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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

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

for the quarterly period ended September 30, 2008

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 000-51262

WELLS REAL ESTATE INVESTMENT TRUST II, INC.

(Exact name of registrant as specified in its charter)







|                                                              |  |                                       
|------------------------------------------------------------- |  | --------------------------------------
|Maryland                                                      |  | 20-0068852                            
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification Number)

6200 The Corners Parkway

Norcross, Georgia 30092

(Address of principal executive offices)

(Zip Code)

(770)
449-7800

(Registrants telephone number, including area code)

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, a non-accelerated filer,
or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated filer   ̈    Accelerated filer   ̈    Non-Accelerated filer  x    Smaller reporting company   ̈

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   ̈    No  x

Number of shares outstanding of the registrants

only class of common stock, as of October 31, 2008:
432,021,685 shares









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FORM 10-Q

WELLS REAL ESTATE INVESTMENT TRUST II, INC.

TABLE OF CONTENTS



|                              |  |          |  |                                                                                                                                                |  |   
|----------------------------- |  | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | --
|                              |  | Page No.
|PART I. FINANCIAL INFORMATION |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Consolidated Financial Statements                                                                                                              |  |   
|                              |  |          | 
|                              |  |          |  | Consolidated Balance Sheets as of September 30, 2008 (unaudited) and December 31,
2007                                                         |  | 4 
|                              |  |          | 
|                              |  |          |  | Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2008 (unaudited)
 and 2007 (unaudited)          |  | 5 
|                              |  |          | 
|                              |  |          |  | Consolidated Statements of Stockholders Equity for the Year Ended December 31, 2007 and the Nine Months
 Ended September 30, 2008 (unaudited) |  | 6 
|                              |  |          | 
|                              |  |          |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 (unaudited) and 2007 (unaudited)                            |  | 7 
|                              |  |          | 
|                              |  |          |  | Condensed Notes to Consolidated Financial Statements (unaudited)                                                                               |  | 8 
|                              |  |          | 
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                          |  | 19
|                              |  |          | 
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                     |  | 29
|                              |  |          | 
|                              |  | Item 4T. |  | Controls and Procedures                                                                                                                        |  | 30
|                              | 
|PART II. OTHER INFORMATION    |  |         
|                              |  |          | 
|                              |  | Item 1.  |  | Legal Proceedings                                                                                                                              |  | 31
|                              |  |          | 
|                              |  | Item 1A. |  | Risk Factors                                                                                                                                   |  | 31
|                              |  |          | 
|                              |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                    |  | 31
|                              |  |          | 
|                              |  | Item 3.  |  | Defaults Upon Senior Securities                                                                                                                |  | 32
|                              |  |          | 
|                              |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                                            |  | 32
|                              |  |          | 
|                              |  | Item 5.  |  | Other Information                                                                                                                              |  | 32
|                              |  |          | 
|                              |  | Item 6.  |  | Exhibits                                                                                                                                       |  | 32



2



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Investment Trust II, Inc. (Wells REIT II, we, our
or us) 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. We intend for all such
forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject
to certain risks and uncertainties, including 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. 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 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, make distributions to stockholders, and maintain the value of
our real estate properties, may be significantly hindered. See Item 1A in this Form 10-Q and Item 1A in Wells REIT IIs Annual Report on Form 10-K for the year ended December 31, 2007, for a discussion of some of the risks and
uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements. The risk factors described herein and in our Annual Report are not the only ones we face, but do represent those risks and
uncertainties that we believe are material to us. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also harm our business.



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WELLS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED BALANCE SHEETS

(in
thousands, except share and per-share amounts)



|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                                                     |  | (Unaudited)September 30,2008 |           |   | December 31,2007 |  
|Assets:                                                                                                                                                                              |  |                              |           |   |                  |   |           |  
|Real estate assets, at cost:                                                                                                                                                         |  |                              |           |   |                  |   |           |  
|Land                                                                                                                                                                                 |  | $                            | 552,747   |   |                  | $ | 494,431   |  
|Buildings and improvements, less accumulated depreciation of $197,060 and $139,940 as of September 30, 2008 and
December 31, 2007, respectively                                      |  |                              | 2,932,802 |   |                  |   | 2,364,471 |  
|Intangible lease assets, less accumulated amortization of $231,683 and $184,532 as of September 30, 2008 and
December 31, 2007, respectively                                         |  |                              | 614,084   |   |                  |   | 587,185   |  
|Construction in progress                                                                                                                                                             |  |                              | 64,598    |   |                  |   | 17,279    |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Total real estate assets                                                                                                                                                             |  |                              | 4,164,231 |   |                  |   | 3,463,366 |  
|Cash and cash equivalents                                                                                                                                                            |  |                              | 45,568    |   |                  |   | 47,513    |  
|Tenant receivables, net of allowance for doubtful accounts of $740 and $1,747 as of September 30, 2008 and
December 31, 2007, respectively                                           |  |                              | 84,119    |   |                  |   | 70,409    |  
|Prepaid expenses and other assets                                                                                                                                                    |  |                              | 70,662    |   |                  |   | 86,636    |  
|Deferred financing costs, less accumulated amortization of $1,621 and $2,668 as of September 30, 2008 and
December 31, 2007, respectively                                            |  |                              | 5,493     |   |                  |   | 3,881     |  
|Intangible lease origination costs, less accumulated amortization of $126,930 and $93,356 as of September 30, 2008 and
December 31, 2007, respectively                               |  |                              | 376,852   |   |                  |   | 319,496   |  
|Deferred lease costs, less accumulated amortization of $5,168 and $2,942 as of September 30, 2008 and December 31,
2007, respectively                                                |  |                              | 42,723    |   |                  |   | 32,857    |  
|Investment in development authority bonds                                                                                                                                            |  |                              | 664,000   |   |                  |   | 78,000    |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Total assets                                                                                                                                                                         |  | $                            | 5,453,648 |   |                  | $ | 4,102,158 |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Liabilities:                                                                                                                                                                         |  |                              |           |   |                  |   |           |  
|Lines of credit and notes payable                                                                                                                                                    |  | $                            | 1,315,552 |   |                  | $ | 928,297   |  
|Accounts payable, accrued expenses, and accrued capital expenditures                                                                                                                 |  |                              | 80,904    |   |                  |   | 59,627    |  
|Due to affiliates                                                                                                                                                                    |  |                              | 3,123     |   |                  |   | 13,385    |  
|Dividends payable                                                                                                                                                                    |  |                              | 10,514    |   |                  |   | 9,710     |  
|Deferred income                                                                                                                                                                      |  |                              | 26,473    |   |                  |   | 16,436    |  
|Intangible lease liabilities, less accumulated amortization of $31,484 and $21,270 as of September 30, 2008 and
December 31, 2007, respectively                                      |  |                              | 122,570   |   |                  |   | 109,149   |  
|Obligations under capital leases                                                                                                                                                     |  |                              | 664,000   |   |                  |   | 78,000    |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Total liabilities                                                                                                                                                                    |  |                              | 2,223,136 |   |                  |   | 1,214,604 |  
|Commitments and Contingencies (Note 5)                                                                                                                                               |  |                              |          |   |                  |   |          |  
|Minority Interest                                                                                                                                                                    |  |                              | 7,549     |   |                  |   | 3,170     |  
|Redeemable Common Stock                                                                                                                                                              |  |                              | 667,781   |   |                  |   | 596,464   |  
|Stockholders Equity:                                                                                                                                                                |  |                              |           |   |                  |   |           |  
|Common stock, $0.01 par value; 900,000,000 shares authorized; 427,602,340 and 371,510,095 shares issued and outstanding as of
September 30, 2008 and December 31, 2007, respectively |  |                              | 4,276     |   |                  |   | 3,715     |  
|Additional paid-in capital                                                                                                                                                           |  |                              | 3,815,097 |   |                  |   | 3,311,895 |  
|Cumulative distributions in excess of earnings                                                                                                                                       |  |                              | (591,566  | ) |                  |   | (427,857  | )
|Redeemable common stock                                                                                                                                                              |  |                              | (667,781  | ) |                  |   | (596,464  | )
|Other comprehensive loss                                                                                                                                                             |  |                              | (4,844    | ) |                  |   | (3,369    | )
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Total stockholders equity                                                                                                                                                           |  |                              | 2,555,182 |   |                  |   | 2,287,920 |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  
|Total liabilities, minority interest, redeemable common stock, and stockholders equity                                                                                              |  | $                            | 5,453,648 |   |                  | $ | 4,102,158 |  
|                                                                                                                                                                                     |  |                              |           |   |                  |   |           |  

See accompanying notes.



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WELLS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per-share amounts)



|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ------------------------------------------ | ------- | - | ----------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                               |  | (Unaudited)Three Months EndedSeptember 30, |         |   | (Unaudited)Nine Months EndedSeptember 30, |  
|                                                               |  | 2008                                       |         |   | 2007                                      |   |         | 2008 |  |   | 2007    |  
|Revenues:                                                      |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Rental income                                                  |  | $                                          | 106,981 |   |                                           | $ | 82,794  |      |  | $ | 295,301 |   |  | $ | 232,136 |  
|Tenant reimbursements                                          |  |                                            | 27,548  |   |                                           |   | 20,271  |      |  |   | 77,336  |   |  |   | 61,262  |  
|Hotel income                                                   |  |                                            | 6,532   |   |                                           |   | 6,989   |      |  |   | 17,728  |   |  |   | 18,552  |  
|Other property income                                          |  |                                            | 187     |   |                                           |   | 751     |      |  |   | 955     |   |  |   | 2,762   |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|                                                               |  |                                            | 141,248 |   |                                           |   | 110,805 |      |  |   | 391,320 |   |  |   | 314,712 |  
|Expenses:                                                      |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Property operating costs                                       |  |                                            | 43,585  |   |                                           |   | 35,140  |      |  |   | 122,942 |   |  |   | 98,088  |  
|Hotel operating costs                                          |  |                                            | 4,626   |   |                                           |   | 4,894   |      |  |   | 13,073  |   |  |   | 13,835  |  
|Asset and property management fees:                            |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Related-party                                                  |  |                                            | 9,265   |   |                                           |   | 7,140   |      |  |   | 26,256  |   |  |   | 19,816  |  
|Other                                                          |  |                                            | 1,065   |   |                                           |   | 1,142   |      |  |   | 3,122   |   |  |   | 3,877   |  
|Depreciation                                                   |  |                                            | 21,070  |   |                                           |   | 15,796  |      |  |   | 57,413  |   |  |   | 44,087  |  
|Amortization                                                   |  |                                            | 31,838  |   |                                           |   | 28,883  |      |  |   | 91,064  |   |  |   | 86,292  |  
|General and administrative                                     |  |                                            | 5,190   |   |                                           |   | 4,623   |      |  |   | 17,434  |   |  |   | 12,581  |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|                                                               |  |                                            | 116,639 |   |                                           |   | 97,618  |      |  |   | 331,304 |   |  |   | 278,576 |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Real estate operating income                                   |  |                                            | 24,609  |   |                                           |   | 13,187  |      |  |   | 60,016  |   |  |   | 36,136  |  
|Other income (expense):                                        |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Interest expense                                               |  |                                            | (24,302 | ) |                                           |   | (12,572 | )    |  |   | (55,787 | ) |  |   | (34,682 | )
|Loss on interest rate swaps                                    |  |                                            | (6,356  | ) |                                           |   | (5,481  | )    |  |   | (6,995  | ) |  |   | (5,496  | )
|Gain (loss) on foreign currency exchange contract              |  |                                            | 464     |   |                                           |   |        |      |  |   | (841    | ) |  |   |        |  
|Gain on early extinguishment of debt                           |  |                                            |        |   |                                           |   |        |      |  |   | 2,971   |   |  |   |        |  
|Interest and other income                                      |  |                                            | 9,919   |   |                                           |   | 2,834   |      |  |   | 15,920  |   |  |   | 7,130   |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|                                                               |  |                                            | (20,275 | ) |                                           |   | (15,219 | )    |  |   | (44,732 | ) |  |   | (33,048 | )
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before minority interest and income tax expense  |  |                                            | 4,334   |   |                                           |   | (2,032  | )    |  |   | 15,284  |   |  |   | 3,088   |  
|Minority interest in loss (earnings) of consolidated entities  |  |                                            | 67      |   |                                           |   | (21     | )    |  |   | 91      |   |  |   | (39     | )
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) before income tax expense                        |  |                                            | 4,401   |   |                                           |   | (2,053  | )    |  |   | 15,375  |   |  |   | 3,049   |  
|Income tax expense                                             |  |                                            | (251    | ) |                                           |   | (400    | )    |  |   | (740    | ) |  |   | (436    | )
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss)                                              |  | $                                          | 4,150   |   |                                           | $ | (2,453  | )    |  | $ | 14,635  |   |  | $ | 2,613   |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Per share information  basic and diluted:                     |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Net income (loss) available to common stockholders             |  | $                                          | 0.01    |   |                                           | $ | (0.01   | )    |  | $ | 0.04    |   |  | $ | 0.01    |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  
|Weighted-average common shares outstanding  basic and diluted |  |                                            | 417,192 |   |                                           |   | 342,924 |      |  |   | 397,873 |   |  |   | 317,232 |  
|                                                               |  |                                            |         |   |                                           |   |         |      |  |   |         |   |  |   |         |  

See accompanying notes.



