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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q



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(Mark One)



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



For the quarterly period ended September 30, 2003



OR



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



For the transition period
fromto



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 of other jurisdiction of incorporation or organization)                                 |  | (I.R.S. Employer Identification No.)
|                                                                                               | 
|6200 The Corners Parkway, Suite 250 Norcross, Georgia (Address of principal executive offices) |  | 30092 (Zip Code)                    
|                                                                                               | 
|Registrants telephone number, including area code                                             |  | (770) 449-7800                      



---

(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past  90 days.



Yes x     No ̈



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TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                               |  | Page No.
|-------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | --------
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                              
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                          |  |         
|         |  |                       | 
|         |  |                       |  | Balance SheetsSeptember 30, 2003 (unaudited) and December 31, 2002                                                           |  | 3       
|         |  |                       | 
|         |  |                       |  | Statements of Income for the Three Months and Nine Months EndedSeptember 30, 2003 (unaudited) and 2002 (unaudited)            |  | 4       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Nine Months Ended September 30, 2003 (unaudited) and the Year Ended December 31, 2002 |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Nine Months Ended September 30, 2003 (unaudited) and 2002 (unaudited)                        |  | 6       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                           |  | 7       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 12      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                   |  | 16      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                       |  | 16      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  | 17                                                                                                                           





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WELLS REAL ESTATE FUND XII, L.P.

BALANCE SHEETS



|                                                                                                                      |  | (unaudited)September 30, |            | December 31,
|--------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ------------
|                                                                                                                      |  | 2003                     |            | 2002        
|ASSETS:                                                                                                               |  |                          |            |             
|Investments in Joint Ventures                                                                                         |  | $                        | 28,152,751 |             
|Due from Joint Ventures                                                                                               |  |                          | 666,939    |             
|Cash and cash equivalents                                                                                             |  |                          | 12,199     |             
|Accounts receivable                                                                                                   |  |                          | 0          |             
|                                                                                                                      |  |                          |            |             
|Total assets                                                                                                          |  | $                        | 28,831,889 |             
|                                                                                                                      |  |                          |            |             
|                                                                                                                      |  |                         
|LIABILITIES AND PARTNERS CAPITAL:                                                                                    |  |                          |            |             
|Liabilities:                                                                                                          |  |                          |            |             
|Partnership distributions payable                                                                                     |  | $                        | 645,727    |             
|Accounts payable                                                                                                      |  |                          | 1,017      |             
|                                                                                                                      |  |                          |            |             
|Total liabilities                                                                                                     |  |                          | 646,744    |             
|                                                                                                                      |  |                          |            |             
|Partners capital:                                                                                                    |  |                          |            |             
|Limited partners:                                                                                                     |  |                          |            |             
|Cash Preferred2,869,896 and 2,856,396 units outstanding as of September 30, 2003 and December 31, 2002,
respectively |  |                          | 25,282,575 |             
|Tax Preferred691,223 and 704,723 units outstanding as of September 30, 2003 and December 31, 2002,
respectively      |  |                          | 2,902,570  |             
|General Partners                                                                                                      |  |                          | 0          |             
|                                                                                                                      |  |                          |            |             
|Total partners capital                                                                                               |  |                          | 28,185,145 |             
|                                                                                                                      |  |                          |            |             
|Total liabilities and partners capital                                                                               |  | $                        | 28,831,889 |             
|                                                                                                                      |  |                          |            |             



See accompanying notes



Page 3



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WELLS REAL ESTATE FUND XII, L.P.

