Prepared by R.R. Donnelley Financial -- Amendment One to Form 8-K
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) July 1, 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 July 1, 2002 to provide the required financial statements relating to the acquisition by the Registrant of the ISS Atlanta Buildings located in Atlanta, Georgia, as described in such Current Report.
 
Item 7.    Financial Statements and Exhibits.
 
(a) Financial Statements.  The following financial statements are submitted in this Amendment to Current Report on Form 8-K and are filed herewith and incorporated herein by reference:
 
Since the ISS Atlanta Buildings are leased to a single tenant on a long-term basis under a net lease expiring in May 2013 that transfers substantially all of the operating costs to the tenant, the Registrant believes that financial information about the guarantor of the lease, Internet Security Systems, Inc., a Delaware corporation (“ISS, Inc.”), is more relevant to investors than financial statements of the property acquired. ISS, Inc. is a public company which currently files its financial statements in reports filed with the Securities and Exchange Commission, and following is a summary of certain selected financial data regarding ISS, Inc. taken from its previously filed public reports:
 
      
FOR THE FISCAL YEAR ENDED
CONSOLIDATED STATEMENTS
            OF OPERATIONS:
     
DECEMBER 31, 2001
       
DECEMBER 31, 2000
     
DECEMBER 31, 1999
               
(IN THOUSANDS)
       
Revenues
     
$223,559
 
     
$194,975
     
$116,487
Operating Income
     
$ (24,158
)
     
$  20,569
     
$    2,700
Net Income
     
$ (15,458
)
     
$  18,315
     
$    7,490
                        
 
CONSOLIDATED BALANCE
            SHEET DATA:
     
DECEMBER 31, 2001
     
DECEMBER 31, 2000
      
(IN THOUSANDS)
       
Total Assets
     
$500,984
     
$240,240
Stockholders’ Equity
     
$426,935
     
$188,389
 
For more detailed financial information regarding ISS, Inc., please refer to the financial statements of ISS, Inc., which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.
 
Wells Real Estate Investment Trust, Inc.
    
Page
Unaudited Pro Forma Financial Statements
     
      
Summary of Unaudited Pro Forma Financial Statements
   
F-1
      
Pro Forma Balance Sheet as of June 30, 2002 (unaudited)
   
F-2
      
Pro Forma Statement of Income for the year ended December 31, 2001 (unaudited)
   
F-4
      
Pro Forma Statement of Income for the six months ended June 30, 2002 (unaudited)
   
F-5
 

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 on Form 8-K 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:    September 10, 2002
 

3

WELLS REAL ESTATE INVESTMENT TRUST, INC.
 
SUMMARY OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
 
This pro forma information should be read in conjunction with the financial statements and notes of Wells Real Estate Investment Trust, Inc. included in its annual report on Form 10-K for the year ended December 31, 2001 and quarterly report on Form 10-Q for the period ended June 30, 2002. In addition, this pro forma information should be read in conjunction with the financial statements and notes of certain acquired properties included in various Form 8-Ks previously filed.
 
The following unaudited pro forma balance sheet as of June 30, 2002 has been prepared to give effect to the third quarter 2002 acquisitions of the PacifiCare San Antonio Building, the Kerr McGee Property, the BMG Greenville Buildings, the Kraft Atlanta Building, the Nokia Dallas Buildings (collectively, the “Other Recent Acquisitions”) and the ISS Atlanta Buildings (“ISS Atlanta”) by Wells OP as if the acquisitions occurred on June 30, 2002.
 
The following unaudited pro forma statement of income for the six months ended June 30, 2002 has been prepared to give effect to the first and second quarter 2002 acquisitions of the Arthur Andersen Building, the Transocean Houston Building, the Novartis Atlanta Building, the Dana Corporation Buildings, the Travelers Express Denver Buildings, the Agilent Atlanta Building, the BellSouth Ft. Lauderdale Building, the Experian/TRW Buildings, the Agilent Boston Building, the TRW Denver Building, the MFS Phoenix Building (collectively, the “2002 Acquisitions”), ISS Atlanta and the Other Recent Acquisitions as if the acquisitions occurred on January 1, 2001. The Kerr McGee Property had no operations during the six months ended June 30, 2002.
 
