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UNITED STATES

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 June 30, 2007 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 0-30287



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WELLS REAL ESTATE FUND XII, L.P.

(Exact name of registrant as specified in
its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-2438242                             
|(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

N/A

(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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (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 XII, L.P. (the Partnership or the Registrant) 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, we consider, among others, statements concerning future operating results and cash flows, our ability to meet future
obligations, and the amount and timing of any 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 this
report is filed with the Securities and Exchange Commission. We make no representations or warranties (express or implied) about the accuracy of any such 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 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
partners, and maintain the value of our real estate properties, may be significantly hindered. See Item 1A. in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2006 for a discussion of some of the risks and
uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in our forward-looking statements.



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WELLS REAL ESTATE FUND XII, L.P.



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                     |  |         
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                     |  | Page No.
|         |  |                      
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                    
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                |  |         
|         |  |                       | 
|         |  |                       |  | Balance Sheets  June 30, 2007 (unaudited) and December 31, 2006                                                    |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Operations for the Three Months and Six Months Ended June 30, 2007 (unaudited) and 2006 (unaudited)   |  | 6       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Year Ended December 31, 2006 and Six Months Ended June 30, 2007 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Six Months Ended June 30, 2007 (unaudited) and 2006 (unaudited)                    |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                 |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                               |  | 16      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                                          |  | 22      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                             |  | 22      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                    
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                   |  | 23      
|         |  |                       | 
|         |  | Item 1A.              |  | Risk Factors                                                                                                        |  | 23      
|         |  |                       | 
|         |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                         |  | 23      
|         |  |                       | 
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                     |  | 23      
|         |  |                       | 
|         |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                 |  | 23      
|         |  |                       | 
|         |  | Item 5.               |  | Other Information                                                                                                   |  | 23      
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                            |  | 23      



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|PART I. | FINANCIAL INFORMATION
|------- | ---------------------



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

The information furnished in the
Partnerships accompanying balance sheets and consolidated statements of operations, partners capital, and cash flows reflects all adjustments that are, in managements opinion, necessary for a fair and consistent presentation of the
aforementioned financial statements.

The accompanying financial statements should be read in conjunction with the notes to the Partnerships
financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations included both in this report on Form 10-Q and in the Partnerships Annual Report on Form 10-K for the year ended
December 31, 2006. The Partnerships results of operations for the three months and six months ended June 30, 2007 are not necessarily indicative of the operating results expected for the full year.



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WELLS REAL ESTATE FUND XII, L.P.



BALANCE SHEETS

ASSETS



|                             |  |                           |            |                  |   |           
|---------------------------- |  | ------------------------- | ---------- | ---------------- | - | ----------
|                             |  | (Unaudited) June 30, 2007 |            | December 31,2006
|Investment in joint ventures |  | $                         | 16,560,109 |                  | $ | 17,507,984
|Cash and cash equivalents    |  |                           | 1,393,215  |                  |   | 144,645   
|Due from joint ventures      |  |                           | 426,335    |                  |   | 418,013   
|Other assets                 |  |                           | 10,210     |                  |   | 1,198     
|                             |  |                           |            |                  |   |           
|Total assets                 |  | $                         | 18,389,869 |                  | $ | 18,071,840
|                             |  |                           |            |                  |   |           

LIABILITIES AND PARTNERS CAPITAL



|                                                                                                                                    |  |   |            |  |   |           
|----------------------------------------------------------------------------------------------------------------------------------- |  | - | ---------- |  | - | ----------
|LIABILITIES:                                                                                                                        |  |   |            |  |   |           
|Accounts payable and accrued expenses                                                                                               |  | $ | 18,742     |  | $ | 16,416    
|Due to affiliates                                                                                                                   |  |   | 10,237     |  |   | 5,673     
|Partnership distributions payable                                                                                                   |  |   | 283,242    |  |   | 308,811   
|                                                                                                                                    |  |   |            |  |   |           
|Total liabilities                                                                                                                   |  |   | 312,221    |  |   | 330,900   
|                                                                                                                                    |  |  
|PARTNERS CAPITAL:                                                                                                                  |  |   |            |  |   |           
|Limited partners:                                                                                                                   |  |   |            |  |   |           
|Cash Preferred  3,007,500 units and 3,003,500 units issued and outstanding as of June 30, 2007 and December 31, 2006,
respectively |  |   | 17,628,654 |  |   | 17,375,625
|Tax Preferred 553,619 units and 557,619 units issued and outstanding as of June 30, 2007 and December 31, 2006, respectively       |  |   | 448,909    |  |   | 365,315   
|General partners                                                                                                                    |  |   | 85         |  |   | 0         
|                                                                                                                                    |  |   |            |  |   |           
|Total partners capital                                                                                                             |  |   | 18,077,648 |  |   | 17,740,940
|                                                                                                                                    |  |   |            |  |   |           
|Total liabilities and partners capital                                                                                             |  | $ | 18,389,869 |  | $ | 18,071,840
|                                                                                                                                    |  |   |            |  |   |           

See accompanying notes.



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WELLS REAL ESTATE FUND XII, L.P.



STATEMENTS OF OPERATIONS



|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|------------------------------------------------------------ |  | --------------------------------------- | --------- | ---- | ------------------------------------- | --------- | ---- |  | ---- | --------- |  | - | --------- | -
|                                                             |  | (Unaudited) Three Months Ended June 30, |           |      | (Unaudited) Six Months Ended June 30, |          
|                                                             |  | 2007                                    |           | 2006 |                                       |           | 2007 |  | 2006 |          
|                                                             |  |                                         |           |     
|EQUITY IN INCOME OF JOINT VENTURES                           |  | $                                       | 658,359   |      | $                                     | 249,701   |      |  | $    | 985,930   |  | $ | 508,525   |  
|                                                             |  |                                         |           |     
|EXPENSES:                                                    |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|General and administrative                                   |  |                                         | 36,191    |      |                                       | 58,649    |      |  |      | 92,805    |  |   | 152,808   |  
|                                                             |  |                                         |           |     
|INTEREST AND OTHER INCOME                                    |  |                                         | 7,603     |      |                                       | 2,526     |      |  |      | 9,902     |  |   | 8,901     |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|NET INCOME                                                   |  | $                                       | 629,771   |      | $                                     | 193,578   |      |  | $    | 903,027   |  | $ | 364,618   |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|                                                             |  |                                         |           |     
|NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS:             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|CASH PREFERRED                                               |  | $                                       | 416,547   |      | $                                     | 318,630   |      |  | $    | 817,645   |  | $ | 614,783   |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|TAX PREFERRED                                                |  | $                                       | 213,139   |      | $                                     | (125,052  | )    |  | $    | 85,297    |  | $ | (250,165  | )
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|GENERAL PARTNERS                                             |  | $                                       | 85        |      | $                                     | 0         |      |  | $    | 85        |  | $ | 0         |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|                                                             |  |                                         |           |     
|NET INCOME (LOSS) PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT: |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|CASH PREFERRED                                               |  |                                         | $0.14     |      |                                       | $ 0.11    |      |  |      | $0.27     |  |   | $ 0.20    |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|TAX PREFERRED                                                |  |                                         | $0.38     |      |                                       | $(0.22    | )    |  |      | $0.15     |  |   | $(0.45    | )
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|                                                             |  |                                         |           |     
|WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:          |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|CASH PREFERRED                                               |  |                                         | 3,007,500 |      |                                       | 3,003,500 |      |  |      | 3,005,500 |  |   | 3,003,500 |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  
|TAX PREFERRED                                                |  |                                         | 553,619   |      |                                       | 557,619   |      |  |      | 555,619   |  |   | 557,619   |  
|                                                             |  |                                         |           |      |                                       |           |      |  |      |           |  |   |           |  