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WELLS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2007

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED)

(in thousands, except per-share amounts)



|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|------------------------------------------------------------------------ |  | ------------ | - |  | ------------------------ | ----- | - | ------------------------------------------- | - | --------- | --------------------- |  | - | ---------------------- | - |  | ------------------------ | -------- | - |  | - | ------ | - |  | - | --------- | -
|                                                                         |  | Common
Stock |   |  | AdditionalPaid-InCapital |       |   | CumulativeDistributionsin Excess ofEarnings |   |           | RedeemableCommonStock |  |   | OtherComprehensiveLoss |   |  | TotalStockholdersEquity |         
|                                                                         |  | Shares       |   |  | Amount                   |       |   |                                             |   |           |                      
|Balance, December 31, 2006                                               |  | 280,119      |   |  | $                        | 2,801 |   |                                             | $ | 2,491,817 |                       |  | $ | (225,549               | ) |  | $                        |         |   |  | $ | (1,049 | ) |  | $ | 2,268,020 |  
|Adjustment resulting from the adoption of FIN 48                         |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   | (410                   | ) |  |                          |         |   |  |   |       |   |  |   | (410      | )
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Balance, January 1, 2007                                                 |  | 280,119      |   |  |                          | 2,801 |   |                                             |   | 2,491,817 |                       |  |   | (225,959               | ) |  |                          |         |   |  |   | (1,049 | ) |  |   | 2,267,610 |  
|Issuance of common stock                                                 |  | 97,251       |   |  |                          | 973   |   |                                             |   | 971,541   |                       |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | 972,514   |  
|Redemptions of common stock                                              |  | (5,860       | ) |  |                          | (59   | ) |                                             |   | (55,347   | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (55,406   | )
|Redeemable common stock                                                  |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          | (596,464 | ) |  |   |       |   |  |   | (596,464  | )
|Dividends ($0.60 per share)                                              |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   | (197,230               | ) |  |                          |         |   |  |   |       |   |  |   | (197,230  | )
|Commissions and discounts on stock sales and related dealer-manager fees |  |             |   |  |                          |      |   |                                             |   | (86,376   | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (86,376   | )
|Other offering costs                                                     |  |             |   |  |                          |      |   |                                             |   | (9,740    | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (9,740    | )
|Components of comprehensive loss:                                        |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Net loss                                                                 |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   | (4,668                 | ) |  |                          |         |   |  |   |       |   |  |   | (4,668    | )
|Foreign currencytranslation adjustment                                   |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          |         |   |  |   | 1      |   |  |   | 1         |  
|Market value adjustment to interest rate swap                            |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          |         |   |  |   | (2,321 | ) |  |   | (2,321    | )
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Comprehensive loss                                                       |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   | (6,988    | )
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Balance, December 31, 2007                                               |  | 371,510      |   |  |                          | 3,715 |   |                                             |   | 3,311,895 |                       |  |   | (427,857               | ) |  |                          | (596,464 | ) |  |   | (3,369 | ) |  |   | 2,287,920 |  
|Issuance of common stock                                                 |  | 64,574       |   |  |                          | 646   |   |                                             |   | 645,091   |                       |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | 645,737   |  
|Redemptions of common stock                                              |  | (8,482       | ) |  |                          | (85   | ) |                                             |   | (79,190   | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (79,275   | )
|Redeemable common stock                                                  |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          | (71,317  | ) |  |   |       |   |  |   | (71,317   | )
|Dividends ($0.45 per share)                                              |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   | (178,344               | ) |  |                          |         |   |  |   |       |   |  |   | (178,344  | )
|Commissions and discounts on stock sales and relateddealer-manager fees  |  |             |   |  |                          |      |   |                                             |   | (55,898   | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (55,898   | )
|Other offering costs                                                     |  |             |   |  |                          |      |   |                                             |   | (6,801    | )                     |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | (6,801    | )
|Components of comprehensive income:                                      |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Net income                                                               |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   | 14,635                 |   |  |                          |         |   |  |   |       |   |  |   | 14,635    |  
|Foreign currencytranslation adjustment                                   |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          |         |   |  |   | (51    | ) |  |   | (51       | )
|Market value adjustment to interest rate swap                            |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          |         |   |  |   | (1,424 | ) |  |   | (1,424    | )
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Comprehensive income                                                     |  |             |   |  |                          |      |   |                                             |   |          |                       |  |   |                       |   |  |                          |         |   |  |   |       |   |  |   | 13,160    |  
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  
|Balance, September 30, 2008                                              |  | 427,602      |   |  | $                        | 4,276 |   |                                             | $ | 3,815,097 |                       |  | $ | (591,566               | ) |  | $                        | (667,781 | ) |  | $ | (4,844 | ) |  | $ | 2,555,182 |  
|                                                                         |  |              |   |  |                          |       |   |                                             |   |           |                       |  |   |                        |   |  |                          |          |   |  |   |        |   |  |   |           |  

See accompanying notes.



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WELLS REAL ESTATE INVESTMENT TRUST II, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                  |  |                                           |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ----------------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | (unaudited)Nine Months EndedSeptember 30, |         
|                                                                                  |  | 2008                                      |          |   | 2007 |  
|Cash Flows from Operating Activities:                                             |  |                                           |          |   |      |   |          |  
|Net income                                                                        |  | $                                         | 14,635   |   |      | $ | 2,613    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                           |          |   |      |   |          |  
|Straight-line rental income                                                       |  |                                           | (11,706  | ) |      |   | (12,113  | )
|Depreciation                                                                      |  |                                           | 57,413   |   |      |   | 44,087   |  
|Amortization                                                                      |  |                                           | 97,756   |   |      |   | 96,850   |  
|Unrealized loss on interest rate swaps                                            |  |                                           | 5,881    |   |      |   | 5,496    |  
|Loss on foreign currency exchange contract                                        |  |                                           | 841      |   |      |   |         |  
|Non-cash interest expense                                                         |  |                                           | 11,061   |   |      |   | 4,649    |  
|Gain on early extinguishment of debt                                              |  |                                           | (2,971   | ) |      |   |         |  
|Minority interest in (loss) earnings of consolidated entities                     |  |                                           | (91      | ) |      |   | 39       |  
|Changes in assets and liabilities:                                                |  |                                           |          |   |      |   |          |  
|Increase in other tenant receivables, net                                         |  |                                           | (1,422   | ) |      |   | (3,291   | )
|Increase in prepaid expenses and other assets                                     |  |                                           | (3,322   | ) |      |   | (8,483   | )
|Increase in accounts payable and accrued expenses                                 |  |                                           | 7,267    |   |      |   | 9,025    |  
|Decrease in due to affiliates                                                     |  |                                           | (6,277   | ) |      |   | (5,686   | )
|Increase in deferred income                                                       |  |                                           | 10,037   |   |      |   | 3,683    |  
|                                                                                  |  |                                           |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                           | 179,102  |   |      |   | 136,869  |  
|Cash Flows from Investing Activities:                                             |  |                                           |          |   |      |   |          |  
|Investment in real estate and earnest money paid                                  |  |                                           | (853,430 | ) |      |   | (837,107 | )
|Proceeds from master leases                                                       |  |                                           |         |   |      |   | 1,385    |  
|Release of escrowed funds                                                         |  |                                           | 18,848   |   |      |   |         |  
|Acquisition fees paid                                                             |  |                                           | (14,313  | ) |      |   | (18,007  | )
|Deferred lease costs paid                                                         |  |                                           | (13,137  | ) |      |   | (16,441  | )
|                                                                                  |  |                                           |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                           | (862,032 | ) |      |   | (870,170 | )
|Cash Flows from Financing Activities:                                             |  |                                           |          |   |      |   |          |  
|Deferred financing costs paid                                                     |  |                                           | (2,622   | ) |      |   | (1,868   | )
|Proceeds from lines of credit and notes payable                                   |  |                                           | 797,222  |   |      |   | 498,036  |  
|Repayments of lines of credit and notes payable                                   |  |                                           | (437,513 | ) |      |   | (293,272 | )
|Distributions paid to minority interest partners                                  |  |                                           | (76      | ) |      |   | (61      | )
|Issuance of common stock                                                          |  |                                           | 639,963  |   |      |   | 774,470  |  
|Redemptions of common stock                                                       |  |                                           | (79,029  | ) |      |   | (42,864  | )
|Dividends paid to stockholders                                                    |  |                                           | (177,540 | ) |      |   | (140,911 | )
|Commissions on stock sales and related dealer-manager fees paid                   |  |                                           | (50,722  | ) |      |   | (64,102  | )
|Other offering costs paid                                                         |  |                                           | (8,674   | ) |      |   | (8,955   | )
|                                                                                  |  |                                           |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                                           | 681,009  |   |      |   | 720,473  |  
|                                                                                  |  |                                           |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                         |  |                                           | (1,921   | ) |      |   | (12,828  | )
|Effect of foreign exchange rate on cash and cash equivalents                      |  |                                           | (24      | ) |      |   |         |  
|Cash and cash equivalents, beginning of period                                    |  |                                           | 47,513   |   |      |   | 46,100   |  
|                                                                                  |  |                                           |          |   |      |   |          |  
|Cash and cash equivalents, end of period                                          |  | $                                         | 45,568   |   |      | $ | 33,272   |  
|                                                                                  |  |                                           |          |   |      |   |          |  

See accompanying notes.



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WELLS REAL ESTATE INVESTMENT TRUST II, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

(unaudited)



|1. | Organization
|-- | ------------

Wells Real
Estate Investment Trust II, Inc. (Wells REIT II) is a Maryland corporation that has elected to be taxed as a real estate investment trust (REIT) for federal income tax purposes. Wells REIT II engages in the acquisition and
ownership of commercial real estate properties, including properties that are under construction, are newly constructed, or have operating histories. Wells REIT II was incorporated on July 3, 2003 and commenced operations on January 22,
2004. Wells REIT II conducts business primarily through Wells Operating Partnership II, L.P. (Wells OP II), a Delaware limited partnership. Wells REIT II is the sole general partner of Wells OP II and possesses full legal control
and authority over the operations of Wells OP II. Wells REIT II owns more than 99.9% of the equity interests in Wells OP II. Wells Capital, Inc. (Wells Capital), the external advisor to Wells REIT II, is the sole limited partner of Wells
OP II. Wells OP II acquires, develops, owns, leases, and operates real properties directly, through wholly owned subsidiaries or through joint ventures. References to Wells REIT II herein shall include Wells REIT II and all subsidiaries of
Wells REIT II, including consolidated joint ventures, Wells OP II, and Wells OP IIs direct and indirect subsidiaries. See Note 7 for a discussion of the advisory services provided by Wells Capital.

As of September 30, 2008, Wells REIT II owned interests in 63 office properties, one industrial building, one hotel, and one office property under
construction, comprising approximately 20.1 million square feet of commercial space located in 23 states and the District of Columbia. Of these properties, 60 are wholly owned and six are owned through consolidated joint ventures. As of
September 30, 2008, the office and industrial properties were approximately 98.5% leased.

On December 1, 2003, Wells REIT II
commenced its initial public offering of up to 785.0 million shares of common stock, of which 185.0 million shares were reserved for issuance through Wells REIT IIs dividend reinvestment plan, pursuant to a Registration Statement
filed on Form S-11 under the Securities Act of 1933. Except for continuing to offer shares for sale through its dividend reinvestment plan, Wells REIT II stopped offering shares for sale under its initial public offering on November 26, 2005.
Wells REIT II raised gross offering proceeds of approximately $2.0 billion from the sale of approximately 197.1 million shares under its initial public offering, including shares sold under the dividend reinvestment plan through March 2006. On
November 10, 2005, Wells REIT II commenced a follow-on offering of up to 300.6 million shares of common stock, of which 0.6 million shares were reserved for issuance under Wells REIT IIs dividend reinvestment plan, pursuant to a
Registration Statement filed on Form S-11 under the Securities Act of 1933. On April 14, 2006, Wells REIT II amended the aforementioned registration statements to offer in a combined prospectus 300.6 million shares registered under the
follow-on offering and 174.4 million unsold shares related to the dividend reinvestment plan originally registered under the initial public offering. As of September 30, 2008, Wells REIT II had raised gross offering proceeds of
approximately $2.5 billion from the sale of approximately 250.3 million shares under the follow-on offering.

As of September 30,
2008, Wells REIT II had raised gross offering proceeds from the sale of common stock under the initial public offering and follow-on offering of approximately $4.5 billion. After deductions from such gross offering proceeds for payments of
acquisition fees of approximately $89.0 million, selling commissions and dealer-manager fees of approximately $408.3 million, other organization and offering expenses of approximately $59.6 million, and common stock redemptions of approximately
$198.3 million under the share redemption program, Wells REIT II had received aggregate net offering proceeds of approximately $3.7 billion. Substantially all of Wells REIT IIs net offering proceeds have been invested in real properties and
related assets. As of September 30, 2008, approximately 79.7 million shares remain available for sale to the public under the follow-on offering, exclusive of shares available under the dividend reinvestment plan.



