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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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(Mark One)



| | x |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| | - |  | ---------------------------------------------------------------------------------------



For the quarterly period ended September 30, 2004 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



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WELLS REAL ESTATE FUND VII, L.P.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-2022629                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|6200 The Corners Pkwy.,Norcross, Georgia                       |  | 30092-3365                             
|(Address of principal executive offices)                       |  | (Zip Code)                             
|                                                               | 
|Registrants telephone number, including area code             |  | (770) 449-7800                         



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(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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



Yes ̈No  x



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS



Certain statements contained in this Form 10-Q of Wells Real Estate Fund VII, L.P. (the
Partnership) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, in
particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated.
Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as may, will,
expect, intend, anticipate, estimate, believe, continue, or other similar words. Specifically, among others, we consider statements concerning projections of future operating
results and cash flows, our ability to meet future obligations, and the amount and timing of future distributions to limited partners to be forward-looking statements.



Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that this report is
filed with the Securities and Exchange Commission. Neither the Partnership nor the general partners make any representations or warranties (expressed or implied) about the accuracy of any such forward-looking statements. Actual results could differ
materially from any forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



Any such forward-looking statements are subject to known and unknown risks, uncertainties and
other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that
our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations; provide distributions to limited partners; and maintain the value of our real
estate properties, may be significantly hindered. Some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in certain forward-looking statements follow:



General economic risks



| |  |  | Adverse changes in general or local economic conditions; and
| | - |  | ------------------------------------------------------------



| |  |  | Adverse economic conditions affecting the particular industry of one or more tenants in properties owned by our joint ventures.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



Real estate risks inherent in properties owned through joint ventures



| |  |  | Ability to achieve appropriate occupancy levels resulting in sufficient rental amounts;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | Supply of or demand for similar or competing rentable space, which may adversely impact retaining or obtaining new tenants upon lease expiration at acceptable rental amounts;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tenant ability or willingness to satisfy obligations relating to our existing lease agreements;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow or net sale proceeds;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Increases in property operating expenses, including property taxes, insurance, and other costs not recoverable from tenants;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | Ability to secure adequate insurance at reasonable and appropriate rates to avoid uninsured losses or losses in excess of insured amounts;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Discovery of previously undetected environmentally hazardous or other undetected adverse conditions;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Unexpected costs of capital expenditures related to tenant build-out projects or other unforeseen capital expenditures; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | Ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any and all closing conditions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



Other operational risks



| |  |  | Dependency on Wells Capital, Inc. (Wells Capital), the corporate general partner of one of our General Partners, its key personnel, and its affiliates for various
administrative services;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Wells Capitals ability to attract and retain high-quality personnel who can provide acceptable service levels to us and generate economies of scale for us over time;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increases in our administrative operating expenses, including increased expenses associated with operating as a public company in the current regulatory environment;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in governmental, tax, real estate, environmental, and zoning laws and regulations and the related costs of compliance;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ability to demonstrate compliance with any governmental, tax, real estate, environmental, and zoning law or regulation in the event that any such position is questioned by the
respective authority; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Actions of our joint venture partners including potential bankruptcy, business interests differing from ours, or other actions that may adversely impact the operations of joint
ventures.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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WELLS REAL ESTATE FUND VII, L.P.



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                               |  |         
|-------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                               |  | Page No.
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                              
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                          |  |         
|         |  |                       | 
|         |  |                       |  | Balance SheetsSeptember 30, 2004 (unaudited) and December 31, 2003                                                           |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Operations for the Three and Nine Months Ended September 30, 2004 (unaudited) and 2003 (unaudited)              |  | 6       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Year Ended December 31, 2003 and the Nine Months Ended September 30, 2004 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Nine Months Ended September 30, 2004 (unaudited) and 2003 (unaudited)                        |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                           |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 14      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                   |  | 22      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                       |  | 22      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  | 23                                                                                                                           



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WELLS REAL ESTATE FUND VII, L.P.



BALANCE SHEETS



ASSETS



|                                                                                                                     |  |                                |            |                   |   |           
|-------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | ----------------- | - | ----------
|                                                                                                                     |  | (unaudited) September 30, 2004 |            | December 31, 2003
|Investments in joint ventures                                                                                        |  | $                              | 7,714,457  |                   | $ | 13,397,571
|Cash and cash equivalents                                                                                            |  |                                | 8,138,493  |                   |   | 1,078,108 
|Due from joint ventures                                                                                              |  |                                | 386,415    |                   |   | 407,105   
|                                                                                                                     |  |                                |            |                   |   |           
|Total assets                                                                                                         |  | $                              | 16,239,365 |                   | $ | 14,882,784
|                                                                                                                     |  |                                |            |                   |   |           
|                                                                                                                    
|LIABILITIES AND PARTNERS CAPITAL                                                                                   
|Liabilities:                                                                                                         |  |                                |            |                   |   |           
|Accounts payable and accrued expenses                                                                                |  | $                              | 24,595     |                   | $ | 13,623    
|Partnership distributions payable                                                                                    |  |                                | 157,337    |                   |   | 368,497   
|                                                                                                                     |  |                                |            |                   |   |           
|Total liabilities                                                                                                    |  |                                | 181,932    |                   |   | 382,120   
|                                                                                                                     |  |                               
|Partners capital:                                                                                                   |  |                                |            |                   |   |           
|Limited partners:                                                                                                    |  |                                |            |                   |   |           
|Class A2,124,147 units and 2,105,697 units outstanding as of September 30, 2004 and December 31, 2003, respectively |  |                                | 14,568,251 |                   |   | 14,500,664
|Class B293,870 units and 312,320 units outstanding as of September 30, 2004 and December 31, 2003, respectively     |  |                                | 1,489,182  |                   |   | 0         
|General partners                                                                                                     |  |                                | 0          |                   |   | 0         
|                                                                                                                     |  |                                |            |                   |   |           
|Total partners capital                                                                                              |  |                                | 16,057,433 |                   |   | 14,500,664
|                                                                                                                     |  |                                |            |                   |   |           
|Total liabilities and partners capital                                                                              |  | $                              | 16,239,365 |                   | $ | 14,882,784
|                                                                                                                     |  |                                |            |                   |   |           



See accompanying notes.



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WELLS REAL ESTATE FUND VII, L.P.



STATEMENTS OF OPERATIONS



(unaudited)