See accompanying notes.



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WELLS REAL ESTATE FUND XII, L.P.



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2006 AND

FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED)



|                                                                                     |  |                  |  |        |                  |   |                         |         |   |        |   |          |   |  |   |    |  |   |            |  
|------------------------------------------------------------------------------------ |  | ---------------- |  | ------ | ---------------- | - | ----------------------- | ------- | - | ------ | - | -------- | - |  | - | -- |  | - | ---------- | -
|                                                                                     |  | Limited Partners |  |        | General Partners |   | Total Partners Capital |        
|                                                                                     |  | Cash Preferred   |  |        | Tax Preferred    |   |                         |        
|                                                                                     |  | Units            |  | Amount |                  |   | Units                   |         |   | Amount |   |          |  
|BALANCE, December 31, 2005                                                           |  | 3,000,000        |  | $      | 17,301,510       |   |                         | 561,119 |   |        | $ | 870,955  |   |  | $ | 0  |  | $ | 18,172,465 |  
|                                                                                     |  |                  |  |        |                  |  
|Tax preferred conversion elections                                                   |  | 3,500            |  |        | 5,433            |   |                         | (3,500  | ) |        |   | (5,433   | ) |  |   | 0  |  |   | 0          |  
|Net income (loss)                                                                    |  | 0                |  |        | 1,303,927        |   |                         | 0       |   |        |   | (500,207 | ) |  |   | 0  |  |   | 803,720    |  
|Distributions of operating cash flow($0.41 per weighted-average Cash Preferred Unit) |  | 0                |  |        | (1,235,245       | ) |                         | 0       |   |        |   | 0        |   |  |   | 0  |  |   | (1,235,245 | )
|                                                                                     |  |                  |  |        |                  |   |                         |         |   |        |   |          |   |  |   |    |  |   |            |  
|BALANCE, December 31, 2006                                                           |  | 3,003,500        |  |        | 17,375,625       |   |                         | 557,619 |   |        |   | 365,315  |   |  |   | 0  |  |   | 17,740,940 |  
|                                                                                     |  |                  |  |        |                  |  
|Tax preferred conversion elections                                                   |  | 4,000            |  |        | 1,703            |   |                         | (4,000  | ) |        |   | (1,703   | ) |  |   | 0  |  |   | 0          |  
|Net income                                                                           |  | 0                |  |        | 817,645          |   |                         | 0       |   |        |   | 85,297   |   |  |   | 85 |  |   | 903,027    |  
|Distributions of operating cash flow($0.19 per weighted-average Cash Preferred Unit) |  | 0                |  |        | (566,319         | ) |                         | 0       |   |        |   | 0        |   |  |   | 0  |  |   | (566,319   | )
|                                                                                     |  |                  |  |        |                  |   |                         |         |   |        |   |          |   |  |   |    |  |   |            |  
|BALANCE, June 30, 2007                                                               |  | 3,007,500        |  | $      | 17,628,654       |   |                         | 553,619 |   |        | $ | 448,909  |   |  | $ | 85 |  | $ | 18,077,648 |  
|                                                                                     |  |                  |  |        |                  |   |                         |         |   |        |   |          |   |  |   |    |  |   |            |  

See accompanying notes.



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WELLS REAL ESTATE FUND XII, L.P.



STATEMENTS OF CASH FLOWS



|                                                                                  |  |                                       |           |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ---- | - | -------- | -
|                                                                                  |  | (Unaudited) Six Months Ended June 30, |          
|                                                                                  |  | 2007                                  |           |   | 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                                       |           |   |      |   |          |  
|Net income                                                                        |  | $                                     | 903,027   |   |      | $ | 364,618  |  
|Operating distributions received from joint ventures                              |  |                                       | 834,890   |   |      |   | 778,607  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                       |           |   |      |   |          |  
|Equity in income of joint ventures                                                |  |                                       | (985,930  | ) |      |   | (508,525 | )
|Changes in assets and liabilities:                                                |  |                                       |           |   |      |   |          |  
|Increase in other assets                                                          |  |                                       | (9,012    | ) |      |   | (908     | )
|Increase in accounts payable and accrued expenses                                 |  |                                       | 2,326     |   |      |   | 5,426    |  
|Increase (decrease) in due to affiliates                                          |  |                                       | 4,564     |   |      |   | (2,402   | )
|                                                                                  |  |                                       |           |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                       | 749,865   |   |      |   | 636,816  |  
|                                                                                  |  |                                      
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                                       |           |   |      |   |          |  
|Net sale proceeds received from joint ventures                                    |  |                                       | 1,236,704 |   |      |   | 0        |  
|Investment in joint ventures                                                      |  |                                       | (146,111  | ) |      |   | (68,356  | )
|                                                                                  |  |                                       |           |   |      |   |          |  
|Net cash provided by (used in) investing activities                               |  |                                       | 1,090,593 |   |      |   | (68,356  | )
|                                                                                  |  |                                      
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                                       |           |   |      |   |          |  
|Operating distributions paid to limited partners                                  |  |                                       | (591,888  | ) |      |   | (722,572 | )
|                                                                                  |  |                                       |           |   |      |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |                                       | 1,248,570 |   |      |   | (154,112 | )
|                                                                                  |  |                                      
|CASH AND CASH EQUIVALENTS, beginning of period                                    |  |                                       | 144,645   |   |      |   | 373,378  |  
|                                                                                  |  |                                       |           |   |      |   |          |  
|CASH AND CASH EQUIVALENTS, end of period                                          |  | $                                     | 1,393,215 |   |      | $ | 219,266  |  
|                                                                                  |  |                                       |           |   |      |   |          |  
|                                                                                  |  |                                      
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:           |  |                                       |           |   |      |   |          |  
|Partnership distributions payable                                                 |  | $                                     | 283,242   |   |      | $ | 308,811  |  
|                                                                                  |  |                                       |           |   |      |   |          |  

See accompanying notes.