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##### Table of Contents

On July 9, 2007, Wells REIT II filed a Registration Statement on Form S-11 with the SEC to register
a third public offering of up to 375.0 million shares of common stock, which was amended on August 18, 2008 and on September 22, 2008 (the Third Offering). Pursuant to the Third Offering registration statement, as amended,
Wells REIT II is offering up to 300.0 million shares of common stock in a primary offering for $10 per share, with discounts available to certain categories of purchasers. Wells REIT II is also offering up to 75.0 million shares pursuant
to its dividend reinvestment plan at a purchase price equal to the higher of $9.55 per share or 95% of the estimated value of a share of its common stock. The Third Offering registration statement was declared effective by the SEC on October 1,
2008 and offering activities commenced promptly thereafter. Wells REIT II stopped offering shares for sale under the follow-on offering on November 10, 2008 and began accepting subscriptions under the Third Offering on November 11, 2008.

Wells REIT IIs stock is not listed on a public securities exchange. However, Wells REIT IIs charter requires that in the event
Wells REIT IIs stock is not listed on a national securities exchange by October 2015, Wells REIT II must either seek stockholder approval to extend or amend this listing deadline or stockholder approval to begin liquidating investments and
distributing the resulting proceeds to the stockholders. If Wells REIT II seeks stockholder approval to extend or amend this listing date and does not obtain it, Wells REIT II will then be required to seek stockholder approval to liquidate. In this
circumstance, if Wells REIT II seeks and does not obtain approval to liquidate, Wells REIT II will not be required to list or liquidate and could continue to operate indefinitely as an unlisted company.



|2. | Summary of Significant Accounting Policies
|-- | ------------------------------------------

Basis of Presentation

The consolidated financial statements of Wells REIT II 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 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 management, the statements for these unaudited interim periods presented include all adjustments, which are of a normal and recurring
nature, necessary for a fair and consistent presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full years results. Wells REIT IIs consolidated financial statements include
the accounts of Wells REIT II, Wells OP II, and any variable interest entity in which Wells REIT II or Wells OP II is deemed the primary beneficiary. For further information, refer to the financial statements and footnotes included in Wells REIT
IIs Annual Report on Form 10-K for the year ended December 31, 2007.

Investment in Development Authority Bonds and
Obligations Under Capital Leases

In connection with the acquisition of certain real estate assets, Wells REIT II has assumed
investments in development authority bonds and corresponding obligations under capital leases of land or buildings. The county development authority issued bonds to developers to finance the initial development of these projects, a portion of which
was then leased back to the developer under a capital lease. This structure enabled the developer to receive property tax abatements over the concurrent terms of the development authority bonds and capital leases. The remaining property tax
abatement benefits transferred to Wells REIT II upon assumption of the bonds and corresponding capital leases at acquisition. The development authority bonds are recorded at net principal value, and the obligations under capital leases are recorded
at the present value of the expected payments. The related amounts of interest income and expense are recognized as earned in equal amounts and, accordingly, do not impact net income.

Redeemable Common Stock

Wells REIT IIs share redemption program requires
Wells REIT II to honor all redemption requests made within two years following the death of a stockholder. Wells REIT II has insurance-backed source of funding for the redemption of shares under its share redemption program in the event Wells REIT
II receives an unusually large number of redemption requests due to the death of its investors. As the decision to honor redemptions sought within two years following the death of a stockholder is outside of the control of Wells REIT II and an
insurance agreement provides Wells REIT II with the ability to fund all of such redemptions, Wells REIT II has recorded redeemable common stock in the temporary equity section of the accompanying consolidated balance sheet equal to the present value
of the future estimated deductible



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##### Table of Contents

amounts under the insurance agreement. In addition, Wells REIT II is required to honor certain other redemptions up to the amount of proceeds raised in the
current calendar year under the dividend reinvestment plan. Accordingly, the amount of proceeds raised under the dividend reinvestment plan, less redemptions funded in the current calendar year, is also recorded as redeemable common stock in the
temporary equity section of the accompanying consolidated balance sheet. Further, upon being tendered for redemption by the holder, Wells REIT II reclassifies redeemable common shares from temporary equity to a liability at settlement value.

Interest Rate Swap Agreements

Wells REIT II has entered into interest rate swaps in order to mitigate its interest rate risk on related financial instruments. Wells REIT II does not enter into derivative or interest rate transactions for speculative purposes; however,
certain of its derivatives may not qualify for hedge accounting treatment. Wells REIT II records the fair value of its interest rate swap agreements as either prepaid expenses and other assets or accounts payable, accrued expenses, and accrued
capital expenditures. Changes in the fair value of the effective portion of an interest rate swap agreement that is designated as a hedge is recorded as other comprehensive loss in the accompanying consolidated statement of stockholders
equity. The ineffective portion of the hedge, if any, is recognized in current earnings during the period of change in fair value. Changes in the fair value of interest rate swap agreements that do not qualify for hedge accounting treatment are
recorded as gain (loss) on interest rate swaps in the accompanying consolidated statements of operations. Amounts received or paid under interest rate swap agreements are recorded as gain or loss on interest rate swaps as incurred. For the three and
nine months ended September 30, 2008, net payments of $1.1 million are included in loss on interest rate swaps on the accompanying statement of operations.

Income Taxes

Wells REIT II has elected to be taxed as a REIT under the Internal Revenue Code of 1986
(the Code), as amended, and has operated as such beginning with its taxable year ended December 31, 2003. To qualify as a REIT, Wells REIT II must meet certain organizational and operational requirements, including a requirement to
distribute at least 90% of its REIT taxable income, as defined by the Code, to its stockholders. As a REIT, Wells REIT II generally is not subject to income tax on income it distributes to stockholders. Wells REIT II is subject to certain state and
local taxes related to the operations of properties in certain locations, which have been provided for in the accompanying consolidated financial statements.

Wells TRS II, LLC (Wells TRS) is a wholly owned subsidiary of Wells REIT II and is organized as a Delaware limited liability company and operates, among other things, a full-service hotel. Wells REIT II
has elected to treat Wells TRS as a taxable REIT subsidiary. Wells REIT II may perform certain additional, non-customary services for tenants of its buildings through Wells TRS; however, any earnings related to such services are subject to federal
and state income taxes. In addition, for Wells REIT II to continue to qualify as a REIT, Wells REIT II must limit its investments in taxable REIT subsidiaries to 20% of the value of the total assets of Wells REIT II in 2008 and to 25% of the value
of the total assets of Wells REIT II in future periods. Deferred tax assets and liabilities represent temporary differences between the financial reporting basis and the tax basis of assets and liabilities based on the enacted rates expected to be
in effect when the temporary differences reverse.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 157, Fair Value Measurements
(SFAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP. SFAS 157 emphasizes that fair value is a market-based measurement, as
opposed to a transaction-specific measurement. In February 2008, the FASB issued Staff Position No. SFAS 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (FSP 157-1). FSP 157-1, which is effective upon the initial adoption of SFAS 157, excludes SFAS No. 13, Accounting for Leases(SFAS 13), as well as other accounting pronouncements that address fair value measurements on lease classification or measurement under SFAS 13, from the scope of SFAS 157. In February 2008, the FASB delayed the effective date of
SFAS 157 for nonrecurring and nonfinancial assets and liabilities until 2009. All other aspects of SFAS 157 were effective for Wells REIT II beginning January 1, 2008. The adoption of this guidance has not had a material impact on Wells REIT
IIs consolidated financial statements.



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Fair value is defined by SFAS 157 as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. SFAS 157 defines the
following fair value hierarchy:

Level 1  Assets or liabilities for which the identical term is traded on an active
exchange, such as publicly-traded instruments or futures contracts.

Level 2  Assets and liabilities valued based on
observable market data for similar instruments.

Level 3  Assets or liabilities for which significant valuation
assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that a market participant would require.

Wells REIT II applied the provisions of SFAS 157 in recording its interest rate swaps and foreign currency exchange contract at fair value. The valuation
of the interest rate swaps and foreign currency hedge contract is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual
terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The following table presents information about Wells REIT IIs assets and liabilities measured at fair value on a recurring basis as of September 30, 2008, and indicates the fair value hierarchy of the
valuation techniques utilized to determine such fair value (in thousands):



|                                   |  |                                                  |        |         |   |         |  |         |        |  |   |  
|---------------------------------- |  | ------------------------------------------------ | ------ | ------- | - | ------- |  | ------- | ------ |  | - | -
|                                   |  | Fair Value Measurements as of September 30, 2008
|                                   |  | Total                                            |        | Level 1 |   | Level 2 |  | Level 3
|Liabilities:                       |  |                                                  |        |         |   |         |  |         |        |  |   |  
|Foreign currency exchange contract |  | $                                                | 1,311  |         | $ |        |  | $       | 1,311  |  | $ | 
|Interest rate swaps                |  | $                                                | 22,833 |         | $ |        |  | $       | 22,833 |  | $ | 

Accounting Adjustment

In the third quarter of 2008, Wells REIT II recorded an out-of-period gain on foreign currency exchange contract of approximately $3.5 million to correct the amount of cumulative losses
previously reported. Wells REIT II adjusts the basis of its foreign currency exchange contract to fair value as estimated by the counterparty to the contract. During the period from October 2007 through June 2008, the estimates provided by
the counterparty were incorrect. As a result, Wells REIT IIs net income is understated by $0.9 million for the year ended December 31, 2007, by $2.2 million for the quarter ended March 31, 2008 and by $0.4 million for the quarter
ended June 30, 2008. Conversely, Wells REIT IIs net income is overstated by $3.5 million for the quarter ended September 30, 2008.

We believe that the out-of-period activity described above, when considered either individually or in the aggregate, is not material to Wells REIT IIs consolidated financial statements for the year ended
December 31, 2007 or for any of the three quarters ended September 30, 2008. In making this assessment, Wells REIT II has considered qualitative and quantitative factors, including the non-cash nature of this activity and Wells REIT
IIs substantial stockholders equity balances at the end of the period affected.

Reclassifications

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



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Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 permits entities to measure
many financial instruments and certain other items at fair value that were not previously required to be measured at fair value. SFAS 159 is effective for Wells REIT II beginning January 1, 2008. The adoption of this guidance has not had a
material impact on Wells REIT IIs consolidated financial statements.

On October 10, 2008, the FASB issued Staff Position No.
SFAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP 157-3). FSP 157-3 includes guidance for how companies should value illiquid assets under the fair value accounting
method prescribed in SFAS 157, but does not change any of the provisions of SFAS 157. FSP 157-3 became effective upon issuance on October 10, 2008, and retrospective application is prohibited. Wells REIT II does not expect the
provisions of FSP 157-3 will have a material effect on its consolidated financial statements.

In December 2007, the FASB issued SFAS
No. 141(R), Business Combinations (SFAS 141(R)). SFAS 141(R) requires, among other things, (i) transaction costs related to business combinations to be expensed as incurred and (ii) preacquisition contingencies
related to contractual obligations and purchase price contingencies to be recorded at fair value as of the acquisition date. SFAS 141(R) will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the
provisions of SFAS 141(R) and has not yet determined the financial impact, if any, on its consolidated financial statements.

In December
2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160). SFAS 160 requires, among other things, (i) noncontrolling ownership interests to be classified as equity,
instead of as a minority interest component of mezzanine equity, and (ii) earnings from noncontrolling interests to be included in earnings from consolidated subsidiaries with an additional disclosure of the allocation of such earnings between
controlling and noncontrolling interests on the face of the statement of income. SFAS 160 will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the provisions of SFAS 160 and has not yet determined
the financial impact, if any, on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities- an amendment to FASB Statement No. 133 (SFAS 161). SFAS 161 requires additional disclosures about an entitys derivative and hedging activities including,
(i) descriptions of how and why the entity uses derivative instruments, (ii) how such instruments are accounted for under SFAS No. 133, and (iii) how derivative instruments affect the entitys financial position, operations,
and cash flows. SFAS 161 will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the provisions of SFAS 161 and has not yet determined the financial impact, if any, on its consolidated financial
statements.



|3. | Real Estate Acquisitions
|-- | ------------------------

Summary

As of September 30, 2008, Wells REIT II owned interests in 66 properties as a result of acquiring the three
properties described below during the third quarter of 2008, acquiring three properties during the first two quarters of 2008, acquiring 11 properties during the year ended December 31, 2007, and acquiring 49 properties in prior periods.

Lindbergh Center Buildings

On July 1, 2008, Wells REIT II acquired interests in two 14-story office buildings containing approximately 955,000 rentable square feet and located on a 3.0-acre tract of land in Atlanta, Georgia (the Lindbergh Center
Buildings) for $285.0 million, exclusive of closing costs. In connection with acquiring the Lindbergh Center Buildings, Wells REIT II assumed a $250.0 million investment in development authority bond and a corresponding $250.0 million
obligation under a capital lease (See Note 2).



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Three Glenlake Building

On July 31, 2008, Wells REIT II acquired a 95% interest in a 14-story office building containing approximately 356,000 rentable square feet and located on a 2.8-acre tract of land in Sandy
Springs, Georgia (the Three Glenlake Building) for approximately $100.6 million. In connection with the acquisition, Wells REIT II assumed a $120.0 million investment in development authority bond and a corresponding $120.0 million
obligation under a capital lease (See Note 2).

