<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                   Form 10-Q


(Mark one)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
For the quarterly period ended               June 30, 1999                 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                       0-25606
                       --------------------------------------------------------

                       Wells Real Estate Fund VII, L.P.
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

              Georgia                                58-2022629
------------------------------          --------------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
incorporation or organization)

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, 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
     -----      ----
<PAGE>

                                   Form 10-Q
                                   ---------

                        Wells Real Estate Fund VII, L.P.
                        --------------------------------

                                     INDEX
                                     -----

                                                                      Page No.

PART I.   FINANCIAL INFORMATION

          Item 1.  Financial Statements

                   Balance Sheets -- June 30, 1999
                     and December 31, 1998.............................   3

                   Statements of Income for Six Months and Three Months
                     Ended June 30, 1999 and 1998......................   4

                   Statements of Partners' Capital for the Year Ended
                   December 31, 1998 and the Six Months Ended
                   June 30, 1999.......................................   5

                   Statements of Cash Flows for the Six
                   Months Ended June 30, 1999 and 1998.................   6

                   Condensed Notes to Financial Statements.............   7

          Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of Operations........  8

PART II.  OTHER INFORMATION............................................. 20

                                       2
<PAGE>

                       WELLS REAL ESTATE FUND VII,  L.P.
                     (A Georgia Public Limited Partnership)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                      Assets                                 June 30, 1999        December 31, 1998
                      ------                                 -------------        -----------------
<S>                                                  <C>                    <C>

Investment in joint ventures (Note 2)                          $17,932,005            $18,368,726
Cash and cash equivalents                                           66,101                 75,740
Due from affiliates                                                427,780                339,387
Organizational costs,
 less accumulated amortization of $32,500 in
  1999 and $29,688 in 1998                                               0                  1,562
Prepaid expenses and other assets                                    2,546                  4,263
                                                               -----------            -----------

     Total assets                                              $18,428,432            $18,789,678
                                                               ===========            ===========


           Liabilities and Partners' Capital
           ---------------------------------

Liabilities:
 Accounts payable                                              $        35            $     5,208
 Partnership distributions payable                                 433,216                396,500
                                                               -----------            -----------

     Total liabilities                                             433,251                401,708
                                                               -----------            -----------

Partners' capital:
 Limited partners
  Class A -- 2,013,506 Units outstanding                        17,034,744             16,935,935
  Class B -- 404,511 Units outstanding                             960,437              1,452,035
                                                               -----------            -----------

     Total partners' capital                                    17,995,181             18,387,970
                                                               -----------            -----------

     Total liabilities and partners' capital                   $18,428,432            $18,789,678
                                                               ===========            ===========
</TABLE>

           See accompanying condensed notes to financial statements.


                                       3
<PAGE>

                        WELLS REAL ESTATE FUND VII, L.P.
                     (A Georgia Public Limited Partnership)

                              STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                 Three Months Ended                     Six Months Ended
                                        ----------------------------------       -------------------------------
                                        June 30, 1999        June 30, 1998       June 30, 1999     June 30, 1998
                                        -------------        -------------       -------------     -------------
<S>                                     <C>                 <C>                 <C>                <C>
Revenues:
 Equity in income of joint
  ventures (Note 2)                       $ 268,409            $ 218,705          $ 509,185           $ 416,605
 Interest income                             (1,493)               2,312                146               5,595
                                          ---------            ---------          ---------           ---------
                                            266,916              221,017            509,331             422,200

Expenses:
 Legal and accounting                         9,720               10,287             15,460              15,058
 Partnership administration                  14,535               12,095             35,990              23,296
 Amortization of organization cost
  costs                                           1                1,563              1,563               3,125
                                          ---------            ---------          ---------           ---------
                                             24,256               23,945             53,013              41,479
                                          ---------            ---------          ---------           ---------
 Net income                               $ 242,660            $ 197,072          $ 456,318           $ 380,721
                                          =========            =========          =========           =========

Net income allocated to Class
 A Limited Partners                       $ 480,530            $ 432,142          $ 934,923           $ 864,032

Net loss allocated to Class B
 Limited Partners                         $(237,870)           $(235,069)         $(478,605)          $(483,311)

Net income per Class A Limited
 Partner Unit                             $    0.24            $    0.22          $    0.47           $    0.44

Net loss per Class B Limited
 Partner Unit                             $   (0.57)           $   (0.56)         $   (1.16)          $   (1.12)

Cash distribution per Class A
 Limited Partner Unit                     $    0.22            $    0.21          $    0.42           $    0.42
</TABLE>