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WELLS REAL ESTATE FUND XII, L.P.



CONDENSED NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2007 (unaudited)



|1. | ORGANIZATION AND BUSINESS
|-- | -------------------------

Wells Real Estate Fund XII, L.P. (the
Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia non-public limited partnership, serving as its general partners (collectively, the General
Partners). Wells Capital, Inc. (Wells Capital) serves as the corporate general partner of Wells Partners. Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. (WREF). Leo F. Wells, III is the
president and sole director of Wells Capital and the president, sole director, and sole owner of WREF. The Partnership was formed on September 15, 1998 for the purpose of acquiring, developing, constructing, owning, operating, improving,
leasing and managing income-producing commercial properties for investment purposes. Upon subscription, limited partners elected to have their units treated as Cash Preferred Units or Tax Preferred Units. Thereafter, the limited partners have the
right to change their prior elections to have some or all of their units treated as Cash Preferred Units or Tax Preferred 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; (c) add or remove a general partner; (d) elect a new general partner; (e) dissolve the
Partnership; and (f) approve a sale involving all or substantially all of the Partnerships assets, subject to certain limitations. The majority vote on any of the matters described above will bind the Partnership without the concurrence
of the General Partners. Each limited partnership unit has equal voting rights regardless of class.

The Partnership was formed to acquire and operate
commercial real estate properties, including properties, which are either to be developed, are currently under construction, are newly constructed, or have operating histories.

On September 15, 1998, the Partnership was organized under the laws of the state of Georgia. On March 22, 1999, the Partnership commenced an offering of up to $70,000,000 of Cash Preferred or Tax Preferred
limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units on
June 1, 1999. The offering was terminated on March 21, 2001, at which time the Partnership had sold approximately 2,688,861 Cash Preferred Units and 872,258 Tax Preferred Units to 1,227 and 106 Cash Preferred and Tax Preferred Limited
Partners, respectively, for total limited partner capital contributions of $35,611,192.

The Partnership owns interests in all of its real estate assets
through joint ventures with other entities affiliated with the General Partners and Wells Operating Partnership, L.P. (Wells OP). Wells OP is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells
REIT) serving as its general partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust. During the periods presented, the Partnership owned interests in the following joint ventures (the Joint
Ventures) and properties:



|                                                                              |  |                                                                                                             |  |                                                                                                                                                                                                 
|----------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                                 |  | Joint Venture Partners                                                                                      |  | Properties                                                                                                                                                                                      
|The Wells Fund XIFund XIIREIT Joint Venture
(Fund XI-XII-REIT Associates) |  |   Wells Real Estate Fund XI, L.P.   Wells Real Estate Fund XII, L.P.   Wells Operating Partnership, L.P. |  | 1. 111 Southchase Boulevard(1) A two-story manufacturing and office building located in
Fountain Inn, South Carolina  2. 20/20
Building A three-story office building located in Leawood, Kansas



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|                                                                           |  |                                                                          |  |                                                                                                                                                               
|-------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                              |  | Joint Venture Partners                                                   |  | Properties                                                                                                                                                    
|Wells Fund XII-REIT Joint Venture Partnership (Fund XII-REIT Associates) |  |   Wells Real Estate Fund XII, L.P.   Wells Operating Partnership, L.P. |  | 3. Siemens Building A three-story office building located in Troy, Michigan  4. Comdata Building A three-story office building located in Brentwood, Tennessee



| | (1) | This property was sold in May 2007.
| | --- | -----------------------------------

Wells
Real Estate Fund XI, L.P. is affiliated with the Partnership through common general partners. Each of the properties described above was acquired on an all-cash basis. For further information regarding the Joint Ventures and foregoing properties,
refer to the Partnerships Annual Report on Form 10-K for the year ended December 31, 2006.

On May 23, 2007, Fund XI-XII-REIT Associates
sold 111 Southchase Boulevard to an unrelated third party for a gross sale price of $7,625,000. As a result of the sale, the Partnership received net sale proceeds of approximately $1,237,000 and was allocated a gain of approximately $338,000, which
may be adjusted as additional information becomes available in subsequent periods.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

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 (SEC), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S. generally accepted
accounting principles (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 and consistently 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 Annual Report on Form 10-K for the year ended December 31, 2006.

Investment in Joint Ventures

The Partnership has evaluated the Joint Ventures and concluded that none are variable interest entities under the provisions of Financial Accounting Standards Board
Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities, which supersedes FIN No. 46 and is an interpretation of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial
Statements. 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, upon applying the provisions of Statement of Financial Accounting Standard (SFAS) No. 94, Consolidation of
All Majority-Owned Subsidiaries, ARB No. 51, and Statement of Position (SOP) No. 78-9, Accounting for Investments In Real Estate Ventures, the Partnership accounts for its investments in the Joint Ventures using the
equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements,
all income (loss) and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on
a quarterly basis.



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##### Table of Contents

Other Assets

Other
assets as of June 30, 2007 and December 31, 2006 are comprised of the following items:



|                    |  |               |        |                   |       
|------------------- |  | ------------- | ------ | ----------------- | ------
|                    |  | June 30, 2007 |        | December 31, 2006
|Interest receivable |  | $             | 6,000  |                   | $1,198
|Prepaid expense     |  |               | 4,210  |                   | 0     
|                    |  |               |        |                   |       
|Total               |  | $             | 10,210 |                   | $1,198
|                    |  |               |        |                   |       

Interest receivable represents interest earned during the period presented, which will be received in the
following month. Prepaid expenses are recognized as the related services are provided. Balances without a future economic benefit are written off as they are identified.

Distributions of Net Cash from Operations

Net cash from operations, if available, is generally distributed quarterly
to the limited partners as follows:



| |  |  | First, to all Cash Preferred limited partners on a per-unit basis until each limited partner has received distributions equal to a 10% per annum return on his
respective net capital contributions, as defined.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Second, to the General Partners until the General Partners receive distributions equal to 10% of the total cumulative distributions paid by the Partnership to date.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Third, to the Cash Preferred limited partners on a per-unit basis and the General Partners allocated on a basis of 90% and 10%, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

No distributions of net cash from operations will be made to limited partners holding Tax Preferred Units.

