $730,345
OPERATING EXPENSES, NET OF REIMBURSEMENTS 0
--------
REVENUES OVER CERTAIN OPERATING EXPENSES $730,345
========
The accompanying notes are an integral part of this statement.
F-5
DANA CORPORATION BUILDINGS
NOTES TO STATEMENT OF REVENUES
OVER CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2001
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Real Estate Property Acquired
On March 29, 2002, the Wells Operating Partnership, L.P. ("Wells OP") acquired
the Dana Corporation Buildings from GEBAM, Inc. ("GEBAM"). Wells OP is a
Delaware limited partnership formed to acquire, own, lease, operate, and manage
real properties on behalf of Wells Real Estate Investment Trust, Inc., a
Maryland corporation. As the sole general partner of Wells OP, Wells Real Estate
Investment Trust, Inc. possesses full legal control and authority over the
operations of Wells OP.
The Dana Corporation Buildings are comprised of Dana Corporation Detroit, which
consists of 112,480 square feet in one three-story building and Dana Corporation
Kalamazoo, which consists of 147,004 square feet in one two-story building. Dana
Corporation, Inc ("Dana") currently occupies the entire 259,484 rentable square
feet of the two office buildings under two net lease agreements (the "Dana
Leases"). Dana Corporation is a public entity traded on the New York Stock
Exchange. GEBAM's interest in the Dana Leases was assigned to Wells OP at the
closing. The initial term of the Dana Leases commenced on October 26, 2001 and
expires on October 31, 2021. Dana has the right to extend the Dana Leases for up
to six successive renewal terms of five years each at the then current market
rental rate. Under the Dana Leases, Dana is required to pay, as additional
monthly rent, all ad valorem real estate taxes, insurance premiums, utility
charges, maintenance, repair and replacement expenses. In addition, Dana is
responsible for maintaining the buildings in good order and repair, subject to
ordinary wear and tear, including necessary repairs, replacements and renewals,
whether interior or exterior, structural or nonstructural.
Rental Revenues
Rental income is recognized on a straight-line basis over the terms of the
respective leases.
2. BASIS OF ACCOUNTING
The accompanying statement of revenues over certain operating expenses is
presented in conformity with accounting principles generally accepted in the
United States and in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, this statement excludes certain historical expenses, such as
depreciation, interest, and management fees. Therefore, this statement is not
comparable to the operations of the Dana Corporation Buildings after acquisition
by Wells OP.
F-6
WELLS REAL ESTATE INVESTMENT TRUST, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma balance sheet as of December 31, 2001 has been
prepared to give effect to the acquisitions of the Transocean Houston Building,
the Novartis Atlanta Building and the Dana Corporation Buildings by Wells OP as
if the acquisitions occurred on December 31, 2001.
The following unaudited pro forma statement of income for the year ended
December 31, 2001 has been prepared to give effect to the acquisitions of the
Transocean Houston Building, the Novartis Atlanta Building, and the Dana
Corporation Buildings as if the acquisitions occurred on January 1, 2001.
Wells OP is a Delaware limited partnership that was organized to own and operate
properties on behalf of the Wells Real Estate Investment Trust, Inc., a Maryland
corporation. As the sole general partner of Wells OP, Wells Real Estate
Investment Trust, Inc. possesses full legal control and authority over the
operations of Wells OP. Accordingly, the accounts of Wells OP are consolidated
with the accompanying pro forma financials statements of Wells Real Estate
Investment Trust, Inc.
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 acquisitions of the Transocean
Houston Building, the Novartis Atlanta Building and the Dana Corporation
Buildings been consummated at the beginning of the period presented.
As of December 31, 2001, the date of the accompanying pro forma balance sheet,
Wells OP held cash of $75,586,168. The additional cash used to purchase the Dana
Corporation Buildings, including deferred project costs paid to Wells Capital,
Inc. (an affiliate of Wells OP), was raised through the issuance of additional
shares subsequent to December 31, 2001. This balance is reflected as purchase
consideration payable in the accompanying pro forma balance sheet
F-7
WELLS REAL ESTATE INVESTMENT TRUST, INC.