            See accompanying condensed notes to financial statements

                                       4
<PAGE>

                        WELLS REAL ESTATE FUND VII, L.P.
                     (A Georgia Public Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL
       FOR THE YEAR ENDED DECEMBER 31, 1998 AND FOR THE SIX MONTHS ENDED
                                 JUNE 30, 1999


<TABLE>
<CAPTION>
                                                              Limited Partners
                                              ------------------------------------------------
                                                      Class A                  Class B                       Total
                                              ------------------------  ----------------------  General     Partners'
                                                Units       Amounts      Units      Amounts     Partners     Capital
                                               ---------  -------------  --------  ------------  --------  -------------
<S>                                           <C>        <C>            <C>       <C>           <C>       <C>
BALANCE,
 December 31, 1997                             1,971,399   $16,701,193   446,618    $2,560,972         $0   $19,262,165

 Net income (loss)                                     0     1,704,213         0      (949,879)         0       754,334
 Partnership distributions                             0    (1,628,529)        0             0          0    (1,628,529)
 Class B conversion elections                     38,118       159,058   (38,118)     (159,058)         0             0
                                               ---------   -----------   -------    ----------         --   -----------
BALANCE,
 December 31, 1998                             2,009,517   $16,935,935   408,500    $1,452,035         $0   $18,387,970
 Net income (loss)                                     0       934,923         0      (478,605)         0       456,318
 Partnership distributions                             0      (849,107)        0             0          0      (849,107)
 Class B conversion elections                      3,989        12,993    (3,989)      (12,993)         0             0
                                               ---------   -----------   -------    ----------         --   -----------

BALANCE,
 June 30, 1999                                 2,013,506   $17,034,744   404,511    $  960,437          0   $17,995,181
                                               =========   ===========   =======    ==========         ==   ===========
</TABLE>

           See accompanying condensed notes to financial statements.

                                       5
<PAGE>

                        WELLS REAL ESTATE FUND VII, L.P.
                     (A Georgia Public Limited Partnership)

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                              --------------------------------------
                                                              June 30, 1999            June 30, 1998
                                                              -------------            -------------
<S>                                                           <C>                      <C>
Cash flows from operating activities:
 Net income                                                      $ 456,318                $ 380,721
                                                                 ---------                ---------
 Adjustments to reconcile net income to net cash
  used in operating activities:
   Equity in income of joint ventures                             (509,185)                (416,605)
   Amortization of organization costs                                1,563                    3,127
   Changes in assets and liabilities:
     Prepaids and other assets                                       1,717                    1,050
     Accounts payable                                               (5,173)                   1,655
                                                                 ---------                ---------
     Total adjustments                                            (511,078)                (410,773)
                                                                 ---------                ---------
      Net cash used in operating activities                        (54,760)                 (30,052)
                                                                 ---------                ---------

Cash flow from investing activities:
 Investment in joint ventures                                            0                 (109,765)
 Distributions received from joint ventures                        857,513                  837,326
                                                                 ---------                ---------
      Net cash provided by
       investing activities                                        857,513                  727,561
                                                                 ---------                ---------

Cash flow from financing activities:
 Partnership distributions paid                                   (812,392)                (811,541)
                                                                 ---------                ---------
      Net cash used in financing
       activities                                                 (812,392)                (811,541)

Net decrease in cash and cash  equivalents                          (9,639)                (114,032)

Cash and cash equivalents, beginning of year                        75,740                  194,420
                                                                 ---------                ---------

Cash and cash equivalents, end of period                         $  66,101                $  80,388
                                                                 =========                =========

Supplemental disclosure of noncash investing
 activities:
  Deferred project costs applied to real estate
  and joint venture property                                     $       0                $     416
                                                                 =========                =========
</TABLE>

           See accompanying condensed notes to financial statements.

                                       6
<PAGE>

                        WELLS REAL ESTATE FUND VII, L.P.
                    (A Georgia Public Limited Partnership)

                    Condensed Notes to Financial Statements

                                 June 30, 1999

(1)  Summary of Significant Accounting Policies
     ------------------------------------------

     (a)  General
     ------------

     Wells Real Estate Fund VII, L.P. (the "Partnership") is a Georgia public
     limited partnership, having Leo F. Wells, III and Wells Partners, L.P., a
     Georgia limited partnership, as general partners.  The Partnership was
     formed on December 1, 1992, for the purpose of acquiring, developing,
     owning, operating, improving, leasing, and otherwise managing for
     investment purposes income-producing commercial properties.