STATEMENTS OF INCOME



|                                                                           |  | (unaudited) Three Months EndedSeptember 30, |           |   | (unaudited) Nine Months EndedSeptember 30, |  
|-------------------------------------------------------------------------- |  | ------------------------------------------- | --------- | - | ------------------------------------------ | -
|                                                                           |  | 2003                                        |           |   | 2002                                       |  
|REVENUES:                                                                  |  |                                             |           |   |                                            |  
|Equity in income of Joint Ventures (Note 2)                                |  | $                                           | 408,693   |   |                                            | $
|Other income                                                               |  |                                             | 0         |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  
|                                                                           |  |                                             | 408,693   |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  
|EXPENSES:                                                                  |  |                                             |           |   |                                            |  
|Partnership administration                                                 |  |                                             | 17,656    |   |                                            |  
|Legal and accounting                                                       |  |                                             | 208       |   |                                            |  
|Other general and administrative                                           |  |                                             | 2,449     |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  
|                                                                           |  |                                             | 20,313    |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  
|NET INCOME                                                                 |  | $                                           | 388,380   |   |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|NET INCOME ALLOCATED TO CASH PREFERRED LIMITED PARTNERS                    |  | $                                           | 666,606   |   |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|NET LOSS ALLOCATED TO TAX PREFERRED LIMITED PARTNERS                       |  | $                                           | (278,226  | ) |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|NET INCOME PER WEIGHTED AVERAGE CASH PREFERRED LIMITED PARTNER UNIT        |  | $                                           | 0.23      |   |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|NET LOSS PER WEIGHTED AVERAGE TAX PREFERRED LIMITED PARTNER UNIT           |  | $                                           | (0.40     | ) |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|CASH DISTRIBUTION PER WEIGHTED AVERAGE CASH PREFERRED LIMITED PARTNER UNIT |  | $                                           | 0.23      |   |                                            | $
|                                                                           |  |                                             |           |   |                                            |  
|WEIGHTED AVERAGE LIMITED PARTNER UNITS OUTSTANDING:                        |  |                                             |           |   |                                            |  
|CASH PREFERRED LIMITED PARTNER UNIT                                        |  |                                             | 2,869,896 |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  
|TAX PREFERRED LIMITED PARTNER UNIT                                         |  |                                             | 691,223   |   |                                            |  
|                                                                           |  |                                             |           |   |                                            |  



See accompanying notes



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WELLS REAL ESTATE FUND XII, L.P.

STATEMENTS OF PARTNERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2002 AND

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 (UNAUDITED)



|                                          |  | Limited Partners |  |         | GeneralPartners |   | TotalPartnersCapital |        
|----------------------------------------- |  | ---------------- |  | ------- | --------------- | - | --------------------- | -------
|                                          |  | Cash Preferred   |  |         | Tax Preferred   |   |                       |        
|                                          |  | Units            |  | Amounts |                 |   | Units                 |        
|BALANCE at December 31, 2001              |  | 2,778,607        |  | $       | 24,613,370      |   |                       | 782,512
|Net income (loss)                         |  | 0                |  |         | 2,655,622       |   |                       | 0      
|Partnership distributions                 |  | 0                |  |         | (2,652,529      | ) |                       | 0      
|Tax preferred conversion elections        |  | 77,789           |  |         | 541,826         |   |                       | (77,789
|                                          |  |                  |  |         |                 |   |                       |        
|BALANCE at December 31, 2002              |  | 2,856,396        |  |         | 25,158,289      |   |                       | 704,723
|Net income (loss)                         |  | 0                |  |         | 1,919,081       |   |                       | 0      
|Partnership distributions                 |  | 0                |  |         | (1,858,501      | ) |                       | 0      
|Tax preferred conversion elections        |  | 13,500           |  |         | 63,706          |   |                       | (13,500
|                                          |  |                  |  |         |                 |   |                       |        
|BALANCE at September 30, 2003 (unaudited) |  | 2,869,896        |  | $       | 25,282,575      |   |                       | 691,223
|                                          |  |                  |  |         |                 |   |                       |        



See accompanying notes



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WELLS REAL ESTATE FUND XII, L.P.

STATEMENTS OF CASH FLOWS



|                                                                              |  | (unaudited) Nine Months Ended |           
|----------------------------------------------------------------------------- |  | ----------------------------- | ----------
|                                                                              |  | September 30, 2003            |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |  |                               |           
|Net income                                                                    |  | $                             | 1,084,487 
|Adjustments to reconcile net income to net cash used in operating activities: |  |                               |           
|Equity in income of Joint Ventures                                            |  |                               | (1,233,338
|Changes in assets and liabilities:                                            |  |                               |           
|Accounts receivable                                                           |  |                               | 2,127     
|Accounts payable                                                              |  |                               | (2,914    
|                                                                              |  |                               |           
|Net cash used in operating activities                                         |  |                               | (149,638  
|                                                                              |  |                               |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |                               |           
|Distributions received from Joint Ventures                                    |  |                               | 2,006,391 
|                                                                              |  |                               |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |  |                               |           
|Distributions to limited partners                                             |  |                               | (1,875,025
|                                                                              |  |                               |           
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                     |  |                               | (18,272   
|CASH AND CASH EQUIVALENTS, beginning of period                                |  |                               | 30,471    
|                                                                              |  |                               |           
|CASH AND CASH EQUIVALENTS, end of period                                      |  | $                             | 12,199    
|                                                                              |  |                               |           
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                               |  |                               |           
|Due from Joint Ventures                                                       |  | $                             | 666,939   
|                                                                              |  |                               |           
|Partnership distributions payable                                             |  | $                             | 645,727   
|                                                                              |  |                               |           