1580 West Nursery Road Buildings

On September 5, 2008, Wells REIT II acquired two five-story office buildings containing approximately 315,000 rentable square feet and located on a
21.8-acre tract of land in Linthicum, Maryland (the West Nursery Road Buildings) for $97.6 million, exclusive of closing costs.



|4. | Lines of Credit and Notes Payable
|-- | ---------------------------------

As of September 30, 2008 and December 31, 2007, Wells REIT II had the following indebtedness outstanding (in thousands):



|                                                  |  |                   |           |                  |   |        
|------------------------------------------------- |  | ----------------- | --------- | ---------------- | - | -------
|Facility                                          |  | September 30,2008 |           | December 31,2007
|Wachovia Line of Credit                           |  | $                 | 351,000   |                  | $ | 84,000 
|222 E. 41stStreet
Building mortgage note          |  |                   | 140,467   |                  |   | 133,260
|100 East Pratt Street Building mortgage note      |  |                   | 105,000   |                  |   | 105,000
|Wachovia Term Loan                                |  |                   | 100,000   |                  |   |       
|Wildwood Buildings mortgage note                  |  |                   | 90,000    |                  |   | 90,000 
|5 Houston Center Building mortgage note           |  |                   | 90,000    |                  |   | 90,000 
|Manhattan Towers Building mortgage note           |  |                   | 75,000    |                  |   | 75,000 
|80 Park Plaza Building mortgage note              |  |                   | 52,446    |                  |   | 49,875 
|263 Shuman Boulevard Building mortgage note       |  |                   | 49,000    |                  |   | 49,000 
|800 North Frederick Building mortgage note        |  |                   | 46,400    |                  |   | 46,400 
|One West Fourth Street Building mortgage note     |  |                   | 45,600    |                  |   | 46,841 
|SanTan Corporate Center mortgage note             |  |                   | 39,000    |                  |   | 39,000 
|Highland Landmark Building mortgage note          |  |                   | 33,840    |                  |   | 33,038 
|Three Glenlake Building mortgage note             |  |                   | 25,047    |                  |   |       
|One and Four Robbins Road Buildings mortgage note |  |                   | 23,000    |                  |   | 23,000 
|215 Diehl Road Building mortgage note             |  |                   | 21,000    |                  |   | 21,000 
|West Nursery Road Buildings mortgage note         |  |                   | 20,806    |                  |   |       
|Bank Zenit Line of Credit                         |  |                   | 7,946     |                  |   | 4,903  
|Key Center Complex mortgage notes                 |  |                   |          |                  |   | 14,180 
|9 Technology Drive Building mortgage note         |  |                   |          |                  |   | 23,800 
|                                                  |  |                   |           |                  |   |        
|Total indebtedness                                |  | $                 | 1,315,552 |                  | $ | 928,297
|                                                  |  |                   |           |                  |   |        

During the three months ended September 30, 2008, Wells REIT II engaged in the following
significant activities with respect to its notes payable:

On July 31, 2008, Wells REIT II obtained a $25.0 million loan secured by
the Three Glenlake Building from PNC Bank, N.A. (PNC Bank), the proceeds of which were used to purchase the Three Glenlake Building (See Note 3). The note bears interest at one-month LIBOR plus 90 basis points (approximately
3.827% per annum as of September 30, 2008); however, interest has been effectively fixed at 5.95% for the life of the loan through an interest rate swap agreement with PNC Bank. The note matures in July 2013. Interest is due monthly;
however, under the terms of the loan agreement, a portion of the monthly debt service amounts accrues and is added to the outstanding balance of the note over the term.



13



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On September 5, 2008, Wells REIT II assumed a $19.8 million fixed-rate loan with Bank of America in
connection with the acquisition of the 1580 West Nursery Road Buildings (See Note 3). The West Nursery Road loan is an amortizing note, which requires monthly payments of principal and interest at 7.7% annualized through its maturity in September
2010. Upon assumption, Wells REIT II adjusted the West Nursery Road loan to fair value by increasing the basis of the loan by $1.0 million and recording a corresponding increase to the basis of real estate assets acquired. The loan premium is
amortized to interest expense over the term of the note. The outstanding principal balance and unamortized fair value adjustment for this loan were approximately $19.8 million and $1.0 million, respectively, as of September 30, 2008.

On September 10, 2008, Wells REIT II refinanced the $90.0 million 5 Houston Center Building mortgage note, which was set to mature
October 1, 2008. The new interest-only loan from Principal Life Insurance Company matures October 1, 2010 and bears interest at a fixed rate of 5.42% per annum.

Wells REIT II has a $450.0 million unsecured revolving credit facility with a syndicate of 16 banks led by Wachovia Bank, N.A., which expires May 9, 2009 (the Wachovia Line of
Credit). None of the individual syndicate banks are committed to fund more than $65.0 million under this facility. During the three months ended September 30, 2008, Wells REIT II drew down $293.0 million of net borrowings under the
Wachovia Line of Credit.

Wells REIT II made interest payments, including amounts capitalized, of approximately $32.3 million and $26.6
million during the nine months ended September 30, 2008 and 2007, respectively.



|5. | Commitments and Contingencies
|-- | -----------------------------

Property Under Construction

On August 1, 2007, Wells REIT II entered into a development agreement with an unrelated
third party for the purpose of constructing three office buildings comprised of approximately 824,000 rentable square feet and located in Cranberry, Pennsylvania (the Cranberry Woods Drive Buildings) for approximately $185.2 million. As
of September 30, 2008, Wells REIT II had incurred and capitalized as construction in progress approximately $73.0 million and estimated incurring additional costs of approximately $112.2 million to complete the project. The Cranberry Woods
Drive Buildings are scheduled to be completed in two phases, with approximately 424,000 rentable square feet to be completed in 2009 and approximately 400,000 rentable square feet to be completed in 2010. Upon completion of construction, the
Cranberry Woods Drive Buildings will be 100% leased to Westinghouse Electric Company, LLC at rental rates to be determined based on total construction costs.

Dvintsev Business Center-Tower B

On October 2, 2007, Wells REIT II acquired 100% of Wells
International RE II Limited, a Cypriot corporation that is party to a shared construction agreement with an unrelated entity for the development of a nine-story office tower containing approximately 144,863 rentable square feet in Moscow, Russia
(Dvintsev Business Center  Tower B). As of October 31, 2008, Wells REIT II anticipates acquiring Dvintsev Business Center  Tower B following the completion of construction in 2009 for approximately $79.1 million,
including $6.2 million of value-added tax payments that may be used to reduce the amount of value-added taxes assessed on future rental receipts. Wells REIT II may owe additional purchase consideration pursuant to an earn-out agreement under which
the developer would be compensated for securing qualified leases, as defined, for currently vacant space within two years of closing. As of September 30, 2008, Wells REIT II has made earnest money deposits of $39.4 million under the shared
construction agreement, including $1.2 million of value-added taxes, which have been funded with a combination of cash and draws under a line of credit with Bank Zenit, a Russian bank, equal to approximately $7.9 million. In November 2008, Bank
Zenit indicated that there may be a delay in its funding of future draws under this loan. In the event that Bank Zenit cannot meet its requirement to fund an additional 729.4 million Russian rubles (equal to approximately $28.4 million as of
September 30, 2008) under this loan, Wells REIT II will consider other sources of funding for this project, including foreign borrowings, funds raised under its offerings of common stock and draws from the Wachovia line of credit, among others.

Foreign Currency Exchange Contract

In connection with the future acquisition of the Dvintsev Business Center  Tower B, Wells REIT II entered into a foreign currency exchange contract to hedge its exposure to fluctuations in the U.S. Dollar
to Russian ruble exchange rate. This contract is indexed against a requirement to purchase 802.4 million Russian rubles at a fixed price of $0.04 per Russian ruble and must be settled during the period from September 2008 through March 2009. As
of September 30, 2008, Wells REIT II estimated the fair value of this contract equal to a liability of approximately $1.3 million, which is included in accounts payable, accrued expenses and accrued capital expenditures in the accompanying
consolidated balance sheet.



14



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##### Table of Contents

Obligations Under Capital Leases

Certain properties are subject to capital leases of land and/or buildings. Each of these obligations requires payments equal to the amounts of principal and interest receivable from related
investments in development authority bonds, which mature in 2012, 2013 and 2017. The required payments under the terms of the leases are as follows as of September 30, 2008 (in thousands):



|                              |  |   |          |  
|----------------------------- |  | - | -------- | -
|2008                          |  | $ | 10,277   |  
|2009                          |  |   | 41,109   |  
|2010                          |  |   | 41,109   |  
|2011                          |  |   | 41,109   |  
|2012                          |  |   | 366,495  |  
|Thereafter                    |  |   | 381,626  |  
|                              |  |   |          |  
|                              |  |   | 881,725  |  
|Amounts representing interest |  |   | (217,725 | )
|                              |  |   |          |  
|Total                         |  | $ | 664,000  |  
|                              |  |   |          |  

Commitments Under Existing Lease Agreements

Certain lease agreements include provisions that, at the option of the tenant, may obligate Wells REIT II to expend capital to expand an existing property
or provide other expenditures for the benefit of the tenant. As of September 30, 2008, no tenants have exercised such options that had not been materially satisfied.

Litigation

From time to time, Wells REIT II is party to legal proceedings, which arise in the
ordinary course of its business. Wells REIT II is not currently involved in any legal proceedings for which the outcome is reasonably likely to have a material adverse effect on the results of operations or financial condition of Wells REIT II.
Wells REIT II is not aware of any such legal proceedings contemplated by governmental authorities.

5 Houston Sky Bridge

In September 2008, Wells REIT II entered into a contract with the developer of a building adjacent to the 5 Houston Center building that grants a
perpetual easement between the two buildings to the developer in consideration for $12.0 million payable to Wells REIT II in two non-refundable installments. Upon execution of the contract, Wells REIT II received the first installment of
$6.0 million, which is recorded as deferred income in the accompanying consolidated balance sheet. Upon the sooner of the completion of the steel frame of the adjacent building or March 2010, the second installment will become payable and both
payments will be recognized as income.



15



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##### Table of Contents

|6. | Supplemental Disclosures of Noncash Activities
|-- | ----------------------------------------------

Outlined below are significant noncash investing and financing transactions for the nine months ended September 30, 2008 and 2007 (in thousands):



|                                                                                             |  |                                |         |      |   |        
|-------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | ---- | - | -------
|                                                                                             |  | Nine Months EndedSeptember 30,
|                                                                                             |  | 2008                           |         | 2007
|Investment in real estate funded with other assets                                           |  | $                              |        |      | $ | 750    
|                                                                                             |  |                                |         |      |   |        
|Acquisition fees applied to real estate assets                                               |  | $                              | 11,810  |      | $ | 15,489 
|                                                                                             |  |                                |         |      |   |        
|Assumption of investment in development authority bonds and obligations under capital leases |  | $                              | 586,000 |      | $ |       
|                                                                                             |  |                                |         |      |   |        
|Fair market value of notes payable assumed upon acquisition of properties                    |  | $                              | 20,842  |      | $ |       
|                                                                                             |  |                                |         |      |   |        
|Other liabilities assumed upon acquisition of properties                                     |  | $                              | 130     |      | $ | 1,786  
|                                                                                             |  |                                |         |      |   |        
|Market value adjustment to interest rate swap that qualifies for hedge accounting treatment  |  | $                              | 1,424   |      | $ | 91     
|                                                                                             |  |                                |         |      |   |        
|Accrued capital expenditures and deferred lease costs                                        |  | $                              | 11,512  |      | $ | 2,967  
|                                                                                             |  |                                |         |      |   |        
|Accrued redemptions of common stock                                                          |  | $                              |        |      | $ | 440    
|                                                                                             |  |                                |         |      |   |        
|Acquisition fees due to affiliate                                                            |  | $                              | 224     |      | $ | 981    
|                                                                                             |  |                                |         |      |   |        
|Commissions on stock sales and related dealer-manager fees due to affiliate                  |  | $                              | 1,302   |      | $ | 868    
|                                                                                             |  |                                |         |      |   |        
|Other offering costs due to affiliate                                                        |  | $                              | 528     |      | $ | 767    
|                                                                                             |  |                                |         |      |   |        
|Dividends payable                                                                            |  | $                              | 10,514  |      | $ | 8,665  
|                                                                                             |  |                                |         |      |   |        
|Contribution from minority interest partner upon acquisition                                 |  | $                              | 5,346   |      | $ |       
|                                                                                             |  |                                |         |      |   |        
|Assumption of minority interest in consolidated joint venture                                |  | $                              | 800     |      | $ |       
|                                                                                             |  |                                |         |      |   |        
|Discounts applied to issuance of common stock                                                |  | $                              | 5,774   |      | $ | 5,865  
|                                                                                             |  |                                |         |      |   |        
|Redeemable common stock                                                                      |  | $                              | 71,317  |      | $ | 609,518
|                                                                                             |  |                                |         |      |   |        



|7. | Related-Party Transactions and Agreements
|-- | -----------------------------------------

