<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K

(Mark One)
[X]  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 [Fee Required]

For the fiscal year ended                   December 31, 1999                 or
                                ---------------------------------------------

[_]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required]

For the transition period from to     _______________  to   ____________________
Commission file number                 0-16518


                           WELLS REAL ESTATE FUND II
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

             Georgia                                     58-1678709
------------------------------------     ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

6200 The Corners Parkway,
Norcross, Georgia                                           30092
------------------------------------     ---------------------------------------
(Address of principal executive                          (Zip Code)
offices)

Registrant's telephone number, including              (770) 449-7800
                                         ---------------------------------------
area code Securities registered pursuant
to Section 12 (b) of the Act:

        Title of each class                 Name of exchange on which registered
------------------------------------     ---------------------------------------
              NONE                                           NONE
------------------------------------     ---------------------------------------

Securities registered pursuant to Section 12 (g) of the Act:


                                 CLASS A UNITS
--------------------------------------------------------------------------------
                               (Title of Class)
                                 CLASS B UNITS
--------------------------------------------------------------------------------
                               (Title of Class)

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 ____
      ----
Aggregate market value of the voting stock held by nonaffiliates: Not Applicable
                                                                 ---------------
<PAGE>

                                    PART I

ITEM 1.  BUSINESS

General

Wells Real Estate Fund II (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Capital, Inc., a nonpublic
Georgia limited partnership, as General Partners.  The Partnership was formed on
June 23, 1986, for the purpose of acquiring, developing, constructing, owning,
operating, improving, leasing and otherwise managing for investment purposes
income-producing commercial or industrial properties.

On September 8, 1986, the Partnership commenced a public offering of its limited
partnership units pursuant to a Registration Statement filed on Form S-11 under
the Securities Act of 1933.  The Partnership terminated its offering on
September 7, 1988, and received gross proceeds of $34,948,250 representing
subscriptions from 4,440 Limited Partners, composed of two classes of limited
partnership interests, Class A and Class B limited partnership units.

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

As of December 31, 1999, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a two-
story office building located in Charlotte, North Carolina ("First Union at
Charlotte"); (ii) a four-story office building located in metropolitan Houston,
Texas (the "Atrium"); (iii) a restaurant located in Fulton County, Georgia ("the
Brookwood Grill"); (iv) an office/retail center currently being developed in
Fulton County, Georgia ("Holcomb Bridge Road"); (v) a retail shopping and
commercial office complex located in Tucker, Georgia ("Heritage Place at
Tucker"); and (vi) a shopping center located in Cherokee County, Georgia
("Cherokee Commons").  All of the foregoing properties were acquired on an all
cash basis.

Employees

The Partnership has no direct employees.  The employees of Wells Capital, Inc.,
a General Partner of the Partnership, perform a full range of real estate
services including leasing and property management, accounting, asset management
and investor relations for the Partnership.  See Item 11--"Compensation of
General Partner and Affiliates"--for a summary of the fees paid to the General
Partners and their affiliates during the fiscal year ended December 31, 1999.

                                      -2-
<PAGE>

Insurance

Wells Management Company, Inc., an affiliate of the General Partner, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership.  In the opinion of management
of the registrant, the properties are adequately insured.

Competition

The Partnership will experience competition for tenants from owners and managers
of competing projects which may include the General Partners and their
affiliates.  As a result, the Partnership may be required to provide free rent,
reduced charges for tenant improvements, and other inducements, all of which may
have an adverse impact on results of operations.  At the time the Partnership
elects to dispose of its properties, the Partnership will also be in competition
with sellers of similar properties to locate suitable purchasers for its
properties.

ITEM 2.  PROPERTIES

The Partnership owns all of its properties through a joint venture (the "Fund
II-Fund II-OW Joint Venture") formed on March 1, 1988, between the Partnership
and Wells Real Estate Fund II-OW ("Wells Fund II-OW").  Wells Fund II-OW is a
Georgia public limited partnership affiliated with the Partnership through
common general partners.  The investment objectives of Wells Fund II-OW are
substantially identical to those of the Partnership.  As of December 31, 1999,
the Partnership's equity interest in the Fund II-Fund II-OW Joint Venture was
approximately 95%, and the equity interest of Wells Fund II-OW was approximately
5%.  The Partnership does not have control over the operations of the joint
venture; however, it does exercise significant influence.  Accordingly,
investment in joint venture is recorded on the equity method.

Of the six properties owned by the joint venture, three are retail shopping
centers, two are office buildings and one is a restaurant.  As of December 31,
1999, these properties were 97% occupied.  As of December 31, 1998, these
properties were 95% occupied.  As of December 31, 1997 these properties were 96%
occupied.

                                      -3-
<PAGE>

The following table shows lease expirations during each of the next ten years
for all leases as of December 31, 1999, assuming no exercise of renewal options
or termination rights:

<TABLE>
<CAPTION>
                                                                     Partnership         Percentage        Percentage
                 Number                         Annualized            Share of            of Total          of Total
  Year of          of           Square          Gross Base           Annualized            Square          Annualized
   Lease         Leases          Feet            Rent (1)            Gross Base             Feet           Gross Base
 Expiration     Expiring       Expiring          Expiring         Rent (1) Expiring       Expiring            Rent
------------  ------------   ------------      ------------       -----------------     -------------     -------------
<S>           <C>           <C>             <C>                 <C>                    <C>              <C>
2000                 14          32,827         $  484,268              $  204,388             9.2%               9.8%
2001(2)              20         114,193          1,549,428               1,032,429            32.0               31.5
2002(3)              18         173,725          2,460,987               1,199,308            48.8               50.0
2003                  1           5,478             32,938                  14,009             1.5                0.7
2004                  7          18,213            190,873                  65,728             5.1                3.9
2005                  0               0                  0                       0             0.0                0.0
2006                  1           5,935            127,575                  18,065             1.7                2.6
2007                  1           3,600             44,250                  22,860             1.0                0.9
2008                  1           2,400             27,384                  11,646             0.7                0.6
2009                  0               0                  0                       0             0.0                0.0
              ------------   ------------      ------------       -----------------     -------------     -------------
                     63         356,371         $4,917,703              $2,568,433           100.0%             100.0%
              ============   ============      ============       =================     =============     =============
</TABLE>

     (1) Average monthly gross rent over the life of the lease, annualized.
     (2) Expiration of First Union Bank with 70,752 square feet at the First
         Union project.
     (3) Expiration of Boeing company lease with 119,040 square feet at the
         Atrium.

The following describes the properties in which the Partnership owns an interest
as of December 31, 1999:

     The First Union Property/Fund II-Fund II-OW Joint Venture


     On May 9, 1988, the Fund II-Fund II-OW Joint Venture acquired a two-story
     building containing approximately 70,752 net leasable square feet, located
     on a 9.54 acre tract of land located in Charlotte, Mecklenburg County,
     North Carolina (the "Charlotte Property") for a purchase price of
     $8,550,000.

     On May 1, 1994, First Union Bank assumed occupancy of the First Union
     Property under a lease which expires April 30, 2001.  The principal terms
     of the lease provide for First Union's sole tenancy of the project as a
     regional operations center for the initial term of seven years.  Because
     First Union Bank invested approximately $1 million on tenant improvements
     at the First Union Property, a lower rental rate was accepted for the first
     five years of the lease term.

     The annual base rent during the initial term is $412,705 payable in equal
     monthly installments of $34,392.08 during the first two years, annual base
     rent of $454,651 payable in equal monthly installments of $37,887.58 during
     the third year, annual base rent of $489,650 payable in equal monthly
     installments of $40,804.17 during the fourth year and annual base rent of
     $524,625 payable in equal monthly installments of $43,718.75 during the
     fifth year.  Rental rates during the remaining two years of the lease term
     will be determined by market rates which is $844,071 payable in equal
     monthly installments of $70,339 for the last two years.

     The occupancy rates at the First Union Property as of December 31 were 100%
     in 1999, 1998, and 1997.

                                      -4-
<PAGE>

     The average effective annual rental per square foot at the First Union
     Property was $10.14 for 1999, $6.49 for 1998 and 1997, $6.51 for 1996, and
     $5.83 for 1995.

     The Atrium/Fund II--Fund III Joint Venture

     On April 3, 1989, the Fund II-Fund II-OW Joint Venture formed a joint
     venture (the "Fund II-Fund III Joint Venture") with Wells Real Estate Fund
     III, L.P. ("Wells Fund III"), a public Georgia limited partnership
     affiliated with the Partnership through common general partners.  The
     investment objectives of Wells Fund III are substantially identical to
     those of the Partnership.

     In April 1989, the Fund II-Fund III Joint Venture acquired a four-story
     office building located on a 5.6 acre tract of land adjacent to the Johnson
     Space Center in metropolitan Houston, in the City of Nassau Bay, Harris
     County, Texas, know as "The Atrium at Nassau Bay" (the "Atrium").

     The funds used by the Fund II-Fund III Joint Venture to acquire the Atrium
     were derived from capital contributions made to the Fund II-Fund III Joint
     Venture by the Fund II-Fund II-OW Joint Venture and Wells Fund III in the
     amounts of $8,327,856 and $2,538,000, respectively, for total initial
     capital contributions of $10,865,856.  As of December 31, 1999, the Fund
     II-Fund II-OW Joint Venture and Wells Fund III had made total capital
     contributions to the Fund II-Fund III Joint Venture of approximately
     $8,330,000 and $4,448,000, respectively, for the acquisition and
     development of the Atrium.

     The Atrium was first occupied in 1987 and contains approximately 119,000
     net leasable square feet.  Each floor of the Atrium was originally under a
     separate lease to Lockheed Engineering and Science Company, Inc., a wholly
     owned subsidiary of the Lockheed Company, each of which leases had terms of
     approximately eight years and expired June 30, 1996, and upon which date
     Lockheed vacated the property.

     On March 3, 1997, a lease was signed with The Boeing Company for the entire
     Atrium building.  The lease is for a period of five years with an option to
     renew for an additional five year term.  The rental rate for the first
     three years of the lease term is $12.25 per square foot and $12.50 per
     square foot for the final two years of initial lease term.  The rate for
     the optional five year term will be determined based upon then current
     market rates.  Upon 150 day prior written notice, Boeing has the right to
     cancel its lease in the event that NASA or another prime contractor were to
     cancel or substantially reduce its contract.  In addition, there is a no-
     cause cancellation provision at the end of the first three year period.  If
     this no-cause cancellation is exercised, Boeing would be required to pay
     unamortized, up-front tenant improvement costs.  The lease also provides
     that tenant will pay certain operating expenses in excess of $5.50 per
     square foot on an annual basis.

     Boeing began the move-in phase of its occupancy on April 15, 1997, and
     occupied the Atrium and began paying rent on May 15, 1997.  The total cost
     of completing the required tenant improvements and outside broker
     commissions of approximately $1.4 million was funded out of reserves and
     cash flows of the Partnership, Wells Fund II-OW and Wells Fund III.  As of
     December 31, 1999, the Partnership had contributed approximately $387,752,
     Wells Fund II-OW had contributed approximately $21,744, Wells Fund III had
     contributed approximately $659,810, and Fund II--Fund III Joint Venture had
     contributed $330,694 to fund the tenant improvements and outside broker
     commissions required.  As of December 31, 1999, the Fund II--Fund II-OW
     Joint Venture holds approximately 61%, and Wells Fund III holds
     approximately 39%.

                                      -5-
<PAGE>

     The occupancy rate at the Atrium property was 100% as of December 31, 1999,
     1998, and 1997.  The average effective rental per square foot at the Atrium
     is $12.35 for 1999 and 1998, $7.77 for 1997, $8.81 for 1996, and $15.89 for
     1995.

     The Brookwood Grill Property/Fund II--Fund III Joint Venture

     On January 31, 1990, the Fund II-Fund II-OW Joint Venture acquired a 5.8
     acre tract of undeveloped real property at the intersection of Warsaw Road
     and Holcomb Bridge Road in Roswell, Fulton County, Georgia (the "Holcomb
     Bridge Road Property").  The Fund II--Fund II-OW Joint Venture paid
     $1,848,561, including acquisition expenses, for the 5.8 acre tract of
     undeveloped property.

     On September 20, 1991,  the Fund II-Fund II-OW Joint Venture contributed
     approximately 1.5 acres of the Holcomb Bridge Road Property (the "Brookwood
     Grill Property"), along with its interest as landlord under the lease
     agreement referred to below, as a capital contribution to the Fund II-Fund
     III Joint Venture.  As of September 20, 1991, the Fund II-Fund II-OW Joint
     Venture had expended approximately $2,128,000 for the land acquisition and
     development of the Brookwood Grill Property.

     As of September 20, 1991, a lease agreement was entered into with the
     Brookwood Grill of Roswell, Inc. for the development of approximately 1.5
     acres and the construction of a 7,440 square foot restaurant.  This
     restaurant, which opened early in March 1992, is similar in concept to
     Houston's, Ruby Tuesday, and Friday's.  It is principally owned by David
     Rowe, an Atlanta real estate developer of Kroger shopping centers, and
     several operating partners formerly with Houston's.  The terms of the lease
     call for an initial term of 9 years and 11 months, with two additional 10-
     year option periods.  The agreement calls for a base rental of $217,006 per
     year for years 1 through 5, with a 15% increase over the remainder of the
     initial term.  Rental rates for all option periods will be based on the
     prevailing market values and rates for those periods. The Fund II-Fund III
     Joint Venture has expended approximately $1,100,000 for the development and
     construction of the restaurant building together with parking areas,
     driveways, landscaping and other improvements.  In addition to the base
     rent described above, the tenant is required to pay additional rent in
     amounts equal to a 12% per annum return on all amounts expended for such
     improvements.

     The occupancy rate for the Brookwood Grill, a sole tenant, was 100% as of
     December 31, 1999, 1998, and 1997.  The average effective rental per square
     foot at the Brookwood Grill is $30.22 for 1999, $30.26 for 1998 and 1997,
     $30.29 for 1996, and $30.21 for 1995.

     As of December 31, 1999, the Fund II-Fund II-OW Joint Venture and Wells
     Fund III had made total contributions to the Fund II-Fund III Joint Venture
     of approximately $2,128,000 and $1,330,000, respectively, for the
     acquisition and development of the Brookwood Grill.  The Fund II-Fund II-OW
     Joint Venture holds an approximately 62% equity interest in the Brookwood
     Grill Property, and Wells Fund III holds an approximately 38% equity
     interest in the project.

     On January 10, 1995, the remaining 4.3 undeveloped acres of land comprising
     the Holcomb Bridge Road Property was contributed to a new joint venture,
     Fund II, III, VI, and VII Associates by Fund II-Fund III Joint Venture.
     This property is described below.

                                      -6-
<PAGE>

     Holcomb Bridge Road Property/Fund II, III, VI and VII Associates

     On January 10, 1995, Fund II-Fund III Joint Venture, Wells Real Estate Fund
     VI , L.P. ("Wells Fund VI"), a Georgia public limited partnership having
     Leo F. Wells, III and Wells Partners, L.P., a Georgia limited partnership,
     as general partners, and Wells Real Estate Fund VII, L.P. ("Wells Fund
     VII"), a Georgia public limited partnership having Leo F. Wells, III and
     Wells Partners, L.P., a Georgia limited partnership, as general partners,
     entered into a Joint Venture Agreement known as Fund II, III, VI and VII
     Associates ("Fund II, III, VI and VII Joint Venture").  Wells Partners,
     L.P. is a private limited partnership having Wells Capital, Inc., a General
     Partner of the Partnership, as its sole general partner.  The investment
     objectives of Wells Fund VI and Wells Fund VII are substantially identical
     to those of the Partnership.

     In January 1995, the Fund II-Fund III Joint Venture contributed to the Fund
     II-III-VI-VII Joint Venture approximately 4.3 acres of land at the
     intersection of Warsaw Road and Holcomb Bridge Road in Roswell, Fulton
     County, Georgia (the "Holcomb Bridge Road Property") including land
     improvements for the development and construction on two buildings with a
     total of 49,534 square feet.  Fifteen tenants occupied the Holcomb Bridge
     Road Property as of December 31, 1999 for an occupancy rate of 100% in
     1999, and 94% in 1998 and 1997.  The average effective annual rental was
     $19.26 for 1999, $17.63 for 1998, $13.71 for 1997, and $9.87 for 1996.

     As of December 31, 1999, Fund II and Fund III Joint Venture had contributed
     $1,729,116 in land and improvements for an equity interest of approximately
     24.1%, Wells Fund VI had contributed $1,929,541 for an equity interest of
     approximately 26.9%,  and Wells Fund VII had contributed $3,525,041 for an
     equity interest of approximately 49.0%.  The total cost to develop the
     Holcomb Bridge Road Property was $5,454,582, excluding land.

     Tucker Property/Fund I--Fund II Joint Venture

     The Tucker Property consists of a retail shopping center and a commercial
     office building complex located in Tucker, DeKalb County, Georgia (the
     "Tucker Property").  The retail shopping center at the Tucker Property
     contains approximately 29,858 net leasable square feet.  The commercial
     office space at the Tucker Property, which is divided into seven separate
     buildings, contains approximately 67,465 net leasable square feet.

     On January 9, 1987, the Partnership acquired an interest in the Tucker
     Property which was acquired by a joint venture (the "Tucker Joint Venture")
     originally between the Partnership and Wells Real Estate Fund I ("Wells
     Fund I").  Wells Fund I is a Georgia public limited partnership affiliated
     with the Partnership through common general partners.  The investment
     objectives of Wells Fund I are substantially identical to those of the
     Partnership.  Upon the formation of the Fund II-Fund II-OW Joint Venture in
     March 1988, the Partnership contributed its joint venture interest in the
     Tucker Joint Venture to the Fund II-Fund II-OW Joint Venture as a part of
     its capital contribution.  On January 1, 1991, the Cherokee Joint Venture,
     which is defined below, was merged into the Tucker Joint Venture forming a
     new joint venture (the "Tucker-Cherokee Joint Venture").  As described
     below, the Cherokee Joint Venture was also a joint venture between the Fund
     II-Fund II-OW Joint Venture and Wells Fund I.  Under the terms of the
     Amended and Restated Joint Venture Agreement of Fund I and Fund II Tucker-
     Cherokee, the percentage interest of the Fund II-Fund II-OW Joint Venture
     in the Tucker Project remained unchanged as a result of the merger of the
     Tucker Joint Venture into the Tucker-Cherokee Joint Venture.