     On April 6, 1994, the Partnership commenced an offering of up to
     $25,000,000 of Class A or Class B limited partnership units ($10.00 per
     unit) pursuant to a Registration Statement on Form S-11 filed under the
     Securities Act of 1933.  The Partnership commenced active operations when
     it received and accepted subscriptions for a minimum of 125,000 units on
     April 26, 1994.  The Partnership terminated its offering on January 5,
     1995, and received gross proceeds of $24,180,174 representing subscriptions
     from 1910 Limited Partners.

     The Partnership owns interests in properties through ownership in the
     following joint ventures:  (i) Fund V, Fund VI, Fund VII Associates, a
     joint venture between the Partnership, Wells Real Estate Fund V, L.P., and
     Wells Real Estate Fund VI, L.P. ("Fund V-VI-VII Joint Venture"); (ii) Fund
     VI and Fund VII Associates a joint venture between the Partnership and
     Wells Real Estate Fund VI L.P. ("Fund VI-Fund VII Joint Venture"); (iii)
     Fund II, III, VI and VII Associates, a joint venture between the
     Partnership, Wells Fund II-III Joint Venture, Wells Real Estate Fund VI,
     L.P., and Wells Real Estate Fund VII, L.P. (the "Fund II-III-VI-VII Joint
     Venture"); (iv) Fund VII and Fund VIII Associates, a joint venture between
     the Partnership and Wells Real Estate Fund VIII, L.P. ("Fund VII-Fund VIII
     Joint Venture"); (v) Fund VI, Fund VII and Fund VIII Associates, a joint
     venture between the Partnership, Wells Real Estate Fund VI, L.P., and Wells
     Real Estate Fund VIII, L.P. (the "Fund VI-VII-VIII Joint Venture"); and
     (vi) Fund I, II, II-OW, VI, VII Associates, a joint venture between the
     Partnership, Wells Real Estate Fund I, the Fund II and Fund II-OW Joint
     Venture and Wells Real Estate Fund VI, L.P. (the "Fund I, II, II-OW, VI,
     VII Joint Venture").

     As of June 30, 1999, the Partnership owned interests in the following
     properties through its ownership of the foregoing joint ventures: (i) a
     three-story office building located in Appleton, Wisconsin (the "Marathon
     Building"); (ii) two retail buildings located in

                                       7
<PAGE>

     Stockbridge, Georgia ("Stockbridge Village III"); (iii) a retail shopping
     center expansion in Stockbridge, Georgia ("Stockbridge Village I
     Expansion"); (iv) an office/retail center located in Roswell, Georgia ("880
     Holcomb Bridge Road"); (v) a retail center located in Stockbridge, Georgia
     ("the Hannover Center"); (vi) a four-story office building located in
     Jacksonville, Florida ("BellSouth"); (vii) an office building located in
     Gainesville, Florida ("CH2M Hill"); (viii) a retail center in Winston-
     Salem, North Carolina ("Tanglewood Commons"); and (ix) a retail center
     located in Cherokee County, Georgia ("Cherokee Commons").

     (b)  Basis of  Presentation
     ---------------------------

     The consolidated financial statements of Wells Real Estate Fund VII, L.P.
     (the "Partnership") have been prepared in accordance with instructions to
     Form 10-Q and do not include all of the information and footnotes required
     by generally accepted accounting principles for complete financial
     statements.  These quarterly statements have not been examined by
     independent accountants, but in the opinion of the General Partners, the
     statements for the unaudited interim periods presented include all
     adjustments, which are of a normal and recurring nature, necessary to
     present a fair presentation of the results for such periods.  For further
     information, refer to the financial statements and footnotes included in
     the Partnership's Form 10-K for the year ended December 31, 1998.

(2)  Investments in Joint Ventures
     -----------------------------

     The Partnership owns interests in nine properties through its ownership in
     joint ventures of which three are office buildings and six are retail
     centers.  The Partnership does not have control over the operations of the
     joint ventures; however, it does exercise significant influence.
     Accordingly, investment in joint ventures is recorded on the equity method.
     For a description of the joint ventures and properties owned by the
     Partnership, please refer to the Partnership's Form 10-K for the year ended
     December 31, 1998.

     Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     ------------------------------------------------------------------------
     RESULTS OF OPERATIONS.
     ---------------------

     The following discussion and analysis should be read in conjunction with
     the accompanying financial statements of the Partnership and notes thereto.
     This Report contains forward-looking statements, within the meaning of
     Section 27A of the Securities Act of 1933 and 21E of the Securities
     Exchange Act of 1934, including discussion and analysis of the financial
     condition of the Partnership, anticipated capital expenditures required to
     complete certain projects, amounts of cash distributions anticipated to be
     distributed to Limited Partners in the future and certain other matters.
     Readers of this Report should be aware that there are various factors that
     could cause actual results to differ materially from any forward-looking
     statement made in this Report, which include construction costs which may
     exceed estimates, construction delays, lease-up risks, inability to obtain
     new tenants upon the expiration of existing leases, and the potential

                                       8
<PAGE>

     need to fund tenant improvements or other capital expenditures out of
     operating cash flow.

     Results of Operations and Changes in Financial Conditions
     ---------------------------------------------------------

     General
     -------

     As of June 30, 1999, the developed properties owned by the Partnership were
     96% occupied as compared to 93.5% for the same period ended June 30, 1998.
     Gross revenues of the Partnership were $509,331 and $422,200 for the six
     months ended June 30, 1999 and June 30, 1998, respectively.  The revenues
     increased in 1999 compared to 1998 due to the increase in income from the
     joint ventures.  Expenses of the Partnership increased primarily due to an
     increase in administrative costs.

     Net income per Unit for Class A Limited Partners was $0.24 for the three
     months ended June 30, 1999.  Net loss per Unit for Class B and converted
     Class A Limited Partners was $0.57 for the three months ended June 30,
     1999.

     Cash distributions of $0.22 per weighted average Unit were made to Class A
     Limited Partners for the three months ended June 30, 1999.  The Partnership
     anticipates that distributions will continue to be paid on a quarterly
     basis on a level at least consistent with 1998.

     The Partnership's net cash used in operating activities increased from
     $30,052 in 1998 to $54,760 in 1999 due to the decrease in accounts payable
     and an increase in administrative expenses.  Net cash provided by investing
     activities increased from $727,561 in 1998 to $857,518 in 1998, due
     primarily to the increase in distributions received from the joint
     ventures.

     The Partnership expects to continue to meet its short-term liquidity
     requirements and budget demands generally through net cash provided by
     operations which the Partnership believes will continue to be adequate to
     meet both operating requirements and distributions to Limited Partners.  At
     this time, given the nature of the joint ventures in which the Partnership
     has invested, there are no known improvements and renovations to the
     properties expected to be funded from cash flow from operations.

     Year 2000
     ---------

     The Partnership is presently reviewing the potential impact of Year 2000
     compliance issues on its information systems and business operations.  A
     full assessment of Year 2000 compliance issues was begun in late 1997 and
     was completed during the first half of 1999.  Renovations and replacements
     of equipment have been and are being made as warranted.  The costs incurred
     by the Partnership and its affiliates thus far for renovations and
     replacements have been immaterial. All testing of systems has been
     completed as of June 30, 1999.

                                       9
<PAGE>

     As to the status of the Partnership's information technology systems, it is
     presently believed that all major systems and software packages are Year
     2000 compliant. At the present time, it is believed that all major non-
     information technology systems are Year 2000 compliant.  The cost to
     upgrade any non-compliant systems is believed to be immaterial.

     The Partnership has confirmed with the Partnership's vendors, including
     third-party service providers such as banks, that their systems are Year
     2000 compliant.

     The Partnership relies on computers and operating systems provided by
     equipment manufacturers, and also on application software designed for use
     with its accounting, property management and investment portfolio tracking.
     The Partnership has preliminarily determined that any costs, problems or
     uncertainties associated with the potential consequences of Year 2000
     issues are not expected to have a material impact on the future operations
     or financial condition of the Partnership.  The Partnership will perform
     due diligence as to the Year 2000 readiness of each property owned by the
     Partnership and each property contemplated for purchase by the Partnership.

     The Partnership's reliance on embedded computer systems (i.e.,
     microcontrollers) is limited to facilities related matters, such as office
     security systems and environmental control systems.

     The Partnership is currently formulating contingency plans to cover any
     areas of concern.  Alternate means of operating the business are being
     developed in the unlikely circumstance that the computer and phone systems
     are rendered inoperable.  An off-site facility from which the Partnership
     could operate is being sought as well as alternate means of communication
     with key third-party vendors.  A written plan is being developed for
     testing and dispensation to each staff member of the General Partner of the
     Partnership.