|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|------------------------------------------------------------------------------------- |  | -------------------------------- | --------- | ------------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                                                      |  | Three Months Ended September 30, |           | Nine Months Ended September 30,
|                                                                                      |  | 2004                             |           | 2003                            |   | 2004      |  | 2003
|EQUITY IN INCOME OF JOINT VENTURES (Note 2)                                           |  | $                                | 1,105,248 |                                 | $ | 330,415   |  | $    | 2,888,396 |  | $ | 845,688  
|                                                                                      |  |                                  |           |                                
|EXPENSES:                                                                             |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|Partnership administration                                                            |  |                                  | 35,696    |                                 |   | 22,260    |  |      | 109,281   |  |   | 64,662   
|Legal and accounting                                                                  |  |                                  | 13,155    |                                 |   | 278       |  |      | 29,353    |  |   | 9,077    
|Other general and administrative                                                      |  |                                  | 763       |                                 |   | 3,068     |  |      | 1,954     |  |   | 6,751    
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|Total expenses                                                                        |  |                                  | 49,614    |                                 |   | 25,606    |  |      | 140,588   |  |   | 80,490   
|                                                                                      |  |                                  |           |                                
|OTHER INCOME                                                                          |  |                                  | 11,573    |                                 |   | 3,106     |  |      | 14,340    |  |   | 7,526    
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|NET INCOME                                                                            |  | $                                | 1,067,207 |                                 | $ | 307,915   |  | $    | 2,762,148 |  | $ | 772,724  
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS                                      |  | $                                | 208,541   |                                 | $ | 307,915   |  | $    | 778,554   |  | $ | 772,724  
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|NET INCOME ALLOCATED TO CLASS B LIMITED PARTNERS                                      |  | $                                | 858,666   |                                 | $ | 0         |  | $    | 1,983,594 |  | $ | 0        
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|NET INCOME PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT:                                 |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS A                                                                               |  | $                                | 0.10      |                                 | $ | 0.15      |  | $    | 0.37      |  | $ | 0.37     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS B                                                                               |  | $                                | 2.92      |                                 | $ | 0.00      |  | $    | 6.59      |  | $ | 0.00     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|DISTRIBUTION OF OPERATING CASH PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT:             |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS A                                                                               |  | $                                | 0.07      |                                 | $ | 0.18      |  | $    | 0.22      |  | $ | 0.53     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS B                                                                               |  | $                                | 0.00      |                                 | $ | 0.00      |  | $    | 0.00      |  | $ | 0.00     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|DISTRIBUTION OF NET PROPERTY SALE PROCEEDS PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT: |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS A                                                                               |  | $                                | 0.00      |                                 | $ | 0.00      |  | $    | 0.12      |  | $ | 0.00     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS B                                                                               |  | $                                | 0.00      |                                 | $ | 0.00      |  | $    | 1.57      |  | $ | 0.00     
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:                                   |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS A                                                                               |  |                                  | 2,124,147 |                                 |   | 2,106,197 |  |      | 2,116,880 |  |   | 2,101,230
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          
|CLASS B                                                                               |  |                                  | 293,870   |                                 |   | 311,820   |  |      | 301,137   |  |   | 316,787  
|                                                                                      |  |                                  |           |                                 |   |           |  |      |           |  |   |          



See accompanying notes.



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WELLS REAL ESTATE FUND VII, L.P.



STATEMENTS OF PARTNERS CAPITAL



FOR THE
YEAR ENDED DECEMBER 31, 2003

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2004 (unaudited)



|                                                  |  |                  |  |         |            |   |                         |                  |   |         |   |           |   |  |   |   |  |   |            |  
|------------------------------------------------- |  | ---------------- |  | ------- | ---------- | - | ----------------------- | ---------------- | - | ------- | - | --------- | - |  | - | - |  | - | ---------- | -
|                                                  |  | Limited Partners |  |         |            |   | Total Partners Capital |                 
|                                                  |  | Class A          |  |         | Class B    |   |                         | General Partners |  
|                                                  |  | Units            |  | Amounts |            |   | Units                   |                  |   | Amounts |   |           |  
|BALANCE, December 31, 2002                        |  | 2,092,547        |  | $       | 14,932,843 |   |                         | 325,470          |   |         | $ | 0         |   |  | $ | 0 |  | $ | 14,932,843 |  
|                                                  |  |                  |  |         |            |  
|Net income                                        |  | 0                |  |         | 1,039,461  |   |                         | 0                |   |         |   | 0         |   |  |   | 0 |  |   | 1,039,461  |  
|Distributions of operating cash flow              |  | 0                |  |         | (1,471,640 | ) |                         | 0                |   |         |   | 0         |   |  |   | 0 |  |   | (1,471,640 | )
|Class B conversion elections                      |  | 13,150           |  |         | 0          |   |                         | (13,150          | ) |         |   | 0         |   |  |   | 0 |  |   | 0          |  
|                                                  |  |                  |  |         |            |   |                         |                  |   |         |   |           |   |  |   |   |  |   |            |  
|BALANCE, December 31, 2003                        |  | 2,105,697        |  |         | 14,500,664 |   |                         | 312,320          |   |         |   | 0         |   |  |   | 0 |  |   | 14,500,664 |  
|                                                  |  |                  |  |         |            |  
|Net income                                        |  | 0                |  |         | 778,554    |   |                         | 0                |   |         |   | 1,983,594 |   |  |   | 0 |  |   | 2,762,148  |  
|Partnership distributions of operating cash flows |  | 0                |  |         | (470,378   | ) |                         | 0                |   |         |   | 0         |   |  |   | 0 |  |   | (470,378   | )
|Distributions of net sale proceeds                |  | 0                |  |         | (263,117   | ) |                         | 0                |   |         |   | (471,884  | ) |  |   | 0 |  |   | (735,001   | )
|Class B conversion elections                      |  | 18,450           |  |         | 22,528     |   |                         | (18,450          | ) |         |   | (22,528   | ) |  |   | 0 |  |   | 0          |  
|                                                  |  |                  |  |         |            |   |                         |                  |   |         |   |           |   |  |   |   |  |   |            |  
|BALANCE, September 30, 2004                       |  | 2,124,147        |  | $       | 14,568,251 |   |                         | 293,870          |   |         | $ | 1,489,182 |   |  | $ | 0 |  | $ | 16,057,433 |  
|                                                  |  |                  |  |         |            |   |                         |                  |   |         |   |           |   |  |   |   |  |   |            |  



See accompanying notes.



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WELLS REAL ESTATE FUND VII, L.P.



STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                  |  |                                 |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | Nine Months Ended September 30, |           
|                                                                                  |  | 2004                            |            |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                                 |            |   |      |   |            |  
|Net income                                                                        |  | $                               | 2,762,148  |   |      | $ | 772,724    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |            |   |      |   |            |  
|Equity in income of joint ventures                                                |  |                                 | (2,888,396 | ) |      |   | (845,688   | )
|Operating distributions received from joint ventures                              |  |                                 | 953,050    |   |      |   | 1,366,654  |  
|Changes in operating assets and liabilities:                                      |  |                                 |            |   |      |   |            |  
|Accounts payable and accrued expenses                                             |  |                                 | 10,972     |   |      |   | (1,931     | )
|                                                                                  |  |                                 |            |   |      |   |            |  
|Total adjustments                                                                 |  |                                 | (1,924,374 | ) |      |   | 519,035    |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                                 | 837,774    |   |      |   | 1,291,759  |  
|                                                                                  |  |                                
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                                 |            |   |      |   |            |  
|Investments in joint ventures                                                     |  |                                 | (332,571   | ) |      |   | 0          |  
|Net sale proceeds received from joint ventures                                    |  |                                 | 7,971,721  |   |      |   | 0          |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash provided by investing activities                                         |  |                                 | 7,639,150  |   |      |   | 0          |  
|                                                                                  |  |                                
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                                 |            |   |      |   |            |  
|Net sale proceeds distributions paid to limited partners                          |  |                                 | (735,001   | ) |      |   | 0          |  
|Operating distributions paid to limited partners                                  |  |                                 | (681,538   | ) |      |   | (1,126,916 | )
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash used in financing activities                                             |  |                                 | (1,416,539 | ) |      |   | (1,126,916 | )
|                                                                                  |  |                                
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                         |  |                                 | 7,060,385  |   |      |   | 164,843    |  
|                                                                                  |  |                                
|CASH AND CASH EQUIVALENTS, beginning of period                                    |  |                                 | 1,078,108  |   |      |   | 993,780    |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, end of period                                          |  | $                               | 8,138,493  |   |      | $ | 1,158,623  |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:           |  |                                 |            |   |      |   |            |  
|Partnership distributions payable                                                 |  | $                               | 157,337    |   |      | $ | 368,584    |  
|                                                                                  |  |                                 |            |   |      |   |            |  



See accompanying notes.



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WELLS REAL ESTATE FUND VII, L.P.