                                      -7-
<PAGE>

     On August 1, 1995, Wells Fund I and the Fund II-Fund-II-OW Joint Venture
     entered into another amendment to effect the contribution of the Cherokee
     Project to the Fund I, II, II-OW, VI, VII Joint Venture, as described
     below.  As a result, the name of the joint venture owning the Tucker
     Property was changed back to "Fund I and Fund II Tucker," and is therefore
     no longer merged with the Cherokee Joint Venture.  The Partnership's
     percentage interest in the Tucker Project remained unchanged as a result of
     the transaction.

     Both Wells Fund I and the Fund II-Fund II-OW Joint Venture have funded the
     cost of completing the Tucker Property through capital contributions which
     have been paid as progressive stages of construction were completed.  As of
     December 31, 1999, Wells Fund I had contributed a total of $6,194,634, and
     the Fund II-Fund II-OW Joint Venture had contributed a total of $4,764,585
     for the acquisition and development of the Tucker Property.  As of December
     31, 1999, Wells Fund I had an approximately 55% equity interest in the
     Tucker Property and the Fund II-Fund II-OW Joint Venture had an
     approximately 45% equity interest in the Tucker Property.  As of December
     31, 1999, the Tucker Property was 87% occupied by 35 tenants.

     There are no tenants in the project occupying 10% or more of the rentable
     square footage.  The principal businesses, occupations, and professions
     carried on in the building are typical retail shopping/commercial office
     services.

     The occupancy rate at the Tucker Property was 87% in 1999, 94% in 1998, and
     85% in 1997.

     The average effective annual rental per square foot at the Tucker Property
     was $14.11 for 1999, $12,76 for 1998, $11.08 for 1997, $13.78 for 1996, and
     $12.61 for 1995.

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

     The Cherokee Property consists of a retail shopping center known as
     "Cherokee Commons Shopping Center" located in metropolitan Atlanta,
     Cherokee County, Georgia (the "Cherokee Property").  The Cherokee Property
     consists of approximately 103,755 net leasable square feet.

     On June 30, 1987, the Partnership acquired an interest in the Cherokee
     Property through a joint venture (the "Cherokee Joint Venture") between the
     Wells Fund I and Wells Fund II-Fund II-OW Joint Venture.  On January 1,
     1991, the Cherokee Joint Venture merged with the Tucker Joint Venture to
     form the Tucker-Cherokee Joint Venture.  As described above, the Tucker
     Joint Venture was also a joint venture between the Wells Fund I and the
     Fund II-Fund II-OW Joint Venture.  Under the terms of the Amended and
     Restated Joint Venture Agreement of Fund I and Fund II Tucker-Cherokee, the
     Fund II-Fund II-OW Joint Venture's percentage interest in the Cherokee
     Property remained unchanged as a result of the merger of the Cherokee Joint
     Venture into the Tucker-Cherokee Joint Venture.

     On August 1, 1995, the Fund II-Fund II-OW Joint Venture, Wells Fund I,
     Wells Real Estate Fund VI, L.P. ("Wells Fund VI"), a Georgia public limited
     partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia
     limited partnership, as general partners, and Wells Real Estate Fund VII,
     L.P. ("Wells Fund VII"), a Georgia public limited partnership having Leo F.
     Wells, III and Wells Partners, L.P., a Georgia limited partnership, as
     general partners entered into a joint venture agreement known as Fund I,
     II, II-OW, VI, VII Associates (the "Fund I, II, II-OW, VI, VII Joint
     Venture"), which was formed to own and operate the Cherokee Project.  Wells
     Partners, L.P. is a private limited partnership having Wells Capital, Inc.,
     a General Partner, as its sole general partner.  The investment objectives
     of Wells Fund I, Wells Fund VI, and Wells Fund VII are substantially
     identical to those of the Partnership.

                                      -8-
<PAGE>

     As of December 31, 1999, Wells Fund I had contributed property with a book
     value of $2,139,900, the Fund II-Fund II-OW Joint Venture had contributed
     property with a book value of $4,860,100, Wells Fund VI had contributed
     cash in the amount of $953,798 and Wells Fund VII had contributed cash in
     the amount of $953,798 to the Fund I, II, II-OW, VI, VII Joint Venture.  As
     of December 31, 1999, the equity interests in the Fund I, II, II-OW, VI,
     VII Joint Venture were approximately as follows:  Wells Fund I--24%, Fund
     II-Fund II-OW Joint Venture--54%, Wells Fund VI--11%, and Wells Fund VII--
     11%.

     The Cherokee Property is anchored by a 67,115 square foot lease with Kroger
     Food/Drug which expires in 2011.  Kroger's original lease was for 45,528
     square feet.  In 1994, Kroger expanded to the current 67,115 square feet
     which is approximately 65% of the total rentable square feet in the
     property.  Kroger, a retail grocery chain, is the only tenant occupying 10%
     or more of the rentable square footage.  The other tenants in the shopping
     center provide typical retail shopping services.

     The Kroger lease provides for an annual rent of $392,915 which increased to
     $589,102 on August 16, 1995 due to the expansion from 45,528 square feet to
     67,115 square feet.  The lease expires March 31, 2011 with Kroger entitled
     to five successive renewals each for a term of five years at the same
     rental rate as the original lease.

     The occupancy rate at the Cherokee Property was 97% in 1999, 91% in 1998,
     and 94% in 1997.

     The average effective annual rental per square foot at the Cherokee
     Property was $9.11 for 1999, $8.78 for 1998, $8.49 for 1997, $8.59 for
     1996, and $7.50 for 1995.

ITEM 3.  LEGAL PROCEEDINGS

There were not material pending legal proceedings or proceedings know to be
contemplated by governmental authorities involving the Partnership during 1999.

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

No matters were submitted to a vote of the Limited Partners during 1999.

                                      -9-
<PAGE>

                                    PART II

ITEM 5.  MARKET FOR PARTNERSHIP'S UNITS AND RELATED SECURITY HOLDER MATTERS

As of February 29, 2000, the Partnership had 108,572 outstanding Class A units
held by a total of 3,461 Limited Partners and 30,221 outstanding Class B units
held by a total of 691 Limited Partners.  The total number of Limited Partners
has decreased due to repurchase of units since the termination of the offering
in 1988.  The capital contribution per unit is $250.  There is no established
public trading market for the Partnership's limited partnership units, and it is
not anticipated that a public trading market for the units will develop.  Under
the Partnership Agreement, the General Partners have the right to prohibit
transfers of units.

The General Partners estimated the investment value of properties held by the
Partnership as of December 31, 1999 to be $169.37 per Class A unit and $353.41
per Class B unit based on market conditions existing in early December 1999.
This value was confirmed as reasonable by an independent MAI appraiser, David L.
Beal Company, although no actual MAI appraisal was performed due to the
inordinate expense involved with such an undertaking.  The valuation does not
include any fractional interest valuation.

Class A unit holders are entitled to an annual 8% noncumulative distribution
preference over Class B unit holders as to cash distributions from net cash from
operations, defined in the Partnership Agreement as cash flow, less adequate
cash reserves for other obligations of the Partnership for which there is no
provision, but are initially allocated none of the depreciation, amortization,
cost recovery and interest expense.  These items are allocated to Class B unit
holders until their capital account balances have been reduced to zero.

Cash distributions from net cash from operations to the Limited Partners is
distributed on a quarterly basis unless Limited Partners elect to have their
cash distributions paid monthly.  Cash distributions made to the Limited
Partners for the two most recent fiscal years were as follows:

<TABLE>
<CAPTION>
                                                   Per Class A          Per Class A          Per Class B          Per Class B
     Distribution                Total                Unit                 Unit                 Unit                 Unit
     for Quarter                 Cash              Investment            Return of            Return of             General
        Ended                 Distributed            Income               Capital              Capital              Partner
------------------         ----------------     ----------------      --------------       ---------------     ---------------
<S>                        <C>                  <C>                   <C>                  <C>                 <C>
March 31, 1998                  $383,141             $0.41                $3.12                  $0.00                $0.00
June 30, 1998                    403,529              0.45                 3.27                  $0.00                $0.00
September 30, 1998               385,969              0.37                 3.19                  $0.00                $0.00
December 31, 1998                336,715              0.00                 3.09                  $0.00                $0.00
March 31, 1999                   404,182              0.58                 3.14                  $0.00                $0.00
June 30, 1999                    372,778              0.66                 2.77                  $0.00                $0.00
September 30, 1999               441,063              1.36                 2.70                  $0.00                $0.00
December 31, 1999                475,030              0.82                 3.56                  $0.00                $0.00
</TABLE>

The fourth quarter distributions were accrued for accounting purposes in 1999
and were not actually paid until February 2000.

                                      -10-
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

The following sets forth a summary of the selected financial data for the fiscal
years ended December 31, 1999, 1998, 1997, 1996, and 1995:

<TABLE>
<CAPTION>
                                            1999        1998         1997         1996           1995
                                        -----------  -----------  -----------  -----------    -----------
<S>                                     <C>          <C>          <C>          <C>            <C>
Total assets                            $21,208,935  $22,382,691  $23,795,430   $24,608,842   $26,078,445
Total revenues                              371,178       93,162     (331,376)      112,454     1,011,995
Net income (loss)                           371,178       93,162     (331,376)      112,354     1,011,745
Net income (loss) allocated to Class
 A Limited Partners                         371,178       93,162     (168,693)    1,335,976     1,922,246
Net loss allocated to Class B Limited
 Partners                                         0            0     (162,683)   (1,223,612)     (910,501)
Net income (loss) per Class A Limited
 Partner unit                           $      3.42  $      0.86  $     (1.55)  $     12.30   $     17.71
Net loss per Class B Limited Partner
 unit                                          0.00         0.00        (5.38)       (40.49)       (30.13)
Cash distribution per Class A Limited
 Partner unit                                 15.59        13.90         6.01         11.56         17.34
Cash distribution per Class B Limited
 Partner unit                                  0.00         0.00         0.00          0.00          0.00
</TABLE>

Cash distributions per unit were comprised of $3.42 paid from net cash from
operations and $12.17 paid from capital in 1999.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS
         RESULTS OF OPERATION

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

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

Results of Operations and Changes in Financial Conditions

General

As of December 31, 1999, the properties owned by the Fund II-Fund II-OW Joint
Venture were 97% occupied compared to 95% in 1998 and 96% in 1997.

Gross revenues of the Partnership were $371,178 for the year ended December 31,
1999 as compared to $93,162 for the year ended December 31, 1998, and $(331,376)
for the fiscal year ended December 31, 1997.  The increase in gross revenues is
primarily due to Boeing moving into the Atrium building in May 1997 and
increased rental renewal rates in 1999 for First Union at Charlotte.

                                      -11-
<PAGE>

Administrative expenses of the Partnership are incurred at the joint venture
level.

The Partnership made cash distributions to Limited Partners holding Class A
units of $15.59 per unit for fiscal year ended December 31, 1999, $13.90 per
unit for fiscal year ended December 31, 1998, and $6.01 per unit for fiscal year
ended December 31, 1997.  The Partnership made no cash distributions to Limited
Partners holding Class B units for fiscal year ended 1999, 1998, or 1997.

Property Operations

As of December 31, 1999, the Partnership's percentage ownership in properties
was as follows:  94.7% in the First Union Property, 58.03% in the Atrium, 59% in
the Brookwood Grill Property, 14.2% in the Holcomb Bridge Property, 42.5% in the
Tucker Property, and 51.7% in the Cherokee Property.

As of December 31, 1999, the Partnership owned interests in the following
properties through the Fund II--Fund II-OW Joint Venture:

       First Union at Charlotte Property/Fund II and II-OW Joint Venture

<TABLE>
<CAPTION>
                                                                                                 For the Year Ended December 31
                                                                                               ------------------------------------
                                                                                                   1999        1998         1997
                                                                                               -----------  ----------- -----------
<S>                                                                                            <C>          <C>         <C>
Revenues:
 Rental income                                                                                    $717,676    $458,867    $460,920
                                                                                               -----------  ----------- ----------
Expenses:
 Depreciation                                                                                      367,667     367,667     367,667
 Management and leasing expenses                                                                    61,295      45,887      45,887
 Other operating expenses                                                                           17,797      14,932      12,281
                                                                                               -----------  ----------- ----------
                                                                                                   446,759     428,486     425,835
                                                                                               -----------  ----------- ----------
Net income                                                                                        $270,917    $ 30,381    $ 33,032
                                                                                               ===========  =========== ==========
Occupied percentage                                                                                    100%        100%        100%
                                                                                               ===========  =========== ==========
Partnership ownership percentage                                                                      94.7%       94.7%       94.7%
                                                                                               ===========  =========== ==========
Cash generated to the Fund II-Fund II-OW Joint
  Venture*                                                                                        $677,542    $467,262    $437,023
                                                                                               ===========  =========== ==========
Net income generated to the Fund II-Fund II-OW
  Joint Venture*                                                                                  $270,917    $ 30,381    $ 33,032
                                                                                               ===========  =========== ==========
</TABLE>

*The Partnership holds a 95% ownership in the Fund II-Fund II-OW Joint Venture.


Real estate taxes and all operational expenses for the building are the
responsibility of the tenant.

Rental income and net income increased, as compared to 1998 and 1997, due
primarily to increased rental renewal rates this year.  Management and leasing
expenses increased due primarily to increased management fees which are charges
based on rental income.

Cash generated to the Joint Venture increased for the year ended 1999 due to the
increase in rental income billed to the tenant.

                                      -12-
<PAGE>

For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 1.  For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

                   The Atrium/Fund II-Fund III Joint Venture

<TABLE>
<CAPTION>
                                                                                                For the Year Ended December 31
                                                                                           ----------------------------------------
                                                                                              1999          1998           1997
                                                                                           -----------   -----------    -----------
<S>                                                                                        <C>           <C>            <C>
Revenues:
 Rental income                                                                              $1,470,144    $1,470,144    $   924,769
 Interest income                                                                                     0             0          2,617
 Other income                                                                                    4,000        13,280          8,638
                                                                                           -----------   -----------    -----------
                                                                                             1,474,144     1,483,424        936,024
                                                                                           -----------   -----------    -----------
Expenses:
 Depreciation                                                                                  867,720       866,778        795,829
 Management and leasing expenses                                                               179,762       186,102        111,576
 Other operating expenses                                                                      720,594       713,955        841,456
                                                                                           -----------   -----------    -----------
                                                                                             1,768,076     1,766,835      1,748,861
                                                                                           -----------   -----------    -----------
Net loss                                                                                    $ (293,932)   $ (283,411)   $  (812,837)
                                                                                           ===========   ===========    ===========

Occupied percentage                                                                                100%          100%           100%
                                                                                           ===========   ===========    ===========
Partnership Ownership percentage                                                                  58.0%         58.0%          58.0%
                                                                                           ===========   ===========    ===========

Cash distributed to the Fund II-Fund II-OW Joint Venture*                                   $  385,541    $  405,758    $   124,481
                                                                                           ===========   ===========    ===========

Net loss allocated to the Fund II-Fund II-OW Joint Venture*                                 $ (180,180)   $ (173,731)   $  (509,625)
                                                                                           ===========   ===========    ===========
</TABLE>

*The Partnership holds a 95% ownership in the Fund II-Fund II-OW Joint Venture.


Rental income remained stable for 1999 and 1998.  The lower rental income and
management and leasing expenses in 1997 is due primarily to the Atrium vacancy
until the Boeing lease began in May 1997.  Management and leasing expenses
decreased, as compared to 1998, due to an over accrual of fees in 1998.
Operating expenses increased in 1999, as compared to 1998, due to an increase in
property tax in 1999.  Other operating expense were higher in 1997 due primarily
to the vacancy of Lockheed.

The real estate taxes were $175,360 for 1999, $148,006 for 1998, and $140,366
for 1997.

For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 1.  For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

                                      -13-
<PAGE>

          The Brookwood Grill Property/Fund II-Fund III Joint Venture

<TABLE>
<CAPTION>
                                                                                        For the Year Ended December 31
                                                                                    --------------------------------------
                                                                                        1999         1998          1997
                                                                                    -----------   ----------   -----------
<S>                                                                                 <C>           <C>          <C>
Revenues:
 Rental income                                                                      $   224,801   $  225,100   $   225,106
 Equity in income of joint venture                                                       81,669       78,791        27,213
                                                                                    -----------   ----------   -----------
                                                                                        306,470      303,891       252,319
Expenses:                                                                           -----------   ----------   -----------
 Depreciation                                                                            54,014       54,012        54,014
 Management and leasing expenses                                                         30,096       23,349        28,464
 Other operating expenses                                                                  (460)     (24,632)       23,887
                                                                                    -----------   ----------   -----------
                                                                                         83,650       52,729       106,365
                                                                                    -----------   ----------   -----------
Net income                                                                          $   222,820   $  251,162   $   145,954
                                                                                    ===========   ==========   ===========

Occupied percentage                                                                         100%         100%          100%
                                                                                    ===========   ==========   ===========

Partnership Ownership percentage in the Fund II--Fund III Joint Venture                    59.0%        59.0%         59.0%
                                                                                    ===========   ==========   ===========

Cash distributed to the Fund II-Fund II-OW Joint Venture*                           $   253,723   $  270,886   $   190,653
                                                                                    ===========   ==========   ===========

Income allocated to the Fund II-Fund II-OW Joint Venture*                           $   138,928   $  156,599   $    91,002
                                                                                    ===========   ==========   ===========
</TABLE>

*The Partnership holds a 95% ownership in the Fund II-Fund II-OW Joint Venture.