See accompanying notes



.





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WELLS REAL ESTATE FUND XII, L.P.

CONDENSED NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2003 (unaudited)



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



|(a) |  | 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, as the general partners (the General Partners). 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 elect 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. The 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) 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.



On
March 22, 1999, the Partnership commenced a public offering of up to $70,000,000 of limited partnership units pursuant to a Registration Statement on filed Form S-11 under the Securities Act of 1933. The Partnership commenced active operations on
June 1, 1999 upon receiving and accepting subscriptions for 125,000 units. The offering was terminated on March 21, 2001 at which time the Partnership had sold 2,688,861 Cash Preferred Units and 872,258 Tax Preferred Units for $10 per unit held by a
total of 1,227 and 106 Cash Preferred and Tax Preferred limited partners, respectively. As of September 30 2003, the Partnership had paid a total of $1,246,391 in acquisition and advisory fees and acquisition expenses, $4,451,400 in selling
commissions and organization and offering expenses, and had invested $5,300,000 in Fund XI-XII-REIT Associates and $24,613,401 in Fund XII-REIT Associates.



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



|                                                                             
|-----------------------------------------------------------------------------
|                                                                             
|Joint Venture                                                                
|                                                                             
|The Wells Fund XI-Fund XII-REIT Joint Venture (Fund XI-XII-REIT Associates)
|                                                                             



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|                                                                          
|--------------------------------------------------------------------------
|                                                                          
|Joint Venture                                                             
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Wells Fund XII-REIT Joint Venture Partnership (Fund
XII-REIT Associates)
|                                                                          
|                                                                          
|                                                                          



|* |  | Wells Operating Partnership, L.P. 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.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Each of the aforementioned properties was acquired on an all-cash basis. For further information regarding the foregoing Joint Ventures and properties, refer to the report filed for the Partnership on Form 10-K for
the year ended December 31, 2002.



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



The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including the
instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by accounting principles generally accepted in the United States
(GAAP) for complete financial statements. The quarterly statements have not been examined by independent auditors. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments
that are of a normal and recurring nature and necessary to fairly present the results for these periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and
footnotes included in the Partnerships Form 10-K for the year ended December 31, 2002.



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



For purpose of determining allocations per the partnership agreement, net income is defined as net income recognized by the Partnership, excluding deductions for
depreciation and amortization. Net income, as defined, of the Partnership will be allocated each year in the same proportions that net cash from operations is distributed to the limited 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 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/her 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.



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



Cash available for distribution, as defined by the partnership agreement, is distributed quarterly to the limited partners as follows:



| |  |  | First, to all Cash Preferred limited partners until such limited partners have received distributions equal to a 10% per annum return on their 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 and the General Partners allocated on a basis of 90% and 10%, respectively.
| | - |  | -------------------------------------------------------------------------------------------------------------------------



No distributions will be made to the limited partners holding Tax Preferred Units.



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



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



| |  |  | In the event that the particular property sold is sold for a price less than the original property purchase price, to the limited partners holding Cash Preferred Units until they
receive 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 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 they receive an amount necessary to equal the net cash available for distribution
received by the limited partners holding Cash Preferred Units on a per-unit basis
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | To limited partners on a per-unit basis until each limited partner has received 100% of his/her Net Capital Contributions, as defined
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per-unit basis until they receive a cumulative 10% per annum return on their Net Capital Contributions, as defined
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners on a per-unit basis until they receive an amount equal to their 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
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | 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
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|2. |  | INVESTMENTS IN JOINT VENTURES
|-- |  | -----------------------------



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



During the periods presented, the Partnership owned interests in seven properties through its ownership in the Joint Ventures. The Partnership does not have control over
the operations of the Joint Ventures; however, it does exercise significant influence. Accordingly, the Partnerships investments in the Joint Ventures are recorded 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. For further information regarding investments in Joint Ventures, see the report filed for the Partnership on Form
10-K for the year ended December 31, 2002.