The following unaudited pro forma statement of income for the year ended December 31, 2001 has been prepared to give effect to the 2001 acquisitions of the Comdata Building, the AmeriCredit Building, the State Street Bank Building, the IKON Buildings, the Ingram Micro Building, the Lucent Building, the ADIC Buildings, the Convergys Building, the Windy Point Buildings (collectively, the “2001 Acquisitions”), the 2002 Acquisitions, ISS Atlanta and the Other Recent Acquisitions as if the acquisitions occurred on January 1, 2001. The Nissan Property, the Travelers Express Denver Buildings and the Kerr McGee Property had no operations during 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 2001 Acquisitions, the 2002 Acquisitions, ISS Atlanta and the Other Recent Acquisitions been consummated as of January 1, 2001.
 

F-1

 
WELLS REAL ESTATE INVESTMENT TRUST, INC.
 
PRO FORMA BALANCE SHEET
 
JUNE 30, 2002
 
(Unaudited)
 
ASSETS
 
         
Pro Forma Adjustments
          
Pro Forma Adjustments
       
    
Wells Real
Estate
Investment
Trust, Inc. (g)
   
ISS Atlanta
     
Pro Forma
Subtotal
   
Other Recent
Acquisitions
     
Pro Forma
Total
REAL ESTATE ASSETS, at cost:
                                       
Land
   
$
110,330,449
   
$
2,700,000
(a)
   
$
113,140,333
   
$
17,588,044
(a)
   
$
131,444,168
           
 
109,884
(b)
          
 
715,791
(b)
       
Buildings, less accumulated depreciation of $37,717,737
   
 
689,490,969
   
 
38,065,159
(a)
   
 
729,105,291
   
 
157,133,684
(a)
   
 
892,633,950
           
 
1,549,163
(b)
          
 
6,394,975
(b)
       
Construction in progress
   
 
16,081,841
   
 
0
 
   
 
16,081,841
   
 
379,901
(a)
   
 
16,461,742
    
  
  
  
  
Total real estate assets
   
 
815,903,259
   
 
42,424,206
 
   
 
858,327,465
   
 
182,212,395
 
   
$
1,040,539,860
    
  
  
  
  
CASH AND CASH EQUIVALENTS
   
 
341,909,775
   
 
(40,606,422
)(a)
   
 
306,072,046
   
 
(163,384,038
)(a)
   
 
331,465,876
           
 
4,941,651
(c)
          
 
195,624,733
(d)
       
           
 
(172,958
) (e)
          
 
(6,846,865
)(e)
       
INVESTMENT IN JOINT VENTURES
   
 
76,217,870
   
 
0
 
   
 
76,217,870
   
 
0
 
   
 
76,217,870
INVESTMENT IN BONDS
   
 
22,000,000
   
 
32,500,000
(f)
   
 
54,500,000
   
 
0
 
   
 
54,500,000
ACCOUNTS RECEIVABLE
   
 
10,709,104
   
 
0
 
   
 
10,709,104
   
 
0
 
   
 
10,709,104
DEFERRED LEASE ACQUISITION COSTS, net
   
 
1,790,608
   
 
0
 
   
 
1,790,608
   
 
0
 
   
 
1,790,608
DEFERRED PROJECT COSTS
   
 
14,314,914
   
 
(1,659,047
)(b)
   
 
12,828,825
   
 
(7,110,766
)(b)
   
 
12,564,924
           
 
172,958
(e)
          
 
6,846,865
(e)
       
DEFERRED OFFERING COSTS
   
 
1,392,934
   
 
0
 
   
 
1,392,934
   
 
0
 
   
 
1,392,934
DUE FROM AFFILIATES
   
 
1,897,309
   
 
0
 
   
 
1,897,309
   
 
0
 
   
 
1,897,309
NOTE RECEIVABLE
   
 
5,149,792
   
 
0
 
   
 
5,149,792
   
 
0
 
   
 
5,149,792
PREPAID EXPENSES AND OTHER ASSETS, net
   
 
1,881,308
   
 
0
 
   
 
1,881,308
   
 
0
 
   
 
1,881,308
    
  
  
  
  