Although rental income remained relatively stable in 1999, 1998, and 1997, total
revenues increased in 1998 and 1999 due to the increase equity in income from
the Fund II, III, VI, VII Joint Venture, as the Holcomb Bridge Property
increased its occupancy rate.

Management and leasing expenses increased in 1999 as compared to 1998 due to an
under accrual of management fees in 1998. Other operating expenses decreased in
1998 as compared to 1997 due primarily to a change in the rental agreement of
billing water reimbursements to the tenant in 1998. However, these
reimbursements were over estimated in 1998 thus 1999 operating expenses
increased as compared to 1998.

Real estate taxes were $18,055 for 1999, $16,270 for 1998, $25,771 for 1997, and
$33,494 for 1996.

For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

                                      -14-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                        For the Year Ended December 31
                                                                                       1999           1998         1997
                                                                                  ------------    ----------   -----------
<S>                                                                                <C>            <C>          <C>
Revenues:
 Rental income                                                                     $   953,952    $  872,978   $   679,268
 Other income                                                                           23,843        36,000             0
                                                                                   -----------    ----------   -----------
                                                                                       977,795       908,978       679,268
Expenses:                                                                          -----------    ----------   -----------
 Depreciation                                                                          415,165       376,290       325,974
 Management and leasing expenses                                                       129,798        97,701        48,962
 Other operating expenses                                                               93,534       107,418       195,567
                                                                                   -----------    ----------   -----------
                                                                                       638,497       581,409       570,503
                                                                                   -----------    ----------   -----------
Net income                                                                         $   339,298    $  327,569   $   108,765
                                                                                   ===========    ==========   ===========

Occupied percentage                                                                        100%           94%           94%
                                                                                   ===========    ==========   ===========

Partnership's ownership percentage in the Fund II, III, VI, VII Joint Venture             14.2%         14.2%         14.3%
                                                                                   ===========    ==========   ===========

Cash distribution to the Fund II-Fund III Joint Venture*                           $   182,886    $  179,198   $   109,242
                                                                                   ===========    ==========   ===========

Net income allocated to the Fund II-Fund III Joint Venture*                        $    81,669    $   78,791   $    27,213
                                                                                   ===========    ==========   ===========
</TABLE>

*The Partnership holds a 59.1% ownership in the Fund II-Fund III Joint Venture.


Rental income increased in 1999 as compared to 1998 due primarily to increased
tenant occupancy. The lower rental income in 1997 is due to the 94% occupancy
starting in late 1997. Depreciation expense increased as occupancy rate
increased due to tenant improvements taking place when tenants moved in.
Management and leasing expenses increased due primarily to increased management
fees that are charged based on rental income. Other operating expenses decreased
in 1999 as compared to 1998 due primarily to an over accrual of property tax in
1998. Other operating expenses were higher in 1997 due primarily to water/sewer
reimbursement paid by Fulton County Water which did not begin until 1998.

Real estate taxes were $53,896 for 1999, $52,162 for 1998, and $85,230 for 1997.

For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 2.  For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

                                      -15-
<PAGE>

                 Tucker Property/Fund I--Fund II Joint Venture

<TABLE>
<CAPTION>
                                                                        For the Year Ended December 31
                                                                  ------------------------------------------
                                                                      1999           1998           1997
                                                                  ------------    -----------   ------------
<S>                                                               <C>             <C>           <C>
Revenues:
 Rental income                                                    $  1,373,213    $ 1,242,332   $  1,077,916
 Interest income                                                           447              0          1,159
                                                                  ------------    -----------   ------------
                                                                     1,373,660      1,242,332      1,079,075
                                                                  ------------    -----------   ------------
Expenses:
 Depreciation                                                          491,385        440,099        419,928
 Gain on real estate assets                                                  0              0        (45,943)
 Management and leasing expenses                                       158,270        164,378        122,452
 Other operating expenses                                              498,849        532,985        532,859
                                                                  ------------    -----------   ------------
                                                                     1,148,504      1,137,462      1,029,296
                                                                  ------------    -----------   ------------
Net income                                                        $    225,156    $   104,870   $     49,799
                                                                  ============    ===========   ============

Occupied percentage                                                         87%            94%            85%
                                                                  ============    ===========   ============

Partnership ownership percentage                                          42.5%          44.3%          44.3%
                                                                  ============    ===========   ============

Cash distribution to the Fund II-Fund II-OW Joint Venture*        $    199,737    $   170,937   $    123,264
                                                                  ============    ===========   ============

Net income allocated to the Fund II-Fund II-OW Joint Venture*     $    101,117    $    47,097   $     22,356
                                                                  ============    ===========   ============
</TABLE>

*The Partnership holds a 95% ownership in the Fund II-Fund II-OW Joint Venture.


Rental income increased in 1999 compared to 1998 even though occupancy decreased
due to increased rental renewal rates and the decrease in occupancy moving
slowly downward throughout the year. The increased rental income for 1998 as
compared to 1997 was due to increased tenant occupancy at the property. The
increase in depreciation expense for 1999 was due to capitalized building
repairs. Other operating expenses decreased for 1999 as compared to both 1998
and 1997 due to significant variable expenses for those years. Expenses were
higher in 1998 due to sewer and main water line repairs and were higher in 1997
due to HVAC repairs and painting expense.

Real estate taxes were $91,970 in 1999, $93,697 in 1998, and $108,836 in 1997.

For comments on the general conditions to which the property may be subject, see
Item 1, Business, Page 2. For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

                                      -16-
<PAGE>

   Cherokee Commons Shopping Center/Fund I, II, II-OW, VI, VII Joint Venture

<TABLE>
<CAPTION>
                                                                              For the Year Ended December 31
                                                                          ---------------------------------------
                                                                               1999          1998          1997
                                                                          -----------    ----------     ---------
<S>                                                                       <C>            <C>            <C>
Revenues:
 Rental income                                                             $  945,222   $   909,831   $   880,652
 Interest income                                                                   68            84            67
                                                                           ----------   -----------   -----------
                                                                              945,290       909,915       880,719
                                                                           ----------   -----------   -----------
Expenses:
 Depreciation                                                                 447,969       444,660       440,882
 Management and leasing expenses                                               94,149        82,517        78,046
 Other operating expenses                                                      68,089        84,676       138,294
                                                                           ----------   -----------   -----------
                                                                              610,207       611,853       657,222
                                                                           ----------   -----------   -----------
Net income                                                                 $  335,083   $   298,062   $   223,497
                                                                           ==========   ===========   ===========

Occupied percentage                                                                97%           91%           94%
                                                                           ==========   ===========   ===========

Partnership ownership percentage                                                 51.7%         51.7%         51.7%
                                                                           ==========   ===========   ===========

Cash distributed to the Fund II-Fund II-OW Joint Venture*                  $  425,382   $   403,744   $   331,435
                                                                           ==========   ===========   ===========

Net income allocated to the Fund II-Fund II-OW Joint Venture*              $  182,825   $   162,626   $   121,942
                                                                           ==========   ===========   ===========
</TABLE>

*The Partnership holds a 95% ownership in the Fund II-Fund II-OW Joint Venture.


Rental income increased from $909,821 in 1998 to $945,222 in 1999 due to an
increase in occupancy from 91% in 1998 to 97% in 1999. Rental income increase in
1998 over 1997 due primarily to a one time adjustment made to the straight-line
rent schedule in 1997. Management and leasing expenses increased from $82,517 in
1998 to $94,149 in 1999 due to an increase in occupancy and rental renewal
rates. Operating expenses of the property decreased to $68,090 in 1999 from
$84,676 in 1998 due to increased CAM billings to tenants that were under-accrued
in 1998 offset by increased expenditures for tenant improvements, HVAC repairs,
and a partial demolition of a tenant suite in 1999, and decreased from $138,294
in 1997, to $84,676 in 1998, due to decreased expenditures for tenant
improvements, common area expenses and legal fees. Tenants are billed an
estimate amount for the current year common area maintenance which is then
reconciled next year and the difference billed to the tenant. Net income of the
property increased to $335,082 in 1999, from $298,062 in 1998 and $223,497 in
1997, due to the reasons discussed above.

Real estate taxes were $87,411 for 1999, $77,311 for 1998, and $67,259 for 1997.

For comments on the general conditions to which the property may be subject, see
Item 1, Business, page 2.  For additional information on the property, tenants,
etc., see Item 2, Properties, page 3.

Liquidity and Capital Resources

During its offering, which terminated on September 7, 1988, the Partnership
raised a total of $34,948,250 through the sale of 139,793 Units.  No additional
Units will be sold by the Partnership.  As of

                                      -17-
<PAGE>

December 31, 1999, the Partnership contributed an aggregate of $28,107,150 in
capital contributions to the Fund II--Fund II-OW Joint Venture, after incurring
approximately $6,841,100 in offering costs, commissions and acquisition and
advisory fees.

Since the Partnership is an investment partnership formed for the purpose of
acquiring, owning and operating income-producing real property and has invested
all of its funds available for investment, it is unlikely that the Partnership
will acquire interests in any additional properties, and the Partnership's
capital resources are anticipated to remain relatively stable over the holding
period of its investments.

Net cash provided by investing activities increased from $1,495,069 to
$1,608,013 in 1999, and net cash used in financing activities increased from
$1,504,142 to $1,547,064 in 1999 due to the increase in distributions from joint
ventures as occupancy increased.

The Partnership's cash distribution to Class A unit holders paid and payable
through the fourth quarter of 1999 have been paid from Net Cash from Operations
and a Return of Capital.  The Partnership anticipates that distributions will
continue to be paid on a quarterly basis from such sources.  No cash
distributions were paid to Class B unit holders for 1999.

The Partnership expects to meet liquidity requirements and budget demands
through cash flow from operations.  The Partnership is unaware of any known
demands, commitments, events or capital expenditures other than that which is
required for the normal operation of its properties that will result in the
Partnership's liquidity increasing or decreasing in any material way.

The Partnership has recently made the decision to begin selling its properties.
At this time, two properties have been identified that will be offered for sale
within the next several months. The Partnership's goal is to have all Fund II
properties sold by the end of 2002. As the properties are sold, all proceeds
will be returned to limited partners in accordance with the Partnership's
prospectus. Management estimates that the net realizable value of each of the
properties exceeds the carrying value of the corresponding real estate assets;
consequently, no impairment loss has been recorded. In the event that the net
sales proceeds are less than the carrying value of the property sold, the
Partnership would recognize a loss on the sale. Management is not contractually
or financially obligated to sell any of its properties, and it is management's
current intent to fully realize the Partnership's investment in real estate. The
success of the partnership's future operations and the ability to realize the
investment in its assets will be dependent on the Partnership's ability to
maintain rental rates, occupancy and an appropriate level of operating expenses
in future years. Management believes that the steps that it is taking will
enable the Partnership to realize its investment in its assets.

Inflation

Real estate has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. There are provisions in the
majority of the tenant leases to protect the Partnership from the impact of
inflation. Most leases contain common area maintenance charges (CAM 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. These provisions should reduce the Partnership's exposure
to increases in costs and operating expenses resulting from inflation. In
addition, a number of the Partnership's leases are for terms of less than five
years which may permit the Partnership to replace existing leases with new
leases at higher base rental rates if the existing leases are below market rate.
There is no assurance, however, that the Partnership would be able to replace
existing leases with new leases at higher base rentals.

                                      -18-
<PAGE>

Year 2000

The Partnership made the transaction into the year 2000 without any information
systems, business operations or facilities related system problems. Management
believes that there are no other Y2K related issues that may require disclosure.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements of the registrant and supplementary data are detailed
under Item 14(a) and filed as part of the report on the pages indicated.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

There were no disagreements with the Partnership's accountants or other
reportable events during 1999.

                                      -19-
<PAGE>

                                   PART III

ITEM 10.  GENERAL PARTNERS OF THE PARTNERSHIP

Wells Capital, Inc.

Wells Capital, Inc. ("Capital") is a Georgia corporation formed in April 1984.
The executive offices of Capital are located at 6200 The Corners Parkway,
Norcross, Georgia 30092.  Leo F. Wells, III is the sole Director and the
President of Capital.

Leo F. Wells, III.

Mr. Wells is a resident of Atlanta, Georgia, is 56 years of age and holds a
Bachelor of Business Administration Degree in Economics from the University of
Georgia. Mr. Wells is the President and sole Director of Wells Capital. Mr.
Wells is the President of Wells & Associates, Inc., a real estate brokerage and
investment company formed in 1976 and incorporated in 1978, for which he serves
as principal broker. Mr. Wells is also currently the sole Director and President
of Wells Management Company, Inc., a property management company he founded in
1983. In addition, Mr. Wells is the President and Chairman of the Board of Wells
Investment Securities, Inc., Wells & Associates, Inc., and Wells Management
Company, Inc. which are affiliates of the General Partners. From 1980 to
February 1985, Mr. Wells served as Vice-President of Hill-Johnson, Inc., a
Georgia corporation engaged in the construction business. From 1973 to 1976, he
was associated with Sax Gaskin Real Estate Company and from 1970 to 1973, he was
a real estate salesman and property manager for Roy D. Warren & Company, an
Atlanta real estate company.

ITEM 11. COMPENSATION OF GENERAL PARTNERS AND AFFILIATES

The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 1999:

<TABLE>
<CAPTION>
                   (A)                                       (B)                              (C)
           Name of Individual                     Capacities in Which Served                  Cash
           or Number in Group                        Form of Compensation                 Compensation
--------------------------------------     ----------------------------------------       ------------
<S>                                        <C>                                            <C>
Wells Management Company, Inc.             Property Manager-Management and Leasing            $214,325 (1)
                                           Fees

Wells Capital, Inc.                        General Partner                                           0

Leo F. Wells, III                          General Partner                                           0
</TABLE>

     (1) The majority of these fees are not paid directly by the Partnership but
         are paid by the joint venture entities which own properties to which
         the property management and leasing services relate and include
         management and leasing fees.

                                      -20-
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No Limited Partner is known by the Partnership to own beneficially more than 5%
of the outstanding units of the Partnership.

Set forth below is the security ownership of management as of February 28, 2000.

<TABLE>
<CAPTION>
       (1)                         (2)                           (3)                          (4)
                            Name and Address of           Amount and Nature of
  Title of Class             Beneficial Owner             Beneficial Ownership           Percent of Class
--------------------    -------------------------     -----------------------------      ----------------
<S>                     <C>                           <C>                                <C>
Class A units           Leo F. Wells, III             61 units (IRA, 401 (k), and          Less than 1%
                                                      Profit Sharing)

Class B units           Leo F. Wells, III             114 units (401 (k))                  Less than 1%
</TABLE>

The General Partner did not receive any distribution from cash flows or sale
proceeds in 1999.

No arrangements exist which would, upon operation, result in a change in control
of the Partnership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following are compensation and fees paid or to be paid by the Partnership to
the General Partners and their affiliates in connection with the operation of
the Partnership.

Interest in Partnership Cash Flow and Net Sale Proceeds

The General Partners will receive a subordinated participation in distributions
from cash available for distribution equal to 10% of the total distributions for
such year payable only after the Limited Partners receive distributions from
cash available for distribution equal to 8% of their adjusted capital accounts
in each fiscal year. In addition, after Limited Partners receive their
distributions equal to 8% of their adjusted capital contributions and the
General Partners receive their distributions equal to 10% of the total
distributions for such year, the General Partners will receive a participation
of 10% of the additional distributions from cash available for a distribution,
9% of which shall be paid to the General Partners as a Partnership Management
Fee. The General Partners will also receive a return of their adjusted capital
contributions plus a 12% cumulative return on their adjusted capital
contributions. The General Partners did not receive any distributions from net
cash flow from operations or net sale proceeds for the year ended December 31,
1999.

Property Management and Leasing Fees

Wells Management Company, Inc., an affiliate of the General Partners, will
receive compensation for supervising the management of the Partnership
properties equal to 6%(3% management and 3% leasing) of rental income. In no
event will such fees exceed the sum of (i) 6% of the gross receipts of each
property, plus (ii) a separate one-time fee for initial rent-up or leasing-up of
development properties in an amount not to exceed the fee customarily charged in
arm's-length transactions by others rendering similar services in the same
geographic area for similar properties. With respect to properties leased on a
net basis for a period of ten years or longer, property management fees will not
exceed 1% of gross revenues from such leases, plus a one-time initial leasing
fee of 3% of the gross revenues which are payable over

                                      -21-
<PAGE>

the first five years of the term of such net leases. Management and leasing fees
are not paid directly by the Partnership but by the joint venture entities which
own the properties. The Partnership's share of these fees which were paid to
Wells Management Company, Inc. totaled $214,325 for the year ended December 31,
1999.

Real Estate Commissions

In connection with the sale of Partnership properties, the General Partners or
their affiliates may receive commissions not exceeding the lesser of (A) 50% of
the commissions customarily charged by other brokers in arm's-length
transactions involving comparable properties in the same geographic area or (B)
3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior
distributions totaling 100% of their capital contributions plus a 6% cumulative
return on their adjusted capital contributions. No real estate commissions were
paid to the General Partners or affiliates for the year ended December 31, 1999.

                                      -22-
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)1. The financial statements are contained on pages F-2 through F-51 of this
      Annual Report on Form 10-K, and the list of the financial statements
      contained herein is set forth on page F-1, which is hereby incorporated by
      reference.

(a)2. Financial statement Schedule III

      Information with respect to this item begins on page S-1 of this Annual
      Report on Form 10-K.

(a)3. The Exhibits filed in response to Item 601 of Regulation S-K are listed on
      the Exhibit Index attached hereto.

(b)   No reports on Form 8-K were filed with the commission during the year of
      1999.

(c)   The exhibits filed in response to Item 601 of Regulation S-K are listed on
      the Exhibit Index attached hereto.

(d)   See (a) 2 above.

                                      -23-
<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) 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 this 27th day of March
2000.