Distribution of Sale Proceeds

Upon the sale of properties, unless
reserved, net sale proceeds will be distributed in the following order:



| |  |  | In the event that the particular property sold is sold for a price that is less than the original property purchase price, to the limited partners holding Cash
Preferred Units until they 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 Tax Preferred Units with respect to such property;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners holding units which at any time have been treated as Tax Preferred Units until each limited partner has received an amount necessary to equal
the net cash available for distribution previously received by the limited partners holding Cash Preferred Units on a per-unit basis;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners on a per-unit basis until each limited partner has received 100% of his net capital contributions, as defined;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per-unit basis until each limited partner has received a cumulative 10% per annum return on his net capital contributions, as
defined;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners on a per-unit basis until each limited partner has received an amount equal to his preferential 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 Cash Preferred Units and a 15% per annum cumulative return on net capital contributions for all periods during which the
units were treated as Tax Preferred Units);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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##### Table of Contents

| |  |  | Then, if limited partners have received any excess limited partner distributions (defined as distributions to limited partners over the life of their investment in
the Partnership in excess of their net capital contributions, as defined, plus their preferential limited partner return), to the General Partners until they have received distributions equal to 20% of the sum of any such excess limited partner
distributions plus distributions made to the General Partners pursuant to this provision; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Thereafter, 80% to the limited partners on a per-unit basis and 20% to the General Partners.
| | - |  | --------------------------------------------------------------------------------------------

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 proportion that net cash from operations is distributed to the partners holding Cash Preferred 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 holding Cash Preferred Units and 1% to the General Partners.

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

Gains 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 the qualified income offset provisions of the partnership agreement; (b) allocations to partners having negative capital accounts until all
negative capital accounts have been restored to zero; and (c) allocations to limited partners holding Tax Preferred Units in amounts equal to the deductions for depreciation, amortization, and cost recovery 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.

Reclassifications

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

Recent Accounting Pronouncements

In June 2007, the American Institute of Certified Public Accountants (AICPA) issued SOP 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies
and Equity Method Investors for Investments in Investment Companies, which provides guidance for determining which entities fall within the scope of the AICPA Audit and Accounting Guide for Investment Companies and requires additional
disclosures for certain of those entities. SOP 07-1 will be effective for the Partnership beginning January 1, 2008. The Partnership is currently in the process of evaluating the provisions of SOP 07-1 and related impact on its financial
statements and accompanying notes.

In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities  Including an Amendment of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities. SFAS No. 159 permits entities to choose to measure
many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS
No. 159 will be effective for fiscal years beginning after November 15, 2007. The Partnership is currently assessing these provisions and evaluating the financial impact of SFAS No. 159 on its financial statements, however, it is not
currently planning to adopt the fair value option in 2008.



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##### Table of Contents

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP, including amending SFAS No. 144. SFAS No. 157 emphasizes that fair value is a market-based measurement, as opposed
to an entity-specific measurement. SFAS No. 157 will be effective for the Partnership beginning January 1, 2008. The Partnership is currently assessing these provisions and evaluating the financial impact of SFAS No. 157 on its
financial statements, however, does not believe the adoption of this pronouncement will have a material impact on its financial statements.

In July 2006,
the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes, which clarifies the relevant criteria and approach for the recognition, derecognition,
and measurement of uncertain tax positions. FIN No. 48 was effective for the Partnership beginning January 1, 2007. The adoption of this pronouncement has not had a material impact on the Partnerships financial statements.



|3. | INVESTMENT IN JOINT VENTURES
|-- | ----------------------------

Summary of Financial Information

Condensed financial information for the Joint Ventures for the three months and six months ended June 30, 2007 and 2006, respectively, is
presented below:



|                            |  |                    |           |                                         |   |           |                                            |      |           |                    |      |           |      |  |   |           |  |      |          |   |  |   |           |  |   |           |  
|--------------------------- |  | ------------------ | --------- | --------------------------------------- | - | --------- | ------------------------------------------ | ---- | --------- | ------------------ | ---- | --------- | ---- |  | - | --------- |  | ---- | -------- | - |  | - | --------- |  | - | --------- | -
|                            |  | Total Revenues     |           | Income (Loss) FromContinuing Operations |   |           | Income (Loss) From Discontinued Operations |      |           | Net Income (Loss)  |     
|                            |  | Three Months Ended |           | Three Months Ended                      |   |           | Three Months Ended                         |      |           | Three Months Ended |     
|                            |  | June 30,           |           | June 30,                                |   |           | June 30,                                   |      |           | June 30,           |     
|                            |  | 2007               |           | 2006                                    |   | 2007      |                                            | 2006 |           |                    | 2007 |           | 2006 |  |   | 2007      |  | 2006 |         
|Fund XI-XII-REIT Associates |  | $                  | 236,529   |                                         | $ | 0         |                                            |      | $  35,177 |                    |      | $(151,086 | )    |  | $ | 2,032,131 |  | $    | (121,337 | ) |  | $ | 2,067,308 |  |   | $(272,423 | )
|Fund XII-REIT Associates    |  |                    | 1,078,105 |                                         |   | 1,085,078 |                                            |      | 678,129   |                    |      | 681,863   |      |  |   | 0         |  |      | (23,343  | ) |  |   | 678,129   |  |   | 658,520   |  
|                            |  |                    |           |                                         |   |           |                                            |      |           |                    |      |           |      |  |   |           |  |      |          |   |  |   |           |  |   |           |  
|                            |  | $                  | 1,314,634 |                                         | $ | 1,085,078 |                                            |      | $713,306  |                    |      | $ 530,777 |      |  | $ | 2,032,131 |  | $    | (144,680 | ) |  | $ | 2,745,437 |  |   | $ 386,097 |  
|                            |  |                    |           |                                         |   |           |                                            |      |           |                    |      |           |      |  |   |           |  |      |          |   |  |   |           |  |   |           |  
|                            |  |                    |           |                                        
|                            |  | Total Revenues     |           | Income (Loss) FromContinuing Operations |   |           | Income (Loss) FromDiscontinued Operations  |      |           | Net Income (Loss)  |     
|                            |  | Six Months Ended   |           | Six Months Ended                        |   |           | Six Months Ended                           |      |           | Six Months Ended   |     
|                            |  | June 30,           |           | June 30,                                |   |           | June 30,                                   |      |           | June 30,           |     
|                            |  | 2007               |           | 2006                                    |   | 2007      |                                            | 2006 |           |                    | 2007 |           | 2006 |  |   | 2007      |  | 2006 |         
|Fund XI-XII-REIT Associates |  | $                  | 455,232   |                                         | $ | 0         |                                            | $    | 54,255    |                    | $    | (291,904  | )    |  | $ | 2,146,372 |  | $    | (247,681 | ) |  | $ | 2,200,627 |  | $ | (539,585  | )
|Fund XII-REIT Associates    |  |                    | 2,161,178 |                                         |   | 2,155,512 |                                            |      | 1,354,797 |                    |      | 1,358,172 |      |  |   | 820       |  |      | (22,850  | ) |  |   | 1,355,617 |  |   | 1,335,322 |  
|                            |  |                    |           |                                         |   |           |                                            |      |           |                    |      |           |      |  |   |           |  |      |          |   |  |   |           |  |   |           |  
|                            |  | $                  | 2,616,410 |                                         | $ | 2,155,512 |                                            | $    | 1,409,052 |                    | $    | 1,066,268 |      |  | $ | 2,147,192 |  | $    | (270,531 | ) |  | $ | 3,556,244 |  | $ | 795,737   |  
|                            |  |                    |           |                                         |   |           |                                            |      |           |                    |      |           |      |  |   |           |  |      |          |   |  |   |           |  |   |           |  