Total assets
   
$
1,293,166,873
   
$
37,600,388
 
   
$
1,330,767,261
   
$
207,342,324
 
   
$
1,538,109,585
    
  
  
  
  

F-2

 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
           
Pro Forma Adjustments
            
Pro Forma Adjustments
         
    
Wells Real
Estate
Investment
Trust, Inc. (h)
     
ISS Atlanta
     
Pro Forma
Subtotal
     
Other Recent
Acquisitions
     
Pro Forma
Total
  
LIABILITIES:
                                             
Accounts payable and accrued expenses
   
$
11,840,214
 
   
$
158,737
(a)
   
$
11,998,951
 
   
$
14,830
(a)
   
$
12,013,781
 
Notes payable
   
 
15,658,141
 
   
 
0
 
   
 
15,658,141
 
   
 
11,702,761
(a)
   
 
27,360,902
 
Obligations under capital lease
   
 
22,000,000
 
   
 
32,500,000
(g)
   
 
54,500,000
 
   
 
0
 
   
 
54,500,000
 
Dividends payable
   
 
4,538,635
 
   
 
0
 
   
 
4,538,635
 
   
 
0
 
   
 
4,538,635
 
Due to affiliate
   
 
2,106,790
 
   
 
0
 
   
 
2,106,790
 
   
 
0
 
   
 
2,106,790
 
Deferred rental income
   
 
1,013,544
 
   
 
0
 
   
 
1,013,544
 
   
 
0
 
   
 
1,013,544
 
    
  
  
  
  
Total liabilities
   
 
57,157,324
 
   
 
32,658,737
 
   
 
89,816,061
 
   
 
11,717,591
 
   
 
101,533,652
 
    
  
  
  
  
                                              
COMMITMENTS AND CONTINGENCIES
                                             
MINORITY INTEREST OF UNIT HOLDER IN OPERATING PARTNERSHIP
   
 
200,000
 
   
 
0
 
   
 
200,000
 
   
 
0
 
   
 
200,000
 
    
  
  
  
  
                                              
SHAREHOLDERS’ EQUITY:
                                             
Common shares, $.01 par value; 125,000,000 shares authorized, 145,589,053 shares issued and 144,366,772 outstanding at June 30, 2002
   
 
1,455,890
 
   
 
4,942
(c)
   
 
1,460,832
 
   
 
195,624
(d)
   
 
1,656,456
 
                                              
Additional paid-in capital
   
 
1,290,858,515
 
   
 
4,936,709
(c)
   
 
1,295,795,224
 
   
 
195,429,109
(d)
   
 
1,491,224,333
 
                                              
Cumulative distributions in excess of earnings
   
 
(43,991,669
)
   
 
0
 
   
 
(43,991,669
)
   
 
0
 
   
 
(43,991,669
)
Treasury stock, 1,222,381 at cost, shares
   
 
(12,223,808
)
   
 
0
 
   
 
(12,223,808
)
   
 
0
 
   
 
(12,223,808
)
Other comprehensive loss
   
 
(289,379
)
   
 
0
 
   
 
(289,379
)
   
 
0
 
   
 
(289,379
)
    
  
  
  
  
Total shareholders’ equity
   
 
1,235,809,549
 
   
 
4,941,651
 
   
 
1,240,751,200
 
   
 
195,624,733
 
   
 
1,436,375,933
 
    
  
  
  
  
Total liabilities and shareholders’ equity
   
$
1,293,166,873
 
   
$
37,600,388
 
   
$
1,330,767,261
 
   
$
207,342,324
 
   
$
1,538,109,585
 
    
  
  
  
  
 
 
(a)
 
Reflects Wells Real Estate Investment Trust, Inc.’s purchase price for the land, building and liabilities assumed.
 
(b)
 
Reflects deferred project costs applied to the land and building at approximately 4.07% of the cash paid for purchase.
 
(c)
 
Reflects capital raised through issuance of additional shares subsequent to June 30, 2002 through ISS Atlanta acquisition date.
 
(d)
 
Reflects capital raised through issuance of additional shares subsequent to ISS Atlanta acquisition date of the latest Other Recent Acquisitions.
 
(e)
 
Reflects deferred project costs capitalized as a result of additional capital raised described in notes (c) and (d) above.
 