Advisory Agreement

Wells REIT II and Wells Capital are party to an advisory agreement (the
Advisory Agreement) under which Wells Capital receives the following fees and reimbursements:



| |  |  | Reimbursement of organization and offering costs paid by Wells Capital on behalf of Wells REIT II, not to exceed 2.0% of gross offering proceeds;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Acquisition fees of 2.0% of gross offering proceeds, subject to certain limitations; Wells REIT II also reimburses Wells Capital for expenses it pays to third
parties in connection with acquisitions or potential acquisitions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Monthly asset management fees equal to one-twelfth of 0.75% of the cost of (i) all properties of Wells REIT II and (ii) investment in joint ventures
for the months of July, August, and September, 2008. Thereafter, the monthly asset management fee is equal to one-twelfth of 0.625% of the cost of (i) all properties of Wells REIT II and (ii) investment in joint ventures until the monthly
payment equals $2,708,333.33 (or $32.5 million annualized). The monthly payment remains capped at that amount until the cost of (i) all properties of Wells REIT II and (ii) investment in joint ventures is at least $6.5 billion, after
which the monthly asset management fee is based equal to one-twelfth of 0.5% of the cost of (i) all properties of Wells REIT II and (ii) investment in joint ventures. However, the asset management fee related to the Lindbergh Center
Buildings, which were acquired July 1, 2008, was immediately 0.5%. The amount of these fees paid in any three-month period is limited to 0.25% of the average of the preceding three months net asset value calculations less Wells REIT
IIs outstanding debt borrowed for purposes of acquiring, improving or refinancing investment properties;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Reimbursement for all costs and expenses Wells Capital incurs in fulfilling its duties as the asset portfolio manager, including (i) wages and salaries and
other employee-related expenses of Wells Capitals employees, who perform a full range of real estate services for Wells REIT II, including management, administration, operations, and marketing, and are billed to Wells REIT II based on the
amount of time spent on Wells REIT II by such personnel, provided that such expenses are not reimbursed if incurred in connection with services for which Wells Capital receives a disposition fee (described below) or an acquisition fee, and
(ii) amounts paid for IRA custodial service costs allocated to Wells REIT II accounts;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For any property sold by Wells REIT II, a disposition fee equal to 1.0% of the sales price, with the limitation that the total real estate commissions (including
such disposition fee) for any Wells REIT II property sold may not exceed the lesser of (i) 6.0% of the sales price of each property or (ii) the level of real estate commissions customarily charged in light of the size, type, and location
of the property;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Incentive fee of 10% of net sales proceeds remaining after stockholders have received distributions equal to the sum of the stockholders invested capital
plus an 8% return of invested capital; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Listing fee of 10% of the excess by which the market value of the stock plus dividends paid prior to listing exceeds the sum of 100% of the invested capital plus
an 8% return on invested capital.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Either party may terminate the Advisory Agreement without cause or penalty upon
providing 60 days prior written notice to the other. Under the terms of the Advisory Agreement, Wells REIT II is required to reimburse Wells Capital for certain organization and offering costs up to the lesser of actual expenses or 2% of gross
equity proceeds raised. As of September 30, 2008, Wells REIT II has incurred and charged to additional paid-in capital cumulative other offering costs of approximately $31.7 million related to the initial public offering and
$27.9 million related to the follow-on offering, which represents approximately 1.6% and 1.1% of cumulative gross proceeds raised by Wells REIT II under each offering, respectively.

Dealer-Manager Agreement

Wells REIT II is party to a Dealer-Manager Agreement
with Wells Investment Securities, Inc. (WIS), whereby WIS, an affiliate of Wells Capital, performs the dealer-manager function for Wells REIT II. For these services, WIS earns a commission of up to 7% of the gross offering proceeds from
the sale of the shares of Wells REIT II, of which substantially all is re-allowed to participating broker dealers. Wells REIT II pays no commissions on shares issued under its dividend reinvestment plan.

Additionally, Wells REIT II is required to pay WIS a dealer-manager fee of 2.5% of the gross offering proceeds from the sale of Wells REIT IIs
stock at the time the shares are sold. Under the dealer-manager agreement, up to 1.5% of the gross offering proceeds may be reallowed by WIS to participating broker dealers. Wells REIT II pays no dealer-manager fees on shares issued under its
dividend reinvestment plan.

Property Management, Leasing, and Construction Agreement

Wells REIT II and Wells Management Company, Inc. (Wells Management), an affiliate of Wells Capital, are party to a Master Property Management,
Leasing, and Construction Agreement (the Management Agreement) under which Wells Management receives the following fees and reimbursements in consideration for supervising the management, leasing, and construction of certain Wells REIT
II properties:



| |  |  | Property management fees in an amount equal to a percentage negotiated for each property managed by Wells Management of the gross monthly income collected for
that property for the preceding month;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leasing commissions for new, renewal, or expansion leases entered into with respect to any property for which Wells Management serves as leasing agent equal to a
percentage as negotiated for that property of the total base rental and operating expenses to be paid to Wells REIT II during the applicable term of the lease, provided, however, that no commission shall be payable as to any portion of such term
beyond ten years;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | Initial lease-up fees for newly constructed properties under the agreement, generally equal to one months rent;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Fees equal to a specified percentage of up to 5% of all construction build-out funded by Wells REIT II, given as a leasing concession, and overseen by Wells
Management; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other fees as negotiated with the addition of each specific property covered under the agreement.
| | - |  | -------------------------------------------------------------------------------------------------

Related-Party Costs

Pursuant to the
terms of the agreements described above, Wells REIT II incurred the following related-party costs for the three months and nine months ended September 30, 2008 and 2007, respectively (in thousands):



|                                         |  |                                 |        |                                |   |        |  |      |         |  |   |        
|---------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------- |  | - | -------
|                                         |  | Three Months EndedSeptember 30, |        | Nine Months EndedSeptember 30,
|                                         |  | 2008                            |        | 2007                           |   | 2008   |  | 2007
|Commissions, net of discounts(1) (2)     |  | $                               | 12,828 |                                | $ | 13,340 |  | $    | 36,567  |  | $ | 46,641 
|Asset management fees                    |  |                                 | 8,452  |                                |   | 6,515  |  |      | 23,627  |  |   | 18,545 
|Dealer-manager fees, net of discounts(1) |  |                                 | 4,733  |                                |   | 4,991  |  |      | 13,557  |  |   | 17,276 
|Acquisition fees(3)                      |  |                                 | 4,438  |                                |   | 4,601  |  |      | 12,799  |  |   | 15,489 
|Administrative reimbursements            |  |                                 | 3,412  |                                |   | 2,681  |  |      | 9,939   |  |   | 6,309  
|Other offering costs(1)                  |  |                                 | 1,886  |                                |   | 2,759  |  |      | 6,801   |  |   | 7,339  
|Property management fees                 |  |                                 | 813    |                                |   | 625    |  |      | 2,629   |  |   | 1,271  
|Construction fees                        |  |                                 | 34     |                                |   |       |  |      | 286     |  |   |       
|                                         |  |                                 |        |                                |   |        |  |      |         |  |   |        
|Total                                    |  | $                               | 36,596 |                                | $ | 35,512 |  | $    | 106,205 |  | $ | 112,870
|                                         |  |                                 |        |                                |   |        |  |      |         |  |   |        



|(1) | Commissions, dealer-manager fees, and other offering costs are charged against stockholders equity as incurred.
|--- | ----------------------------------------------------------------------------------------------------------------



|(2) | Substantially all commissions were re-allowed to participating broker dealers during the three months and nine months
ended September 30, 2008 and 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Acquisition fees are capitalized to prepaid expenses and other assets as incurred and allocated to properties upon
using investor proceeds to fund acquisitions or repay debt used to finance property acquisitions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Wells REIT II incurred
no related-party disposition fees, incentive fees, listing fees, or leasing commissions during the three months or nine months ended September 30, 2008 or 2007, respectively.

Due to Affiliates

The detail of amounts due to affiliates is provided below as
of September 30, 2008 and December 31, 2007 (in thousands):



|                                                                                |  |                   |       |                  |   |       
|------------------------------------------------------------------------------- |  | ----------------- | ----- | ---------------- | - | ------
|                                                                                |  | September 30,2008 |       | December 31,2007
|Commissions and dealer-manager fees due to WIS                                  |  | $                 | 1,302 |                  | $ | 1,900 
|Administrative reimbursements due to Wells Capital and/or Wells Management      |  |                   | 1,041 |                  |   | 2,293 
|Other offering cost reimbursements due to Wells Capital                         |  |                   | 528   |                  |   | 2,401 
|Acquisition fees due to Wells Capital                                           |  |                   | 224   |                  |   | 1,738 
|Asset and property management fees due to Wells Capital and/or Wells Management |  |                   | 28    |                  |   | 5,053 
|                                                                                |  |                   |       |                  |   |       
|                                                                                |  | $                 | 3,123 |                  | $ | 13,385
|                                                                                |  |                   |       |                  |   |       



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Economic Dependency

Wells REIT II has engaged Wells Capital and its affiliates, Wells Management and WIS, to provide certain services that are essential to Wells REIT II, including asset management services, supervision of the property
management and leasing of some properties owned by Wells REIT II, asset acquisition and disposition services, the sale of shares of Wells REIT IIs common stock, as well as other administrative responsibilities for Wells REIT II, including
accounting services, stockholder communications, and investor relations. As a result of these relationships, Wells REIT II is dependent upon Wells Capital, Wells Management, and WIS.

Wells Capital, Wells Management, and WIS are owned and controlled by Wells Real Estate Funds, Inc. (WREF). The operations of Wells Capital, Wells Management, and WIS represent
substantially all of the business of WREF. Accordingly, Wells REIT II focuses on the financial condition of WREF when assessing the financial condition of Wells Capital, Wells Management, and WIS. In the event that WREF were to become unable to meet
its obligations as they become due, Wells REIT II 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 and the volume of future acquisitions and dispositions of real estate assets by
Wells REIT II and other WREF-sponsored programs, as well as dividend income earned from equity interests in another REIT. As of September 30, 2008, Wells REIT II believes that WREF is generating 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.

In addition, WREF guarantees debt held by another WREF-sponsored product that is in the start-up phase of its operations equal to approximately $76.1 million as of October 31, 2008.



|8. | Subsequent Event
|-- | ----------------

Sale
of Shares of Common Stock

From October 1, 2008 through October 31, 2008, Wells REIT II raised approximately $58.6 million
through the issuance of approximately 5.9 million shares of common stock under its follow-on offering. As of October 31, 2008, approximately 73.8 million shares remained available for sale to the public under the follow-on offering,
exclusive of shares available under Wells REIT IIs dividend reinvestment plan.

On October 1, 2008, the registration statement
relating to Wells REIT IIs Third Offering was declared effective by the SEC and Wells REIT II commenced offering activities for the Third Offering promptly thereafter. Wells REIT II stopped offering shares for sale under the follow-on offering
on November 10, 2008 and began accepting subscriptions under the Third Offering on November 11, 2008.



|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 our accompanying consolidated financial statements and notes thereto. See also
Cautionary Note Regarding Forward-Looking Statements preceding Part I, as well as our consolidated financial statements and the notes thereto and Managements Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the year ended December 31, 2007.

Overview

During the periods presented, we have continued to receive investor proceeds under our follow-on offering of common stock and to invest in real estate
assets. Thus, our results of operations for the three months and nine months ended September 30, 2008 and 2007, respectively, reflect growing operational revenues and expenses and fluctuating interest



19



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##### Table of Contents

and general and administrative expenses. The increases in operational revenues and expenses result from acquiring real properties, while the fluctuations in
interest expense arise from using varying levels of short-term and long-term debt financing to fund such acquisitions.

Impact of
Economic Conditions on our Portfolio

The fundamentals of the U.S. office real estate market have continued to weaken due to
macro-economic conditions in general and the global financial crisis in particular. During the nine months ended September 30, 2008, national vacancy rates rose steadily by approximately 90 basis points to 14.1%. During October 2008, vacancy
rates have continued to rise as have sublease inventory levels. Rising sublease inventories will create additional competition for landlords with direct space to lease and, thus, will result in downward pressure on the rents that landlords are able
to achieve with new leases.

We believe that we are well positioned to withstand this downturn with minimal exposure to immediate lease
rollover, a strong tenant credit base and low leverage levels relative to our competitors. As of September 30, 2008, our portfolio had an average remaining lease term of 7.6 years, of which only 1.7% of the leased space will expire before 2010.
We evaluate the creditworthiness of the tenants of our properties not only at the time of entering into a lease or acquiring a property but throughout the lease term. At present, we believe that the majority of our tenants have
an investment grade credit rating or are as creditworthy as investment-grade entities. As of September 30, 2008, our leverage ratio was 26.6%, which is the ratio of total debt to total purchase price of real estate assets plus cash and
cash equivalents. We expect this ratio to decline in the near-term as we utilize proceeds raised from the sale of our common stock to repay third-party borrowings. We believe that the factors outlined above will allow us to be flexible with respect
to how we may address challenges that could arise under the current economic environment.