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##### Table of Contents

The Partnership allocates its share of earnings generated by the properties owned by the Joint Ventures to its Cash
Preferred and Tax Preferred limited partners pursuant to the partnership agreement provisions outlined in Note 2 for net income, net loss, and gain on sale, respectively. The components of income (loss) from discontinued operations recognized by the
Joint Ventures are provided below:



|                            |  |                                |         |                                |   |           |  |               |           |  |              |          |       |  |    |  |   |          |  
|--------------------------- |  | ------------------------------ | ------- | ------------------------------ | - | --------- |  | ------------- | --------- |  | ------------ | -------- | ----- |  | -- |  | - | -------- | -
|                            |  | Six Months Ended June 30, 2007 |         | Six Months Ended June 30, 2006 |  
|                            |  | OperatingIncome                |         | Gain on Sale                   |   | Total     |  | OperatingLoss |           |  | Gain on Sale |          | Total | 
|Fund XI-XII-REIT Associates |  | $                              | 168,061 |                                | $ | 1,978,311 |  | $             | 2,146,372 |  | $            | (247,681 | )     |  | $0 |  | $ | (247,681 | )
|Fund XII-REIT Associates    |  |                                | 820     |                                |   | 0         |  |               | 820       |  |              | (22,850  | )     |  | 0  |  |   | (22,850  | )
|                            |  |                                |         |                                |   |           |  |               |           |  |              |          |       |  |    |  |   |          |  
|                            |  | $                              | 168,881 |                                | $ | 1,978,311 |  | $             | 2,147,192 |  | $            | (270,531 | )     |  | $0 |  | $ | (270,531 | )
|                            |  |                                |         |                                |   |           |  |               |           |  |              |          |       |  |    |  |   |          |  

Due from Joint Ventures

As presented in the accompanying balance sheets, due from joint ventures as of June 30, 2007 and December 31, 2006 represents operating cash flow generated by the Joint Ventures for the three months ended
June 30, 2007 and December 31, 2006, respectively, which is attributable to the Partnership.



|4. | RELATED-PARTY TRANSACTIONS
|-- | --------------------------

Management and Leasing Fees

In accordance with the property management and leasing agreement, 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 the lesser of (a) 2.5% for management services and 2% for leasing services of the gross
revenues collected monthly, plus a separate competitive fee for the one-time initial 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, which is assessed periodically based on market studies, or (b) in the case of commercial properties leased on a long-term net basis (ten or more years), the maximum property
management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original
lease term. Management and leasing fees are paid by the Joint Ventures and, accordingly, included in equity in income of joint ventures in the accompanying statements of operations. The Partnerships share of management and leasing fees and
lease acquisition costs incurred through the Joint Ventures is $16,383 and $15,909 for the three months ended June 30, 2007 and 2006, respectively, and $42,035 and $36,388 for the six months ended June 30, 2007 and 2006, respectively.

Administrative Reimbursements

Wells Capital, the
corporate general partner of Wells Partners, one of our General Partners, and Wells Management perform certain administrative services for the Partnership, relating to accounting, property management, and other partnership administration, and incur
the related expenses. Such expenses are allocated among other entities affiliated with the General Partners based on time spent on each fund by individual administrative personnel. In the opinion of the General Partners, this allocation is a
reasonable estimation of such expenses. The Partnership reimbursed Wells Capital and Wells Management for administrative expenses of $21,418 and $15,821 for the three months ended June 30, 2007 and 2006, respectively, and $42,193 and $32,625
for the six months ended June 30, 2007 and 2006, respectively. As of June 30, 2007 and December 31, 2006, the due to affiliates balances represent administrative reimbursements due to Wells Management and/or Wells Capital.



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##### Table of Contents

Economic Dependency

We have engaged Wells Capital and Wells Management to provide certain essential services for us, including supervision of the management and leasing of our properties, asset acquisition and disposition services, as well as other
administrative responsibilities, including accounting services and investor communications and relations. These agreements are terminable by either party upon 60 days written notice. As a result of these relationships, we are dependent upon
Wells Capital and Wells Management.

Wells Capital and Wells Management are all owned and controlled by WREF. The operations of Wells Capital and Wells
Management represent substantially all of the business of WREF. Accordingly, 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, we might be required to find alternative service providers.

Future net income generated by WREF will be largely
dependent upon the amount of fees earned by Wells Capital and Wells Management based on, among other things, the level of investor proceeds raised from the sale of common stock for certain WREF-sponsored programs and the volume of future
acquisitions and dispositions of real estate assets by WREF-sponsored programs, as well as anticipated dividend income earned from its holdings of common stock of Wells REIT. As of June 30, 2007, the General Partners believe that WREF generates
adequate cash flow from operations and has adequate liquidity available in the form of cash on hand and current receivables necessary to meet its current and future obligations as they become due.