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



The following information summarizes the operations of the Joint Ventures for the three and nine months ended September 30, 2003 and 2002, respectively:



|                            |  | Total Revenues                  |           |      | Net Income                      |           | Partnerships Share of Net Income
|--------------------------- |  | ------------------------------- | --------- | ---- | ------------------------------- | --------- | ---------------------------------
|                            |  | Three Months EndedSeptember 30, |           |      | Three Months EndedSeptember 30, |           | Three Months EndedSeptember 30,  
|                            |  | 2003                            |           | 2002 |                                 |           | 2003                             
|Fund XI-XII-REIT Associates |  | $                               | 722,863   |      | $                               | 855,310   |                                  
|Fund XII-REIT Associates    |  |                                 | 1,550,233 |      |                                 | 1,480,958 |                                  
|                            |  |                                 |           |      |                                 |           |                                  
|                            |  | $                               | 2,273,096 |      | $                               | 2,336,268 | (1)                              
|                            |  |                                 |           |      |                                 |           |                                  



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|                            |  |                                |          
|--------------------------- |  | ------------------------------ | ---------
|                            |  | Total Revenues                 |          
|                            |  | Nine Months EndedSeptember 30, |          
|                            |  | 2003                           |          
|Fund XI-XII-REIT Associates |  | $                              | 2,158,746
|Fund XII-REIT Associates    |  |                                | 4,590,084
|                            |  |                                |          
|                            |  | $                              | 6,748,830
|                            |  |                                |          



|(1) |  | Amounts have been restated to reflect tenant reimbursements of $165,083 as revenues for the three months ended September 30, 2002, which has no impact on net income.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Amounts have been restated to reflect tenant reimbursements of $534,016 as revenues for the nine months ended September 30, 2002, which has no impact on net income.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | RECENT ACCOUNTING PRONOUNCEMENTS
|-- |  | --------------------------------



In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, which clarifies
the application of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements, relating to consolidation of certain entities. FIN 46 requires the identification of the Partnerships participation in variable
interest entities (VIEs), which are defined as entities with a level of invested equity that is not sufficient to fund future activities to permit them to operate on a stand-alone basis, or whose equity holders lack certain
characteristics of a controlling financial interest. For entities identified as VIEs, FIN 46 sets forth a model to evaluate potential consolidation based on an assessment of which party to the VIE, if any, bears a majority of the exposure to its
expected losses, or stands to gain from a majority of its expected returns. FIN 46 is effective for all new VIEs created or acquired after January 31, 2003. For VIEs created or acquired prior to February 1, 2003, the Partnership has adopted the
provisions of FIN 46 commencing on June 15, 2003. FIN 46 also sets forth certain disclosures regarding interests in VIEs that are deemed significant, even if consolidation is not required. As the Joint Ventures do not fall under the definition of
VIEs provided above, the adoption of FIN 46 has not resulted in the consolidation of any previously unconsolidated entities.



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



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



Wells Management Company, Inc. (Wells Management), an affiliate of the General Partners, receives compensation for supervising the management and leasing of
the Partnerships properties owned through Joint Ventures equal to the lesser of (a) fees that would be paid to a comparable outside firm or (b) 4.5% of the gross revenues generally paid over the life of the lease plus a separate competitive
fee for the one-time initial lease-up of newly constructed properties generally paid in conjunction with the receipt of the first months rent. In the case of commercial properties which are 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. The properties in which the Partnership owns interests incurred management and leasing fees payable to Wells Management of $103,004 and $114,926 for the three months ended September 30, 2003 and 2002, respectively,
and $311,624 and $316,339 for the nine months ended September 30, 2003 and 2002, respectively.