CONDENSED NOTES TO FINANCIAL STATEMENTS



SEPTEMBER 30, 2004 (unaudited)



|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- |  | ------------------------------------------



|(a) |  | Organization and Business
|--- |  | -------------------------



Wells Real Estate Fund VII, L.P. (the Partnership) is a public limited partnership organized on December 1, 1992 under the laws of the state of Georgia. The
general partners are Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), (collectively, the General Partners). Upon subscription for units, the limited partners elect to have their units treated as either Class A
Units or Class B Units. Limited partners have the right to change their prior elections to have some or all of their units treated as Class A or Class B Units one time during each quarterly accounting period. Limited partners may vote to, among
other things, (a) amend the partnership agreement, subject to certain limitations; (b) change the business purpose or investment objectives of the Partnership; and (c) remove a General Partner. A majority vote on any of the above-described matters
will bind the Partnership without the concurrence of the General Partners. Each limited partnership unit has equal voting rights, regardless of class.



On April 6, 1994, the Partnership commenced an offering of up to $25,000,000 of Class A or Class B limited partnership units pursuant to a Registration Statement filed on
Form S-11 under the Securities Act of 1933. The Partnership terminated its offering on January 5, 1995 upon receiving gross proceeds of $24,180,174 representing subscriptions for approximately 1,678,810 Class A Units and 739,207 Class B Units.



The Partnership owns indirect interests in all of its real estate assets
through joint ventures with other entities affiliated with the General Partners. During the periods presented, the Partnership owned interests in the following joint ventures (the Joint Ventures):



|                                                                           |  |                                                                                                                                         |  |                                                                                                                                                                                            
|-------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                              |  | Joint Venture Partners                                                                                                                  |  | Properties                                                                                                                                                                                 
|Fund II, III, VI, and VII Associates (Fund II-III-VI-VII Associates)     |  |   Fund II and Fund III Associates (Fund II-III Associates)(1)   Wells Real Estate Fund VI, L.P.   Wells Real Estate Fund VII,
L.P. |  | 1. Holcomb Bridge Property(2) An Office/retail center located in Roswell, Georgia                                                                                                          
|Fund V, Fund VI, and Fund VII
Associates (Fund V-VI-VII Associates)      |  |   Wells Real Estate
Fund V, L.P.   Wells Real Estate Fund VI, L.P.   Wells Real Estate Fund VII, L.P.                                |  | 2. Marathon Building A three-story office building located in Appleton, Wisconsin                                                                                                          
|Fund VI and Fund VII Associates (Fund VI-Fund VII Associates)            |  |   Wells Real Estate Fund VI, L.P.   Wells Real Estate Fund VII, L.P.                                                                  |  | 3. Stockbridge Village III(3) Two retail buildings located in
Stockbridge, Georgia 4. Stockbridge Village I Expansion(3) A retail shopping center expansion located in Stockbridge,
Georgia
|Fund VI, Fund VII and Fund VIII Associates (Fund VI-VII-VIII Associates) |  |   Wells Real Estate Fund VI, L.P.   Wells Real Estate Fund VII, L.P.   Wells Real Estate Fund VIII, L.P.                             |  | 5. BellSouth Building A four-story office building located in Jacksonville, Florida 6. Tanglewood Commons A retail center in Clemmons, North Carolina                                      



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|                                                               |  |                                                                            |  |                                                                                                                                               
|-------------------------------------------------------------- |  | -------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                  |  | Joint Venture Partners                                                     |  | Properties                                                                                                                                    
|Fund VII and Fund VIII Associates (Fund VIIVIII Associates) |  |    Wells Real Estate Fund VII, L.P.
   Wells Real Estate Fund VIII, L.P. |  | 7. Hannover Center(2) A retail center located in Stockbridge, Georgia 8. CH2M Hill Property An office building located in
Gainesville, Florida



|(1) |  | Fund II-III Associates is a joint venture between Fund II and Fund II-OW
(Fund II-IIOW) and Wells Real Estate Fund III, L.P.; Fund II-IIOW is a joint venture between Wells Real Estate Fund II and Wells Real Estate Fund II-OW.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | This property was sold in July 2004.
|--- |  | ------------------------------------

|(3) |  | These properties were sold in April 2004.
|--- |  | -----------------------------------------



Each of the aforementioned properties was acquired on an all-cash basis. Approval by the
Partnership as well as the other Joint Venture partners is required for any major decision or any action that would materially affect the Joint Ventures, or their real property investments. For further information regarding the Joint Ventures and
foregoing properties, refer to the Partnerships Form 10-K for the year ended December 31, 2003.



On April 29, 2004, four Wells-affiliated Joint Ventures, including Fund VI-VII Associates and Fund VII-VIII Associates, sold five real properties, including Stockbridge Village I Expansion, Stockbridge Village III,
and Hannover Center, to an unrelated third party for a gross sale price of $23,750,000. As a result of the sale of Stockbridge Village I Expansion, net proceeds of approximately $2,300,000, and a gain of approximately $944,000 were allocated to the
Partnership. As a result of the sale of Stockbridge Village III, net proceeds of approximately $1,600,000 and a gain of approximately $237,000 were allocated to the Partnership. As a result of the sale of the Hannover Center, net proceeds of
approximately $624,000, and a gain of approximately $168,000 were allocated to the Partnership.



On July 1, 2004, two Wells-affiliated Joint Ventures, including Fund II-III-VI-VII Associates, sold two real properties, including the Holcomb Bridge Property, to an unrelated third party for a gross sale price of
$9,500,000. As a result of the sale of the Holcomb Bridge Property, the Partnership received net sale proceeds of approximately $3,474,000, recognized an immediate gain of approximately $938,000, and recorded a deferred gain of approximately
$81,000. The deferred gain represents the Partnerships pro-rata allocation of maximum exposure under an eighteen-month rental guarantee provided to the purchaser in connection with the sale. As of September 30, 2004, the Partnership recognized
approximately $4,000 of the deferred gain. Gain on the sale of the Holcomb Bridge Property may be adjusted as additional information becomes available in subsequent periods.



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



The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including the
instructions to Form 10-Q and Article 10 of Regulation S-X, in accordance with such rules and regulations, and do not include all of the information and footnotes required by accounting principles generally accepted in the United States
(GAAP) for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly
present the results for these periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and footnotes included in the Partnerships Form 10-K for the
year ended December 31, 2003.



|(c) |  | Allocations of Net Income, Net Loss, and Gain on Sale
|--- |  | -----------------------------------------------------



For the purpose of determining allocations per the partnership agreement, net income is defined as Net Income recognized by the Partnership, excluding deductions for
depreciation, amortization, and cost recovery and the gain on the sale of assets. Net Income, as defined, of the Partnership is generally allocated each year in the same



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proportions that net cash from operations is distributed to the limited partners holding Class A Units and the General Partners. To the extent the
Partnerships Net Income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners and 1% to the General Partners.



Net loss, depreciation, and amortization deductions for each fiscal year are allocated as follows: (a) 99% to the limited partners holding Class B Units and 1% to the
General Partners until their capital accounts are reduced to zero; (b) then to any partners having a positive balance in their respective capital accounts in an amount not to exceed such positive balance; and (c) thereafter to the General Partners.