Assertion of Legal Action Against Related-Parties

On March 12,
2007, a stockholder of Wells REIT filed a putative class action and derivative complaint, Washtenaw County Employees Retirement System v. Wells Real Estate Investment Trust, Inc., et al., in the United States District Court for the
District of Maryland against, among others, Wells REIT, Leo F. Wells, III, one of our general partners, Wells Capital, the corporate general partner of Wells Partners, our other general partner, Wells Management, our property manager, certain
affiliates of WREF, the directors of Wells REIT, and certain individuals who formerly served as officers and directors of Wells REIT prior to the closing of the internalization transaction on April 16, 2007. The complaint alleges, among other
things, violations of the federal proxy rules and breaches of fiduciary duty arising from the Wells REIT internalization transaction and the related proxy statement filed with the SEC on February 26, 2007, as amended. The complaint seeks, among
other things, unspecified monetary damages and nullification of the Wells REIT internalization transaction. On April 9, 2007, the District Court denied the plaintiffs motion for an order enjoining the internalization transaction. On
April 17, 2007, the Court granted the defendants motion to transfer venue to the United States District Court for the Northern District of Georgia, and the case was docketed in the Northern District of Georgia on April 24, 2007. The
plaintiff filed an amended class action and derivative complaint on June 27, 2007. The amended complaint attempts to assert class action claims on behalf of those persons who received and were entitled to vote on the Wells REIT proxy statement
filed with the SEC on February 26, 2007 and derivative claims on behalf of Wells REIT. The defendants have until August 13, 2007 to respond. On July 9, 2007, the court denied the plaintiffs motion for expedited discovery related
to an anticipated motion for a preliminary injunction, noting that the alleged conduct could be evaluated through the normal path of litigation. Mr. Wells, Wells Capital, and Wells Management intend to vigorously defend this action.
Any financial loss incurred by Wells Capital, Wells Management, or their affiliates could hinder their ability to successfully manage our operations and our portfolio of investments.



|5. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

The Partnership and its General
Partners are from time to time a party to legal proceedings, which arise in the ordinary course of its business. The Partnership is not currently involved in any legal proceedings of which the outcome is reasonably possible to have a material
adverse effect on results of operations or financial condition. The Partnership is not aware of any legal proceedings contemplated by governmental authorities.



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##### Table of Contents

|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. See also Cautionary Note Regarding Forward-Looking Statements preceding
Part I, as well as the notes to our financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended December 31, 2006.

Overview

The Partnership typically operates in the following five
life cycle phases and, during which, typically focuses on the following key operating objectives. The duration of 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 the Partnership owns and operates its real estate assets 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, distributes net sale proceeds to the partners, liquidates, and terminates the Partnership.

Portfolio Overview

We are currently operating in the holding phase of our life cycle. We currently own interests in
three properties following the sale of 111 Southchase Boulevard in the second quarter of 2007. The sale of 111 Southchase Boulevard was a direct result of leasing the previously vacant building to Caterpillar, Inc. through 2011. As a result of this
property sale, we anticipate distributing net sale proceeds of approximately $1.2 million in November 2007, along with certain residual net sales proceeds from the previous sales of the Gartner Building and the AT&T Oklahoma Building,. Our focus
at this time involves leasing the remaining vacancy at the 20/20 Building and maximizing the operating performance of our assets in order to deliver what we believe will be the best overall performance for our limited partners.

Operating distributions payable to the Cash Preferred limited partners for the second quarter of 2007 remained consistent with the level paid in the prior quarter. We
anticipate that operating distributions will remain at a similar level in the near term due to various issues, including (i) funding our pro-rata share of the remaining re-leasing costs and absorbing rental abatement periods associated with the
recent leases at the 20/20 Building, (ii) funding our pro-rata share of anticipated capital improvements for the 20/20 Building, and (iii) funding our pro-rata share of anticipated re-leasing costs associated with leasing the remaining
vacant space at the 20/20 Building.



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##### Table of Contents

Property Summary

As
we continue to operate in the holding 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 will seek to maximize returns to the limited partners by
negotiating long-term leases at market rental rates while attempting to minimize down time, re-leasing expenditures, ongoing property-level costs and portfolio costs. Later, as we move into the positioning-for-sale and disposition-and-liquidation
phases, our attention will shift to locating suitable buyers and negotiating purchase-sale contracts that will attempt to maximize the total return to the limited partners, and to minimize contingencies and our post-closing involvement with the
buyer.

Information relating to the properties owned, or previously owned, by the Joint Ventures is provided below:



| |  |  | The Johnson Matthey Building was sold on October 5, 2004.
| | - |  | ---------------------------------------------------------



| |  |  | The Gartner Building was sold on April 13, 2005.
| | - |  | ------------------------------------------------



| |  |  | The AT&T Oklahoma Building was sold on April 13, 2005.
| | - |  | ------------------------------------------------------



| |  |  | The 111 Southchase Boulevard property was sold on May 23, 2007.
| | - |  | ---------------------------------------------------------------



| |  |  | The 20/20 Building, located in Leawood, Kansas, is approximately 77% leased through October 2012.
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | The Siemens Building, located in Troy, Michigan, is 100% leased through August 2010.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | The Comdata Building, located in Brentwood, Tennessee, outside Nashville, is 100% leased through May 2016.
| | - |  | ----------------------------------------------------------------------------------------------------------

Liquidity and Capital Resources

Overview

Our operating strategy entails funding expenditures related to the recurring operations of the Joint Ventures properties and the portfolio with operating cash
flows, including current and prior period operating distributions received from the Joint Ventures, and assessing the amount of remaining cash flows that will be required to fund known future re-leasing costs and other capital improvements. Any
residual operating cash flows are generally considered available for distribution to the Cash Preferred limited partners and, unless reserved, are generally paid 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 our tenants to honor lease payments and our ability to re-lease 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 could be adversely affected.

Short-Term Liquidity

During the six months ended June 30, 2007,
we generated net operating cash flows, including operating distributions received from the Joint Ventures, of approximately $750,000, which were used primarily to fund operating distributions to limited partners of approximately $592,000. 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. 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. We anticipate future operating distributions from the Joint Ventures will remain at similar levels until the remaining re-leasing costs and rental abatement periods are absorbed at the
20/20 Building.

During the six months ended June 30, 2007, we also invested residual operating cash flows of approximately $146,000 in Fund
XI-XII-REIT Associates to fund re-leasing costs incurred in connection with the new lease at



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##### Table of Contents

111 Southchase Boulevard. We anticipate funding our pro-rata share of the re-leasing costs for the 20/20 Building resulting from recent leasing activity and
the anticipated capital improvements for the 20/20 Building in the near-term.

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. We also 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 $312,000 as of June 30, 2007. During 2007, our General Partners anticipate that we will fund our proportionate share of capital expenditures noted above.

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,
funding tenant improvements, renovations, expansions, and other significant capital improvements necessary for properties owned through the Joint Ventures. We expect to continue to use substantially all future net cash flows from operations,
including distributions received from the Joint Ventures, less expenses related to the recurring operations of the properties and the portfolio and reserves for known capital expenditures, to pay operating distributions to the limited partners.