PRO FORMA BALANCE SHEET
DECEMBER 31, 2001
(Unaudited)
ASSETS
ProForma Adjustments
Wells Real ------------------------------------------------------------------
Estate Transocean Novartis Dana
Investment Houston Atlanta Corporation Pro Forma
Trust, Inc. Building Building Buildings Total
--------------- ---------------- ------------ -------------- -------------
REAL ESTATE ASSETS, at cost:
Land $ 86,246,985 $ 845,000 (a) $ 2,000,000 (a) $ 3,171,000 (a) $ 92,505,008
33,994 (b) 80,460 (b) 127,569 (b)
Buildings, less accumulated
depreciation of $24,814,454 472,383,102 21,203,182 (a) 13,047,316 (a) 39,608,512 (a) 549,213,452
853,002 (b) 524,892 (b) 1,593,446 (b)
Construction in progress 5,738,573 0 0 0 5,738,573
------------ ------------ ------------ ----------- ------------
Total real estate assets 564,368,660 22,935,178 15,652,668 44,500,527 647,457,033
------------ ------------ ------------ ----------- ------------
CASH AND CASH EQUIVALENTS 75,586,168 (22,048,182)(a) (15,047,316)(a) (17,345,759)(a) 21,144,911
INVESTMENT IN JOINT VENTURES 77,409,980 0 0 0 77,409,980
INVESTMENT IN BONDS 22,000,000 0 0 0 22,000,000
ACCOUNTS RECEIVABLE 6,003,179 0 0 0 6,003,179
DEFERRED LEASE ACQUISITION COSTS 1,525,199 0 0 0 1,525,199
DEFERRED PROJECT COSTS 2,977,110 (886,996)(b) (605,352)(b) (603,724)(b) 881,038
DEFERRED OFFERING COSTS 0 0 0 0 0
DUE FROM AFFILIATES 1,692,727 0 0 0 1,692,727
PREPAID EXPENSES AND OTHER ASSETS 718,389 0 0 0 718,389
------------ ------------ ------------ ----------- ------------
Total Assets $752,281,412 $ 0 $ 0 $26,551,044 $778,832,456
============ ============ ============ =========== ============
F-8
LIABILITIES AND SHAREHOLDERS' EQUITY
ProForma Adjustments
Wells Real ------------------------------------------------------------------
Estate Transocean Novartis
Investment Houston Atlanta Dana Corporation Pro Forma
Trust, Inc. Building Building Buildings Total
------------- ----------- -------- ---------------- -------------
LIABILITIES:
Accounts payable and
accrued expenses $ 8,727,473 $ 0 $ 0 $ 0 $ 8,727,473
Notes payable 8,124,444 0 0 0 8,124,444
Obligations under capital
lease 22,000,000 0 0 0 22,000,000
Purchase consideration
payable 0 0 0 25,433,753 (a) 25,433,753
Dividends payable 1,059,026 0 0 0 1,059,026
Due to affiliate 2,166,161 0 0 1,117,291 (b) 3,283,452
Deferred rental income 661,657 0 0 0 661,657
------------ -------- ------ ----------- ------------
Total liabilities 42,738,761 0 0 26,551,044 69,289,805
------------ -------- ------ ----------- ------------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST OF UNIT
HOLDER IN OPERATING
PARTNERSHIP 200,000 0 0 0 200,000
------------ -------- ------ ----------- ------------
SHAREHOLDERS' EQUITY:
Common shares, $.01 par value;
125,000,000 shares authorized,
83,761,469 shares issued and
83,206,429 shares outstanding 837,614 0 0 0 837,614
Additional paid-in capital 738,236,525 0 0 0 738,236,525
Cumulative distributions in
excess of earnings (24,181,092) 0 0 0 (24,181,092)
Treasury stock, at cost,
555,040 shares (5,550,396) 0 0 0 (5,550,396)
------------ -------- ------ ----------- ------------
Total shareholders'
equity 709,342,651 0 0 0 709,342,651
------------ -------- ------ ----------- ------------
Total liabilities
and shareholders'
equity $752,281,412 $ 0 $ 0 $26,551,044 $778,832,456
============ ======== ====== =========== ============
(a) Reflects Wells Real Estate Investment Trust, Inc.'s purchase price for the
land and the building.
(b) Reflects deferred project costs applied to the land and building at
approximately 4.02% of the purchase price.
The accompanying notes are an integral part of this statement.
F-9
WELLS REAL ESTATE INVESTMENT TRUST, INC.
PRO FORMA STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 2001
(Unaudited)
Wells Real ProForma Adjustments
Estate ---------------------------------------------------------------------
Investment Transocean Houston Novartis Atlanta Dana Corporation Pro Forma
Trust, Inc. Building Building Buildings Total
------------- ------------------ ---------------- ---------------- -----------
REVENUES:
Rental income $44,204,279 $1,549,527 (a) $650,705(a) $ 730,345(a) $47,134,856
Equity in income of joint 0 0
ventures 3,720,959 0 3,720,959
Interest income 1,246,064 (1,246,064)(b) 0 0 0
Take out fee 137,500 0 0 0 137,500
----------- ----------- --------- ----------- -----------
49,308,802 303,463 650,705 730,345 50,993,315
----------- ----------- --------- ----------- -----------
EXPENSES:
Depreciation and amortization 15,344,801 882,247 (c) 542,888(c) 1,648,078(c) 18,418,014
Interest 3,411,210 0 0 0 3,411,210
Operating costs, net of 4,929(d) 0
reimbursements 4,128,883 1,151,107 (d) 5,284,919
Management and leasing fees 2,507,188 69,729 (e) 29,282(e) 32,866(e) 2,639,065
General and administrative 973,785 0 0 0 973,785
Amortization of deferred 0 0
financing costs 770,192 0 770,192
Legal and accounting 448,776 0 0 0 448,776
----------- ----------- --------- ----------- -----------
27,584,835 2,103,083 577,099 1,680,944 31,945,961
----------- ----------- --------- ----------- -----------
NET INCOME (LOSS) $21,723,967 $(1,799,620) $ 73,606 $ (950,599) $19,047,354
=========== =========== ========= =========== ===========
(a) Rental income is recognized on a straight-line basis.
(b) Represent forgone interest income related to cash utilized to purchase the
prior acquisitions.
(c) Depreciation expense on the buildings is recognized using the straight-line
method and a 25-year life.
(d) Consists of nonreimbursable operating expenses.
(e) Management and leasing fees are calculated at 4.5% of rental income.
The accompanying notes are an integral part of this statement.
F-10