Gain on the sale or exchange of the Partnerships properties will be
allocated generally in the same manner that the net proceeds from such sale are distributed to partners after the following allocations are made, if applicable: (a) allocations made pursuant to a qualified income offset provision in the partnership
agreement; (b) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero; (c) allocations to Class B limited partners in amounts equal to deductions for depreciation and amortization
previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property; and (d) allocations to Class A limited
partners and General Partners in amounts equal to the deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain on sale recognized by the
Partnership with respect to the sale of such property.



|(d) |  | Distribution of Net Cash from Operations
|--- |  | ----------------------------------------



Net cash from operations, if available, is generally distributed to limited partners quarterly. In accordance with the partnership agreement, such distributions are paid
first to the Class A limited partners until such limited partners have received a 10% per annum return on their respective adjusted capital contributions, as defined. Cash from operations is then paid to the General Partners until the General
Partners have received an amount equal to 10% of distributions. Any remaining cash from operations is split between the limited partners holding Class A Units and the General Partners on a basis of 90% and 10%, respectively. No cash distributions
will be made to the limited partners holding Class B Units.



|(e) |  | Distribution of Sales Proceeds
|--- |  | ------------------------------



Upon sales of properties, the net sale proceeds are distributed in the following order:



| |  |  | In the event that the particular property sold is sold for a price less than its original property purchase price, to the limited partners holding Class A Units until such limited
partners have received an amount equal to the excess of the original property purchase price over the price for which the property was sold, limited to the amount of depreciation, amortization, and cost recovery deductions taken by the limited
partners holding Class B Units with respect to such property;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners holding units, which at any time have been treated as Class B Units, until such limited partners have received an amount necessary to equal the net cash
available for distribution received by the Class A limited partners;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners, on a per-unit basis, until the limited partners have received 100% of their respective adjusted capital contributions, as defined;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners until the limited partners have received a cumulative 10% per annum return on their respective adjusted capital contributions, as defined;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | To limited partners on a per-unit basis until the limited partners have received an amount equal to their respective cumulative limited partner return (defined as the sum of a 10%
per annum cumulative return on net capital contributions for all periods during which the units were treated as Class A Units and a 15% per annum cumulative return on net capital contributions for all periods during which the units were treated as
Class B Units);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To the General Partners until they have received 100% of their respective capital contributions, as defined;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | To the General Partners until they have received 100% of their respective capital contributions; in the event that limited partners have received aggregate cash distributions from
the Partnership over the life of their investment in excess of a return of their net capital contributions plus their cumulative limited partner return, then the General Partners shall receive an additional sum equal to 25% of such excess; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Thereafter, 80% to the limited partners and 20% to the General Partners.
| | - |  | ------------------------------------------------------------------------



|(f) |  | Reclassifications
|--- |  | -----------------



Certain prior year amounts have been reclassified to conform with the current year financial statement presentation.



|2. |  | INVESTMENT IN JOINT VENTURES
|-- |  | ----------------------------



|(a) |  | Basis of Presentation
|--- |  | ---------------------



The Partnership owned interests in eight properties during the periods presented through its ownership in the Joint Ventures. The Partnership does not have control over
the operations of the Joint Ventures; however, it does exercise significant influence. Approval by the Partnership, as well as the other joint venture partners, is required for any major decision or any action that would materially affect the Joint
Ventures, or their real property investments. Accordingly, investments in the Joint Ventures are recorded using the equity method of accounting. For further information, refer to the financial statements and footnotes included in the
Partnerships Form 10-K for the year ended December 31, 2003.



|(b) |  | Summary of Operations
|--- |  | ---------------------



The following information summarizes the operations of the Joint Ventures for the three months and nine months ended September 30, 2004 and 2003, respectively:



|                              |  |                                 |           |                                         |   |                                    |  |                                 |         |   |      |   |         |  |      |           |  |      |         |  |   |           |     |  |   |        
|----------------------------- |  | ------------------------------- | --------- | --------------------------------------- | - | ---------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- |  | ---- | --------- |  | ---- | ------- |  | - | --------- | --- |  | - | -------
|                              |  | Total Revenues                  |           | Income (Loss) FromContinuing Operations |   | Income FromDiscontinued Operations |  | Net Income (Loss)              
|                              |  | Three Months EndedSeptember 30, |           | Three Months EndedSeptember 30,         |   | Three Months EndedSeptember 30,    |  | Three Months EndedSeptember 30,
|                              |  | 2004                            |           | 2003                                    |   | 2004                               |  |                                 | 2003    |   | 2004 |   | 2003    |  | 2004 |           |  | 2003
|Fund II-III-VI-VII Associates |  | $                               | 0         |                                         | $ | 0                                  |  | $                               | (18,376 | ) |      | $ | 0       |  | $    | 1,869,206 |  | $    | 66,670  |  | $ | 1,850,830 |     |  | $ | 66,670 
|Fund V-VI-VII Associates      |  |                                 | 206,427   |                                         |   | 242,699                            |  |                                 | 124,454 |   |      |   | 139,611 |  |      | 0         |  |      | 0       |  |   | 124,454   | (1) |  |   | 139,611
|Fund VI-VII Associates        |  |                                 | 0         |                                         |   | 0                                  |  |                                 | (17,713 | ) |      |   | 0       |  |      | 0         |  |      | 166,322 |  |   | (17,713   | )   |  |   | 166,322
|Fund VI-VII-VIII Associates   |  |                                 | 716,093   |                                         |   | 715,543                            |  |                                 | 313,468 |   |      |   | 294,844 |  |      | 0         |  |      | 0       |  |   | 313,468   | (1) |  |   | 294,844
|Fund VII-VIII Associates      |  |                                 | 251,205   |                                         |   | 251,084                            |  |                                 | 68,907  |   |      |   | 91,316  |  |      | 0         |  |      | 40,505  |  |   | 68,907    | (1) |  |   | 131,821
|                              |  |                                 |           |                                         |   |                                    |  |                                 |         |   |      |   |         |  |      |           |  |      |         |  |   |           |     |  |   |        
|                              |  | $                               | 1,173,725 |                                         | $ | 1,209,326                          |  | $                               | 470,740 |   |      | $ | 525,771 |  | $    | 1,869,206 |  | $    | 273,497 |  | $ | 2,339,946 |     |  | $ | 799,268
|                              |  |                                 |           |                                         |   |                                    |  |                                 |         |   |      |   |         |  |      |           |  |      |         |  |   |           |     |  |   |        



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|                              |  |                                |           |                                         |   |           |                                    |   |                                 |   |  |      |           |      |  |      |           |  |      |         |  |   |           |     |  |   |          
|----------------------------- |  | ------------------------------ | --------- | --------------------------------------- | - | --------- | ---------------------------------- | - | ------------------------------- | - |  | ---- | --------- | ---- |  | ---- | --------- |  | ---- | ------- |  | - | --------- | --- |  | - | ---------
|                              |  | Total Revenues                 |           | Income (Loss) FromContinuing Operations |   |           | Income FromDiscontinued Operations |   | Net Income                     
|                              |  | Nine Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,          |   |           | Nine Months EndedSeptember 30,     |   | Nine Months Ended September 30,
|                              |  | 2004                           |           | 2003                                    |   | 2004      |                                    |   | 2003                            |   |  | 2004 |           | 2003 |  | 2004 |           |  | 2003
|Fund II-III-VI-VII Associates |  | $                              | 0         |                                         | $ | 0         |                                    | $ | (26,534                         | ) |  | $    | 0         |      |  | $    | 2,085,086 |  | $    | 95,598  |  | $ | 2,058,552 |     |  | $ | 95,598   
|Fund V-VI-VII Associates      |  |                                | 619,285   |                                         |   | 728,436   |                                    |   | 280,177                         |   |  |      | 422,933   |      |  |      | 0         |  |      | 0       |  |   | 280,177   | (1) |  |   | 422,933  
|Fund VI-VII Associates        |  |                                | 0         |                                         |   | 0         |                                    |   | (91,033                         | ) |  |      | (8,479    | )    |  |      | 2,340,923 |  |      | 465,512 |  |   | 2,249,890 |     |  |   | 457,033  
|Fund VI-VII-VIII Associates   |  |                                | 2,161,898 |                                         |   | 2,158,494 |                                    |   | 763,816                         |   |  |      | 795,779   |      |  |      | 0         |  |      | 0       |  |   | 763,816   | (1) |  |   | 795,779  
|Fund VII-VIII Associates      |  |                                | 726,797   |                                         |   | 785,675   |                                    |   | 132,432                         |   |  |      | 177,149   |      |  |      | 513,353   |  |      | 104,126 |  |   | 645,785   | (1) |  |   | 281,275  
|                              |  |                                |           |                                         |   |           |                                    |   |                                 |   |  |      |           |      |  |      |           |  |      |         |  |   |           |     |  |   |          
|                              |  | $                              | 3,507,980 |                                         | $ | 3,672,605 |                                    | $ | 1,058,858                       |   |  | $    | 1,387,382 |      |  | $    | 4,939,362 |  | $    | 665,236 |  | $ | 5,998,220 |     |  | $ | 2,052,618
|                              |  |                                |           |                                         |   |           |                                    |   |                                 |   |  |      |           |      |  |      |           |  |      |         |  |   |           |     |  |   |          