Capital Resources

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

The Joint Ventures fund capital expenditures primarily related to building improvements for the purpose of maintaining the quality of our properties, and
tenant improvements for the purpose of readying our properties for re-leasing. As leases expire, we typically attempt to re-lease space to an existing tenant or 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.

Operating cash flows, if available, are generally distributed from the Joint Ventures to the Partnership approximately one month following
quarter-ends. However, the Joint Ventures will reserve operating distributions, or a portion thereof, as needed in order to fund known capital and other expenditures. 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, if available, would then be utilized. Any capital or other expenditures not provided for by the operations of the Joint Ventures will be required to be funded by the Partnership and the respective joint venture
partners on a pro-rata basis.



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As of June 30, 2007, we have received, used, distributed, and held net sale proceeds allocated to the Partnership
from the sale of properties as presented below:



|                                       |  |                   |  |                                       |        |                                              |            |                          |    |                                                              |   |                                                   |   |            |  |   |          
|-------------------------------------- |  | ----------------- |  | ------------------------------------- | ------ | -------------------------------------------- | ---------- | ------------------------ | -- | ------------------------------------------------------------ | - | ------------------------------------------------- | - | ---------- |  | - | ---------
|                                       |  | Net Sale Proceeds |  | Partnerships Approximate Ownership % |        | Net SaleProceeds Allocated tothe Partnership |            | Use of Net Sale Proceeds |    | Net Sale Proceeds Distributed toPartners as of June 30, 2007 |   | UndistributedNet
SaleProceeds as of June 30, 2007
|Property Sold                          |  |                   |  |                                       | Amount |                                              | Purpose    |                          |   
|Johnson Matthey Building(sold in 2004) |  | $9,675,000        |  | 17.10%                                |        | $                                            | 1,653,361  |                          | $0 |                                                              |  |                                                   | $ | 1,653,361  |  | $ | 0        
|Gartner Building(sold in 2005)         |  | $12,396,859       |  | 17.10%                                |        |                                              | 2,118,499  |                          | 0  |                                                              |  |                                                   |   | 2,117,051  |  |   | 1,448    
|AT&T Oklahoma Building(sold in 2005)   |  | $21,307,577       |  | 44.99%                                |        |                                              | 9,585,853  |                          | 0  |                                                              |  |                                                   |   | 9,579,588  |  |   | 6,265    
|111 Southchase Boulevard(sold in 2007) |  | $7,236,841        |  | 17.10%                                |        |                                              | 1,236,704  |                          | 0  |                                                              |  |                                                   |   | 0          |  |   | 1,236,704
|                                       |  |                   |  |                                       |        |                                              |            |                          |    |                                                              |   |                                                   |   |            |  |   |          
|Total                                  |  |                   |  |                                       |        | $                                            | 14,594,417 |                          | $0 |                                                              |   |                                                   | $ | 13,350,000 |  | $ | 1,244,417
|                                       |  |                   |  |                                       |        |                                              |            |                          |    |                                                              |   |                                                   |   |            |  |   |          

Upon evaluating the capital needs of the properties in which we currently hold an interest, our General Partners
have determined to hold reserves of net sale proceeds of approximately $14,000. Accordingly, our General Partners anticipate distributing net sale proceeds of approximately $1.2 million in November 2007 from the sale of 111 Southchase Boulevard,
along with certain residual net sales proceeds from the previous sales of the Gartner Building and the AT&T Oklahoma Building, and as further discussed below.

Contractual Obligations and Commitments

In June 2007, our General Partners announced their intention to distribute net sale proceeds from
the sale of 111 Southchase Boulevard, along with certain residual net sales proceeds from the previous sales of the Gartner Building and the AT&T Oklahoma Building of approximately $1.2 million in November 2007 to the limited partners of
record as of September 30, 2007, which under the terms of the partnership agreement does not include limited partners acquiring units after June 30, 2007.

This distribution has not been formally declared by our General Partners. In accordance with the terms of the partnership agreement, our General Partners may elect to retain reserves deemed reasonably necessary for
the Partnership in the sole discretion of the General Partners. Thus, should a change in circumstances prior to the intended distribution date require the General Partners to reevaluate the Partnerships reserve requirements, it is possible
that this distribution may not occur or that such distribution could be made at a lower amount.

Results of Operations

Equity in Income of Joint Ventures

Equity in income of Joint Ventures
was $658,359 and $249,701 for the three months ended June 30, 2007 and 2006, respectively, and $985,930 and $508,525 for the six months ended June 30, 2007 and 2006, respectively. The 2007 increases are primarily a result of (i) the
gain recognized on the sale of 111 Southchase Boulevard in May 2007, (ii) the leasing activity at 111 Southchase Boulevard and the 20/20 Building, partially offset by (iii) a decline in operating income resulting from the aforementioned
sale. We anticipate equity in income of Joint Ventures to decrease in the near-term as a result of recognizing a nonrecurring gain on the sale of 111 Southchase Boulevard in May 2007 along with a corresponding decline in income resulting from this
property sale.

Expenses

Our total expenses were
$36,191 and $58,649 for the three months ended June 30, 2007 and 2006, respectively, and $92,805 and $152,808 for the six months ended June 30, 2007 and 2006, respectively. The 2007 decreases



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are primarily attributable to (i) a decline in Tennessee partnership franchise and excise taxes, (ii) a decrease in legal fees, partially offset by
(iii) an increase in administrative costs. We estimate Tennessee partnership franchise and excise taxes based on an estimate of the apportionment of income allocable to the Partnership from properties in Tennessee relative to income allocable
to the Partnership from all properties as if earned ratably during the calendar year. Thus, our future estimates of Tennessee partnership franchise and excise tax expenses will fluctuate as the relationship of income earned by the Partnership from
properties in Tennessee fluctuates relative to income earned by the Partnership from all properties in the future. We anticipate increases in administrative expenses in future periods resulting from increased costs relating to compliance with
additional reporting and regulatory requirements.

Interest and Other Income

Interest and other income were $7,603 and $2,526 for the three months ended June 30, 2007 and 2006, respectively, and $9,902 and $8,901 for the six months ended June 30, 2007 and 2006, respectively. The 2007
increases are primarily a result of an increase in the average amount of net sale proceeds held during the respective periods due to the sale of 111 Southchase Boulevard in May 2007, as well as an increase in the daily interest yield. Future levels
of interest income will be largely dependent upon the timing of future dispositions and net sale proceeds distributions to the limited partners, and the amount of operating cash needed to invest in the Joint Ventures related to funding our pro-rata
share of re-leasing costs and capital expenditures.