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



Wells Capital, Inc (Wells Capital), an affiliate of the General Partners, and its affiliates perform certain administrative services for the Partnership, such
as accounting, property management and other partnership administration, and incur the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel.
The Partnership reimbursed $13,521 and $11,574 for the three months ended September 30, 2003 and 2002, respectively, and $36,178 and $30,986 for the nine months ended September 30, 2003 and 2002, respectively, to Wells Capital and its affiliates for
these services. The Joint Ventures reimbursed $42,461 and $24,931 for the three months ended September 30, 2003 and 2002, respectively, and $120,623 and $77,212 for the nine months ended September 30, 2003 and 2002, respectively, to Wells Capital
and its affiliates for these services and expenses.



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



The General Partners are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the General Partners in their
capacity as general partners of other Wells Real Estate Funds may be in competition with the Partnership in connection with property acquisitions or for tenants in similar geographic markets.



ITEM 2.    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The following discussion and analysis should be read in conjunction with the accompanying financial statements and notes thereto.



|(a) |  | Forward-Looking Statements
|--- |  | --------------------------



This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including
discussion and analysis of the financial condition of the Partnership, anticipated capital expenditures required to complete certain projects, amounts of cash distributions anticipated to be distributed to limited partners in the future, and certain
other matters. Readers of this report should be aware that there are various factors that may cause actual results to differ materially from any forward-looking statements made in this report, including construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants upon the expiration of existing leases, and the potential need to fund tenant improvements or other capital expenditures out of operating cash flows.



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



Gross Revenues



Gross revenues of the Partnership remained relatively stable at $408,693 for the three months ended September 30, 2003 from $409,891 for the three months ended September 30, 2002, and decreased to $1,233,600 for
the nine months ended September 30, 2003 from $1,335,427 for the nine months ended September 30, 2002, primarily due to the corresponding decrease in equity in income of Joint Ventures described below.



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Equity in Income of
Joint Ventures



Gross Revenues of Joint Ventures



Gross revenues of Joint Ventures decreased in 2003, as
compared to 2002, primarily due to (i) the vacancy of the EYBL CarTex Building beginning in November 2002, and (ii) a decline in property tax reimbursements billed to the sole tenant of the Siemens Building, as this tenant inadvertently paid amounts
due for the first half of 2003 directly to the taxing authority instead of paying Fund XII-REIT Associates.



Expenses of Joint Ventures



Expenses of the Joint Ventures increased for the three and nine months ended September 30, 2003, as compared to the nine months ended September 30, 2002,
primarily due to increases in (i) operating and maintenance costs for the EYBL CarTex Building as a result of the vacancy described above; EYBL CarTex Building was obligated under a triple-net lease, whereby the tenant was responsible for paying all
building and common area maintenance costs, (ii) administrative salaries incurred in connection with efforts to release the EYBL CarTex Building during 2003, partially offset by the recovery of doubtful accounts receivable due from the sole tenant
of the Gartner Building for property tax expense reimbursements in 2003. Increases noted are partially offset by a decrease in property tax expense for the sole tenant of the Siemens Building, as the tenant inadvertently paid amounts due for the
first half of 2003 directly to the taxing authority rather than being invoiced by Fund XII-REIT Associates.



As a result of the decrease in gross revenues and increase in expenses of the Joint Ventures for the nine months ended September 30, 2003 as described
above, equity in income of Joint Ventures decreased to $408,693 from $409,742 for the three months ended September 30, 2003 and 2002, respectively, and to $1,233,338 from $1,334,650 for the nine months ended September 30, 2003 and 2002,
respectively.



Expenses



Expenses of the Partnership were $20,313 and $31,431 for the three months ended September
30, 2003 and 2002, respectively, and $149,113 and $153,298 for the nine months ended September 30, 2003 and 2002, respectively. The 2003 decrease is primarily due to a change in the timing of payments of Tennessee partnership taxes, partially offset
by an increase in administrative costs incurred in response to new reporting and regulatory requirements. We anticipate additional increases related to implementing and adhering to such reporting and regulatory requirements on a going forward basis.



Net Income



As a result of the factors described above, net income of the Partnership was $388,380 and
$378,460 for the three months ended September 30, 2003 and 2002, respectively, and $1,084,487 and $1,182,129 for the nine months ended September 30, 2003 and 2002, respectively.



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



Cash Flows From Operating Activities



Net cash flows from operating activities remained relatively stable at $(149,638) and $(155,441) for the nine months ended September 30, 2003 and 2002, respectively.