Liquidity and Capital Resources

Overview

We have
continued to raise funds through the sale of our common stock and invested those proceeds in real properties during 2007 and 2008 and anticipate continuing to do so in the future. We expect that our primary source of future operating cash flows
will be cash generated from the operations of the properties currently in our portfolio and those to be acquired in the future. The amount of future dividends to be paid to our stockholders will be largely dependent upon the amount of cash generated
from our operating activities, how quickly we are able to invest proceeds from the sale of our common stock in quality income-producing assets, our expectations of future cash flows, and our determination of near-term cash needs for capital
improvements, tenant re-leasing, redemptions of our common stock, and debt repayments. While we may periodically be required to borrow funds on a short-term basis to meet our dividend payment schedule, our primary focus is to continue to maintain
the quality of our portfolio. Thus, we may opt to lower the dividend in the future rather than compromise that quality by accumulating significant borrowings to meet a dividend level higher than operating cash flow would support. We will
continue to carefully monitor our cash flows and market conditions and their impact on our earnings and future dividend projections.

Short-term Liquidity and Capital Resources

During the nine months ended September 30, 2008, we generated net cash
flows from operating activities of $179.1 million, which is primarily comprised of receipts of rental payments, tenant reimbursements, hotel income, deferred income and interest and other income, partially offset by payments for operating
costs, interest expense, asset and property management fees, and general and administrative expenses. From net cash flows from operating activities, we paid dividends to stockholders of $177.5 million during this period. We consider net cash flow
from operating activities, as currently defined by GAAP in the accompanying statement of cash flows, when determining the amount of dividends to pay to stockholders. While net cash from operations may fluctuate in the near-term due to
differences in the timing of collections and payments, we believe that, on a long-term basis, net cash from operations is reflective of our operating performance and offers a high degree of comparability with other REITs and real estate companies.

During the nine months ended September 30, 2008, we received net debt proceeds of $359.7 million and generated net proceeds from the
sale of common stock under our follow-on offering, net of fees, offering cost reimbursements and share redemptions of $487.2 million, which were used to fund investments in real estate of $853.4 million. We expect to utilize the residual cash
balance on hand as of September 30, 2008 of approximately $45.6 million to satisfy current liabilities, pay future dividends, fund future acquisitions of real properties, or to reduce indebtedness.



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We intend to continue to generate capital from the sale of common stock under our public offerings and to
use such offering proceeds to repay our line of credit through the maturity date of this facility (May 2009). However, we will continue to seek attractive real estate acquisition opportunities and, as a result, may also use offering proceeds to fund
selective acquisitions in the short-term. We expect that we will use a significant portion of the proceeds from sales under our dividend reinvestment plan to fund redemptions under the share redemption program. As of October 31, 2008, we had
$300.0 million outstanding under the Wachovia Line of Credit. Accordingly, we believe that we have adequate capacity to meet our scheduled purchase and debt obligations noted in the contractual commitments and contingencies table below. We expect to
use substantially all of our future operating cash flow, after payments for certain capital expenditures, to pay dividends to stockholders.

On September 2, 2008, our board of directors declared a daily dividend for stockholders of record from September 16, 2008 through December 15, 2008 in an amount equal to an annualized dividend of $0.60 per share, which is
consistent with the rate of dividends declared for the first three quarters of 2008 and each quarter of 2007 on a per-share basis. This dividend will be paid in December 2008.

Long-term Liquidity and Capital Resources

We expect that our primary sources
of capital over the long term will include proceeds from the sale of our common stock under the Third Offering, proceeds from secured or unsecured borrowings from third-party lenders, and net cash flows from operations. Under the Third Offering, up
to 300.0 million shares of common stock will be available for sale, with discounts available to certain categories of purchasers, and an additional 75.0 million shares will be available for sale under our dividend reinvestment plan at a
purchase price equal to the higher of $9.55 per share or 95% of the estimated value of a share of our common stock. We expect that our primary uses of capital will be for property acquisitions, either directly or through investments in joint
ventures, tenant improvements, offering-related costs, operating expenses, interest expense, and dividends.

In determining how and when to
allocate cash resources, we initially consider the source of the cash. We expect that substantially all future net operating cash flows will be used to pay dividends. However, we may temporarily use other sources of cash, such as short-term
borrowings, to fund dividends from time to time (see Liquidity and Capital Resources  Overview above). We expect to use substantially all net cash flows generated from raising equity or debt financing to fund acquisitions, capital
expenditures, the repayment of outstanding borrowings, and the redemption of shares under the share redemption program. If sufficient equity or debt capital is not available, our future investments in real estate will be lower.

To the extent that future cash flows provided by operations are lower due to lower returns on properties, future dividends paid may be lower as well.
Cash flow from operations will depend significantly on the level of market rents and our tenants ability to make rental payments in the future. We believe that the diversity and creditworthiness of our tenant base helps to mitigate the risk of
a tenant defaulting on a lease. However, general economic downturns, downturns in one or more of our core markets, or downturns in the particular industries in which our tenants operate could adversely impact the ability of our tenants to make lease
payments and our ability to re-lease space on favorable terms when leases expire. In the event of any of these situations, our cash flow and consequently our ability to meet capital needs, could adversely affect our ability to pay dividends in the
future.



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Contractual Commitments and Contingencies

Our contractual obligations as of September 30, 2008 will become payable in the following periods (in thousands):



|                                |  |       |           |      |   |           |  |           |         |            |   |         |  |   |          
|------------------------------- |  | ----- | --------- | ---- | - | --------- |  | --------- | ------- | ---------- | - | ------- |  | - | ---------
|Contractual Obligations         |  | Total |           | 2008 |   | 2009-2010 |  | 2011-2012 |         | Thereafter
|Outstanding debt obligations(1) |  | $     | 1,315,552 |      | $ | 735       |  | $         | 588,571 |            | $ | 88,546  |  | $ | 637,700  
|Capital lease obligations(2)    |  |       | 664,000   |      |   |          |  |           |        |            |   | 328,000 |  |   | 336,000  
|Purchase obligations(3)         |  |       | 184,000   |      |   |          |  |           | 184,000 |            |   |        |  |   |         
|Operating lease obligations     |  |       | 231,409   |      |   | 599       |  |           | 4,792   |            |   | 4,926   |  |   | 221,092  
|                                |  |       |           |      |   |           |  |           |         |            |   |         |  |   |          
|Total                           |  | $     | 2,394,961 |      | $ | 1,334     |  | $         | 777,363 |            | $ | 421,472 |  | $ | 1,194,792
|                                |  |       |           |      |   |           |  |           |         |            |   |         |  |   |          



|(1) | Amounts include principal payments only. We made interest payments, including amounts capitalized, of approximately
$32.3 million during the nine months ended September 30, 2008 and expect to pay interest in future periods on outstanding debt obligations based on the rates and terms disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2007 and in Note 4 to our accompanying consolidated financial statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Amount includes principal payments only. We made interest payments of approximately $14.2 million during the nine
months ended September 30, 2008 and expect to pay interest in future periods based on the terms disclosed in Note 5 to our accompanying consolidated financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Represents purchase commitments for the Cranberry Woods Buildings, the Dvintsev Business Center Tower and the foreign
currency exchange contract (See Note 5 to our accompanying consolidated financial statements).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of Operations

Overview

Our
results of operations are not indicative of those expected in future periods as a result of acquiring properties during the periods presented and future acquisitions of real estate assets.

Comparison of the three months ended September 30, 2007 versus the three months ended September 30, 2008

Rental income increased from approximately $82.8 million for the three months ended September 30, 2007 to approximately $107.0 million for the three months ended September 30, 2008
primarily as a result of the growth in the portfolio. Rental income is expected to continue to increase in future periods, as compared to historical periods, as a result of owning recently acquired properties for an entire period and future
acquisitions of real estate assets.

Tenant reimbursements increased from approximately $20.3 million for the three months ended
September 30, 2007 to approximately $27.5 million for the three months ended September 30, 2008 primarily as a result of the growth in the portfolio and higher after-hours energy usage due from tenants. Tenant reimbursements is
expected to continue to increase in future periods, as compared to historical periods, as a result of owning recently acquired properties for an entire period and future acquisitions of real estate assets.

Property operating costs increased from approximately $35.1 million for the three months ended September 30, 2007 to approximately $43.6 million for
the three months ended September 30, 2008 primarily as a result of the growth in the portfolio and higher after-hours energy usage. The energy usage is reimbursable by tenants under the lease terms. Property operating costs are
expected to continue to increase in future periods, as compared to historical periods, as a result of owning recently acquired properties for an entire period and future acquisitions of real estate assets.

Asset and property management fees increased from approximately $8.3 million for the three months ended September 30, 2007 to approximately
$10.3 million for the three months ended September 30, 2008 primarily as a result of the growth in the portfolio. Based on the terms of the newly revised asset management fee (see Note 7 to our accompanying consolidated financial
statements), the rates at which we incur asset management fees are expected to decrease. Property management fees are expected to continue to increase in future periods, as compared to historical periods, due to owning recently acquired properties
for an entire period and future acquisitions of real estate assets.



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Depreciation increased from approximately $15.8 million for the three months ended September 30,
2007 to approximately $21.1 million for the three months ended September 30, 2008 primarily as a result of the growth in the portfolio. Depreciation is expected to continue to increase in future periods, as compared to historical periods, due
to owning recently acquired properties for an entire period and future acquisitions of real estate assets.

Amortization increased from
approximately $28.9 million for the three months ended September 30, 2007 to approximately $31.8 million for the three months ended September 30, 2008 primarily as a result of the growth in the portfolio. Amortization is expected
to increase in future periods due to owning recently acquired properties for an entire period and future acquisitions of real estate assets.

General and administrative expenses increased from approximately $4.6 million for the three months ended September 30, 2007 to approximately $5.2 million for the three months ended September 30, 2008 primarily as a result of
growth in the portfolio. General and administrative expenses are expected to increase in future periods due to future acquisitions of real estate assets.

Interest expense increased from approximately $12.6 million for the three months ended September 30, 2007 to approximately $24.3 million for the three months ended September 30, 2008 primarily due to $8.5
million incurred on capital leases assumed in connection with 2008 acquisitions, which is entirely offset by interest income earned on corresponding investments in development authority bonds, new borrowings and an increase in the average balance
outstanding on the Wachovia Line of Credit. We anticipate that future borrowings will be used primarily to fund future acquisitions of real estate. Accordingly, the amounts of future borrowings and future interest expense will depend largely upon
the timing and availability of opportunities to acquire real estate assets consistent with our investment objectives, the level of additional proceeds that we are able to raise under our public offerings, our ability to secure financings or
re-financings, and changes in market interest rates.

We recognized a gain on foreign currency exchange contract of approximately $0.5
million for the three months ended September 30, 2008 due to fluctuations in value of the U.S. Dollar compared to the Russian ruble. We anticipate that future gains and losses on our foreign currency exchange contract will vary primarily
in response to future changes in value between the U.S. Dollar and the Russian ruble.

Interest and other income increased from
approximately $2.8 million for the three months ended September 30, 2007 to approximately $9.9 million for the three months ended September 30, 2008 due to $8.5 million earned on investment in development authority bonds offset slightly by
lower interest income on cash on hand caused by declining interest rates. The interest earned on the investment in development authority bonds is entirely offset by interest expense incurred on corresponding capital leases. Future levels of interest
income will vary primarily based on differences in the pace at which capital is raised in our public offerings and the pace at which such capital is invested in real estate assets or used to repay borrowings.

We recognized net loss and net loss per share of approximately $2.5 million and $0.01, respectively, for the three months ended September 30, 2007,
as compared to net income and net income per share of approximately $4.2 million and $0.01, respectively, for the three months ended September 30, 2008. The increase in net income is primarily due to continued growth in our portfolio of real
estate assets, while the increase in net income per share is due to a combination of continued growth in our portfolio of real estate assets and an increase in equity raised from the sale of our common stock. Absent future market value adjustments
on financial instruments such as interest rate swaps or foreign currency exchange contracts, we expect future earnings and earnings per share to increase as a result of newly acquired properties and future acquisitions.

Comparison of the nine months ended September 30, 2007 versus the nine months ended September 30, 2008

Rental income and tenant reimbursements increased from approximately $232.1 million and $61.3 million, respectively, for the nine months ended
September 30, 2007 to approximately $295.3 million and $77.3 million, respectively, for the nine months ended September 30, 2008, primarily as a result of the growth in our portfolio of real estate assets.



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Other property income decreased from approximately $2.8 million for the nine months ended
September 30, 2007 to $1.0 million for the nine months ended September 30, 2008 primarily due to fees earned in connection with a lease termination at 5 Houston Center in the second quarter of 2007. Unlike the majority of rental
income, which is recognized ratably over long-term contracts, income from lease terminations is recognized once we have completed our obligation to provide space to the tenant.

Property operating costs and asset and property management fees increased from approximately $98.1 million and $23.7 million, respectively, for the nine months ended September 30, 2007
to approximately $122.9 million and $29.4 million, respectively, for the nine months ended September 30, 2008 primarily as a result of the growth in the portfolio.

Depreciation increased from approximately $44.1 million for the nine months ended September 30, 2007 to approximately $57.4 million for the nine months ended September 30, 2008
primarily as a result of the growth to the portfolio.

Amortization increased from approximately $86.3 million for the nine months
ended September 30, 2007 to approximately $91.1 million for the nine months ended September 30, 2008 primarily as a result of the growth in the portfolio.