Inflation

We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that would protect us from the impact of inflation. These
provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax, and insurance reimbursements on a per-square-foot basis or, in some cases, annual reimbursement of operating expenses above a certain
per-square-foot allowance. However, due to the long-term nature of our leases, the leases may not readjust their reimbursement rates frequently enough to cover inflation.

Application of Critical Accounting Policies

Summary

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.



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Investment in Real Estate Assets

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



|                      |  |                                       
|--------------------- |  | --------------------------------------
|Buildings             |  | 40 years                              
|Building improvements |  | 5-25 years                            
|Land improvements     |  | 20 years                              
|Tenant improvements   |  | Shorter of lease term or economic life

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 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 assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying
value, management adjusts the real estate assets to the fair value, as defined by SFAS No. 144, and recognizes an impairment loss. Estimated fair values are calculated based on the following information, dependent upon availability, in order of
preference: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value. We have determined that there has been no
impairment in the carrying value of any of the real estate assets held by the Partnership as of June 30, 2007.

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 any of the real estate assets held by the Joint Ventures and net income of the Partnership.

Related-Party Transactions and
Agreements

We have entered into agreements with Wells Capital and Wells Management, affiliates of our General Partners, and their affiliates, whereby
we pay certain fees and expense reimbursements to Wells Capital, Wells Management and their affiliates for asset management; the management and leasing of our properties; administrative services relating to accounting, property management, and other
partnership administration, and incur the related expenses. See Note 4 to our financial statements included in this report for a description of these fees and expense reimbursements we have incurred.

Potential Tax Impact on Limited Partners Holding Tax Preferred Units  American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 added Section 470 to the Internal Revenue Code, which provides for certain limitations on the utilization of losses by
investors that are attributable to leased property owned by a partnership having both taxable and tax-exempt partners such as the Partnership. If Section 470 were deemed to apply to the Partnership, passive losses allocable to limited partners
holding Tax Preferred Units could only be



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utilized to offset passive income generated from the same property or potentially from properties owned by the same partnership. In March 2005, the Internal
Revenue Service (IRS) announced that it would not apply Section 470 to partnerships for the taxable year 2004 based solely on the fact that a partnership had both taxable and tax-exempt partners. In December 2005, the IRS extended
the period for transitional relief through the 2005 tax year, and in December 2006, the IRS again extended the period for transitional relief through all tax years beginning prior to January 1, 2007. In addition, pursuant to
Section 403(ff) of the Gulf Opportunity Zone Act of 2005, the effective date provisions regarding the applicability of Section 470 were amended to provide that, in the case of leased property treated as tax-exempt use property by reason of
its being owned by a partnership having both taxable and tax-exempt partners, Section 470 will apply only to property acquired after March 12, 2004. Since the Partnership acquired all of its properties prior to March 12, 2004, and is
not expected to acquire interests in any additional properties in the future, we do not believe that the provisions of Section 470 should apply to limit the utilization of losses attributable to the properties owned by the Partnership; however,
due to the uncertainties and lack of guidance relating to this provision, it is unclear as to whether the acquisition of a limited partnership interest in the Partnership after the March 12, 2004 effective date may be deemed to be an
acquisition of property within the meaning of the effective date provisions of Section 470.



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

Since
we do not borrow any money, make any foreign investments, or invest in any market risk-sensitive instruments, we are 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
|------- | -----------------------

We carried out an evaluation, under the
supervision and with the participation of management of Wells Capital, our corporate general partner of Wells Partners, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, of the effectiveness of the
design and operation of the Partnerships disclosure controls and procedures as defined in rule 13a-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, the Principal
Executive Officer and the Principal Financial Officer of Wells Capital concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of assurance
that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including
providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer of Wells
Capital, as appropriate, to allow timely decisions regarding required disclosure.

There were no significant changes in our internal control over financial
reporting during the quarter ended June 30, 2007 that have materially affected, or are likely to materially affect, our internal control over financial reporting.



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|PART II. | OTHER INFORMATION
|-------- | -----------------



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

We are from time to time a party to legal
proceedings, which arise in the ordinary course of our business. We are not currently involved in any litigation the outcome of which would, in managements judgment based on information currently available, have a material adverse effect on
our results of operations or financial condition, nor is management aware of any such litigation threatened against us during the quarter ended June 30, 2007, requiring disclosure under Item 103 of Regulation S-K.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There have been no material changes from the risk
factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



|(a) | We did not sell any equity securities that were not registered under the Securities Act of 1933 during the quarter ended June 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



|(c) | We did not redeem any securities during the quarter ended June 30, 2007.
|--- | ------------------------------------------------------------------------



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



|(a) | We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended June 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

No matters were submitted to a vote of our limited partners during the quarter ended June 30, 2007.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



|(a) | During the quarter ended June 30, 2007, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



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

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



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SIGNATURES

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



|               |  |  |  |                                                                                                   |  |                            
|-------------- |  |  |  | ------------------------------------------------------------------------------------------------- |  | ---------------------------
|               |  |  |  | WELLS REAL ESTATE FUND XII, L.P. (Registrant)                                                    
|               |  |  | 
|               |  |  |  | By:                                                                                               |  | WELLS PARTNERS, L.P.       
|               |  |  |  |                                                                                                   |  | (General Partner)          
|               |  |  | 
|               |  |  |  | By:                                                                                               |  | WELLS CAPITAL, INC.        
|               |  |  |  |                                                                                                   |  | (Corporate General Partner)
|               |  | 
|August 8, 2007 |  |  |  | /S/    LEO F. WELLS,
III                                                                         
|               |  |  |  | Leo F. Wells, III President, Principal
Executive Officer,and Sole Director of Wells Capital, Inc.
|               |  | 
|August 8, 2007 |  |  |  | /S/    DOUGLAS P.
WILLIAMS                                                                       
|               |  |  |  | Douglas P. Williams Principal Financial
Officer of Wells Capital, Inc.                           



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EXHIBIT INDEX

TO SECOND QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND XII, L.P.



|            |  |                                                                                                                                                                                                                                                    
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                        
|            | 
|*10.1       |  | Purchase and Sale Agreement for the sale of the 111 Southchase Boulevard Building (Exhibit 10.2 to Form 10-Q of Wells Real Estate Fund XI for the period ended March 31, 2007, Commission
File No. 0-25731)                                        
|            | 
|*10.2       |  | Reinstatement of and Fifth Amendment to Purchase and Sale Agreement for the sale of the 111 Southchase Boulevard Building (Exhibit 10.3 to Form 10-Q of Wells Real Estate Fund XI for the
period ended March 31, 2007, Commission File No. 0-25731)
|            | 
|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                                                                                                                     



|* | previously filed and incorporated herein by reference
|- | -----------------------------------------------------