|(1) |  | Effective July 1, 2004, the Joint Ventures extended the weighted-average composite
useful life for all building assets from 25 years to 40 years, which resulted in an increase to net income for the three and nine months ended September 30, 2004 of approximately $42,330, $43,765, and $17,639 for Fund V-VI-VII Associates, Fund
VI-VII-VIII Associates, and Fund VII-VIII Associates, respectively. Management believes that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry
practice.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



|(a) |  | Management and Leasing Fees
|--- |  | ---------------------------



Wells Management Company, Inc. (Wells Management), an affiliate of the General Partners, receives compensation for the management and leasing of the
Partnerships properties owned through the Joint Ventures equal to (a) of the gross revenues collected monthly, 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for
the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case
of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term. The Partnerships
share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures was $27,539 and $49,662 for the three months ended September 30, 2004 and 2003, respectively, and $111,845 and $147,405 for the nine months ended
September 30, 2004 and 2003, respectively.



|(b) |  | Administration Reimbursements
|--- |  | -----------------------------



Wells Capital, Inc. (Wells Capital), the corporate general partner of Wells Partners, one of our General Partners, and its affiliates perform certain
administrative services for the Partnership, such as accounting, property management, and other partnership administration, and incur the related expenses. Such expenses are allocated among various other entities affiliated with the General Partners
(the Wells Real Estate Funds) based on time spent on each fund by individual administrative personnel. In the opinion of management, this allocation is a reasonable estimation of such expenses. The Partnership reimbursed Wells Capital
$27,862 and $15,224 for the three months ended September 30, 2004 and 2003, respectively, and $79,764 and $42,377 for the nine months ended September 30, 2004 and 2003, respectively, for these services and expenses.



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|(c) |  | Conflicts of Interest
|--- |  | ---------------------



The General Partners are also general partners of other Wells Real Estate Funds. In addition, Wells Capital sponsors and advises two affiliated real estate investment
trusts (the REITs) in which it retains a residual interest. As such, there may exist conflicts of interest where the General Partners in their capacity as general partners of other Wells Real Estate Funds, or as the advisor to the REITs,
may be in competition with the Partnership for tenants in similar geographic markets.



|4. |  | SUBSEQUENT EVENT
|-- |  | ----------------



On October 26, 2004, Fund V-VI-VII Associates entered into a purchase and sale agreement (the Agreement) to sell the Marathon Building containing approximately 76,000 square feet located in Appleton,
Wisconsin for a gross sales price of $10,250,000, excluding closing costs, to an unaffiliated third party. The effective date of the Agreement is October 21, 2004. The Partnership holds an equity interest of approximately 41.71% in Fund V-VI-VII
Associates. The Marathon Building is 100% owned by Fund V-VI-VII Associates. The Partnership expects the closing of this transaction to occur during the fourth quarter of 2004. The completion of this transaction is currently subject to, among other
things, a due diligence period expiring on November 12, 2004. Accordingly, there are no assurances that this sale will be completed.



|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 and notes thereto.



|(a) |  | Overview
|--- |  | --------



We believe that we will operate through the following five key life cycle phases. The time expected to be spent in each phase is dependent upon various economic, industry, market, and other internal/external factors.
Some overlap naturally exists in the transition from one phase to the next.



| |  |  | Fundraising phase
| | - |  | -----------------

The period during which the
Partnership is raising capital through the sale and issuance of limited partner units to the public;



| |  |  | Investing phase
| | - |  | ---------------

The period during which the
Partnership invests the capital raised during the fundraising phase, less upfront fees, into the acquisition of real estate assets;



| |  |  | Holding phase
| | - |  | -------------

The period during which real
estate assets are owned and operated by the Partnership during the initial lease terms of the tenants;



| |  |  | Positioning-for-sale phase
| | - |  | --------------------------

The period during
which the leases in place at the time of acquisition expire and, thus, the Partnership expends time, effort, and funds to re-lease such space to existing and/or new tenants. Following the holding phase, the Partnership continues to own and operate
the real estate assets, evaluate various options for disposition, and market the real estate assets for sale; and



| |  |  | Disposition and Liquidation phase
| | - |  | ---------------------------------

The period
during which the Partnership sells its real estate investments and distributes net sale proceeds to the partners.



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Portfolio Overview



We have moved from the positioning-for-sale phase into the disposition and liquidation phase of our life cycle. We invested in the Joint
Ventures, which originally acquired eight properties, of which four properties and an outparcel of one property have been sold, including the recent sale of the three Stockbridge Village properties and the Holcomb Bridge Property. Our focus on the
remaining assets in the Joint Ventures involves re-leasing and marketing efforts that we believe will result in the best disposition pricing for our investors.



Through the recent sale of the three Stockbridge Village properties on April 29, 2004, and the Holcomb Bridge Property on July 1, 2004, we were able to capitalize on
the current strong investor demand for retail shopping centers in the market. We have secured 100% occupancy at the Marathon Building through two long-term leases. We distributed net sale proceeds of approximately $735,000 to limited partners in
January 2004, and intend to distribute approximately $4,213,000 of additional net proceeds from the sales of the Tanglewood Commons outparcel, and the Stockbridge Village properties to limited partners in the fourth quarter of 2004.



Operating distributions to Class A Unit holders for the third quarter 2004 were 3.0%
(annualized) of the limited partners net capital contributions, as defined, which is consistent with the return paid for the prior quarter. The distribution rate has remained low as a result of the free rent periods at the Marathon Building
and a decrease in revenues resulting from the sales of the Stockbridge Village properties and the Holcomb Bridge Property. Our General Partners anticipate that operating distributions may decline in the near term, given these factors and potential
capital expenditures for the CH2M Hill Building related to ongoing lease renewal negotiations. As we move into 2005, our General Partners will continue to evaluate the availability of additional net sale proceeds for distribution to the limited
partners.



Through September 30, 2004, Class A Unit holders have received
cumulative net operating cash flow distributions of approximately $15.3 million since inception, which equates to approximately 72% of the $21.2 million originally invested. Limited partners who have held Class B Units since inception have
cumulatively received $10.00 per unit in allocated tax losses through December 31, 2003. No operating distributions have been made to investors holding Class B Units or to our General Partners.