     Management believes that the Partnership's risk of Year 2000 problems is
     minimal.  In the unlikely event there is a problem, the worst case
     scenarios would include the risks that the elevator or security systems
     within the Partnership's properties would fail or the key third-party
     vendors upon which the Partnership relies would be unable to provide
     accurate investor information.  In the event that the elevator shuts down,
     the Partnership has devised a plan for each building whereby the tenants
     will use the stairs until the elevators are fixed.  In the event that the
     security system shuts down, the Partnership has devised a plan for each
     building to hire temporary on-site security guards.  In the event that a
     third-party vendor has Year 2000 problems relating to investor information,
     the Partnership intends to perform a full system back-up of all investor
     information as of December 31, 1999 so that the Partnership will have
     accurate hard-copy investor information.

                                       10
<PAGE>

Property Operations
-------------------

As of June 30, 1999, the Partnership owned an interest in the following
operational properties:

The Marathon Building/Fund V-VI-VII Joint Venture
-------------------------------------------------

<TABLE>
<CAPTION>
                                           Three Months Ended                   Six Months Ended
                                   --------------------------------      --------------------------------
                                   June 30, 1999      June 30, 1998      June 30, 1999      June 30, 1998
                                   -------------      -------------      -------------      -------------
<S>                                     <C>                  <C>                 <C>             <C>
Revenues:
 Rental income                        $242,754           $243,184             $485,508           $485,938
                                      --------           --------             --------           --------

Expenses:
 Depreciation                           87,647             87,646              175,293            175,292
 Management & leasing expenses           6,443              9,890               22,687             19,780
 Other operating expenses                2,865              3,099               10,411              6,741
                                      --------           --------             --------           --------
                                        96,955            100,635              208,391            201,813
                                      --------           --------             --------           --------

Net income                            $145,799           $142,549             $277,117           $284,125
                                      ========           ========             ========           ========

Occupied %                                 100%               100%                 100%               100%

Partnership's Ownership % in the
 Fund V-VI-VII Joint Venture              41.7%              41.7%                41.7%              41.7%

Cash distribution to Partnership      $ 98,270           $ 96,989             $190,499           $193,572

Net income allocated to the
 Partnership                          $ 60,813           $ 59,457             $115,586           $118,508
</TABLE>

The increase in management and leasing fees for the six month period ended June
30, 1999, was due to a under accrual of fees in 1998.  The increase in operating
expenses was due primarily to increases in accounting and administrative fees.

Cash distributions allocated to the Partnership and net income allocated to the
Partnership remained relatively stable for the six months ended June 30, 1999
and 1998.

                                       11
<PAGE>

Stockbridge Village III/Fund VI-Fund VII Joint Venture
------------------------------------------------------

<TABLE>
<CAPTION>
                                                     Three Months Ended           Six Months Ended
                                                    --------------------  ---------------------------------
                                      June 30, 1999     June 30, 1998       June 30, 1999     June 30, 1998
                                      -------------     -------------       -------------     -------------
<S>                                   <C>               <C>                  <C>              <C>
Revenues:
 Rental income                            $76,001           $59,509            $156,602           $118,753
                                          -------           -------            --------           --------

Expenses:
 Depreciation                              22,457            22,778              45,043             45,492
 Management & leasing expenses             13,183             8,133              18,739             16,364
 Other operating expenses                   6,611            36,137               9,578             69,354
                                          -------           -------            --------           --------
                                           42,251            67,048              73,360            131,210
                                          -------           -------            --------           --------

Net income (loss)                         $33,750           $(7,539)           $ 83,242           $(12,457)
                                          =======           =======            ========           ========

Occupied %                                    100%               82%                100%                82%

Partnership's Ownership % in the
 Fund VI-Fund VII Joint Venture              56.3%             56.9%               56.3%              56.9%

Cash distribution to Partnership          $31,497           $ 9,362            $ 68,969           $ 20,235

Net income (loss) allocated to the
 Partnership                              $19,001           $(4,293)           $ 46,865           $ (7,088)
</TABLE>


Net income increased for the six months ended June 30, 1999 as compared to the
same period in 1998 due to a increase in occupancy and a decrease in the
operating expenses due to a bad debt recorded in 1998 which over inflated 1998's
expenses.

The Partnership's ownership percentage in the Fund VI-Fund VII Joint Venture
increased to 43.7% for 1999, as compared to 43.1% in 1998, due to additional
fundings by the Partnership.