                                               Wells Real Estate Fund II
                                               (Registrant)



                                               By:  /s/Leo F. Wells, III
                                                    ----------------------------
                                                    Leo F. Wells, III
                                               Individual General Partner and as
                                               President and Chief Financial
                                               Officer of Wells Capital, Inc.,
                                               the Corporate General Partner


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacity as and on the date indicated.

       Signature                          Title                       Date
-------------------------    -------------------------------     ---------------


/s/Leo F. Wells, III
-------------------------
Leo F. Wells, III            Individual General Partner,         March 27, 2000
                             President and Sole Director of
                             Wells Capital, Inc., the
                             Corporate General Partner


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRARS WHICH HAVE NOT BEEN REGISTERED PURSUANT TO
SECTION 12 OF THE ACT.

No annual report or proxy material relating to an annual or other meeting of
security holders has been sent to security holders.

                                      -24-
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                             Financial Statements                                         Page
--------------------------------------------------------------------------------------   ------
<S>                                                                                      <C>
Independent Auditors' Report                                                               F2

Balance Sheets as of December 31, 1999 and 1998                                            F3

Statements of Income (Loss) for the Years ended December 31, 1999, 1998, and 1997          F4

Statements of Partners' Capital for the Years Ended December 31, 1999, 1998, and 1997      F5

Statements of Cash Flows for the Years Ended December 31, 1999, 1998, and 1997             F6

Notes to Financial Statements for December 31, 1999, 1998, and 1997                        F7
</TABLE>

                                      F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Wells Real Estate Fund II:

We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND II (a
Georgia public limited partnership) as of December 31, 1999 and 1998 and the
related statements of income (loss), partners' capital, and cash flows for each
of the three years in the period ended December 31, 1999.  These financial
statements and the schedule referred to below are the responsibility of the
Partnership's management.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
schedule are free of material misstatement.  An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund II as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  Schedule III--Real Estate Investments
and Accumulated Depreciation as of December 31, 1999 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements.  This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.


ARTHUR ANDERSEN LLP



Atlanta, Georgia
January 20, 2000

                                      F-2
<PAGE>

                           WELLS REAL ESTATE FUND II

                    (A Georgia Public Limited Partnership)


                                BALANCE SHEETS

                          DECEMBER 31, 1999 AND 1998


                                     ASSETS

<TABLE>
<CAPTION>
                                                                              1999               1998
                                                                           -----------        -----------
<S>                                                                        <C>                <C>
INVESTMENT IN JOINT VENTURE                                                $20,666,589        $22,019,064

CASH AND CASH EQUIVALENTS                                                       90,558             27,011

DUE FROM AFFILIATE                                                             451,788            336,616
                                                                           -----------        -----------
       Total assets                                                        $21,208,935        $22,382,691
                                                                           ===========        ===========

                       LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
 Accounts payable                                                          $     3,385        $     1,255
 Partnership distributions payable                                             483,167            337,178
                                                                           -----------        -----------
       Total liabilities                                                       486,552            338,433
                                                                           -----------        -----------
COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
 Limited partners:
   Class A--108,572 units                                                   20,722,383         22,044,258
   Class B--30,221 units                                                             0                  0
                                                                           -----------        -----------
       Total partners' capital                                              20,722,383         22,044,258
                                                                           -----------        -----------
       Total liabilities and partners' capital                             $21,208,935        $22,382,691
                                                                           ===========        ===========
</TABLE>



      The accompanying notes are an integral part of these balance sheets.

                                      F-3
<PAGE>

                           WELLS REAL ESTATE FUND II

                     (A Georgia Public Limited Partnership)


                          STATEMENTS OF INCOME (LOSS)

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997




<TABLE>
<CAPTION>
                                                                     1999            1998          1997
                                                                   --------        --------      --------
<S>                                                                <C>             <C>           <C>
REVENUES:
 Equity in income (loss) of joint venture                          $370,710        $92,568       $(331,856)
 Interest income                                                        468            594             480
                                                                   --------        -------       ---------
NET INCOME (LOSS)                                                  $371,178         93,162        (331,376)
                                                                   ========        =======       =========

NET INCOME (LOSS) ALLOCATED TO CLASS A LIMITED PARTNERS            $371,178        $93,162       $(168,693)
                                                                   ========        =======       =========

NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS                     $      0        $     0       $(162,683)
                                                                   ========        =======       =========

NET INCOME (LOSS) PER CLASS A LIMITED PARTNER UNIT                 $   3.42        $  0.86       $   (1.55)
                                                                   ========        =======       =========

NET LOSS PER CLASS B LIMITED PARTNER UNIT                          $   0.00        $  0.00       $   (5.38)
                                                                   ========        =======       =========

CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT                 $  15.59        $ 13.90       $    6.01
                                                                   ========        =======       =========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-4
<PAGE>

                           WELLS REAL ESTATE FUND II

                     (A Georgia Public Limited Partnership)


                        STATEMENTS OF PARTNERS' CAPITAL

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997



<TABLE>
<CAPTION>
                                                             Limited  Partners
                                                     --------------------------------------------
                                                           Class A                  Class B               Total
                                                    -----------------------    ----------------------    Partners'
                                                      Units        Amount        Units       Amount       Capital
                                                    ----------  -----------    ----------  ----------   -----------
<S>                                                 <C>         <C>            <C>         <C>          <C>
BALANCE, December 31, 1996                             108,572  $24,281,269      30,221     $ 162,683   $24,443,952

 Net loss                                                    0     (168,693)          0      (162,683)     (331,376)
 Partnership distributions                                   0     (652,125)          0             0      (652,125)
                                                     ---------  -----------   ---------   -----------  ------------
BALANCE, December 31, 1997                             108,572   23,460,451      30,221             0    23,460,451

 Net income                                                  0       93,162           0             0        93,162
 Partnership distributions                                   0   (1,509,355)          0             0    (1,509,355)
                                                     ---------  -----------   ---------   -----------  ------------
BALANCE, December 31, 1998                             108,572   22,044,258      30,221             0    22,044,258

 Net income                                                  0      371,178           0             0       371,178
 Partnership distributions                                   0   (1,693,053)          0             0    (1,693,053)
                                                     ---------  -----------   ---------   -----------  ------------
BALANCE, December 31, 1999                             108,572  $20,722,383      30,221     $       0   $20,722,383
                                                     =========  ===========   =========   ===========  ============
</TABLE>

                                      F-5
<PAGE>

                           WELLS REAL ESTATE FUND II

                    (A Georgia Public Limited Partnership)


                           STATEMENTS OF CASH FLOWS

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                                           1999                1998              1997
                                                                        -----------         -----------        ---------
<S>                                                                     <C>                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss)                                                      $   371,178         $    93,162        $(331,376)
                                                                        -----------         -----------        ---------
 Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
     Equity in (income) loss of joint venture                              (370,710)            (92,568)         331,856
     Changes in accounts payable                                              2,130              (1,759)          (2,394)
                                                                        -----------         -----------        ---------
         Total adjustments                                                 (368,580)            (94,327)         329,462
                                                                        -----------         -----------        ---------
         Net cash provided by (used in) operating activities                  2,598              (1,165)          (1,914)
                                                                        -----------         -----------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Investment in joint venture                                                      0                   0         (387,751)
 Distributions received from joint venture                                1,608,013           1,495,069          843,815
                                                                        -----------         -----------        ---------
       Net cash provided by investing activities                          1,608,013           1,495,069          456,064
                                                                        -----------         -----------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Distributions to partners in excess of accumulated earnings             (1,304,675)         (1,370,685)               0
 Distributions to partners from accumulated earnings                       (242,389)           (133,457)        (479,642)
                                                                        -----------         -----------        ---------
       Net cash used in financing activities                             (1,547,064)         (1,504,142)        (479,642)
                                                                        -----------         -----------        ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         63,457             (10,238)         (25,492)

CASH AND CASH EQUIVALENTS, beginning of year                                 27,011              37,249           62,741
                                                                        -----------         -----------        ---------
CASH AND CASH EQUIVALENTS, end of year                                  $    90,558         $    27,011        $  37,249
                                                                        ===========         ===========        =========
</TABLE>

       The accompanying notes are an integral part of these statements.

                                      F-6
<PAGE>

                           WELLS REAL ESTATE FUND II

                     (A Georgia Public Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

                       DECEMBER 31, 1999, 1998, AND 1997

 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Business

     Wells Real Estate Fund II (the "Partnership") is a public limited
     partnership organized on June 23, 1986 under the laws of the state of
     Georgia. The public general partners are Leo F. Wells III and Wells
     Capital, Inc. (the "Company"). The Partnership has two classes of limited
     partnership interests, Class A and Class B units. Limited partners may vote
     to, among other things, (a) amend the partnership agreement, subject to
     certain limitations, (b) change the business purpose or investment
     objectives of the Partnership, and (c) remove a general partner. A majority
     vote on any of the above described matters will bind the Partnership,
     without the concurrence of the general partners. Each limited partnership
     unit has equal voting rights, regardless of class.

     The Partnership was formed to acquire and operate commercial real
     properties, including properties which are either to be developed,
     currently under development or construction, newly constructed, or have
     operating histories. The Partnership owns an interest in several properties
     through a joint venture between the Partnership and Wells Real Estate Fund
     II-OW ("Wells Fund II-OW"), referred to as "Fund II and II-OW."

     Through its investment in Fund II and II-OW, the Partnership owns interests
     in the following properties: (i) a retail shopping and commercial office
     complex located in Tucker, Georgia, Heritage Place at Tucker ("Tucker");
     (ii) a shopping center located in Cherokee County, Georgia, the Cherokee
     Commons Shopping Center ("Cherokee Commons"); (iii) a four-story office
     building located in metropolitan Houston, Texas, the Atrium at Nassau Bay
     ("The Atrium"); (iv) a restaurant located in Fulton County, Georgia; and
     (v) two retail and office buildings in Fulton County, Georgia. Fund II and
     II-OW joint venture owns 100% of the First Union Property. All remaining
     properties are owned by Fund II and II-OW through investments in joint
     ventures with other Wells Real Estate Funds.

     Use of Estimates and Factors Affecting the Partnership

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     The Partnership has recently begun considering selling its properties.
     Management estimates that the net realizable value of each of the
     properties exceeds the carrying value of the corresponding real estate
     assets; consequently, no impairment loss has been recorded. In the event
     that the net sales proceeds are

                                      F-7
<PAGE>

     less than the carrying value of the property sold, the Partnership would
     recognize a loss on the sale. Management is not contractually or
     financially obligated to sell any of its properties, and it is management's
     current intent to fully realize the Partnership's investment in real
     estate. The success of the Partnership's future operations and the ability
     to realize the investment in its assets will be dependent on the
     Partnership's ability to maintain rental rates, occupancy, and an
     appropriate level of operating expenses in future years. Management
     believes that the steps that it is taking will enable the Partnership to
     realize its investment in its assets.

     Income Taxes

     The Partnership is not subject to federal or state income taxes, and
     therefore, none have been provided for in the accompanying financial
     statements. The partners are required to include their respective shares of
     profits and losses in their individual income tax returns.

     Distributions of Net Cash From Operations

     Cash available for distribution is distributed on a cumulative
     noncompounded basis to limited partners quarterly. In accordance with the
     partnership agreement, distributions are paid first to limited partners
     holding Class A units until they have received an 8% per annum return on
     their adjusted capital contributions, as defined. Cash available for
     distribution is then distributed to limited partners holding Class B units
     until they have received an 8% per annum return on their adjusted capital
     contributions, as defined. Excess cash available for distribution will be
     distributed to the general partners until each has received 10% of total
     distributions to limited partners for the year. Thereafter, cash available
     for distribution is distributed 90% to the limited partners and 10% to the
     general partners.

     Distribution of Sales Proceeds

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

          .  To limited partners until all limited partners have received 100%
             of their adjusted capital contributions, as defined

          .  To limited partners holding Class B units until they receive an
             amount equal to the net cash available for distribution received by
             the limited partners holding Class A units

          .  To all limited partners until they receive a cumulative 12% per
             annum return on their adjusted capital contributions, as defined

          .  To all limited partners until they receive an amount equal to their
             respective cumulative distributions, as defined

          .  To all general partners until they have received 100% of their
             capital contributions, as defined

          .  Thereafter, 85% to the limited partners and 15% to the general
             partners

     Allocation of Net Income, Net Loss, and Gain on Sale

     Net income is defined as net income recognized by the Partnership,
     excluding deductions for depreciation and amortization. Net income, as
     defined, of the Partnership will be allocated each year in the same
     proportions that net cash from operations is distributed to the partners.
     To the extent the

                                      F-8
<PAGE>

     Partnership's net income in any year exceeds net cash from operations, it
     will be allocated 99% to the limited partners and 1% to the general
     partners.

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

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

     Investment in Joint Venture

     Basis of Presentation. The Partnership does not have control over the
     operations of the joint venture; however, it does exercise significant
     influence. Accordingly, the Partnership's investment in the joint venture
     is recorded using the equity method of accounting. The joint ventures in
     which Fund II and II-OW hold an ownership interest follow the same
     accounting policies as the Partnership.

     Real Estate Assets. Real estate assets held by Fund II and II-OW are stated
     at cost less accumulated depreciation. Major improvements and betterments
     are capitalized when they extend the useful life of the related asset. All
     repairs and maintenance are expensed as incurred.

     Management continually monitors events and changes in circumstances which
     could indicate that carrying amounts of real estate assets may not be
     recoverable. When events or changes in circumstances are present which
     indicate that the carrying amounts of real estate assets may not be
     recoverable, management assesses the recoverability of real estate assets
     by determining whether the carrying value of such real estate assets will
     be recovered through the future cash flows expected from the use of the
     asset and its eventual disposition. Management has determined that there
     has been no impairment in the carrying value of real estate assets held by
     Fund II and II-OW or its affiliated joint ventures as of December 31, 1999.

     Depreciation is calculated using the straight-line method over 25 years.

     Revenue Recognition. All leases on real estate assets held by the joint
     venture are classified as operating leases, and the related rental income
     is recognized on a straight-line basis over the terms of the respective
     leases.

     Partners' Distributions and Allocations of Profit and Loss. Cash available
     for distribution and allocations of profit and loss to the Partnership by
     Fund II and II-OW are made in accordance with the terms of the individual
     joint venture agreement. Generally, these items are allocated in proportion
     to the partners' respective ownership interests. Cash is paid from the
     joint venture to the Partnership on a quarterly basis.

     Deferred Lease Acquisition Costs. Costs incurred to procure operating
     leases are capitalized and amortized on a straight-line basis over the
     terms of the related leases.

                                      F-9
<PAGE>

     Cash and Cash Equivalents

     For the purposes of the statements of cash flows, the Partnership considers
     all highly liquid investments purchased with an original maturity of three
     months or less to be cash equivalents. Cash equivalents include cash and
     short-term investments. Short-term investments are stated at cost, which
     approximates fair value, and consist of investments in money market
     accounts.

     Per Unit Data

     Net income (loss) per unit with respect to the Partnership for the years
     ended December 31, 1999, 1998, and 1997 is computed based on the average
     number of units outstanding during the period.

 2.  RELATED-PARTY TRANSACTIONS

     Due from affiliate at December 31, 1999 and 1998 represents the
     Partnership's share of cash to be distributed from Fund II and II-OW for
     the fourth quarters of 1999 and 1998.

     The Partnership entered into a property management agreement with Wells
     Management Company, Inc. ("Wells Management"), an affiliate of the general
     partners. In consideration for supervising the management of the
     Partnership's properties, the Partnership will generally pay Wells
     Management management and leasing fees equal to (a) 3% of the gross
     revenues for management and 3% of the gross revenues for leasing (aggregate
     maximum of 6%) plus a separate fee for the one-time initial lease-up of
     newly constructed properties in an amount not to exceed the fee customarily
     charged in arm's-length transactions by others rendering similar services
     in the same geographic area for similar properties or (b) in the case of
     commercial properties which are leased on a long-term net basis (ten or
     more years), 1% of the gross revenues except for initial leasing fees equal
     to 3% of the gross revenues over the first five years of the lease term.

     The Partnership incurred management and leasing fees and lease acquisition
     costs, at the joint venture level, of $214,325, $183,033, and $192,312 for
     the years ended December 31, 1999, 1998, and 1997, respectively, which were
     paid to Wells Management.

     The Company performs certain administrative services for the Partnership,
     such as accounting and other Partnership administration, and incurs the
     related expenses. Such expenses are allocated among the various Wells Real
     Estate Funds based on time spent on each fund by individual administrative
     personnel. In the opinion of management, such allocation is a reasonable
     estimation of such expenses.

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

 3.  INVESTMENT IN JOINT VENTURE

     On March 1, 1988, the Partnership entered into a joint venture agreement
     with Wells Fund II-OW. The joint venture, Fund II and II-OW, was formed for
     the purpose of investing in commercial real properties. Fund II and II-OW
     owns the First Union Property directly and has investments in several other
     joint ventures. The Partnership's ownership percentage interest in Fund II
     and II-OW was approximately 95% at December 31, 1999 and 1998.