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Cash Flows From Investing Activities



Net cash flows from investing activities decreased to $2,006,391 for
the nine months ended September 30, 2003, from $2,130,447 for the nine months ended September 30, 2002 primarily due to the corresponding decline in distributions received from Fund XI-XII-REIT Associates as a result of the vacancy of the EYBL
CarTex Building beginning in November 2002.



Cash Flows From Financing
Activities



Net cash flows from financing were $(1,875,025) and
$(1,995,614) for the nine months ended September 30, 2003 and 2002, respectively, due to the decline in distributions as described above.



Distributions



The Partnership declared distributions to the limited partners holding Cash Preferred Units of $0.23 per unit for quarters ended September 30, 2003 and 2002. Such distributions have been made from net cash from
operations and distributions received from investments in Joint Ventures. Distributions accrued for the third quarter of 2003 to the limited partners holding Cash Preferred Units were paid in November 2003. No cash distributions were made to limited
partners holding Tax Preferred Units.



In the near term, cash flows generated
from the Partnerships interest in Joint Ventures and, accordingly, distributions to limited partners holding Cash Preferred Units are anticipated to decline due to reserving future cash flows otherwise distributable to the limited partners in
order to fund the re-leasing of the EYBL CarTex Building; there are no assurances as to when such suitable replacement tenant or tenants will be located or at what rental rates this building will be re-leased.



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 its funds available for investment. Accordingly, it is unlikely that the Partnership will acquire interests in any additional properties. Fund XI-XII-REIT Associates has received
notice that Sprint, the sole tenant of the Sprint Building, will terminate its lease and vacate the premises effective May 18, 2004. The Partnership recognized equity in income of Joint Ventures attributable to its interest in the Sprint Building of
approximately $28,555 and $84,155 for the three months and nine months ended September 30, 2003, respectively. The General Partners anticipate funding costs to re-lease the Sprint Building in 2004.



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



The Partnership and its Joint Ventures have entered into agreements with Wells Capital, the General Partner of Wells Partners, L.P., and its affiliates, whereby the
Partnership or its Joint Ventures pay certain fees or reimbursements to Wells Capital or its affiliates (e.g., property management and leasing fees, administrative salary reimbursements, etc.). See Note 4 to the Partnerships financial
statements included in this report for a discussion of the various related party transactions, agreements, and fees.



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



The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases, which would
protect the Partnership from the impact of inflation. These provisions include 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. There is no assurance, however, that the Partnership would be able to replace existing leases with new leases at higher base rental rates.



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



The Partnerships 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 the Partnerships
results of operations to those of companies in similar businesses.



Below is a
discussion of the accounting policies that management considers to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.



Investment in Real Estate Assets



Management is required to make subjective assessments as to the useful lives of its
depreciable assets. Management considers the period of future benefit of the asset 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:



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



In the event that management uses
inappropriate useful lives or methods for depreciation, the Partnerships net income would be misstated.



Valuation of Real Estate Assets



Management continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which the Partnership has an ownership interest, either directly or through investments in Joint
Ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by
determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted
future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate
assets held by the Partnership to date.



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



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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS



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



ITEM 4.    CONTROLS AND PROCEDURES



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



There were no significant changes in the Partnerships internal controls or other factors that could significantly affect such controls
subsequent to the date of their evaluation.



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PART II.    OTHER INFORMATION



ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K



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



|(b) |  | No reports on Form 8-K were filed during the third quarter of 2003.
|--- |  | -------------------------------------------------------------------



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SIGNATURES



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



|                 |  |  |  | WELLS REAL ESTATE FUND XII, L.P. (Registrant)      
|---------------- |  |  |  | ---------------------------------------------------
|                 |  |  |  | By: WELLS PARTNERS, L.P (General Partner)          
|                 |  |  |  | By: WELLS CAPITAL, INC. (Corporate General Partner)
|                 |  | 
|November 7, 2003 |  |  |  | /s/    LEO F. WELLS, III                           
|                 |  |  | 
|                 |  |  |  |                                                    
|                 |  |  |  |                                                    
|November 7, 2003 |  |  |  | /s/    DOUGLAS P. WILLIAMS                         
|                 |  |  | 
|                 |  |  |  |                                                    



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EXHIBIT INDEX

TO

THIRD QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND XII, L.P.



|Exhibit No. |  | Description                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|            | 
|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