General and administrative expenses increased from approximately $12.6 million for the nine months ended September 30, 2007 to approximately $17.4 million for the nine months ended September 30, 2008
primarily as a result of increases in administrative reimbursements related to the growth in our portfolio and costs incurred in connection with prospective acquisitions that did not close.

Interest expense increased from approximately $34.7 million for the nine months ended September 30, 2007 to approximately $55.8 million for the nine months ended September 30, 2008,
primarily due to new borrowings and $10.7 million incurred on capital leases assumed in connection with 2008 acquisitions, which is entirely offset by interest income earned on corresponding investments in development authority bonds.

We recognized a loss on foreign currency exchange contract of approximately $0.8 million for the nine months ended September 30, 2008
due to fluctuations in value of the U.S. Dollar compared to the Russian ruble.

We recognized a gain on early extinguishment of debt
of approximately $3.0 million for the nine months ended September 30, 2008 in connection with accepting an offer from the lender to prepay the Key Center Complex mortgage notes for approximately $11.5 million in the second quarter of 2008. The
net book value of the mortgage notes was approximately $14.5 million, resulting in a gain on early extinguishment of debt of approximately $3.0 million.

Interest and other income increased from approximately $7.1 million for the nine months ended September 30, 2007 to approximately $15.9 million for the nine months ended September 30, 2008, primarily due to
$10.7 million earned on investment in development authority bonds offset slightly by lower interest income on cash on hand caused by declining interest rates. The interest earned on the investment in development authority bonds is entirely offset by
interest expense incurred on corresponding capital leases.

Net income and net income per share increased from approximately $2.6 million
and $0.01, respectively, for the nine months ended September 30, 2007 to approximately $14.6 million and $0.04, respectively, for the nine months ended September 30, 2008 primarily due to the continued growth of our portfolio of real
estate assets and the gain on early extinguishment of debt described above.

Election as a REIT

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the Code), and have operated as such beginning with
our taxable year ended December 31, 2003. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code, to our
stockholders, computed without regard to the dividends-paid deduction and by excluding our net capital gain. As a REIT, we generally will not be subject to federal income tax on income that we



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distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income
for that year and for the four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and
net cash available for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.

Wells TRS is a wholly owned subsidiary of Wells REIT II that is organized as a Delaware limited liability company and includes the operations of, among
other things, a full-service hotel. We have elected to treat Wells TRS as a taxable REIT subsidiary. We may perform certain additional, non-customary services for tenants of our buildings through Wells TRS; however, any earnings related to such
services are subject to federal and state income taxes. In addition, for us to continue to qualify as a REIT, we must limit our investments in taxable REIT subsidiaries to 20% of the value of our total assets in 2008 and to 25% of the value of our
total assets in future periods. Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted rates expected to be in effect when the
temporary differences reverse.

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 are intended to protect us
from, and mitigate the risk of, 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 the leases, the leases may not reset frequently enough to fully cover inflation.

Application of Critical Accounting Policies

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates
and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting
periods. If our 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.

Investment in Real Estate Assets

We are required to make subjective
assessments as to the useful lives of our depreciable assets. We consider 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 our
assets by class are as follows:



|                        |  |                                       
|----------------------- |  | --------------------------------------
|Buildings               |  | 40 years                              
|Building improvements   |  | 5-25 years                            
|Site improvements       |  | 10 years                              
|Tenant improvements     |  | Shorter of economic life or lease term
|Intangible lease assets |  | Lease term                            

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, we allocate the purchase price of properties to tangible assets, consisting of land, building, and site
improvements and identified intangible assets and liabilities, including the value in-place leases, based in each case on our estimate of their fair values.



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The fair values of the tangible assets of an acquired property (which includes land, building and site
improvements) are determined by valuing the property as if it were vacant, and the as-if-vacant value is then allocated to land, building and site improvements based on our determination of the relative fair value of these assets. We
determine the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors we consider in performing these analyses include an estimate of carrying costs during the expected lease-up periods
considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, we include real estate taxes, insurance, and other operating expenses during the expected
lease-up periods based on current market demand.

Intangible Assets and Liabilities Arising from In-Place Leases where We are the Lessor

As further described below, in-place leases where we are the lessor may have values related to: direct costs associated with obtaining
a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease, tenant relationships, and effective contractual rental rates that are above or below market rates:



| |  |  | Direct costs associated with obtaining a new tenant, including commissions, tenant improvements and other direct costs, are estimated based on managements
consideration of current market costs to execute a similar lease. Such direct costs are included in intangible lease origination costs in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the
respective leases.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The value of opportunity costs associated with lost rentals avoided by acquiring an in-place lease is calculated based on managements estimate of fair
market lease rates over a market absorption period for a similar lease. Such opportunity costs are included in intangible lease assets in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the
respective leases.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The value of tenant relationships is calculated based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations.
Values associated with tenant relationships are included in intangible lease assets in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The value of effective rental rates of in-place leases that are above or below the market rates of comparable leases is calculated based on the present value
(using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be received pursuant to the in-place leases and (ii) managements estimate of fair market
lease rates for the corresponding in-place leases, measured over a period equal to the remaining terms of the leases. The capitalized above-market and below-market lease values are recorded as intangible lease assets or liabilities and amortized as
an adjustment to rental income over the remaining terms of the respective leases.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Intangible Assets and Liabilities
Arising from In-Place Leases where We are the Lessee

In-place ground leases where we are the lessee may have value associated with
effective contractual rental rates that are above or below market rates. Such values are calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the
contractual amounts to be paid pursuant to the in-place lease and (ii) managements estimate of fair market lease rates for the corresponding in-place lease, measured over a period equal to the remaining terms of the leases. The
capitalized above-market and below-market in-place lease values are recorded as intangible lease liabilities or assets and amortized as an adjustment to property operating cost over the remaining term of the respective leases.

Valuation of Real Estate Assets

We
continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate and related intangible assets of both operating properties and properties under construction, in which we have an ownership
interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present that suggest that the carrying amounts of real estate and related intangible assets may not



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be recoverable, we assess the recoverability of these assets by determining whether the carrying value 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, we decrease the carrying value of the real estate and related
intangible assets to the estimated fair values, pursuant to the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and recognize an impairment loss. Estimated fair values are calculated based on
the following information, in order of preference, dependent upon availability: (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 our real estate assets to date.

Projections of expected future operating cash flows require that we estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to
re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the
propertys fair value and could result in the misstatement of the carrying value of our real estate and related intangible assets and net income.

Related Parties

Transactions and Agreements

We have entered into agreements with our advisor, Wells Capital, and its affiliates, whereby we pay certain fees and reimbursements to Wells Capital or
its affiliates, for acquisition fees, commissions, dealer-manager fees, asset and property management fees, construction fees, reimbursement of other offering costs, and reimbursement of operating costs. See Note 7 to our accompanying consolidated
financial statements included herein for a discussion of the various related-party transactions, agreements, and fees.

Appointment of
Independent Director

On July 23, 2008, our Board of Directors appointed John L. Dixon to serve as an independent director, which
appointment filled a vacancy on the Board of Directors. Mr. Dixon will serve on the Conflicts Committee, the Shareholder Relations, Communications and Development Committee. Also on July 23, 2008, our Board of Directors voted to reduce the
size of the Board of Directors from ten members to eight. Following the appointment of Mr. Dixon, there are no vacant board positions.

Legal Actions Against Related Parties

On March 12, 2007, a stockholder of Piedmont REIT filed a putative class action
and derivative complaint, presently styled In re Wells Real Estate Investment Trust, Inc. Securities Litigation, in the United States District Court for the District of Maryland against, among others, Piedmont REIT; Leo F. Wells, III and
Wells Capital, our General Partners; Wells Management, our property manager; certain affiliates of WREF; the directors of Piedmont REIT; and certain individuals who formerly served as officers or directors of Piedmont 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 Piedmont 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 Piedmont 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. On June 7, 2007, the Court granted a motion to designate the class lead plaintiff and class co-lead counsel. On June 27, 2007, the plaintiff
filed an amended complaint, which attempts to assert class action claims on behalf of those persons who received and were entitled to vote on the Piedmont REIT proxy statement filed with the SEC on February 26, 2007, and derivative claims on
behalf of Piedmont REIT. On July 9, 2007, the Court denied the plaintiffs motion for expedited discovery related to an anticipated motion for a preliminary injunction. On August 13, 2007, the defendants filed a motion to dismiss the
amended complaint. On



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March 31, 2008, the Court granted in part the defendants motion to dismiss the amended complaint. The Court dismissed five of the seven counts of
the amended complaint in their entirety. The Court dismissed the remaining two counts with the exception of allegations regarding the failure to disclose in the Piedmont REIT proxy statement details of certain expressions of interest in acquiring
Piedmont REIT. On April 21, 2008, the plaintiff filed a second amended complaint, which alleges violations of the federal proxy rules based upon allegations that the proxy statement to obtain approval for the Piedmont REIT internalization
transaction omitted details of certain expressions of interest in acquiring Piedmont REIT. The second amended complaint seeks, among other things, unspecified monetary damages, to nullify and rescind the internalization transaction, and to cancel
and rescind any stock issued to the defendants as consideration for the internalization transaction. On May 12, 2008, the defendants answered and raised defenses to the second amended complaint. On June 23, 2008, the plaintiff filed a
motion for class certification. As of the date of this filing, the time for the defendants to respond to the plaintiffs motion for class certification has not yet passed. The parties are presently engaged in discovery. 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.

On August 24, 2007, two stockholders of Piedmont REIT filed a derivative complaint, styledDonald and Donna
Goldstein, Derivatively on behalf of Defendant Wells Real Estate Investment Trust, Inc. v. Leo F. Wells, III, et al.,in the Superior Court of Fulton County, Georgia, on behalf of Piedmont REIT against, among others, Leo F. Wells, III and Wells
Capital, our General Partners, and a number of individuals who currently or formerly served as officers or directors of Piedmont REIT. The complaint alleges, among other things, that the consideration paid by Piedmont REIT as part of the
internalization transaction was excessive; that the defendants breached their fiduciary duties to Piedmont REIT; and that the internalization transaction unjustly enriched the defendants. The complaint seeks, among other things, a judgment
declaring that the defendants committed breaches of their fiduciary duties and were unjustly enriched at the expense of Piedmont REIT; monetary damages equal to the amount by which Piedmont REIT was damaged by the defendants; an order awarding
Piedmont REIT restitution from the defendants and ordering disgorgement of all profits and benefits obtained by the defendants from their wrongful conduct and fiduciary breaches; an order rescinding the internalization transaction; and the
establishment of a constructive trust upon any benefits improperly received by the defendants as a result of their wrongful conduct. On October 19, 2007, the Court verbally granted the defendants motion for a protective order (and
entered a written order on October 24, 2007) staying discovery until the Court rules on the defendants motion to dismiss the complaint. On October 31, 2007, the defendants filed their motion to dismiss the plaintiffs
derivative complaint. On December 19, 2007, the Court entered an order allowing the plaintiffs to take limited written discovery on the issue of derivative demand, but the order staying discovery entered in October 2007 otherwise remains
in effect. The defendants responded to the limited discovery requested by the plaintiffs. On January 10, 2008, the plaintiffs filed an amended complaint, which contains substantially the same counts against the same defendants as the
original complaint with certain additional factual allegations based primarily on events occurring after the original complaint was filed. In addition, the plaintiffs have responded to the defendants motion to dismiss this lawsuit. A
hearing on the motion to dismiss was held on February 22, 2008, and on March 13, 2008, the Court granted the motion to dismiss. On April 11, 2008, the plaintiffs filed a notice to appeal the Courts judgment granting the
defendants motion to dismiss. The appeal is currently pending in the Georgia Court of Appeals.

Commitments and Contingencies

We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 5 of our accompanying
consolidated financial statements for further explanation. Examples of such commitments and contingencies include:



| |  |  | Property under construction;
| | - |  | ----------------------------



| |  |  | Property under contract;
| | - |  | ------------------------



| |  |  | Foreign currency exchange contract;
| | - |  | -----------------------------------



| |  |  | Obligations under capital leases;
| | - |  | ---------------------------------



| |  |  | Commitments under existing lease agreements; and
| | - |  | ------------------------------------------------



| |  |  | Litigation.
| | - |  | -----------



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Subsequent Event

Sale of Shares of Common Stock

From October 1, 2008 through October 31, 2008, we raised
approximately $58.6 million through the issuance of approximately 5.9 million shares of our common stock under our follow-on offering. As of October 31, 2008, approximately 73.8 million shares remained available for sale to the public
under the follow-on offering, exclusive of shares available under our dividend reinvestment plan.

On October 1, 2008, the
registration statement relating to our Third Offering was declared effective by the SEC and we commenced offering activities for the Third Offering promptly thereafter. We stopped offering shares for sale under the follow-on offering on
November 10, 2008 and began accepting subscriptions under the Third Offering on November 11, 2008.