                                      F-10
<PAGE>

The following is a rollforward of the Partnership's investment in joint venture
for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                      1999                1998
                                                                   -----------         -----------
<S>                                                                <C>                 <C>
Investment in joint venture, beginning of year                     $22,019,064         $23,435,256
Equity in income of joint venture                                      370,710              92,568
Distributions from joint venture                                    (1,723,185)         (1,508,760)
                                                                   -----------         -----------
Investment in joint venture, end of year                           $20,666,589         $22,019,064
                                                                   ===========         ===========
</TABLE>

Following are the financial statements for Fund II and II-OW:

                               Fund II and II-OW
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                    Assets

                                                                             1999               1998
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
Real estate assets, at cost:
 Land                                                                     $ 1,367,856        $ 1,367,856
 Building and improvements, less accumulated depreciation of
  $2,991,452 in 1999 and $2,623,785 in 1998                                 4,779,666          5,147,333
                                                                          -----------        -----------
       Total real estate assets                                             6,147,522          6,515,189
Investment in joint ventures                                               15,654,420         16,676,111
Cash and cash equivalents                                                     162,241             94,367
Due from affiliates                                                           312,901            267,581
Accounts receivable                                                             2,149             23,184
Prepaid expenses and other assets                                              24,473             42,828
                                                                          -----------        -----------
       Total assets                                                       $22,303,706        $23,619,260
                                                                          ===========        ===========

                           Liabilities and Partners' Capital
Liabilities:
 Partnership distributions payable                                        $   477,122        $   355,370
 Due to affiliates                                                                  0              8,988
                                                                          -----------        -----------
       Total liabilities                                                      477,122            364,358
                                                                          -----------        -----------
Partners' capital:
 Wells Real Estate Fund II                                                 20,666,589         22,019,064
 Wells Real Estate Fund II-OW                                               1,159,995          1,235,838
                                                                          -----------        -----------
       Total partners' capital                                             21,826,584         23,254,902
                                                                          -----------        -----------
       Total liabilities and partners' capital                            $22,303,706        $23,619,260
                                                                          ===========        ===========
</TABLE>

                                      F-11
<PAGE>

                               Fund II and II-OW
                           (A Georgia Joint Venture)
                          Statements of Income (Loss)
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                                           1999        1998        1997
                                                                                         --------    --------   ---------
<S>                                                                                      <C>         <C>        <C>
Revenues:
 Rental income                                                                           $717,676    $458,867   $ 458,867
 Equity in income (loss) of joint ventures                                                242,690     192,591    (274,325)
 Interest income                                                                              367         481         443
                                                                                         --------    --------   ---------
                                                                                          960,733     651,939     184,985
                                                                                         --------    --------   ---------
Expenses:
 Depreciation                                                                             367,667     367,667     367,667
 Partnership administration                                                                88,859      88,632      56,296
 Legal and accounting                                                                      42,899      43,175      49,649
 Management and leasing fees                                                               61,295      45,887      45,887
 Operating costs                                                                              366       2,914       6,575
 Computer costs                                                                             8,148       5,906       9,377
                                                                                         --------    --------   ---------
                                                                                          569,234     554,181     535,451
                                                                                         --------    --------   ---------
Net income (loss)                                                                        $391,499    $ 97,758   $(350,466)
                                                                                         ========    ========   =========

Net income (loss) allocated to Wells Real Estate Fund II                                 $370,710    $ 92,568   $(331,856)
                                                                                         ========    ========   =========

Net income (loss) allocated to Wells Real Estate Fund II-OW                              $ 20,789    $  5,190   $ (18,610)
                                                                                         ========    ========   =========
</TABLE>

                                      F-12
<PAGE>

                               Fund II and II-OW
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                         Wells Real           Wells Real          Total
                                                           Estate               Estate           Partners'
                                                          Fund II             Fund II-OW          Capital
                                                        -----------         ------------       ------------
<S>                                                     <C>                 <C>                <C>
Balance, December 31, 1996                               $24,418,757          $1,370,408         $25,789,165
 Net loss                                                   (331,856)            (18,610)           (350,466)
 Partnership contributions                                   387,751              21,744             409,495
 Partnership distributions                                (1,039,396)            (58,287)         (1,097,683)
                                                         -----------          ----------         -----------
Balance, December 31, 1997                                23,435,256           1,315,255          24,750,511
 Net income                                                   92,568               5,190              97,758
 Partnership distributions                                (1,508,760)            (84,607)         (1,593,367)
                                                         -----------          ----------         -----------
Balance, December 31, 1998                                22,019,064           1,235,838          23,254,902
 Net income                                                  370,710              20,789             391,499
 Partnership distributions                                (1,723,185)            (96,632)         (1,819,817)
                                                         -----------          ----------         -----------
Balance, December 31, 1999                               $20,666,589          $1,159,995         $21,826,584
                                                         ===========          ==========         ===========
</TABLE>

                                      F-13
<PAGE>

                               Fund II and II-OW
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                          1999                 1998              1997
                                                                        ----------          -----------       ----------
<S>                                                                     <C>                 <C>               <C>
Cash flows from operating activities:
 Net income (loss)                                                      $   391,499         $    97,758        $(350,466)
                                                                        -----------         -----------       ----------
 Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
     Depreciation                                                           367,667             367,667          367,667
     Equity in (income) loss of joint ventures                             (242,690)           (192,591)         274,325
     Changes in assets and liabilities:
       Accounts receivable                                                   21,035              61,023           30,353
       Prepaid expenses and other assets                                     18,355              18,355           18,355
       Due to affiliates                                                     (8,988)              4,427           (1,147)
                                                                        -----------         -----------       ----------
          Total adjustments                                                 155,379             258,881          689,553
                                                                        -----------         -----------       ----------
          Net cash provided by operating activities                         546,878             356,639          339,087
                                                                        -----------         -----------       ----------
Cash flows from investing activities:
 Distributions received from joint ventures                               1,219,061           1,232,367          601,045
 Investment in joint venture                                                      0                   0         (409,495)
                                                                        -----------         -----------       ----------
          Net cash provided by investing activities                       1,219,061           1,232,367          191,550
                                                                        -----------         -----------       ----------
Cash flows from financing activities:
 Contributions received from partners                                             0                   0          409,495
 Distributions to joint venture partners                                 (1,698,065)         (1,579,031)        (891,134)
                                                                        -----------         -----------       ----------
          Net cash used in financing activities                          (1,698,065)         (1,579,031)        (481,639)
                                                                        -----------         -----------       ----------
Net increase in cash and cash equivalents                                    67,874               9,975           48,998
Cash and cash equivalents, beginning of year                                 94,367              84,392           35,394
                                                                        -----------         -----------       ----------
Cash and cash equivalents, end of year                                  $   162,241         $    94,367        $  84,392
                                                                        ===========         ===========       ==========
</TABLE>

The following is a rollforward of Fund II and II-OW's investment in joint
venture for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                    1999                1998
                                                                  ----------         -----------
<S>                                                              <C>                 <C>
Investment in joint venture, beginning of year                    $16,676,111         $17,734,845
Equity in income of joint venture                                     242,690             192,591
Distributions from joint venture                                   (1,264,381)         (1,251,325)
                                                                  -----------         -----------
Investment in joint venture, end of year                          $15,654,420         $16,676,111
                                                                  ===========         ===========
</TABLE>

                                      F-14
<PAGE>

Fund II and II-OW's investment and percentage ownership in other joint ventures
at December 31, 1999 and 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                                          1999                             1998
                                                 -----------------------        -----------------------
                                                  Amount        Percent          Amount        Percent
                                                 ---------     ---------        ---------     ---------
<S>                                               <C>           <C>              <C>            <C>
Fund I and II Tucker                                $ 4,058,192      45%        $ 4,156,811       45%
Fund I, II, II-OW, VI, and VII
 Associates--Cherokee                                 4,053,105      54           4,295,663       54
Fund II and III Associates-- The Atrium               5,615,740      61           6,181,461       61
Fund II and III Associates-- Brookwood Grill          1,927,383      62           2,042,176       62
                                                    -----------                 -----------
                                                    $15,654,420                 $16,676,111
                                                    ===========                 ===========
</TABLE>

The following are descriptions of the joint ventures in which Fund II and II-OW
has investments.

Fund I and II Tucker

Tucker and Cherokee Commons were previously held in joint ventures between Wells
Real Estate Fund I ("Fund I") and Fund II and II-OW. The joint ventures were
formed for the purpose of owning, developing, and operating Cherokee Commons and
Tucker. In 1991, the Tucker and Cherokee Commons joint ventures were merged into
a new joint venture, the Fund I and II Tucker-Cherokee Joint Venture. Under the
terms of the joint venture agreement, the ownership interests of Fund I and Fund
II and II-OW in each individual property remained unchanged.

On August 1, 1995, the Fund I and II Tucker--Cherokee joint venture assigned its
ownership in Cherokee Commons to the Fund I, II, II-OW, VI, and VII Associates--
Cherokee joint venture. Upon the assignment of Cherokee Commons, the joint
venture was renamed Fund I and II Tucker. Tucker is a retail shopping center
containing approximately 29,858 square feet and a commercial office building
complex containing approximately 67,465 square feet in Tucker, DeKalb County,
Georgia.

In 1996, one of the tenants in Tucker experienced a fire. In 1996, Fund I and II
Tucker received an initial insurance settlement of $143,944 for damages to the
building. In 1997, an additional $104,895 was received as a final insurance
settlement for the fire damages discussed above and storm damages that occurred
in 1997. In addition, a loss from the retirement of real estate assets of
$58,952 was incurred. The resulting net gain on real estate assets of $45,943 is
included in the following statement of income. Additional insurance proceeds of
$27,319 related to these damages were received in 1998 and are reflected as a
gain on real estate assets in the following statement of income.

                                      F-15
<PAGE>

Following are the financial statements for Fund I and II Tucker:

                              Fund I and II Tucker
                           (A Georgia Joint Venture)
                                 Balance Sheets
                           December 31, 1999 and 1998

                                     Assets

<TABLE>
<CAPTION>
                                                                              1999             1998
                                                                           -----------       ----------
<S>                                                                         <C>              <C>
Real estate assets, at cost:
 Land                                                                       $3,260,887       $3,260,887
 Building and improvements, less accumulated depreciation of                 5,835,882        6,040,015
  $3,405,038 in 1999 and $2,913,652 in 1998
 Construction in progress                                                            0           26,731
                                                                           -----------       ----------
       Total real estate assets                                              9,096,769        9,327,633
Cash and cash equivalents                                                      123,617           49,380
Accounts receivable                                                            125,772           96,362
Prepaid expenses and other assets                                              115,865          122,181
                                                                           -----------       ----------
       Total assets                                                         $9,462,023       $9,595,556
                                                                           ===========       ==========

                           Liabilities and Partners' Capital

Liabilities:
 Accounts payable and accrued expenses                                      $   67,797       $   64,964
 Partnership distributions payable                                             165,750           66,558
 Due to affiliates                                                             588,344          548,632
                                                                           -----------       ----------
       Total liabilities                                                       821,891          680,154
                                                                           -----------       ----------
Partners' capital:
 Wells Real Estate Fund I                                                    4,581,940        4,758,591
 Fund II and II-OW                                                           4,058,192        4,156,811
                                                                           -----------       ----------
       Total partners' capital                                               8,640,132        8,915,402
                                                                           -----------       ----------
       Total liabilities and partners' capital                              $9,462,023       $9,595,556
                                                                           ===========       ==========
</TABLE>

                                      F-16
<PAGE>

                              Fund I and II Tucker
                           (A Georgia Joint Venture)
                              Statements of Income
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                              1999          1998           1997
                                                                            ---------     ----------     ---------
<S>                                                                         <C>           <C>            <C>
Revenues:
 Rental income                                                              $1,373,660    $1,242,332     $1,077,916
 Interest income                                                                     0             0          1,159
                                                                            ----------    ----------     ----------
                                                                             1,373,660     1,242,332      1,079,075
                                                                            ----------    ----------     ----------
Expenses:
 Operating costs, net of reimbursements                                        464,001       515,791        496,258
 Depreciation                                                                  491,386       440,099        419,928
 Management and leasing fees                                                   158,269       164,378        122,452
 Loss on real estate assets                                                          0       (27,319)       (45,943)
 Partnership administration                                                     29,109        32,420         28,665
 Legal and accounting                                                            5,739        12,093          7,936
                                                                            ----------    ----------     ----------
                                                                             1,148,504     1,137,462      1,029,296
                                                                            ----------    ----------     ----------
Net income                                                                  $  225,156    $  104,870     $   49,779
                                                                            ==========    ==========     ==========

Net income allocated to Wells Real Estate Fund I                            $  124,039    $   57,773     $   27,423
                                                                            ==========    ==========     ==========

Net income allocated to Fund II and II-OW                                   $  101,117    $   47,097     $   22,356
                                                                            ==========    ==========     ==========
</TABLE>

                              Fund I and II Tucker
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                         Wells Real          Fund II              Total
                                                           Estate              and              Partners'
                                                           Fund I             II-OW              Capital
                                                       --------------     -------------      -------------
<S>                                                    <C>                <C>                <C>
Balance, December 31, 1996                                 $5,147,557        $4,381,559          $9,529,116
 Net income                                                    27,423            22,356              49,779
 Partnership distributions                                   (205,024)         (123,264)           (328,288)
                                                         ------------      ------------        ------------
Balance, December 31, 1997                                  4,969,956         4,280,651           9,250,607
 Net income                                                    57,773            47,097             104,870
 Partnership distributions                                   (269,138)         (170,937)           (440,075)
                                                         ------------      ------------        ------------
Balance, December 31, 1998                                  4,758,591         4,156,811           8,915,402
 Net income                                                   124,039           101,117             225,156
 Partnership distributions                                   (300,690)         (199,736)           (500,426)
                                                         ------------      ------------        ------------
Balance, December 31, 1999                                 $4,581,940        $4,058,192          $8,640,132
                                                         ============      ============        ============
</TABLE>

                                      F-17
<PAGE>

                             Funds I and II Tucker
                           (A Georgia Joint Venture)
                            Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                               1999              1998             1997
                                                                            ----------        ----------       ----------
<S>                                                                         <C>               <C>              <C>
Cash flows from operating activities:
 Net income                                                                 $ 225,156         $ 104,870        $  49,779
                                                                            ----------        ----------       ----------
 Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation                                                             491,386           440,099           419,928
     Gain on real estate assets                                                     0           (27,319)          (45,943)
     Changes in assets and liabilities:
       Accounts receivable                                                    (29,410)          (16,647)           (5,244)
       Prepaid expenses and other assets                                        6,316           (17,585)          (54,616)
       Accounts payable and accrued expenses                                    2,833            (9,054)           31,831
       Due to affiliates                                                       39,712            67,404            58,435
                                                                            ----------        ----------       ----------
         Total adjustments                                                    510,837           436,898           404,391
                                                                            ----------        ----------       ----------
         Net cash provided by operating activities                            735,993           541,768           454,170
                                                                            ----------        ----------       ----------
Cash flows from investing activities:
 Investment in real estate                                                   (260,522)         (142,814)         (346,550)
 Insurance proceeds                                                                 0            27,319           104,895
                                                                            ----------        ----------       ----------
         Net cash used in investing activities                               (260,522)         (115,495)         (241,655)
                                                                            ----------        ----------       ----------
Cash flows from financing activities:
 Distributions to joint venture partners                                     (401,234)         (389,577)         (423,108)
                                                                            ----------        ----------       ----------
Net increase (decrease) in cash and cash equivalents                           74,237            36,696          (210,593)
Cash and cash equivalents, beginning of year                                   49,380            12,684           223,277
                                                                            ----------        ----------       ----------
Cash and cash equivalents, end of year                                      $ 123,617         $  49,380        $   12,684
                                                                            ==========        ==========       ==========
</TABLE>

Fund I, II, II-OW, VI, and VII Associates--Cherokee


In August 1995, Cherokee Commons was transferred to a new joint venture between
Fund I, Fund II and II-OW, Wells Real Estate Fund VI, L.P. ("Fund VI"), and
Wells Real Estate Fund VII, L.P. ("Fund VII").  The joint venture, Fund I, II,
II-OW, VI, and VII Associates--Cherokee, was formed for the purpose of owning
and operating Cherokee Commons, a retail shopping center containing
approximately 103,755 square feet located in Cherokee County, Georgia.
Percentage ownership interests in Fund I, II, II-OW, VI, and VII Associates--
Cherokee were determined at the time of formation based on contributions.  Under
the terms of the joint venture agreement, Fund VI and Fund VII each contributed
approximately $1 million to the new joint venture in return for a 10.7%
ownership interest.  Fund I's ownership interest in the Cherokee joint venture
changed from 30.6% to 24%, and Fund II and II-OW joint venture's ownership
interest changed from 69.4% to 54.6%.  The $2 million in cash contributed to
Cherokee was used to fund an expansion of the property for an existing tenant.