(f)
 
Reflects investment in bonds for which 100% of the principal balance becomes payable on December 1, 2015.
 
(g)
 
Reflects mortgage note secured by the Deed of Trust to the ISS Atlanta Buildings for which 100% of the principal balance becomes payable on December 1, 2015.
 
(h)
 
Historical financial information derived from quarterly report on Form 10-Q.
 
The accompanying notes are an integral part of this statement.

F-3

 
WELLS REAL ESTATE INVESTMENT TRUST, INC.
 
PRO FORMA STATEMENT OF INCOME
 
FOR THE YEAR ENDED DECEMBER 31, 2001
 
(Unaudited)
 
         
Pro Forma Adjustments
          
Pro Forma Adjustments
       
    
Wells Real
Estate
Investment
Trust, Inc. (f)
   
2001
Acquisitions
     
2002
Acquisitions
     
ISS Atlanta
     
Pro Forma
Subtotal
   
Other Recent
Acquisitions
     
Pro Forma
Total
REVENUES:
                                                         
Rental income
   
$
44,204,279
   
$
11,349,076
(a)
   
$
14,846,431
(a)
   
$
4,398,278
(a)
   
$
74,798,064
   
 
16,538,740
(a)
   
$
91,336,804
Equity in income of joint ventures
   
 
3,720,959
   
 
1,111,850
(b)
   
 
0
 
   
 
0
 
   
 
4,832,809
   
 
0
 
   
 
4,832,809
Interest income
   
 
1,246,064
   
 
0
 
   
 
0
 
   
 
0
 
   
 
1,246,064
   
 
0
 
   
 
1,246,064
Take out fee
   
 
137,500
   
 
0
 
   
 
0
 
   
 
0
 
   
 
137,500
   
 
0
 
   
 
137,500
    
  
  
  
  
  
  
    
 
49,308,802
   
 
12,460,926
 
   
 
14,846,431
 
   
 
4,398,278
 
   
 
81,014,437
   
 
16,538,740
 
   
 
97,553,177
    
  
  
  
  
  
  
EXPENSES:
                                                         
Depreciation
   
 
15,344,801
   
 
5,772,761
(c)
   
 
5,356,374
(c)
   
 
1,584,573
(c)
   
 
28,058,509
   
 
6,198,640
(c)
   
 
34,257,149
Interest
   
 
3,411,210
   
 
0
 
   
 
0
 
   
 
0
 
   
 
3,411,210
   
 
0
 
   
 
3,411,210
Operating costs, net of reimbursements
   
 
4,128,883
   
 
2,854,275
(d)
   
 
1,505,269
(d)
   
 
0
 
   
 
8,488,427
   
 
5,452
(d)
   
 
8,493,879
Management and leasing fees
   
 
2,507,188
   
 
510,708
(e)
   
 
668,090
(e)
   
 
197,923
(e)
   
 
3,883,909
   
 
744,242
(e)
   
 
4,628,151
General and administrative
   
 
973,785
   
 
0
 
   
 
0
 
   
 
0
 
   
 
973,785
   
 
0
 
   
 
973,785
Amortization of deferred financing costs
   
 
770,192
   
 
0
 
   
 
0
 
   
 
0
 
   
 
770,192
   
 
0
 
   
 
770,192
Legal and accounting
   
 
448,776
   
 
0
 
   
 
0
 
   
 
0
 
   
 
448,776
   
 
0
 
   
 
448,776
    
  
  
  
  
  
  
    
 
27,584,835
   
 
9,137,744
 
   
 
7,529,733
 
   
 
1,782,496
 
   
 
46,034,808
   
 
6,948,334
 
   
 
52,983,142
    
  
  
  
  
  
  
NET INCOME
   
$
21,723,967
   
$
3,323,182
 
   
$
7,316,698
 
   
$
2,615,782
 
   
$
34,979,629
   
$
9,590,406
 
   
$
44,570,035
    
  
  
  
  
  
  
EARNINGS PER SHARE, basic and diluted
   
$
0.43
                              
$
0.24
            
$
0.27
    
                             
           
WEIGHTED AVERAGE SHARES, basic and diluted
   
 
50,520,853
                              
 
144,860,936
            
 
164,423,411
    
                             
           
 
 
(a)
 
Rental income is recognized on a straight-line basis.
 