                                       12
<PAGE>

Stockbridge Village I Expansion/Fund VI-Fund VII Joint Venture
--------------------------------------------------------------

<TABLE>
<CAPTION>
                                             Three Months Ended                  Six Months Ended
                                      -------------------------------       -------------------------------
                                      June 30, 1999     June 30, 1998       June 30, 1999     June 30, 1998
                                      -------------     -------------       -------------     -------------
<S>                                   <C>               <C>                 <C>                <C>
Revenues:
 Rental income                           $66,480           $74,595             $144,626           $145,682
                                         -------           -------             --------           --------

Expenses:
 Depreciation                             32,648            35,002               74,203             69,654
 Management & leasing expenses             8,437            10,229               17,727             19,737
 Other operating expenses                 (3,805)            4,856                  986             14,377
                                         -------           -------             --------           --------
                                          37,280            50,087               92,916            103,768
                                         -------           -------             --------           --------

Net income                               $29,200           $24,508             $ 51,710           $ 41,914
                                         =======           =======             ========           ========

Occupied %                                    86%               79%                  86%                79%

Partnership Ownership %                     56.3%             56.9%                56.3%              56.9%

Cash distributed to the Partnership      $43,474           $31,076             $ 83,598           $ 59,682

Net income allocated to the
 Partnership                             $16,439           $13,954             $ 29,112           $ 23,894
</TABLE>

Net income increased for the six months ended June 30, 1999 as compared to the
same period in 1998 due to a increase in occupancy and a decrease in the
operating expenses due to common area maintenance reimbursements being greater
in 1999.  Tenants are billed an estimated amount for the current year common
area maintenance which is then reconciled the second quarter of the following
year and the difference billed to the tenant.


The Partnership's ownership percentage in the Fund VI-Fund VII Joint Venture
decreased to 56.3% for 1999, as compared to 57.0% in 1998, due to additional
funding by Wells Fund VI.

                                       13
<PAGE>

880 Holcomb Bridge Road Property/Fund II, III, VI, VII Joint Venture
--------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              Three Months Ended                Six Months Ended
                                       -------------------------------   -----------------------------
                                       June 30, 1999     June 30, 1998   June 30, 1999   June 30, 1998
                                       -------------     -------------   -------------   -------------
<S>                                    <C>               <C>             <C>             <C>
Revenues:
 Rental income                           $227,761          $208,645         $457,824       $421,880
                                         --------          --------         --------       --------

Expenses:
 Depreciation                              94,128            94,129          188,257        188,033
 Management & leasing expenses             42,063            29,888           80,937         59,252
 Other operating expenses                     387            13,797           24,781         36,830
                                         --------          --------         --------       --------
                                          136,578           137,814          293,975        284,115
                                         --------          --------         --------       --------

Net income                               $ 91,183          $ 70,831         $163,849       $137,765
                                         ========          ========         ========       ========

Occupied %                                     94%            100.0%              94%         100.0%

Partnership Ownership %                      49.1%             49.9%            49.1%          49.9%

Cash distributed to the Partnership      $ 94,147          $ 86,732         $166,352       $170,469

Net income allocated to the
 Partnership                             $ 44,744          $ 34,984         $ 80,401       $ 67,789
</TABLE>

Rental income has increased for the six months ended June 30, 1999 as compared
to the same period in 1998 due primarily to an underestimate of straight line
adjustments in 1998.  Expenses decreased due to common area maintenance
reimbursements.  Tenants are billed an estimated amount for the current year
common area maintenance which is then reconciled the second quarter of the
following year and the difference billed to the tenant.

                                       14
<PAGE>

The Hannover Center/Fund VII - Fund VIII Joint Venture
------------------------------------------------------

<TABLE>
<CAPTION>
                                            Three Months Ended             Six Months Ended
                                       ----------------------------   ----------------------------
                                       June 30, 1999  June 30, 1998   June 30, 1999  June 30, 1998
                                       -------------  -------------   -------------  -------------
<S>                                    <C>            <C>             <C>             <C>
Revenues:
 Rental income                             $56,346       $26,061         $112,493      $52,122
                                           -------       -------         --------      -------

Expenses:
 Depreciation                               10,982        10,982           21,963       21,963
 Management & leasing expenses               5,583         2,661           13,042        5,322
 Other operating expenses                     (499)        6,173            2,918       14,289
                                           -------       -------         --------      -------
                                            16,066        19,816           37,923       41,574
                                           -------       -------         --------      -------

Net income                                 $40,280       $ 6,245         $ 74,570      $10,548
                                           =======       =======         ========      =======

Occupied %                                     100%           50%             100%          50%

Partnership's Ownership % in the
 Fund VII - VIII Joint Venture                36.6%         36.6%            36.6%        36.6%

Cash distribution to Partnership           $16,766       $ 5,725         $ 31,643      $10,846

Net income allocated to the
 Partnership                               $14,763       $ 2,301         $ 27,330      $ 3,918
</TABLE>

On April 1, 1996, Fund VII-Fund VIII Joint Venture acquired a 1.01 acre tract of
land and a 12,000 square foot combination retail/office building known as the
Hannover Retail Center (the "Hannover Center").