                                      F-18
<PAGE>

Following are the financial statements for Fund I, II, II-OW, VI, and VII
Associates--Cherokee:

              Fund I, II, II-OW, VI, and VII Associates--Cherokee
                           (A Georgia Joint Venture)
                                 Balance Sheets
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                    Assets

                                                                              1999              1998
                                                                           ----------        ----------
<S>                                                                        <C>               <C>
Real estate assets, at cost:
 Land                                                                      $1,219,704        $1,219,704
 Building and improvements, less accumulated depreciation of
  $3,165,778 in 1999 and $2,717,809 in 1998                                 6,067,174         6,500,995
                                                                           ----------        ----------
       Total real estate assets                                             7,286,878         7,720,699
Cash and cash equivalents                                                     206,540           222,814
Accounts receivable                                                            27,703            35,517
Prepaid expenses and other assets                                              89,846            90,979
                                                                           ----------        ----------
       Total assets                                                        $7,610,967        $8,070,009
                                                                           ==========        ==========

                       Liabilities and Partners' Capital

Liabilities:
 Accounts payable and accrued expenses                                     $   34,857        $  107,129
 Partnership distributions payable                                            192,184           130,838
 Due to affiliates                                                            122,272           109,267
                                                                           ----------        ----------
       Total liabilities                                                      349,313           347,234
                                                                           ----------        ----------
Partners' capital:
 Wells Real Estate Fund I                                                   1,618,133         1,741,492
 Fund II and II-OW                                                          4,053,105         4,295,663
 Wells Real Estate Fund VI                                                    796,558           844,160
 Wells Real Estate Fund VII                                                   793,858           841,460
       Total partners' capital                                              7,261,654         7,722,775
                                                                           ----------        ----------
       Total liabilities and partners' capital                             $7,610,967        $8,070,009
                                                                           ==========        ==========
</TABLE>

                                      F-19
<PAGE>

               Fund I, II, II-OW, VI and VII Associates--Cherokee
                           (A Georgia Joint Venture)
                              Statements of Income
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
 Rental income                                                $945,222   $909,831   $880,652
 Interest income                                                    68         84         67
                                                              --------   --------   --------
                                                               945,290    909,915    880,719
                                                              --------   --------   --------
Expenses:
 Depreciation                                                  447,969    444,660    440,882
 Operating costs, net of reimbursements                         37,583     35,715     70,017
 Partnership administration                                     24,882     22,934     26,260
 Management and leasing fees                                    94,149     82,517     78,046
 Legal and accounting                                            5,624      7,363      9,385
 Bad debt expense                                                    0     18,664          0
 Loss on real estate assets                                          0          0     32,632
                                                               610,207    611,853    657,222
                                                              --------   --------   --------
Net income                                                    $335,083   $298,062   $223,497
                                                              ========   ========   ========

Net income allocated to Wells Real Estate Fund I              $ 80,496   $ 71,604   $ 53,691
                                                              ========   ========   ========

Net income allocated to Fund II and II-OW                     $182,825   $162,626   $121,942
                                                              ========   ========   ========

Net income allocated to Wells Real Estate Fund VI             $ 35,881   $ 31,916   $ 23,932
                                                              ========   ========   ========

Net income allocated to Wells Real Estate Fund VII            $ 35,881   $ 31,916   $ 23,932
                                                              ========   ========   ========
</TABLE>

               Fund I, II, II-OW, VI and VII Associates--Cherokee
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                Wells Real     Fund II    Wells Real   Wells Real     Total
                                                  Estate         and        Estate       Estate      Partners'
                                                  Fund I        II-OW       Fund VI     Fund VII     Capital
                                               -----------   -----------  ------------ ----------- -----------
<S>                                            <C>           <C>          <C>          <C>         <C>
Balance, December 31, 1996                      $1,970,363   $4,746,274     $932,597     $929,897   $8,579,131
 Net income                                         53,691      121,942       23,932       23,932      223,497
 Partnership distributions                        (160,881)    (331,435)     (65,047)     (65,047)    (622,410)
                                                ----------   ----------   ----------   ----------   ----------
Balance, December 31, 1997                       1,863,173    4,536,781      891,482      888,782    8,180,218
 Net income                                         71,604      162,626       31,916       31,916      298,062
 Partnership distributions                        (193,285)    (403,744)     (79,238)     (79,238)    (755,505)
                                                ----------   ----------   ----------   ----------   ----------
Balance, December 31, 1998                       1,741,492    4,295,663      844,160      841,460    7,722,775
 Net income                                         80,496      182,825       35,881       35,881      335,083
 Partnership distributions                        (203,855)    (425,383)     (83,483)     (83,483)    (796,204)
                                                ----------   ----------   ----------   ----------   ----------
Balance, December 31, 1999                      $1,618,133   $4,053,105     $796,558     $793,858   $7,261,654
                                                ==========   ==========   ==========   ==========   ==========
</TABLE>

                                      F-20
<PAGE>

              Fund I, II, II-OW, VI, and VII Associates--Cherokee
                           (A Georgia Joint Venture)
                            Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                              1999              1998              1997
                                                                            --------          --------          --------
<S>                                                                         <C>               <C>               <C>
Cash flows from operating activities:
 Net income                                                                 $ 335,083         $ 298,062         $ 223,497
                                                                            ---------         ---------         ---------
 Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation                                                             447,969           444,660           440,882
     Loss on real estate assets                                                     0                 0            32,632
     Changes in assets and liabilities:
       Accounts receivable                                                      7,814            56,999             1,386
       Prepaid expenses and other assets                                        1,133             8,890           (21,342)
       Accounts payable and accrued expenses                                  (72,272)           70,278            13,721
       Due to affiliates                                                       13,005            15,327            15,565
                                                                            ---------         ---------         ---------
          Total adjustments                                                   397,649           596,154           482,844
                                                                            ---------         ---------         ---------
          Net cash provided by operating activities                           732,732           894,216           706,341
                                                                            ---------         ---------         ---------
Cash flows from investing activities:
 Investment in real estate                                                    (14,148)           (5,771)          (83,424)
                                                                            ---------         ---------         ---------
Cash flows from financing activities:
 Distributions to joint venture partners                                     (734,858)         (818,790)         (541,104)
                                                                            ---------         ---------         ---------
Net (decrease) increase in cash and cash equivalents                          (16,274)           69,655            81,813
Cash and cash equivalents, beginning of year                                  222,814           153,159            71,346
                                                                            ---------         ---------         ---------
Cash and cash equivalents, end of year                                      $ 206,540         $ 222,814         $ 153,159
                                                                            =========         =========         =========
</TABLE>

                                      F-21
<PAGE>

Fund II and III Associates

On April 3, 1989, Fund II and II-OW entered into a joint venture agreement with
Wells Real Estate Fund III, L.P. ("Fund III").  The new joint venture, Fund II
and III Associates, was formed for the purpose of investing in commercial and
industrial real properties.  In April 1989, Fund II and III Associates acquired
The Atrium.  In 1991, Fund II and II-OW contributed its interest in a parcel of
land known as the 880 Property located in Roswell, Georgia, to Fund II and III
Associates.  The property is a 5.8-acre tract of land.  A restaurant was
developed on 1.5 acres of the 880 Property and is currently operating as the
Brookwood Grill restaurant ("Fund II and III Associates--Brookwood Grill").  The
remaining 4.3 acres of the 880 Property was transferred at cost to the Fund II,
III, VI, and VII Associates joint venture during 1995.  Fund II and III
Associates' investment in this transferred parcel of the 880 Property was
$1,406,591 and $1,507,807 at December 31, 1999 and 1998, respectively, which
represented a 24% interest for each year.

The Atrium was fully occupied from inception through June 1996, at which time
the previous tenant's lease expired.  In March 1997, a lease was signed with a
new tenant for the entire building and the new tenant began paying rent in May
1997.  The lease term is for five years with an option to renew for an
additional five years.  There is a no-cause cancellation provision at the end of
the first three-year period.  If this no-cause cancellation is exercised, the
tenant would be required to pay unamortized, up-front tenant improvement costs.
The cost of completing the required tenant improvements and outside broker
commissions was funded out of reserves and contributions by Fund II and II-OW
and Fund III.

                                      F-22
<PAGE>

Following are the financial statements for Fund II and III Associates--The
Atrium:

                     Fund II and III Associates--The Atrium
                           (A Georgia Joint Venture)
                                 Balance Sheets
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                     Assets

                                                                               1999             1998
                                                                            ----------       ----------
<S>                                                                         <C>              <C>
Real estate assets, at cost:
 Land                                                                       $1,504,743       $1,504,743
 Building and improvements, less accumulated depreciation of
  $6,301,682 in 1999 and $5,433,962 in 1998                                  7,093,742        7,938,061
                                                                            ----------       ----------
       Total real estate assets                                              8,598,485        9,442,804
Cash and cash equivalents                                                       89,170          128,882
Accounts receivable                                                             30,018           18,114
Prepaid expenses and other assets                                              213,143          302,888
                                                                            ----------       ----------
       Total assets                                                         $8,930,816       $9,892,688
                                                                            ==========       ==========

                       Liabilities and Partners' Capital

Liabilities:
 Accounts payable                                                           $    1,801       $    4,587
 Partnership distributions payable                                             101,012          137,224
                                                                            ----------       ----------
       Total liabilities                                                       102,813          141,811
                                                                            ----------       ----------
Partners' capital:
 Fund II and II-OW                                                           5,615,740        6,181,461
 Wells Real Estate Fund III                                                  3,212,263        3,569,416
                                                                            ----------       ----------
       Total partners' capital                                               8,828,003        9,750,877
                                                                            ----------       ----------
       Total liabilities and partners' capital                              $8,930,816       $9,892,688
                                                                            ==========       ==========
</TABLE>

                                      F-23
<PAGE>

                     Fund II and III Associates--The Atrium
                           (A Georgia Joint Venture)
                               Statements of Loss
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                                               1999          1998          1997
                                                                                            ----------    ----------   ----------
<S>                                                                                         <C>           <C>           <C>
Revenues:
 Rental income                                                                              $1,470,144    $1,470,144    $  924,769
 Interest income                                                                                     0             0         2,617
 Other income                                                                                    4,000        13,280         8,638
                                                                                            ----------    ----------    ----------
                                                                                             1,474,144     1,483,424       936,024
                                                                                            ----------    ----------    ----------
Expenses:
 Depreciation                                                                                  867,720       866,778       795,829
 Operating costs, net of reimbursements                                                        692,066       699,550       614,932
 Management and leasing fees                                                                   179,762       186,102       111,576
 Partnership administration                                                                     23,278        11,095        27,325
 Legal and accounting                                                                            5,250         3,310        17,408
 Computer costs                                                                                      0             0           107
 Loss on real estate assets                                                                          0             0       181,684
                                                                                             1,768,076     1,766,835     1,748,861
                                                                                            ----------    ----------    ----------
Net loss                                                                                    $ (293,932)   $ (283,411)   $ (812,837)
                                                                                            ==========    ==========    ==========

Net loss allocated to Fund II and II-OW                                                     $ (180,180)   $ (173,731)   $ (509,625)
                                                                                            ==========    ==========    ==========

Net loss allocated to Wells Real Estate Fund III                                            $ (113,752)   $ (109,680)   $ (303,212)
                                                                                            ==========    ==========    ==========
</TABLE>

                                      F-24
<PAGE>

                     Fund II and III Associates--The Atrium
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                            Fund II          Wells Real            Total
                                                              and              Estate            Partners'
                                                             II-OW            Fund III            Capital
                                                          -----------       ------------      ------------
<S>                                                       <C>               <C>               <C>
Balance, December 31, 1996                                 $6,985,561        $3,663,946        $10,649,507
 Net loss                                                    (509,625)         (303,212)          (812,837)
 Partnership contributions                                    409,495           659,810          1,069,305
 Partnership distributions                                   (124,481)          (85,283)          (209,764)
                                                          -----------       -----------       ------------
Balance, December 31, 1997                                  6,760,950         3,935,261         10,696,211
 Net loss                                                    (173,731)         (109,680)          (283,411)
 Partnership distributions                                   (405,758)         (256,165)          (661,923)
                                                          -----------       -----------       ------------
Balance, December 31, 1998                                  6,181,461         3,569,416          9,750,877
 Net loss                                                    (180,180)         (113,752)          (293,932)
 Partnership distributions                                   (385,541)         (243,401)          (628,942)
                                                          -----------       -----------       ------------
Balance, December 31, 1999                                 $5,615,740        $3,212,263        $ 8,828,003
                                                          ===========       ===========       ============
</TABLE>

                                      F-25
<PAGE>

                     Fund II and III Associates--The Atrium
                           (A Georgia Joint Venture)
                            Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                           1999             1998              1997
                                                                         --------         --------          ---------
<S>                                                                      <C>              <C>               <C>
Cash flows from operating activities:
 Net loss                                                                $(293,932)       $(283,411)        $ (812,837)
                                                                         ---------        ---------         ----------
 Adjustments to reconcile net loss to net cash provided by (used
  in) operating activities:
     Depreciation                                                          867,720          866,778            795,829
     Loss on real estate assets                                                  0                0            181,684
     Changes in assets and liabilities:
       Accounts receivable                                                 (11,904)             836            (18,950)
       Prepaid expenses and other assets                                    89,745           89,745           (357,417)
       Accounts payable                                                     (2,786)        (146,779)           (37,394)
       Due to affiliates                                                         0           (3,829)             3,829
                                                                         ---------        ---------         ----------
         Total adjustments                                                 942,775          806,751            567,581
                                                                         ---------        ---------         ----------
         Net cash provided by (used in) operating activities               648,843          523,340           (245,256)
                                                                         ---------        ---------         ----------
Cash flows from investing activities:
 Investment in real estate assets                                          (23,401)               0           (932,156)
                                                                         ---------        ---------         ----------
Cash flows from financing activities:
 Contributions from joint venture partners                                       0                0          1,069,305
 Distributions to joint venture partners                                  (665,154)        (675,743)           (58,720)
                                                                         ---------        ---------         ----------
         Net cash (used in) provided by financing activities              (665,154)        (675,743)         1,010,585
                                                                         ---------        ---------         ----------
Net decrease in cash and cash equivalents                                  (39,712)        (152,403)          (166,827)
Cash and cash equivalents, beginning of year                               128,882          281,285            448,112
                                                                         ---------        ---------         ----------
Cash and cash equivalents, end of year                                   $  89,170        $ 128,882         $  281,285
                                                                         =========        =========         ==========
</TABLE>

                                      F-26
<PAGE>

Following are the financial statements for Fund II and III Associates--Brookwood
Grill:

                  Fund II and III Associates--Brookwood Grill
                           (A Georgia Joint Venture)
                                 Balance Sheets
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                     Assets

                                                                               1999            1998
                                                                            ----------       ----------
<S>                                                                         <C>              <C>
Real estate assets, at cost:
 Land                                                                       $  745,223       $  745,223
 Building and improvements, less accumulated depreciation of
  $383,745 in 1999 and $329,731 in 1998                                        889,068          943,082
                                                                            ----------       ----------
       Total real estate assets                                              1,634,291        1,688,305
Investment in joint venture                                                  1,406,591        1,507,807
Cash and cash equivalents                                                       65,627           73,956
Due from affiliate                                                              60,193           50,479
Accounts receivable                                                             41,060           67,018
Prepaid expenses and other assets                                               11,912           17,480
                                                                            ----------       ----------
       Total assets                                                         $3,219,674       $3,405,045
                                                                            ==========       ==========

                       Liabilities and Partners' Capital

Liabilities:
 Accounts payable                                                           $        0       $    1,200
 Due to affiliate                                                                2,405            3,894
 Partnership distributions payable                                             126,201          124,772
                                                                            ----------       ----------
       Total liabilities                                                       128,606          129,866
                                                                            ----------       ----------
Partners' capital:
 Fund II and II-OW                                                           1,927,383        2,042,176
 Wells Real Estate Fund III                                                  1,163,685        1,233,003
                                                                            ----------       ----------
       Total partners' capital                                               3,091,068        3,275,179
                                                                            ----------       ----------
       Total liabilities and partners' capital                              $3,219,674       $3,405,045
                                                                            ==========       ==========
</TABLE>

                                      F-27
<PAGE>

                  Fund II and III Associates--Brookwood Grill
                           (A Georgia Joint Venture)
                              Statements of Income
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                                 1999        1998       1997
                                                                              ----------  ----------  ----------
<S>                                                                           <C>         <C>         <C>
Revenues:
 Rental income                                                                 $224,801    $225,100    $225,106
 Equity in income of joint venture                                               81,669      78,791      27,213
                                                                              ---------   ---------   ---------
                                                                                306,470     303,891     252,319
                                                                              ---------   ---------   ---------
Expenses:
 Operating costs, net of reimbursements                                         (11,565)    (31,540)     15,233
 Depreciation                                                                    54,014      54,014      54,014
 Management and leasing fees                                                     30,096      23,348      28,464
 Partnership administration                                                       5,853       3,708       3,875
 Legal and accounting                                                             5,252       3,200       4,672
 Computer costs                                                                       0           0         107
                                                                              ---------   ---------   ---------
                                                                                 83,650      52,730     106,365
                                                                              ---------   ---------   ---------
Net income                                                                     $222,820    $251,161    $145,954
                                                                              =========   =========   =========
Net income allocated to Fund II and II-OW                                      $138,928    $156,599    $ 91,002
                                                                              =========   =========   =========
Net income allocated to Wells Real Estate Fund III                             $ 83,892    $ 94,562    $ 54,952
                                                                              =========   =========   =========
</TABLE>

                  Fund II and III Associates--Brookwood Grill
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                           Fund II          Wells Real          Total
                                                             and              Estate          Partners'
                                                            II-OW            Fund III          Capital
                                                         ------------      ------------     ------------
<S>                                                      <C>               <C>              <C>
Balance, December 31, 1996                                  $2,256,114        $1,362,190        $3,618,304
 Net income                                                     91,002            54,952           145,954
 Partnership distributions                                    (190,653)         (115,125)         (305,778)
                                                          ------------      ------------       -----------
Balance, December 31, 1997                                   2,156,463         1,302,017         3,458,480
 Net income                                                    156,599            94,562           251,161
 Partnership distributions                                    (270,886)         (163,576)         (434,462)
                                                          ------------      ------------       -----------
Balance, December 31, 1998                                   2,042,176         1,233,003         3,275,179
 Net income                                                    138,928            83,892           222,820
 Partnership distributions                                    (253,721)         (153,210)         (406,931)
                                                          ------------      ------------       -----------
Balance, December 31, 1999                                  $1,927,383        $1,163,685        $3,091,068
                                                          ============      ============       ===========
</TABLE>

                                      F-28
<PAGE>

                  Fund II and III Associates--Brookwood Grill
                           (A Georgia Joint Venture)
                            Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                              1999              1998              1997
                                                                            ---------         ---------         ---------
<S>                                                                         <C>               <C>                <C>
Cash flows from operating activities:
 Net income                                                                 $ 222,820         $ 251,161         $ 145,954
                                                                           ----------        ----------        ----------
 Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation                                                              54,014            54,014            54,014
     Equity in income of joint venture                                        (81,669)          (78,791)          (27,213)
     Changes in assets and liabilities:
       Accounts receivable                                                     25,958            22,739            24,229
       Prepaid expenses and other assets                                        5,568             5,568             5,568
       Accounts payable                                                        (1,200)           (2,679)          (16,161)
       Due to affiliates                                                       (1,489)           (1,487)           (1,163)
                                                                           ----------        ----------        ----------
         Total adjustments                                                      1,182              (636)           39,274
                                                                           ----------        ----------        ----------
         Net cash provided by operating activities                            224,002           250,525           185,228
                                                                           ----------        ----------        ----------
Cash flows from investing activities:
 Distributions received from joint venture                                    173,171           160,812            89,622
                                                                           ----------        ----------        ----------
Cash flows from financing activities:
 Distributions to joint venture partners                                     (405,502)         (391,702)         (229,631)
                                                                           ----------        ----------        ----------
Net (decrease) increase in cash and cash equivalents                           (8,329)           19,635            45,219
Cash and cash equivalents, beginning of year                                   73,956            54,321             9,102
                                                                           ----------        ----------        ----------
Cash and cash equivalents, end of year                                      $  65,627         $  73,956         $  54,321
                                                                           ==========        ==========        ==========
</TABLE>

Fund II, III, VI, and VII Associates

On January 1, 1995, the Fund II and III Associates joint venture entered into a
joint venture agreement with Fund VI and Fund VII.  The joint venture, Fund II,
III, VI, and VII Associates, was formed for the purpose of acquiring,
developing, operating, and selling real properties.  During 1995, Fund II and
III Associates contributed a 4.3-acre tract of land from its 880 Property to the
Fund II, III, VI, and VII Associates joint venture.  During 1998, 1997, and
1996, Fund VI and Fund VII made contributions to the joint venture.  Ownership
percentage interests were recomputed accordingly.  Development was substantially
completed in 1996 on two retail and office buildings containing a total of
approximately 49,500 square feet.