Property Summary



Information related to the properties owned by the Joint Ventures follows:



| |  |  | The Holcomb Bridge Property was sold on July 1, 2004, and approximately $3,474,000 in net sale proceeds was allocated to the Partnership. Our General Partners are reviewing
potential capital costs for the Partnership to determine if all, or a portion, of these proceeds can be distributed in 2005.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Marathon Building is 100% leased, with a new seven-year lease to Marathon for 44,000 square feet, and a 10-year lease to Virchow Krause for 27,000 square feet. Each of these
leases included a free rent period, which extends through July 2004 and December 2004, respectively. The Marathon Building is currently providing positive cash flow since the Marathon free rent period expired in August. With these new leases in
place, we are now marketing this asset for sale.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Stockbridge Village III, Stockbridge Village I Expansion, and Hannover Center properties were sold on April 29, 2004, and approximate net sale proceeds of $1,606,000,
$2,268,000, and $624,000, respectively, were allocated to the Partnership from these sales. Our General Partners have reviewed the capital costs anticipated for the Partnership and determined that approximately $4,164,000 of the total $4,498,000 of
net sale proceeds from these assets can be distributed, which is scheduled for the fourth quarter 2004. The remaining $334,000 will be reserved to fund capital costs at CH2M Hill Property.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The BellSouth Building in Jacksonville, Florida, is currently 100% leased. Leases for both tenants of the building expire in 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



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| |  |  | The Tanglewood Commons shopping center continues to be well occupied at 99%. Fund VI-VII-VIII Associates sold an outparcel at Tanglewood in 2002, resulting in an allocation of net
sale proceeds of approximately $175,000 to the Partnership. Approximately $126,000 of these proceeds has been used to fund our pro-rata share of operating expenses and re-leasing costs at the Marathon Building. The remaining $49,000 will be
distributed as part of the net sale proceeds distribution scheduled for the fourth quarter 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The CH2M Hill Property, located in Gainesville, Florida, is approximately 92% leased to a single tenant. This lease expires in November 2005, and we are currently negotiating with
the tenant to renew the lease.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Cherokee Commons property was sold in 2001 and approximately $886,000 of the net sale proceeds was allocated to the Partnership. Approximately $151,000 has been used to fund our
pro-rata share of operating expenses and re-leasing costs at the Marathon Building. The remaining net sale proceeds of approximately $735,000 were distributed to the limited partners in January 2004.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As we move further into the disposition and liquidation phase, we will continue to focus on
re-leasing vacant space and space that may become vacant upon the expiration of our current leases. In doing so, we seek to maximize returns to the limited partners by negotiating long-term leases at market rental rates while attempting to minimize
downtime, re-leasing expenditures, ongoing property level costs, and portfolio costs. As properties are positioned for sale, our attention will shift to locating suitable buyers, negotiating purchase and sale contracts that will attempt to maximize
the total return to the limited partners and minimize contingencies and our post-closing involvement with the buyer.



Industry Factors



Our results continue to be impacted by a number of factors influencing the real estate industry.



General Economic and Real Estate Market Commentary



The U.S. economy appears to be on the road to recovery. The economy has shown signs of growth recently, as companies have recommenced making
investments in new employees. Job growth is the most significant demand driver for office markets. Market fundamentals are improving, and new office jobs are slowly being created. In general, the real estate office market lags behind the overall
economic recovery and, therefore, recovery is not expected until late 2004 or 2005 at the earliest, and then will vary by market.



Overall, real estate market fundamentals are weak; however, capital continues to flow into this asset class. The increase in capital drives the prices of
many properties upward and investor returns downward. There is a significant pricing differential in the underwriting parameters of well-leased assets with credit tenants and those with either existing vacancies or substantial near-term tenant
rollover. Properties with long-term leases to strong credit tenants have seen an increase in value.



The office market has significant excess space. Vacancy levels are believed to have peaked and are expected to trend downward moderately through the end
of 2004. There is some encouraging news in that construction continues to taper off and has come to a complete halt in many markets. As a result of the slowdown in new construction and the modest decline in sublease space, net absorption has turned
positive. Many industry professionals believe that office market fundamentals have bottomed-out; however, a recovery cannot be expected until job growth and corresponding demand for office space begin to significantly increase.



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Wells Real Estate Funds with Current Vacancy or Near-term Rollover Exposure



Real estate funds, such as the Partnership, that invest in properties with
current vacancies or near-term tenant rollover may face a challenging leasing environment. In connection with re-leasing vacant space, the properties within these funds will encounter lower market rental rates and higher concession packages to
tenants.



From a valuation standpoint, it is generally
preferable to either renew an existing tenant lease or re-lease the property prior to marketing it for sale. Generally, buyers will heavily discount their offering price to compensate for the existing or pending vacancies.



|(b) |  | Results of Operations
|--- |  | ---------------------



Equity in Income of Joint Ventures



Equity in income of Joint Ventures was $1,105,248 and $330,415 for the three months ended September 30, 2004 and 2003, respectively, and $2,888,396 and $845,688 for the
nine months ended September 30, 2004 and 2003, respectively. The 2004 increases are primarily attributable to (i) the gains recognized on the sales of Stockbridge Village III, Stockbridge Village I Expansion, Hannover Center in the second quarter of
2004, and the Holcomb Bridge Property in the third quarter of 2004, (ii) decrease in depreciation expense for all buildings owned through the Joint Ventures due to changing the estimated weighted-average composite useful life from 25 years to 40
years effective July 1, 2004, (iii) bad debt reserves for tenants of the BellSouth Building, partially offset by (iv) lower income from the Marathon Building resulting from lower rental rates on the new leases which were effective January 2004, and
(v) foregone operating income due to the sales of the Stockbridge Village properties in the second quarter of 2004, and the Holcomb Bridge Property in the third quarter of 2004.



We expect future equity in income of Joint Ventures to decrease as we fund its pro-rata share of costs anticipated in connection with
leasing currently vacant space at the CH2M Hill Property.



Expenses of
the Partnership



Our total expenses were $49,614 and $25,606 for the
three months ended September 30, 2004 and 2003, respectively, and $140,588 and $80,490 for the nine months ended September 30, 2004 and 2003, respectively. The 2004 increases are primarily due to administrative salaries, accounting fees, and legal
fees associated with increased reporting and regulatory requirements. We anticipate additional increases related to implementing and adhering to such reporting and regulatory requirements going forward.



|(c) |  | Liquidity and Capital Resources
|--- |  | -------------------------------



Our operating strategy entails funding expenses related to the recurring operations of the properties owned by the Joint Ventures with the rental revenues collected, and
assessing the amount of remaining cash flows that will be required to fund portfolio expenses, known re-leasing costs and other capital improvements. Any residual operating cash flows are distributed from the Joint Ventures to the Partnership, and
are considered available for distribution to the limited partners. Distributions are generally paid to the limited partners quarterly. As a result, the ongoing monitoring of our cash position is critical to ensuring that adequate liquidity and
capital resources are available. Economic downturns in one or more of our core markets could adversely impact the ability of the Joint Ventures tenants to honor lease payments and our ability to assist the Joint Ventures in re-leasing space on
favorable terms as leases expire or space otherwise becomes vacant. In the event of either situation, cash flows and, consequently, our ability to provide funding for capital needs would be adversely affected.



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Short-Term Liquidity



During the nine months ended September 30, 2004, we generated net operating cash flows, including distributions received from the Joint
Ventures, of approximately $838,000, as compared to approximately $1,292,000 for the nine months ended September 30, 2003. Operating distributions from the Joint Ventures are generally representative of rental revenues and tenant reimbursements,
less property operating expenses, management fees, general administrative expenses, and capital expenditures. Such operating cash flows were used to pay operating distributions to limited partners and to fund our share of operating expenses at Fund
VI-VII Associates.