Moovies, Inc., a video sales and rental store, signed a nine year, eleven month
lease for 6,020 square feet and occupied the space and opened for business on
June 22, 1996. Prudential and Norwest Financial occupied the remaining space in
November 1998 and signed a five year lease.

Rental income, net income and cash distributions increased for the six months
ended June 30, 1999, as compared to the same period of 1998, due to increased
occupancy at the property.  Operating expenses decreased due to differences in
the annual adjustments for the prior year common area maintenance.  Tenants are
billed an estimated amount for the current year common area maintenance which is
then reconciled the second quarter of the following year and the difference
billed to the tenant.



                                       15
<PAGE>

CH2M Hill/Fund VII - Fund VIII Joint Venture
--------------------------------------------
<TABLE>
<CAPTION>

                                                Three Months Ended                Six Months Ended
                                        --------------------------------    ------------------------------
                                        June 30, 1999      June 30, 1998    June 30, 1999    June 30, 1998
                                        -------------      -------------    -------------    -------------
<S>                                     <C>                <C>              <C>              <C>
Revenues:
 Rental income                            $143,856           $144,440         $287,712         $277,018
                                          --------           --------         --------         --------

Expenses:
 Depreciation                               67,879             59,346          136,825          113,891
 Management & leasing expenses              21,115             22,568           47,996           50,689
 Other operating expenses                  (27,771)            13,584          (10,419)          29,065
                                          --------           --------         --------         --------
                                            61,223             95,498          174,402          193,645
                                          --------           --------         --------         --------

Net income                                $ 82,633           $ 48,942         $113,310         $ 83,373
                                          ========           ========         ========         ========

Occupied %                                     100%               100%             100%             100%

Partnership's Ownership % in the
 Fund VII-VIII Joint Venture                  36.6%              36.6%            36.6%            36.6%

Cash distribution to Partnership          $ 55,954           $ 41,400         $ 91,541         $ 73,230

Net income allocated to the
 Partnership                              $ 30,285           $ 18,061         $ 41,528         $ 31,068
</TABLE>

Expenses of the property decreased for the six months ended June 30, 1999 as
compared to the same period for 1998, due to common area maintenance billings to
tenants that were overestimated in 1998. Tenants are billed an estimated amount
for the current year common area maintenance which is then reconciled the second
quarter of the following year and the difference billed to the tenant.

                                       16
<PAGE>

BellSouth Building/Fund VI - Fund VII - Fund VIII Joint Venture
---------------------------------------------------------------

<TABLE>
<CAPTION>
                                              Three Months Ended                 Six Months Ended
                                      -------------------------------      ------------------------------
                                      June 30, 1999     June 30, 1998      June 30, 1999    June 30, 1998
                                      -------------     -------------      -------------    -------------
<S>                                   <C>               <C>                <C>              <C>
Revenues:
 Rental income                          $380,277          $380,277           $760,554        $760,554
 Interest income                           1,160             2,098              2,302           4,172
                                        --------          --------           --------        --------
                                         381,437           382,375            762,856         764,726
                                        --------          --------           --------        --------

Expenses:
 Depreciation                            111,606           110,953            223,212         221,842
 Management & leasing expenses            49,041            47,381             96,933          95,196
 Other operating expenses                106,051           102,655            209,835         190,065
                                        --------          --------           --------        --------
                                         266,698           260,989            529,980         507,103
                                        --------          --------           --------        --------

Net income                              $114,739          $121,386           $232,876        $257,623
                                        ========          ========           ========        ========

Occupied %                                   100%              100%               100%            100%

Partnership's Ownership % in the
 Fund VI-VII-VIII Joint Venture             33.4%             33.4%              33.4%           33.4%

Cash distribution to Partnership        $ 78,374          $ 80,376           $157,883        $165,690

Net income allocated to the
 Partnership                            $ 38,317          $ 40,536           $ 77,769        $ 86,033
</TABLE>

Net income has decreased slightly due primarily to increased expenditures in
electricity, HVAC repairs, lightning replacement and various other operating
expenses.