                                      F-29
<PAGE>

The following are the financial statements for Fund II, III, VI, and VII
Associates:

                      Fund II, III, VI, and VII Associates
                           (A Georgia Joint Venture)
                                 Balance Sheets
                           December 31, 1999 and 1998

                                     Assets

<TABLE>
<CAPTION>
                                                                               1999             1998
                                                                            ----------      -----------
<S>                                                                         <C>             <C>
Real estate assets, at cost:
 Land                                                                       $1,325,242       $1,325,242
 Building and improvements, less accumulated depreciation of
  $1,299,227 in 1999 and $884,062 in 1998                                    4,418,932        4,773,062
 Construction in progress                                                            0           41,263
                                                                           -----------      -----------
       Total real estate assets                                              5,744,174        6,139,567
Cash and cash equivalents                                                      189,404          308,788
Accounts receivable                                                            162,464          111,460
Prepaid expenses and other assets                                              213,443          233,965
                                                                           -----------      -----------
       Total assets                                                         $6,309,485       $6,793,780
                                                                           ===========      ===========
                       Liabilities and Partners' Capital

Liabilities:
 Accounts payable and accrued expenses                                      $   87,926       $  192,072
 Partnership distributions payable                                             250,075          209,716
                                                                           -----------      -----------
                                                                               338,001          401,788
                                                                           -----------      -----------
Partners' capital:
 Fund II and III Associates                                                  1,406,591        1,507,807
 Wells Real Estate Fund VI                                                   1,569,430        1,682,380
 Wells Real Estate Fund VII                                                  2,995,463        3,201,805
                                                                           -----------      -----------
       Total partners' capital                                               5,971,484        6,391,992
                                                                           -----------      -----------
       Total liabilities and partners' capital                              $6,309,485       $6,793,780
                                                                           ===========      ===========
</TABLE>

                                      F-30
<PAGE>

                      Fund II, III, VI, and VII Associates
                           (A Georgia Joint Venture)
                              Statements of Income
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                                 1999       1998       1997
                                                                               --------   --------   --------
<S>                                                                            <C>        <C>        <C>
Revenues:
 Rental income                                                                  $953,952   $872,978   $679,268
 Other income                                                                     23,843     36,000          0
                                                                                --------   --------   --------
                                                                                 977,795    908,978    679,268
                                                                                --------   --------   --------
Expenses:
 Depreciation                                                                    415,165    376,290    325,974
 Operating costs, net of reimbursements                                           68,691     85,983    122,261
 Management and leasing fees                                                     129,798     97,701     99,834
 Legal and accounting                                                              4,952      6,509      4,885
 Partnership administration                                                       19,891     14,926     17,321
 Computer costs                                                                        0          0        228
                                                                                --------   --------   --------
                                                                                 638,497    581,409    570,503
                                                                                --------   --------   --------
Net income                                                                      $339,298   $327,569   $108,765
                                                                                ========   ========   ========
Net income allocated to Fund II and III Associates                              $ 81,669   $ 78,791   $ 27,213
                                                                                ========   ========   ========
Net income allocated to Wells Real Estate Fund VI                               $ 91,135   $ 87,914   $ 28,409
                                                                                ========   ========   ========
Net income allocated to Wells Real Estate Fund VII                              $166,494   $160,864   $ 53,143
                                                                                ========   ========   ========
</TABLE>

                      Fund II, III, VI, and VII Associates
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                     Fund II             Wells           Wells Real            Total
                                                     and III          Real Estate          Estate            Partners'
                                                   Associates           Fund VI           Fund VII            Capital
                                                  ------------       --------------     ------------       ------------
<S>                                               <C>                <C>                <C>                <C>
Balance, December 31, 1996                            $1,690,244         $1,759,947         $3,292,551         $6,742,742
 Partnership contributions                                     0            116,675            121,576            238,251
 Partnership distributions                              (109,242)          (115,220)          (214,414)          (438,876)
 Net income                                               27,213             28,409             53,143            108,765
                                                    ------------        -----------        -----------        -----------
Balance, December 31, 1997                             1,608,215          1,789,811          3,252,856          6,650,882
 Partnership contributions                                     0              4,600            154,049            158,649
 Partnership distributions                              (179,199)          (199,945)          (365,964)          (745,108)
 Net income                                               78,791             87,914            160,864            327,569
                                                    ------------        -----------        -----------        -----------
Balance, December 31, 1998                             1,507,807          1,682,380          3,201,805          6,391,992
 Partnership distributions                              (182,885)          (204,085)          (372,836)          (759,806)
 Net income                                               81,669             91,135            166,494            339,298
                                                    ------------        -----------        -----------        -----------
Balance, December 31, 1999                            $1,406,591         $1,569,430         $2,995,463         $5,971,484
                                                    ============        ===========        ===========        ===========
</TABLE>

                                      F-31
<PAGE>

                      Fund II, III, VI, and VII Associates
                           (A Georgia Joint Venture)
                            Statements of Cash Flows
             for the Years Ended December 31, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                                                            1999            1998          1997
                                                                                           ---------     ---------     ---------
     <S>                                                                                   <C>           <C>           <C>
     Cash flows from operating activities:
      Net income                                                                           $ 339,298     $ 327,569     $ 108,765
                                                                                           ---------     ---------     ---------
      Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation                                                                       415,165       376,290       325,974
          Changes in assets and liabilities:
            Accounts receivable                                                              (51,004)      (56,936)       12,810
            Prepaid expenses and other assets                                                 20,522        35,603      (123,748)
            Accounts payable and accrued expenses                                           (104,146)       21,296       (34,194)
                                                                                           ---------     ---------     ---------
              Total adjustments                                                              280,537       376,253       180,842
                                                                                           ---------     ---------     ---------
              Net cash provided by operating activities                                      619,835       703,822       289,607
                                                                                           ---------     ---------     ---------
     Cash flows from investing activities:
      Investment in real estate                                                              (19,772)     (102,122)     (620,059)
                                                                                           ---------     ---------     ---------
     Cash flows from financing activities:
      Contributions from joint venture partners                                                    0       154,996       230,699
      Distributions to joint venture partners                                               (719,447)     (667,299)     (356,559)
                                                                                           ---------     ---------     ---------
              Net cash used in financing activities                                         (719,447)     (512,303)     (125,860)
                                                                                           ---------     ---------     ---------
     Net (decrease) increase in cash and cash equivalents                                   (119,384)       89,397      (456,312)
     Cash and cash equivalents, beginning of year                                            308,788       219,391       675,703
                                                                                           ---------     ---------     ---------
     Cash and cash equivalents, end of year                                                $ 189,404     $ 308,788     $ 219,391
                                                                                           =========     =========     =========
     Supplemental disclosure of noncash activities:
      Deferred project costs contributed to joint venture                                  $       0     $   3,653     $   7,552
                                                                                           =========     =========     =========
</TABLE>

4.   INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL

     The Partnership's income tax basis net income for the years ended December
     31, 1999, 1998, and 1997 is calculated as follows:

<TABLE>
<CAPTION>
                                                                                              1999         1998          1997
                                                                                           ----------    ---------    ---------
     <S>                                                                                   <C>           <C>          <C>
     Financial statement net income (loss)                                                 $  371,178    $ 93,162     $(331,376)
     Increase (decrease) in net income (loss) resulting from:
      Depreciation expense for financial reporting purposes in excess
       of amounts for income tax purposes                                                     625,223     627,502       558,365
      Expenses deductible when paid for income tax purposes,
       accrued for financial reporting purposes                                                20,482      30,541        27,667
      Rental income recognized for income tax purposes (less than) in excess of                (6,205)     26,495        38,033
       amounts for financial reporting purposes
      Loss on retirement of fixed assets for income tax purposes                                    0           0       (13,835)
      Involuntary conversion of fixed assets for income tax purposes                                0           0       (13,560)
      Meals and entertainment                                                                     935          83           827
                                                                                          -----------   ---------    ----------
     Income tax basis net income                                                           $1,011,613    $777,783     $ 266,121
                                                                                          ===========   =========    ==========
</TABLE>

                                      F-32
<PAGE>

     The Partnership's income tax basis partners' capital at December 31, 1999,
     1998, and 1997 is computed as follows:

<TABLE>
<CAPTION>
                                                                                    1999          1998          1997
                                                                                -----------   -----------   ----------
     <S>                                                                        <C>           <C>           <C>
     Financial statement partners' capital                                      $20,722,383   $22,044,258   $23,460,451
     Increase (decrease) in partners' capital resulting from:
      Depreciation expense for financial reporting purposes in excess of
       amounts for income tax purposes                                            2,420,407     1,795,184     1,167,682
      Joint venture change in ownership                                             (28,326)      (28,326)      (28,326)
      Accumulated expenses deductible when paid for income tax purposes,            528,685       508,203       477,662
       accrued for financial reporting purposes
      Accumulated rental income accrued for financial reporting purposes in        (104,707)      (98,502)     (124,997)
       excess of amounts for income tax purposes
      Partnership distributions payable                                             483,167       337,178       331,965
      Other                                                                         (40,808)      (41,743)      (42,026)
                                                                                -----------   -----------   -----------
     Income tax basis partners' capital                                         $23,980,801   $24,516,252   $25,242,411
                                                                                ===========   ===========   ===========
</TABLE>

5.   RENTAL INCOME

     The future minimum rental income due from the Partnership's respective
     ownership interest in the joint ventures under noncancelable operating
     leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
               Year ended December 31:
               <S>                                                    <C>
                2000                                                   $2,942,681
                2001                                                    2,226,407
                2002                                                    1,051,850
                2003                                                      524,077
                2004                                                      474,418
               Thereafter                                               2,099,070
                                                                     ------------
                                                                       $9,318,503
                                                                     ============
</TABLE>

     Three tenants contributed approximately 30%, 21%, and 11% of rental income,
     which is included in equity in income of joint ventures for the year ended
     December 31, 1999. In addition, four tenants will contribute approximately
     38%, 23%, 11% and 14% of future minimum rental income.

     The future minimum rental income due Fund II and II-OW for the First Union
     Property under noncancelable operating leases at December 31, 1999 is as
     follows:

<TABLE>
<CAPTION>
                Year ended December 31:
                <S>                                                         <C>
                 2000                                                       $  844,071
                 2001                                                          281,357
                                                                            ----------
                                                                            $1,125,428
                                                                            ==========
</TABLE>

     One tenant at the First Union Property contributed 100% of rental income
     for the year ended December 31, 1999 and will contribute 100% of future
     minimum rental income.

                                      F-33
<PAGE>

     The future minimum rental income due Fund I and II Tucker under
     noncancelable operating leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
             Year ended December 31:
             <S>                                                     <C>
              2000                                                    $1,119,619
              2001                                                       810,590
              2002                                                       531,737
              2003                                                       293,464
              2004                                                        95,633
             Thereafter                                                  101,200
                                                                      ----------
                                                                      $2,952,243
                                                                      ==========
</TABLE>

     One tenant contributed 10% of rental income for the year ended December 31,
     1999 and will contribute approximately 15% of future minimum rental income.

     The future minimum rental income due Fund I, II, II-OW, VI, and VII
     Associates--Cherokee under noncancelable operating leases at December 31,
     1999 is as follows:

<TABLE>
<CAPTION>
            Year ended December 31:
            <S>                                                       <C>
             2000                                                      $  914,317
             2001                                                         828,960
             2002                                                         762,564
             2003                                                         692,708
             2004                                                         771,053
            Thereafter                                                  3,847,339
                                                                       ----------
                                                                       $7,816,941
                                                                       ==========
</TABLE>

     One tenant contributed approximately 62% of rental income for the year
     ended December 31, 1999 and will contribute approximately 85% of future
     minimum rental income.

     The future minimum rental income due Fund II and III Associates--The Atrium
     under noncancelable operating leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
           Year ended December 31:
           <S>                                                    <C>
            2000                                                  $1,476,960
            2001                                                   1,488,000
            2002                                                     550,721
                                                                  ----------
                                                                  $3,515,681
                                                                  ==========
</TABLE>

One tenant at The Atrium contributed 100% of rental income for the year ended
December 31, 1999 and will contribute 100% of future minimum rental income.

                                      F-34
<PAGE>

The future minimum rental income due Fund II and III Associates--Brookwood Grill
under noncancelable operating leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
           Year ended December 31:
           <S>                                                <C>
            2000                                               $249,550
            2001                                                249,550
            2002                                                 25,995
                                                               --------
                                                               $525,095
                                                               ========
</TABLE>

     One tenant contributed 100% of rental income for the year ended December
     31, 1999 and will contribute 100% of future minimum rental income.

     The future minimum rental income due Fund II, III, VI, and VII Associates
     under noncancelable operating leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
        Year ended December 31:
        <S>                                                   <C>
         2000                                                  $  901,595
         2001                                                     847,296
         2002                                                     469,628
         2003                                                     197,540
         2004                                                     175,331
        Thereafter                                                149,157
                                                               ----------
                                                               $2,740,547
                                                               ==========
</TABLE>

     Three tenants contributed approximately 13%, 13%, and 11% of rental income
     for the year ended December 31, 1999. In addition, four tenants will
     contribute approximately 29%, 14%, 14%, and 11% of future minimum rental
     income.

 6.  QUARTERLY RESULTS (UNAUDITED)

     Presented below is a summary of the unaudited quarterly financial
     information for the years ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                             1999 Quarters Ended
                                                        ---------------------------------------------------------------
                                                         March 31       June 30        September 30        December 31
                                                        ---------      ---------       ------------       -------------
<S>                                                     <C>            <C>             <C>                <C>
Revenues                                                 $63,383        $72,086            $147,215            $88,494
Net income                                                63,383         72,086             147,215             88,494
Net income allocated to Class A limited partners          63,383         72,086             147,215             88,494
Net income per weighted average Class A limited
 partner unit outstanding                                $  0.58        $  0.67            $   1.35            $  0.82
Cash distribution per weighted average Class A
 limited partner unit outstanding                           3.72           3.43                4.06               4.38
</TABLE>

                                      F-35
<PAGE>

<TABLE>
<CAPTION>
                                                                                  1999 Quarters Ended
                                                             ---------------------------------------------------------------
                                                              March 31       June 30        September 30        December 31
                                                             ---------      ---------       ------------       -------------
     <S>                                                     <C>            <C>             <C>                <C>
     Revenues                                                  $44,927       $48,966             $39,643           $(40,374)
     Net income                                                 44,927        48,966              39,643            (40,374)
     Net income allocated to Class A limited partners           44,927        48,966              39,643            (40,374)
     Net income per weighted average Class A limited
      partner unit                                             $  0.41       $  0.46             $  0.36           $  (0.37)
     Cash distribution per weighted average Class A
      limited partner unit                                        3.53          3.72                3.64               3.01
</TABLE>

7.   COMMITMENTS AND CONTINGENCIES

     Management, after consultation with legal counsel, is not aware of any
     significant litigation or claims against the Partnership or the Company. In
     the normal course of business, the Partnership or the Company may become
     subject to such litigation or claims.

                                      F-36
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Wells Real Estate Fund II,
Wells Real Estate Fund II-OW, and
Wells Real Estate Fund III, L.P.:

We have audited the accompanying balance sheets of THE ATRIUM BUILDING as of
December 31, 1999 and 1998 and the related statements of loss, partners'
capital, and cash flows for each of the three years in the period ended December
31, 1999.  These financial statements are the responsibility of the building's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Atrium Building as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States.



Atlanta, Georgia
January 20, 2000

                                      F-37
<PAGE>

                              THE ATRIUM BUILDING

                                BALANCE SHEETS

                          DECEMBER 31, 1999 AND 1998



<TABLE>
<CAPTION>
                                    ASSETS
                                                                              1999             1998
                                                                           -----------      -----------
<S>                                                                        <C>              <C>
REAL ESTATE ASSETS:
 Land                                                                       $1,504,743       $1,504,743
 Building and improvements, less accumulated depreciation of
  $6,301,681 in 1999 and $5,433,962 in 1998                                  7,070,342        7,938,061
 Construction in progress                                                       23,400                0
                                                                            ----------       ----------
       Total real estate assets                                              8,598,485        9,442,804

CASH AND CASH EQUIVALENTS                                                       89,170          128,882

ACCOUNTS RECEIVABLE                                                             30,018           18,114

PREPAID AND OTHER ASSETS                                                       213,143          302,888
                                                                            ----------       ----------
       Total assets                                                         $8,930,816       $9,892,688
                                                                            ==========       ==========

                            LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
 Distributions payable to partners                                          $  101,012       $  137,224
 Accounts payable                                                                1,801            4,587
                                                                            ----------       ----------
       Total liabilities                                                       102,813          141,811
                                                                            ----------       ----------
COMMITMENTS AND CONTINGENCIES (Note 4)

PARTNERS' CAPITAL:
 Wells Real Estate Fund II                                                   5,162,262        5,697,944
 Wells Real Estate Fund II-OW                                                  453,477          483,517
 Wells Real Estate Fund III, L.P.                                            3,212,264        3,569,416
                                                                            ----------       ----------
       Total partners' capital                                               8,828,003        9,750,877
                                                                            ----------       ----------
       Total liabilities and partners' capital                              $8,930,816       $9,892,688
                                                                            ==========       ==========
</TABLE>

      The accompanying notes are an integral part of these balance sheets.