Operating distributions from the Joint Ventures have
in 2004 primarily as a result of (i) absorbing rent abatements for the Marathon Building through the end of 2004, and (ii) the sales of properties in the current and previous periods. Future operating distributions from the Joint Ventures and are
expected to continue to decline as we sell additional properties in subsequent periods. At this time, we expect to continue to generate cash flows from operations, including distributions from the Joint Ventures, sufficient to cover our estimated
future expenses but may use net sale proceeds to fund large capital expenditures as necessary. Future operating distributions paid to limited partners will be largely dependent upon the amount of cash generated from the Joint Ventures, our
expectations of future cash flows, and determination of near-term cash needs for tenant re-leasing costs and other capital improvements for properties owned by the Joint Ventures.



During the nine months ended September 30, 2004, approximately $7,972,000 of net proceeds was generated from the sales of Stockbridge
Village III, Stockbridge Village I Expansion, the Hannover Center, and the Holcomb Bridge Property. During the nine months ended September 30, 2004, we invested net property sale proceeds of approximately $333,000 into the Joint Ventures in order to
fund capital expenditures for the Marathon Building and portfolio expenses for Fund VI-VII Associates. Additionally, we distributed net sale proceeds of approximately $735,000 to limited partners in January 2004.



We believe that the cash on hand and distributions due from the Joint Ventures are sufficient
to cover our working capital needs, including liabilities of approximately $182,000 as of September 30, 2004. During the remainder of 2004, our General Partners anticipate that we will fund its proportionate share of capital expenditures for the
CH2M Hill Property.



Long-Term Liquidity



We expect that our future sources of capital will be primarily derived from operating cash
flows generated from the Joint Ventures, and net proceeds generated from the selective and strategic sale of properties. Our future long-term liquidity requirements will include, but not be limited to, tenant improvements, renovations, expansions,
and other significant capital improvements necessary for properties owned through the Joint Ventures. Specifically, we anticipate funding our proportionate share of the costs necessary to re-lease approximately 90% of the CH2M Hill Property upon the
November 2005 expiration of the CH2M Hill lease. We expect to continue to use substantially all future net cash flows from operations. Future cash flows from operating activities will be primarily effected by distributions received from the Joint
Ventures, which are dependent upon the net operating income generated by the Joint Ventures properties, less reserves for known capital expenditures.



Capital Resources



The Partnership is an investment vehicle formed for the purpose of acquiring, owning, and operating income-producing real properties or investing in joint ventures formed
for the same purpose, and has invested all of the partners original capital contributions. Thus, it is unlikely that we will acquire interests in any additional properties or joint ventures. Historically, our investment strategy has generally
involved acquiring properties that are pre-leased to creditworthy tenants on an all cash basis through joint ventures with affiliated partnerships.



The Joint Ventures incur capital expenditures primarily in the form of building improvements for the purpose of maintaining the quality of the properties, and tenant
improvements for the purpose of readying its properties for re-leasing. As leases expire, we will work with the Joint Ventures to attempt to re-lease space to an existing tenant or



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market the space to prospective new tenants. Generally, tenant improvements funded in connection with lease renewals require less capital than those funded
in connection with new leases. However, external conditions, such as the supply of and demand for comparable space available within a given market, drive capital costs as well as rental rates. Any capital or other expenditures not provided for by
the operations of the Joint Ventures will be funded by the Partnership and the respective Joint Venture partners on a pro-rata basis.



Operating cash flows, if available, are generally distributed from the Joint Ventures to the Partnership during the second month following each calendar quarter-end. Our
cash management policy typically includes first utilizing current period operating cash flow until depleted, at which point operating reserves are utilized to fund capital and other required expenditures. In the event that current and prior period
accumulated operating cash flows are insufficient to fund such costs, net property sale proceeds reserves would then be utilized.



As of September 30, 2004, we have received, used, and held net proceeds from the sale of properties as presented below:



|                                            |  |              |           |                                       |      |         |                                              |   |                                 |  |                                 |         |                                                    |                                         |  |   |         |  |   |          
|------------------------------------------- |  | ------------ | --------- | ------------------------------------- | ---- | ------- | -------------------------------------------- | - | ------------------------------- |  | ------------------------------- | ------- | -------------------------------------------------- | --------------------------------------- |  | - | ------- |  | - | ---------
|Property Sold                               |  | Net Proceeds |           | Partnerships Approximate Ownership % |      |         | Net Proceeds Attributable to the Partnership |   | CumulativeNet Proceeds Invested |  | Distributed to Partners to date |         | Undistributed NetProceeds as of September 30, 2004
|                                            |  |              |           | Amount                                |      | Purpose |                                              |  
|Cherokee Commons (sold 2001)                |  | $            | 8,414,089 |                                       | 10.9 | %       |                                              | $ | 886,212                         |  | $                               | 151,211 |                                                    | Re-leasing the MarathonBuilding (2004)  |  | $ | 735,001 |  | $ | 0        
|                                            |  |              |           |                                       |      |         |                                             
|Tanglewood Commons Outparcel (sold 2002)    |  |              | 524,398   |                                       | 33.4 | %       |                                              |   | 175,149                         |  |                                 | 126,160 |                                                    | Re-leasing the Marathon Building (2004) |  |   | 0       |  |   | 48,989   
|                                            |  |              |           |                                       |      |         |                                             
|Stockbridge Village III (sold 2004)         |  |              | 2,909,853 |                                       | 55.2 | %       |                                              |   | 1,606,248                       |  |                                 | 0       |                                                    |                                         |  |   | 0       |  |   | 1,606,248
|                                            |  |              |           |                                       |      |         |                                             
|Stockbridge Village I Expansion (sold 2004) |  |              | 4,108,277 |                                       | 55.2 | %       |                                              |   | 2,267,781                       |  |                                 | 0       |                                                    |                                         |  |   |         |  |   | 2,267,781
|                                            |  |              |           |                                       |      |         |                                             
|Hannover Center (sold 2004)                 |  |              | 1,703,431 |                                       | 36.6 | %       |                                              |   | 624,067                         |  |                                 | 0       |                                                    |                                         |  |   | 0       |  |   | 624,067  
|                                            |  |              |           |                                       |      |         |                                             
|Holcomb Bridge Property (sold 2004)         |  |              | 6,889,379 |                                       | 50.4 | %       |                                              |   | 3,473,625                       |  |                                 | 0       |                                                    |                                         |  |   | 0       |  |   | 3,473,625
|                                            |  |              |           |                                       |      |         |                                              |   |                                 |  |                                 |         |                                                    |                                         |  |   |         |  |   |          
|Total                                       |  |              |           |                                       |      |         |                                              | $ | 9,033,082                       |  | $                               | 277,371 |                                                    |                                         |  | $ | 735,001 |  | $ | 8,020,710
|                                            |  |              |           |                                       |      |         |                                              |   |                                 |  |                                 |         |                                                    |                                         |  |   |         |  |   |          



Upon evaluating the capital needs of
the properties in the Joint Ventures in which we currently hold an interest, our General Partners determined that reserves of net sale proceeds of approximately $3,808,000 will be required to fund the costs anticipated in connection with re-leasing
the CH2M Hill Property and any other capital expenditures that may arise. Our General Partners anticipate distributing residual net sale proceeds of approximately $4,213,000 in the fourth quarter of 2004 to the limited partners of record as of
September 30, 2004, which under the terms of the partnership agreement does not include limited partners acquiring their units after June 30, 2004. We will continue to evaluate the availability of net sale proceeds for distribution to the limited
partners based on our capital needs.



|(d) |  | Related-Party Transactions
|--- |  | --------------------------



We have entered into agreements with Wells Capital and its affiliates, whereby we pay certain fees or reimbursements to Wells Partners or its affiliates (e.g., property
management and leasing fees, administrative salary reimbursements, etc.). See Note 3 to our financial statements included in this report for a discussion of the various related-party transactions, agreements, and fees.