(b)
 
Reflects Wells Real Estate Investment Trust, Inc.’s equity in income of Wells XII-REIT Joint Venture related to the acquisition of the Comdata Building and equity in income of Wells XIII-REIT Joint Venture related to the acquisition of the AmeriCredit Building and the ADIC Building.
 
(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.
 
(f)
 
Historical financial information derived from annual report on Form 10-K.
 
The accompanying notes are an integral part of this statement.

F-4

 
WELLS REAL ESTATE INVESTMENT TRUST, INC.
 
PRO FORMA STATEMENT OF INCOME
 
FOR THE SIX MONTHS ENDED JUNE 30, 2002
 
(Unaudited)
 
         
Pro Forma Adjustments
          
Pro Forma Adjustments
       
    
Wells Real
Estate
Investment
Trust, Inc. (e)
   
2002
Acquisitions
     
ISS Atlanta
     
Pro Forma
Subtotal
   
Other Recent
Acquisitions
     
Pro Forma
Total
REVENUES:
                                                
Rental income
   
$
38,571,815
   
$
7,307,774
(a)
   
$
2,199,139
(a)
   
$
48,078,728
   
$
8,911,649
(a)
   
$
56,990,377
Equity in income of joint ventures
   
 
2,478,686
   
 
0
 
   
 
0
 
   
$
2,478,686
   
 
0
 
   
 
2,478,686
Interest income
   
 
2,648,351
   
 
0
 
   
 
0
 
   
$
2,648,351
   
 
0
 
   
 
2,648,351
Take out fee
   
 
134,102
   
 
0
 
   
 
0
 
   
 
134,102
   
 
0
 
   
 
134,102
    
  
  
  
  
  
    
 
43,832,954
   
 
7,307,774
 
   
 
2,199,139
 
   
 
53,339,867
   
 
8,911,649
 
   
 
62,251,516
    
  
  
  
  
  
EXPENSES:
                                                
Depreciation
   
 
12,903,282
   
 
2,588,546
(b)
   
 
792,286
(b)
   
 
16,284,114
   
 
3,270,573
(b)
   
 
19,554,687
Interest
   
 
880,002
   
 
0
 
   
 
0
 
   
 
880,002
   
 
0
 
   
 
880,002
Operating costs, net of reimbursements
   
 
2,063,997
   
 
300,018
(c)
   
 
0
 
   
 
2,364,015
   
 
79,067
(c)
   
 
2,443,082
Management and leasing fees
   
 
1,903,082
   
 
328,850
(d)
   
 
98,961
(d)
   
 
2,330,893
   
 
401,024 
(d)
   
 
2,731,917
General and administrative
   
 
1,121,457
   
 
0
 
   
 
0
 
   
 
1,121,457
   
 
0
 
   
 
1,121,457
Amortization of deferred financing costs
   
 
424,992
   
 
0
 
   
 
0
 
   
 
424,992
   
 
0
 
   
 
424,992
    
  
  
  
  
  
    
 
19,296,812
   
 
3,217,414
 
   
 
891,247
 
   
 
23,405,473
   
 
3,750,664
 
   
 
27,156,137
    
  
  
  
  
  
NET INCOME
   
$
24,536,142
   
$
4,090,360
 
   
$
1,307,892
 
   
$
29,934,394
   
$
5,160,985
 
   
$
35,095,379
    
  
  
  
  
  
EARNINGS PER SHARE, basic and diluted
   
$
0.22
                     
$
0.21
            
$
0.21
    
                    
           
WEIGHTED AVERAGE SHARES, basic and diluted
   
 
110,885,641
                     
 
144,860,936
            
 
164,423,411
    
                    
           
 
 
(a)
 
Rental income is recognized on a straight-line basis.
 
(b)
 
Depreciation expense on the buildings is recognized using the straight-line method and a 25-year life.
 
(c)
 
Consists of nonreimbursable operating expenses.
 
(d)
 
Management and leasing fees are calculated at 4.5% of rental income.
 
(e)
 
Historical financial information derived from quarterly report on Form 10-Q.
 
The accompanying notes are an integral part of this statement.

F-5