                                       17
<PAGE>

Tanglewood Commons/Fund VI,VII,VIII Joint Venture
-------------------------------------------------

<TABLE>
<CAPTION>
                                            Three Months Ended                Six Months Ended
                                      ------------------------------    -----------------------------
                                      June 30, 1999    June 30, 1998    June 30, 1999   June 30, 1998
                                      ------------     -------------    -------------   -------------
<S>                                   <C>              <C>               <C>             <C>
Revenues:
 Rental income                             $193,288       $182,139           $386,319        $364,752
 Interest income                              2,353          4,587              5,289           9,725
                                           --------       --------           --------        --------
                                            195,641        186,726            391,608         374,477
                                           --------       --------           --------        --------

Expenses:
 Depreciation                                64,677         61,059            126,102         121,486
 Management & leasing expenses               17,537         15,032             32,642          29,851
 Other operating expenses                    10,367        (19,872)            29,448           5,230
                                           --------       --------           --------        --------
                                             92,581         56,219            188,192         156,567
                                           --------       --------           --------        --------

Net income                                 $103,060       $130,507           $203,416        $217,910
                                           ========       ========           ========        ========

Occupied %                                       91%            87%                91%             87%

Partnership's Ownership % in the
 Fund VI - VII -- Fund VIII Joint
  Venture                                      33.4%          33.4%              33.4%           33.4%


Cash distribution to Partnership           $ 56,418       $ 63,926           $110,742        $112,807

Net income allocated to the
 Partnership                               $ 34,417       $ 43,583           $ 67,931        $ 72,771
</TABLE>

Rental income, depreciation expenses and management and leasing expenses have
increases in 1999 as compared to 1998, due to the increased occupancy at the
center.  Other operating expenses increased in 1999 over 1998 due primarily to a
timing difference in billing tenants for common area maintenance expenses.
Tenants are billed an estimated amount for the current year common area
maintenance which is then reconciled the second quarter of the following year
and the difference billed to the tenant.

                                       18
<PAGE>

Cherokee Property - Fund I, II, II-OW, VI, VII Joint Venture
------------------------------------------------------------

<TABLE>
<CAPTION>
                                             Three Months Ended                  Six Months Ended
                                      ------------------------------       -----------------------------
                                      June 30, 1999    June 30, 1998       June 30, 1999   June 30, 1998
                                      -------------    -------------       -------------   -------------
<S>                                   <C>              <C>                 <C>             <C>
Revenues:
 Rental income                          $237,232          $225,705           $464,615        $454,682
 Interest income                              19                19                 39              41
                                        --------          --------           --------        --------
                                         237,251           225,724            464,654         454,723
                                        --------          --------           --------        --------
Expenses:
 Depreciation                            111,415           110,564            221,527         221,127
 Management & leasing expenses            26,135            18,737             51,129          44,488
 Other operating expenses                  9,772             1,919            (19,643)          5,050
                                        --------          --------           --------        --------
                                         147,322           131,220            253,013         270,665
                                        --------          --------           --------        --------

Net income                              $ 89,929          $ 94,504           $211,641        $184,058
                                        ========          ========           ========        ========

Occupied %                                  95.9%             91.0%              95.9%           91.0%

Partnership Ownership %                     10.7%             10.7%              10.7%           10.7%

Cash distributed to the Partnership     $ 20,320          $ 22,720           $ 44,680        $ 42,876

Net income allocated to the
 Partnership                            $  9,630          $ 10,120           $ 22,663        $ 19,709
</TABLE>

Rental income increased in 1999 over 1998 due to increased occupancy.  The
decrease in operating expense for the six month period ended June 30, 1999, as
compared to the same period in 1998 was due to common area maintenance
reimbursement billings. Tenants are billed an estimated amount for the current
year common area maintenance which is then reconciled the second quarter of the
following year and the difference billed to the tenant.  The increase in
operating expenses for the three month period ended June 30, 1998 was due to
increased expenditures for tenant improvements, HVAC repairs and a partial
demolition of a tenant suite.

                                       19

<PAGE>

                          PART  II - OTHER INFORMATION
                          ----------------------------

Item 6(b).  No reports on Form 8-K were filed during the second quarter of 1999.

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,  the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

                                         WELLS REAL ESTATE FUND VII, L.P.
                                         (Registrant)
Dated:  August 10, 1999                  By: /s/Leo F. Wells, III
                                             -------------------------------
                                         Leo F. Wells, III, as Individual
                                         General Partner and as President,
                                         Sole Director and Chief Financial
                                         Officer of Wells Capital, Inc., the
                                         General Partner of Wells Partners, L.P.

                                       20