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|(e) |  | Inflation
|--- |  | ---------



The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. Most tenant leases include provisions designed to protect the lessor from the
impact of inflation and other increases in costs and operating expenses, including common area maintenance, real estate tax, and insurance reimbursements from tenants either on a per-square-foot basis, or above a certain allowance per-square-foot
annually. In addition, a number of our leases are for remaining terms of less than five years, which may allow the Partnership to enter into new leases at higher base rental rates in the event that market rental rates rise above the existing lease
rates. There is no assurance, however, that we would be able to replace existing leases with new leases at higher base rental rates.



|(f) |  | Application of Critical Accounting Policies
|--- |  | -------------------------------------------



Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in
the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements
and the reported amounts of revenue and expenses during the reporting periods. If managements judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different
accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of
companies in similar businesses.



Below is a discussion of the accounting
policies used by the Partnership and the Joint Ventures, which are considered to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.



Investment in Real Estate Assets



We will be required to make subjective assessments as to the useful lives of its depreciable
assets. We will consider the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. We expect that the estimated useful lives of the Joint Ventures assets by class
will be as follows:



|                      |  |            
|--------------------- |  | -----------
|Buildings             |  | 40 years   
|Building improvements |  | 10-25 years
|Land improvements     |  | 20 years   
|Tenant improvements   |  | Lease term 



Effective July 1, 2004, the Joint
Ventures extended the weighted average composite useful life for all building assets from 25 years to 40 years, which resulted in an increase to our net income for the three and nine months ended September 30, 2004. We believe that this change more
appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry practice. In the event that the Joint Ventures utilize inappropriate useful lives or methods of depreciation, our net income would be
misstated.



Valuation of Real Estate Assets



We continually monitor events and changes in circumstances that could indicate that the
carrying amounts of the real estate assets in which we have an ownership interest, either directly or through investments in the Joint Ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the
carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future
operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected



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undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair
value and recognizes an impairment loss. We have determined that there has been no impairment in the carrying value of real estate assets we held as of September 30, 2004.



Projections of expected future cash flows require management to estimate future market rental income amounts subsequent to the expiration of
current lease agreements, property operating expenses, discount rates, the number of months it takes to re-lease the property, and the number of years the property is held for investment. The use of inappropriate assumptions in the future cash flow
analysis would result in an incorrect assessment of the propertys future cash flows and fair value, and could result in the overstatement of the carrying value of real estate assets held by the Joint Ventures and net income of the Partnership.



|(g) |  | Subsequent Event
|--- |  | ----------------



On October 26, 2004, Fund V-VI-VII Associates entered into a purchase and sale agreement (the Agreement) to sell the Marathon Building containing approximately 76,000 square feet located in Appleton,
Wisconsin for a gross sales price of $10,250,000, excluding closing costs, to an unaffiliated third party. The effective date of the Agreement is October 21, 2004. We hold an equity interest of approximately 41.71% in Fund V-VI-VII Associates. The
Marathon Building is 100% owned by Fund V-VI-VII Associates. We expect the closing of this transaction to occur during the fourth quarter of 2004. The completion of this transaction is currently subject to, among other things, a due diligence period
expiring on November 12, 2004. Accordingly, there are no assurances that this sale will be completed.



|(h) |  | Economic Dependency
|--- |  | -------------------



We have engaged Wells Management to supervise the management and leasing of properties owned through the Joint Ventures, and Wells Capital to perform certain administrative services, including accounting, shareholder
communications, and investor relations. As a result of these relationships, we are dependent upon Wells Management, Wells Capital, and other affiliates thereof to provide certain services that are essential to the Partnerships operations,
including asset management and property management services, asset acquisition and disposition services, and other administrative responsibilities under agreements, some of which have terms of one year or less.



Wells Management and Wells Capital are owned and controlled by Wells Real Estate Funds, Inc.
(WREF). The operations of Wells Capital and Wells Management represent substantially all of the business of WREF. Due to their common ownership and importance to WREF, we focus on the financial condition of WREF when assessing the
financial condition of Wells Capital and Wells Management. In the event that WREF were to become unable to meet its obligations as they become due, it may become necessary for the Partnership and/or the Joint Ventures to find alternative service
providers.



For the nine months ended September 30, 2004, WREFs operating
expenses exceeded operating revenues by approximately $11 million. During the first two quarters of 2004, WREF incurred net losses primarily due to the fact that revenues from acquisition, advisory, asset management services and property management
services were less than the costs to provide such services. In planning for 2004, WREF anticipated incurring short-term losses and, accordingly, has reserved funds adequate to cover such a shortfall. WREF anticipated generating lower revenues in
2004, as compared to 2003, primarily due to the fact that the majority of its revenues are earned as a percentage of sales of affiliated investment products. The sale of shares of Wells Real Estate Investment Trust II, Inc. (REIT II), an
investment product sponsored by WREF whose offering commenced in December 2003, was anticipated to be significantly less in 2004 than the sale of shares of Wells Real Estate Investment Trust, Inc. (REIT I), another investment product
sponsored by WREF whose offering closed in December 2003. Consistent with sale of shares of REIT I during the beginning of its offering period, the sale of shares of REIT II was anticipated to remain relatively low in the beginning of its offering
period.



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For the three months ended September 30, 2004, on a consolidated basis, WREFs operating revenues exceeded operating
expenses by approximately $6 million. WREF is also expecting operating revenues to exceed operating expenses during the fourth quarter of 2004. WREF believes that the cash availability provided by both funds on hand and borrowing capacity through
various credit facilities will be adequate to meet its obligations.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|------- |  | -----------------------------------------------------------



Since the Partnership does not borrow any money, make any foreign investments, or invest in any market risk-sensitive instruments, it is not subject to risks relating to
interest rates, foreign current exchange rate fluctuations, or the other market risks contemplated by Item 305 of Regulation S-K.



|ITEM 4. |  | CONTROLS AND PROCEDURES
|------- |  | -----------------------



The Partnership carried out an evaluation, under the supervision and with the participation of management of Wells Capital, the corporate general partner of one of the
General Partners of the Partnership, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Partnerships disclosure controls and procedures as of the end of the period
covered by this report pursuant to the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Partnerships disclosure controls and procedures were
effective.



There were no significant changes in the Partnerships
internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.



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PART II.    OTHER INFORMATION



|ITEM 6. |  | EXHIBITS
|------- |  | --------



The Exhibits to this report are set forth on Exhibit Index to Third Quarter Form 10-Q attached hereto.



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)                    
|                  |  | 
|                  |  |  |  | By: WELLS PARTNERS, L.P.        
|                  |  |  |  | (General Partner)               
|                  |  | 
|                  |  |  |  | By: WELLS CAPITAL, INC.         
|                  |  |  |  | (Corporate General Partner)     
|                  |  | 
|November 12, 2004 |  |  |  | /s/    LEO F. WELLS,
III        
|                  |  |  |  | Leo F. Wells, III               
|                  |  |  |  | President                       
|                  |  | 
|November 12, 2004 |  |  |  | /s/    DOUGLAS P.
WILLIAMS      
|                  |  |  |  | Douglas P. Williams             
|                  |  |  |  | Principal Financial Officer     
|                  |  |  |  | of Wells Capital, Inc.          



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EXHIBIT INDEX

TO

THIRD QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND VII, L.P.



|            |  |                                                                                                                                                                                                                                                                                                  
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                      
|10.1        |  | Purchase and Sale Agreement for 880 Holcomb Bridge Road and Brookwood Grill (previously filed with the Commission as Exhibit 10.1 to the Form 10-Q of Wells Real Estate Fund II for the period
ending September 30, 2004, Commission File No. 0-16518, and hereby incorporated by this reference)
|            | 
|31.1        |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                           
|            | 
|31.2        |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                           
|            | 
|32.1        |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002