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

As a result of our debt facilities, we are exposed to interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flow primarily through a
low to moderate level of overall borrowings. However, we currently have a substantial amount of debt outstanding. We manage our ratio of fixed- to floating-rate debt with the objective of achieving a mix that we believe is appropriate in light of
anticipated changes in interest rates. We closely monitor interest rates and will continue to consider the sources and terms of our borrowing facilities to determine whether we have appropriately guarded ourselves against the risk of increasing
interest rates in future periods.

Additionally, we have entered into interest rate swaps, and may enter into other interest rate swaps,
caps, or other arrangements to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes; however, certain of our derivatives may not qualify for hedge
accounting treatment. All of our debt was entered into for other than trading purposes.

Our financial instruments consist of both
fixed-rate and variable-rate debt. Our variable rate borrowings consist of the Wachovia Line of Credit, the Wachovia Term Loan, the 222 E. 41st Street Building mortgage note, the 80 Park Plaza Building mortgage note, and the Three Glenlake
Building mortgage note; however, only the Wachovia Line of Credit and the Wachovia Term Loan bear interest at an effectively variable rate, as the variable rates on the 222 E. 41st Street Building mortgage note, the 80 Park Plaza Building
mortgage note, and the Three Glenlake Building mortgage note have been effectively fixed through the interest rate swap agreements described below. As of September 30, 2008, we had $351.0 million outstanding on the Wachovia Line of Credit;
$100.0 million outstanding on the Wachovia Term Loan; $140.5 million outstanding on the 222 E. 41st Street Building mortgage note; $52.4 million outstanding on the 80 Park Plaza Building mortgage note; $25.0 million outstanding on the
Three Glenlake Building mortgage note; $7.9 million outstanding on the fixed-rate, Bank Zenit Line of Credit; and $638.8 million outstanding on fixed-rate, term mortgage loans. The weighted-average interest rate of all of our debt instruments was
5.0% as of September 30, 2008.

The Wachovia Line of Credit and the Wachovia Term Loan are subject to interest costs based on, at our
option, LIBOR for 7-, 30-, 60-, 90-, or 180-day periods, plus an applicable margin ranging from 0.85% to 1.20% (LIBOR Loans), or the floating base rate. The applicable margin for LIBOR Loans is based on the ratio of debt-to-total asset
value. The base rate for any day is the higher of Wachovias prime rate for such day, or the Federal Funds Rate for such day plus 50 basis points. The Wachovia Line of Credit and the Wachovia Term Loan mature on May 9, 2009.An
increase in the variable interest rate on this line of credit or term loan constitutes a market risk, as an increase in rates would increase interest incurred and, therefore, decrease cash flows available for distribution to stockholders.

The 80 Park Plaza Building mortgage note was used to purchase the 80 Park Plaza Building. The note bears interest at one-month LIBOR
plus 130 basis points (approximately 4.227% per annum as of September 30, 2008) and matures in September 2016. In connection with obtaining the 80 Park Plaza Building mortgage note, we entered into an interest rate swap agreement to hedge
exposure to changing interest rates. The interest rate swap agreement has an effective date of September 22, 2006 and terminates September 21, 2016. The terms of the interest rate swap agreement effectively fix our interest rate on the 80
Park Plaza Building mortgage note at 6.575% per annum.



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The 222 E. 41st Street Building mortgage note was used to purchase the 222 E. 41st Street Building. The
note bears interest at one-month LIBOR plus 120 basis points (approximately 4.127% per annum as of September 30, 2008) and matures in August 2017. In connection with obtaining the 222 E. 41st Street Building mortgage note, we entered into
an interest rate swap agreement to hedge exposure to changing interest rates. The interest rate swap agreement has an effective date of August 16, 2007 and terminates August 16, 2017. The interest rate swap effectively fixes our interest
rate on the 222 E. 41st Street Building mortgage note at 6.675%.

The Three Glenlake Building mortgage note was used to purchase
the Three Glenlake Building. The note bears interest at one-month LIBOR plus 90 basis points (approximately 3.827% per annum as of September 30, 2008) and matures in July 2013. In connection with obtaining the Three Glenlake Building
mortgage note, we entered into an interest rate swap agreement to hedge exposure to changing interest rates. The interest rate swap agreement has an effective date of July 31, 2008 and terminates July 31, 2013. The interest rate swap
effectively fixes our interest rate on the Three Glenlake Building mortgage note at 5.95%.

Approximately $864.6 million of our total debt
outstanding as of September 30, 2008 is subject to fixed rates, either directly or when coupled with an interest rate swap agreement. As of September 30, 2008, these balances incurred interest expense at an average interest rate of 5.7%
and have expirations ranging from 2008 through 2018. A change in the market interest rate impacts the net financial instrument position of our fixed-rate debt portfolio; however, it has no impact on interest incurred or cash flows. The amounts
outstanding on our variable-rate debt facilities in the future will largely depend upon the level of investor proceeds raised under our public offering and the rate at which we are able to employ such proceeds in acquisitions of real properties.

Foreign Currency Risk

We are also subject to foreign exchange risk arising from our presence in Russia. Assets held in Russia represented 0.8% of total assets at September 30, 2008 and expenses incurred in Russia represented 0.0% of total revenue for the
nine months ended September 30, 2008. As compared to rates in effect at September 30, 2008, an increase or decrease to the U.S. Dollar to Russian Ruble exchange rate by 10% would not materially impact the accompanying consolidated
financial statements.



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

Managements Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an
evaluation, under the supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Rule 13a-15(e) under the Securities Exchange Act of 1934 as of the end of the quarterly period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer 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 in 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 our Principal Executive Officer and our Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no significant changes in our internal control over financial reporting during the quarter ended September 30, 2008 that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.



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PART II. OTHER INFORMATION



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

From
time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of
operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.



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

The following
risk factor should be read together with the risk factors disclosed under Item 1A on page 7 through 22 of our Annual Report on Form 10-K for the year ended December 31, 2007.

Current economic conditions and turbulence in the credit markets may create challenges in securing third-party borrowings or refinancing our existing debt and may cause market rental rates and
property values to decline.

Current economic conditions, the availability and cost of credit, turmoil in the mortgage market and
declining real estate markets have contributed to increased volatility and diminished expectations for real estate markets and the economy as a whole going forward. Many economists are predicting continued deterioration in economic conditions
in the United States, along with significant increases in unemployment and vacancy rates at commercial properties. In the event that the constriction within the credit markets persists, we may face challenges in securing third-party borrowings or
refinancing our existing debt in the future. Should such economic conditions continue for a prolonged period of time, the value of our commercial real estate assets and our ability to achieve market rental rates would decline significantly. In the
near-term, we believe that we are well positioned to withstand this downturn due to having minimal exposure to immediate lease rollover, a strong tenant credit base and low leverage levels relative to our competitors; however, no assurances can be
given that current economic conditions and the effects of the credit crisis will not have a material adverse effect on our business, financial condition and results of operations.



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



|(a) | All equity securities sold by us in the quarter ended September 30, 2008 were sold in an offering registered under the Securities Act of 1933.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------



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



|(c) | During the quarter ended September 30, 2008, we redeemed shares as follows (in thousands, except per-share amounts):
|--- | --------------------------------------------------------------------------------------------------------------------



|               |  |                                   |  |                             |      |                                                                                      |    
|-------------- |  | --------------------------------- |  | --------------------------- | ---- | ------------------------------------------------------------------------------------ | ---
|Period         |  | Total Number ofShares Redeemed(1) |  | Average PricePaid per Share |      | Approximate DollarValue of Shares AvailableThat May Yet Be RedeemedUnder the Program
|July 2008      |  | 1,470                             |  | $                           | 9.26 |                                                                                      | (2)
|August 2008    |  | 1,048                             |  | $                           | 9.28 |                                                                                      | (2)
|September 2008 |  | 1,113                             |  | $                           | 9.32 |                                                                                      | (2)



|(1) | We announced the commencement of the program on December 10, 2003 and amendments to the program on
April 22, 2004; March 28, 2006; May 11, 2006; August 10, 2006; and August 8, 2007. Further amendments are announced in this quarterly report.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | We limit redemptions under the share redemption program as follows: We will not make Ordinary Redemptions
(those that do not occur within two years of death or qualifying disability) until one year after the issuance of the shares to be redeemed. We have not redeemed shares on any redemption date to the extent that such redemptions would cause the
amount paid for Ordinary Redemptions since the beginning of the then-current calendar year to exceed 50% of the net proceeds from the sale of shares under our dividend reinvestment plan during such period. We will limit Ordinary Redemptions and
those upon the
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | qualifying disability of a stockholder so that the aggregate of such redemptions during any calendar year do not exceed 100% of the net proceeds from our
dividend reinvestment plan during the calendar year or 5% of the weighted-average number of shares outstanding in the prior calendar year. We will honor all redemption requests if the request is made within two years of a stockholders
death.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our board of directors has approved an amendment to the share redemption program for 2008 only,
which will become effective 30 days after the filing of this quarterly report on Form 10-Q. The amendment increases the limit on Ordinary Redemptions from 50% of the net proceeds from the sale of shares under our dividend reinvestment plan during
the year ended December 31, 2008 to 70% of the net proceeds from the sale of shares under our dividend reinvestment plan during the year ended December 31, 2008. No changes were made to the limitation for the aggregate of Ordinary
Redemptions and those upon the qualifying disability of a stockholder during any calendar year to not exceed 100% of the net proceeds from our dividend reinvestment plan during the year ended December 31, 2008 or 5% of the weighted-average
number of shares outstanding in the prior calendar year. The limit on Ordinary Redemptions will revert back to 50% of the net proceeds from the sale of shares under our dividend reinvestment plan in 2009.



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



|(a) | There have been no defaults with respect to any of our indebtedness.
|--- | --------------------------------------------------------------------



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



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



|(a) | On July 23, 2008, we held our annual meeting of stockholders at The Atlanta Athletic Club in Duluth, Georgia.
|--- | -------------------------------------------------------------------------------------------------------------



|(b) | Our stockholders elected the following individuals to the board of directors: Leo Wells, III; Douglas Williams; Charles Brown; Richard Carpenter; Bud Carter;
Nelson Mills; and Neil Strickland.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | The above matter was approved by our stockholders at the annual meeting by the casting of the following votes:
|--- | --------------------------------------------------------------------------------------------------------------



|                  |  |             |  |               
|----------------- |  | ----------- |  | --------------
|Name              |  | Votes For   |  | Votes Withheld
|Leo Wells, III    |  | 211,247,276 |  | 9,671,244     
|Douglas Williams  |  | 211,273,788 |  | 9,644,732     
|Charles Brown     |  | 211,289,305 |  | 9,629,215     
|Richard Carpenter |  | 211,247,888 |  | 9,670,631     
|Bud Carter        |  | 211,196,459 |  | 9,722,061     
|Nelson Mills      |  | 211,327,752 |  | 9,590,768     
|Neil Strickland   |  | 211,104,067 |  | 9,814,453     



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



|(a) | During the third quarter of 2008, there was no information that was required to be disclosed in a report on Form 8-K that was not disclosed in a report on
Form 8-K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | There are no material changes to the procedures by which stockholders may recommend nominees to our board of directors since the filing of our Schedule 14A.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



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

The exhibits
required to be filed with this report are set forth on the Exhibit Index to this quarterly report 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 INVESTMENT TRUST II, INC.(Registrant)
|                         |  |  | 
|Dated: November 13, 2008 |  |  |  | By:                                                     |  | /s/ DOUGLAS P. WILLIAMS
|                         |  |  |  |                                                         |  |                         |  | Douglas P. Williams Executive Vice President, Treasurer and Principal Financial Officer



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EXHIBIT INDEX TO

THIRD QUARTER 2008 FORM 10-Q OF

WELLS REAL ESTATE INVESTMENT TRUST II, INC.

The following documents are filed as exhibits to this report. Exhibits that are not required for this report are omitted.



|            |  |                                                                                                                                                                                                                                                                                                                     
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                         
|            | 
|3.1         |  | Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 3 to the Registration Statement on Form S-11 (No. 333-107066) filed
with the Commission on November 25, 2003 (the IPO Registration Statement))                                                          
|            | 
|3.2         |  | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
2007)                                                                                                                                                           
|            | 
|3.3         |  | Amendment No. 1 to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.3 to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2007)                                                                                                                                        
|            | 
|4.1         |  | Form of Subscription Agreement with Consent to Electronic Delivery (incorporated by reference to Appendix A to the Prospectus included in Amendment No. 2 to the Registration
Statement on Form S-11 (No. 333-144414) filed with the Commission on September 22, 2008 (the Third Offering Registration Statement))
|            | 
|4.2         |  | Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders
issued shares without certificates) (incorporated by reference to Exhibit 4.2 to the Third Offering Registration Statement)             
|            | 
|4.3         |  | Amended and Restated Dividend Reinvestment Plan (incorporated by reference to Appendix B to the Prospectus included in the Third Offering Registration
Statement)                                                                                                                                                   
|            | 
|4.4         |  | Description of Share Redemption Program (included herein and incorporated by reference to Third Offering Prospectus included in the Third Offering Registration Statement)                                                                                                                                          
|            | 
|31.1        |  | Certification of the Chief Executive Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002                                                                                                                               
|            | 
|31.2        |  | Certification of the Chief Financial Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002                                                                                                                               
|            | 
|32.1        |  | Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002