Wells Real Estate Funds, a fully integrated real estate investment management firm with more than 36,000 investors nationwide and more than $.5 billion in assets under management, is the only company in the country that offers investors three ways to invest in real estate: through a limited partnership, a non-traded Real Estate Investment Trust (REIT) and a mutual fund. Part of the company' success stems from the fact that its president and sole director, Leo Wells, started off doing partnerships on an all-cash basis. "For about 6 months in the early 1970s, real estate went straight off the cliff," says Wells. "After observing this, I decided that I would only reinvest money for people on an all-cash basis."

Wells implements this practice in his business yet today, and Well' portfolio includes about $350 million of limited partnership properties throughout the country. And it all began in 1984 with all cash and no debt. "We have no long-term financing on any of our properties. They are all cash and no debt, just like all of our limited partnerships," says Steve Franklin, senior vice president of new business development.

Wells Real Estate Fund' conservative investment approach focuses on acquiring Class A office space that is pre-leased long-term (8-10 years) to premier companies such as Sprint, IBM, Coca Cola, PricewaterhouseCoopers and AT&T. All of the company' properties are also diversified geographically and by tenant and industry type, according to Wells. All of this has resulted in success for Wells Real Estate Funds. "We see five deals a day in this office. The average size deal is $20 million," says Wells.

Investing in real estate, according to Franklin, is much safer than investing in bonds. "Eighty percent of the wealth that is able to be invested in this country is controlled by baby boomers and the generation ahead of them," says Franklin. "So as they reach retirement age, the number one thing they are interested in is their future income." According to Franklin, if a person has $1 million in equities and the average S&P 500 annual dividend yield is 1.1 percent, the person can get only $11,000 a year from their $1 million. "Because people do not want to sell off their principle to live, they can be millionaires and be basically broke at the same time," says Franklin.

This is why Wells is quick to point out that real estate is the best income alternative. Corporations have obligations to pay out operating expenses -- including rent, taxes, utilities and salaries -- first, he says. Then they pay bonds, and after that, they pay stockholder dividends. "Real estate investments are incredibly secure," says Wells. "For example, if a person owns stock and a bond with Coca Cola as well as real estate that is leased to them, and Coca Cola disappeared tomorrow, their stocks would be worth nothing, their bonds would be worth nothing, but their real estate would still be worth something," says Wells. Real estate investments also have a higher yield and better growth potential than bonds do and provide a dividend a stock doesn1t have, he notes. Wells also points out that there are a number of companies such as Marriott, Trump Plaza and Chrysler, and cities such as New York, that have defaulted on their bond holder interests. "I can1t think of anybody that failed to pay their operating expenses -- including their rent and salaries -- that is still in business today," says Wells.

Because of its belief in real estate as an investor' best alternative, Wells Real Estate Funds has recently launched an aggressive campaign to raise $1 billion to purchase properties all over the country.

"We are already close to $400 million. Our goal this calendar year is to raise $480 million in the REIT, bringing us close to $800 million," says Franklin. The company is implementing this goal by dividing the nation into 14 territories. In each region, it has a sales team comprised of three people: an outside wholesaler, an inside wholesaler and an inside sales coordinator. "That' how we go about attacking the marketplace," says Franklin. The company also has a strong marketing effort that includes client mailing programs and e-mails that promote and assist financial advisors in their individual practices to provide Wells Real Estate Fund' products as an investment option for their client' portfolios. According to Franklin, March was a record month with $34 million raised in new capital. The company plans to escalate that number so that by year-end, it will be at a run rate of close to $50 million a month. "If all goes well and we stay on target, we should reach $1 billion in the REIT by early- to mid- next year," says Franklin.

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