                                      F-38
<PAGE>

                              THE ATRIUM BUILDING

                               STATEMENTS OF LOSS

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997



<TABLE>
<CAPTION>
                                                              1999             1998                1997
                                                            ----------      -----------         ----------
<S>                                                        <C>              <C>                 <C>
REVENUES:
 Rental income                                              $1,470,144        $1,470,144        $  924,769
                                                            ----------        ----------        ----------
EXPENSES:
 Depreciation                                                  867,719           866,778           795,829
 Operating costs, net of reimbursements                        801,090           697,365           812,686
 Management and leasing fees                                    90,018           186,102           111,576
 Legal and accounting                                            5,250             3,310            17,408
 Computer costs                                                      0                 0               107
                                                            ----------        ----------        ----------
                                                             1,764,077         1,753,555         1,737,606
                                                            ----------        ----------        ----------
NET LOSS                                                    $ (293,933)       $ (283,411)       $ (812,837)
                                                            ==========        ==========        ==========

NET LOSS ALLOCATED TO WELLS REAL ESTATE FUND II             $ (170,613)       $ (164,506)       $ (482,564)
                                                            ==========        ==========        ==========

NET LOSS ALLOCATED TO WELLS REAL ESTATE FUND II-OW          $   (9,568)       $   (9,225)       $  (27,061)
                                                            ==========        ==========        ==========

NET LOSS ALLOCATED TO WELLS REAL ESTATE FUND III, L.P.      $ (113,752)       $ (109,680)       $ (303,212)
                                                            ==========        ==========        ==========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-39
<PAGE>

                              THE ATRIUM BUILDING

                        STATEMENTS OF PARTNERS' CAPITAL

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                  Wells Real         Wells Real         Wells Real            Total
                                                    Estate             Estate             Estate            Partners'
                                                    Fund II          Fund II-OW       Fund III, L.P.         Capital
                                                -------------       -------------     --------------     -------------
<S>                                             <C>                 <C>               <C>                <C>
BALANCE, December 31, 1996                           $6,459,347           $526,214         $3,663,945         $10,649,506

 Net loss                                              (482,564)           (27,061)          (303,212)           (812,837)
 Contributions                                          387,750             21,745            659,810           1,069,305
 Distributions                                         (117,871)            (6,610)           (85,283)           (209,764)
                                                    -----------        -----------        -----------         -----------
BALANCE, December 31, 1997                            6,246,662            514,288          3,935,260          10,696,210

 Net loss                                              (164,506)            (9,225)          (109,680)           (283,411)
 Distributions                                         (384,212)           (21,546)          (256,164)           (661,922)
                                                    -----------        -----------        -----------         -----------
BALANCE, December 31, 1998                            5,697,944            483,517          3,569,416           9,750,877

 Net loss                                              (170,613)            (9,568)          (113,752)           (293,933)
 Distributions                                         (365,069)           (20,472)          (243,400)           (628,941)
                                                    -----------        -----------        -----------         -----------
BALANCE, December 31, 1999                           $5,162,262           $453,477         $3,212,264         $ 8,828,003
                                                    ===========        ===========        ===========         ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-40
<PAGE>

                              THE ATRIUM BUILDING

                            STATEMENTS OF CASH FLOWS

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997




<TABLE>
<CAPTION>
                                                                        1999              1998                1997
                                                                     ----------        ----------          ----------
<S>                                                                  <C>               <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                             $(293,933)        $(283,411)         $ (812,837)
                                                                     ----------        ----------         -----------
 Adjustments to reconcile net loss to net cash provided by
  operating activities:
     Depreciation                                                       867,719           866,778             795,829
     Loss on real estate assets                                               0                 0             181,684
     Changes in assets and liabilities:
       Accounts receivable                                              (11,904)              836             (18,950)
       Prepaid expenses and other assets                                 89,745            89,745            (357,417)
       Accounts payable                                                  (2,786)         (146,779)            (37,394)
       Due to affiliates                                                      0            (3,829)              3,829
                                                                     ----------        ----------         -----------
         Total adjustments                                              942,774           806,751             567,581
                                                                     ----------        ----------         -----------
         Net cash provided by (used in) operating activities            648,841           523,340            (245,256)
                                                                     ----------        ----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Investment in real estate assets                                       (23,400)                0            (932,156)
                                                                     ----------        ----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Contributions from partners                                                  0                 0           1,069,305
 Distributions paid to partners                                        (665,153)         (675,743)            (58,720)
                                                                     ----------        ----------         -----------
         Net cash (used in) provided by financing activities           (665,153)         (675,743)          1,010,585
                                                                     ----------        ----------         -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                               (39,712)         (152,403)           (166,827)

CASH AND CASH EQUIVALENTS, beginning of year                            128,882           281,285             448,112
                                                                     ----------        ----------         -----------
CASH AND CASH EQUIVALENTS, end of year                                $  89,170         $ 128,882          $  281,285
                                                                     ==========        ==========         ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-41
<PAGE>

                              THE ATRIUM BUILDING

                         NOTES TO FINANCIAL STATEMENTS

                       DECEMBER 31, 1999, 1998, AND 1997

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Business

     The Atrium Building ("Atrium") is a four-story office building located in
     Houston, Harris County, Texas. The building is owned by Fund II and III
     Associates, a joint venture between Wells Real Estate Fund II ("Fund II"),
     Wells Real Estate Fund II-OW ("Fund II-OW"), and Wells Real Estate Fund
     III, L.P. ("Fund III). Fund II owns 59% of Atrium, Fund II-OW owns 3% of
     Atrium, and Fund III owns 38% of Atrium at December 31, 1999. Allocation of
     net loss and distributions are made in accordance with ownership
     percentages.

     Use of Estimates

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Income Taxes

     Atrium is not deemed to be a taxable entity for federal income tax
     purposes.

     Real Estate Assets

     Real estate assets are stated at cost, less accumulated depreciation. Major
     improvements and betterments are capitalized when they extend the useful
     life of the related asset. All repairs and maintenance are expensed as
     incurred.

     Management continually monitors events and changes in circumstances which
     could indicate that carrying amounts of real estate assets may not be
     recoverable. When events or changes in circumstances are present which
     indicate that the carrying amounts of real estate assets may not be
     recoverable, management assesses the recoverability of real estate assets
     by determining whether the carrying value of such real estate assets will
     be recovered through the future cash flows expected from the use of the
     asset and its eventual disposition. Management has determined that there
     has been no impairment in the carrying value of Atrium as of December 31,
     1999.

     Depreciation is calculated using the straight-line method over 25 years.

                                      F-42
<PAGE>

     Revenue Recognition

     The lease on Atrium is classified as an operating lease, and the related
     rental income is recognized on a straight-line basis over the term of the
     lease.

     Deferred Lease Acquisition Costs

     Costs incurred to procure operating leases are capitalized and amortized on
     a straight-line basis over the terms of the related leases.

     Cash and Cash Equivalents

     For the purposes of the statements of cash flows, Atrium considers all
     highly liquid investments purchased with an original maturity of three
     months or less to be cash equivalents. Cash equivalents include cash and
     short-term investments. Short-term investments are stated at cost, which
     approximates fair value, and consist of investments in money market
     accounts.

2.   RENTAL INCOME

     The future minimum rental income due to Atrium under noncancelable
     operating leases at December 31, 1999 is as follows:

<TABLE>
<CAPTION>
         Year ending December 31:
         <S>                                                 <C>
          2000                                                $1,476,960
          2001                                                 1,408,000
          2002                                                   550,722
                                                              ----------
                                                              $3,435,682
                                                              ==========
</TABLE>

     One tenant contributed 100% of rental income for the year ended December
     31, 1999 and represents 100% of the future minimum rental income above.

3.   RELATED-PARTY TRANSACTIONS

     Fund II and II-OW and Fund III entered into a property management agreement
     with Wells Management Company, Inc. ("Wells Management"), an affiliate of
     Fund II and II-OW and Fund III. In consideration for supervising the
     management of Atrium, Fund II and II-OW and Fund III will generally pay
     Wells Management management and leasing fees equal to (a) 3% of the gross
     revenues for management and 3% of the gross revenues for leasing (aggregate
     maximum of 6%) plus a separate fee for the one-time initial lease-up of
     newly constructed properties in an amount not to exceed the fee customarily
     charged in arm's-length transactions by others rendering similar services
     in the same geographic area for similar properties or (b) in the case of
     commercial properties which are leased on a long-term net basis (ten or
     more years), 1% of the gross revenues except for initial leasing fees equal
     to 3% of the gross revenues over the first five years of the lease term.

     Atrium incurred management and leasing fees of $90,018, $186,102, and
     $111,576 for the years ended December 31, 1999, 1998, and 1997,
     respectively, which were paid to Wells Management.

                                      F-43
<PAGE>

4.   COMMITMENTS AND CONTINGENCIES

     Management, after consultation with legal counsel, is not aware of any
     significant litigation or claims against Atrium or its partners. In the
     normal course of business, Atrium or its partners may become subject to
     such litigation or claims.

                                      F-44
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Wells Real Estate Fund II
and Wells Real Estate Fund II-OW:

We have audited the accompanying balance sheets of THE FIRST UNION PROPERTY as
of December 31, 1999 and 1998 and the related statements of income, partners'
capital, and cash flows for each of the three years in the period ended December
31, 1999.  These financial statements are the responsibility of the property's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The First Union Property as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the United States.



Atlanta, Georgia
January 20, 2000

                                      F-45
<PAGE>

                            THE FIRST UNION PROPERTY

                                 BALANCE SHEETS

                           DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
                                        ASSETS

                                                                              1999              1998
                                                                           ----------       ----------
<S>                                                                        <C>              <C>
REAL ESTATE ASSETS:
 Land                                                                       $1,367,856       $1,367,856
 Building and improvements, less accumulated depreciation of
  $2,991,452 in 1999 and $2,623,785 in 1998                                  4,779,666        5,147,333
                                                                           -----------       ----------
       Total real estate assets                                              6,147,522        6,515,189

CASH AND CASH EQUIVALENTS                                                      193,979          116,860

ACCOUNTS RECEIVABLE                                                              2,149           23,184

PREPAID EXPENSES AND OTHER ASSETS                                               24,473           42,828
                                                                           -----------       ----------
       Total assets                                                         $6,368,123       $6,698,061
                                                                           ===========       ==========

                       LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
 Distributions payable to partners                                          $  196,127       $  118,125
 Due to affiliate                                                                    0            1,315
                                                                           -----------       ----------
       Total liabilities                                                       196,127          119,440
                                                                           -----------       ----------
COMMITMENTS AND CONTINGENCIES (Note 4)

PARTNERS' CAPITAL:
 Wells Real Estate Fund II                                                   5,859,102        6,244,136
 Wells Real Estate Fund II-OW                                                  312,894          334,485
                                                                           -----------       ----------
       Total partners' capital                                               6,171,996        6,578,621
                                                                           -----------       ----------
       Total liabilities and partners' capital                              $6,368,123       $6,698,061
                                                                           ===========       ==========
</TABLE>



      The accompanying notes are an integral part of these balance sheets.

                                      F-46
<PAGE>

                            THE FIRST UNION PROPERTY

                              STATEMENTS OF INCOME

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                                   1999            1998            1997
                                                                 ---------       ---------       ---------
<S>                                                               <C>             <C>             <C>
REVENUES:
 Rental income                                                    $717,676        $458,867        $458,867
                                                                  --------        --------        --------
EXPENSES:
 Depreciation                                                      367,667         367,667         367,667
 Legal and accounting                                                3,375           4,050           5,600
 Management and leasing fees                                        61,295          45,887          45,887
 Operating costs                                                    13,797          10,878           6,574
 Computer costs                                                        625               0             107
                                                                  --------        --------        --------
                                                                   446,759         428,482         425,835
                                                                  --------        --------        --------
NET INCOME                                                        $270,917        $ 30,385        $ 33,032
                                                                  ========        ========        ========

NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND II                 $256,531        $ 28,772        $ 31,278
                                                                  ========        ========        ========

NET INCOME ALLOCATED TO WELLS REAL ESTATE FUND II-OW              $ 14,386        $  1,613        $  1,754
                                                                  ========        ========        ========
</TABLE>

      The accompanying notes are an integral part of these balance sheets.

                                      F-47
<PAGE>

                           THE FIRST UNION PROPERTY


                        STATEMENTS OF PARTNERS' CAPITAL

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997


                                Wells Real     Wells Real       Total
                                  Estate        Estate        Partners'
                                 Fund II       Fund II-OW      Capital
                                ----------     ----------    -----------

BALANCE, December 31, 1996      $7,040,352     $  379,136    $ 7,419,488

 Net income                         31,278          1,754         33,032
 Distributions                    (413,817)       (23,206)      (437,023)
                                ----------     ----------    -----------
BALANCE, December 31, 1997       6,657,813        357,684      7,015,497

 Net income                         28,772          1,613         30,385
 Distributions                    (442,449)       (24,812)      (467,261)
                                ----------     ----------    -----------
BALANCE, December 31, 1998       6,244,136        334,485      6,578,621

 Net income                        256,531         14,386        270,917
 Distributions                    (641,565)       (35,977)      (677,542)
                                ----------     ----------    -----------
BALANCE, December 31, 1999      $5,859,102     $  312,894    $ 6,171,996
                                ==========     ==========    ===========

       The accompanying notes are an integral part of these statements.

                                      F-48
<PAGE>

                           THE FIRST UNION PROPERTY


                           STATEMENTS OF CASH FLOWS

             FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997




<TABLE>
<CAPTION>
                                                                         1999              1998              1997
                                                                     -----------        ----------        ----------
<S>                                                                 <C>                <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                            $ 270,917         $  30,385         $  33,032
                                                                     -----------        ----------        ----------
 Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation                                                        367,667           367,667           367,667
     Changes in assets and liabilities:
       Accounts receivable                                                21,035            61,024            30,352
       Prepaid expenses and other assets                                  18,355            18,355            18,355
       Due to affiliate                                                   (1,315)           (3,246)           (1,147)
                                                                     -----------        ----------        ----------
         Total adjustments                                               405,742           443,800           415,227
                                                                     -----------        ----------        ----------
         Net cash provided by operating activities                       676,659           474,185           448,259

CASH FLOWS FROM FINANCING ACTIVITIES:
 Distributions paid to partners                                         (599,540)         (460,563)         (433,059)
                                                                     -----------        ----------        ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                 77,119            13,622            15,200

CASH AND CASH EQUIVALENTS, beginning of year                             116,860           103,238            88,038
                                                                     -----------        ----------        ----------
CASH AND CASH EQUIVALENTS, end of year                                 $ 193,979         $ 116,860         $ 103,238
                                                                     ===========        ==========        ==========
</TABLE>

       The accompanying notes are an integral part of these statements.

                                      F-49
<PAGE>

                           THE FIRST UNION PROPERTY



                         NOTES TO FINANCIAL STATEMENTS


                       DECEMBER 31, 1999, 1998, AND 1997

 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Business

     The First Union Property ("First Union") is a two-story office building
     located in Charlotte, North Carolina. The property is owned by Fund II and
     Fund II-OW, a joint venture between Wells Real Estate Fund II ("Fund II")
     and Wells Real Estate Fund II-OW ("Fund II-OW"). Fund II owns 95% of Fund
     II and Fund II-OW and Fund II-OW owns 5% of Fund II and Fund II-OW at
     December 31, 1999 and 1998. Allocation of net income and distributions are
     made in accordance with ownership percentages.

     Use of Estimates

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Income Taxes

     First Union is not deemed to be a taxable entity for federal income tax
     purposes.

     Real Estate Assets

     Real estate assets held by First Union are stated at cost, less accumulated
     depreciation. Major improvements and betterments are capitalized when they
     extend the useful life of the related asset. All repairs and maintenance
     are expensed as incurred.

     Management continually monitors events and changes in circumstances which
     could indicate that carrying amounts of real estate assets may not be
     recoverable. When events or changes in circumstances are present which
     indicate that the carrying amounts of real estate assets may not be
     recoverable, management assesses the recoverability of real estate assets
     by determining whether the carrying value of such real estate assets will
     be recovered through the future cash flows expected from the use of the
     asset and its eventual disposition. Management has determined that there
     has been no impairment in the carrying value of First Union as of December
     31, 1999.

     Depreciation is calculated using the straight-line method over 25 years.

     Revenue Recognition

     The lease on First Union is classified as an operating lease, and the
     related rental income is recognized on a straight-line basis over the term
     of the lease.

                                      F-50
<PAGE>

     Deferred Lease Acquisition Costs

     Costs incurred to procure operating leases are capitalized and amortized on
     a straight-line basis over the terms of the related leases.

     Cash and Cash Equivalents

     For the purposes of the statements of cash flows, First Union considers all
     highly liquid investments purchased with an original maturity of three
     months or less to be cash equivalents. Cash equivalents include cash and
     short-term investments. Short-term investments are stated at cost, which
     approximates fair value, and consist of investments in money market
     accounts.

 2.  RENTAL INCOME

     The future minimum rental income due to First Union under noncancelable
     operating leases at December 31, 1999 is as follows:

           Year ended December 31:
               2000                             $  844,071
               2001                                281,357
                                                ----------
                                                $1,125,428
                                                ==========

     One tenant at First Union contributed 100% of rental income for the year
     ended December 31, 1999 and represents 100% of the future minimum rental
     income above.

 3.  RELATED-PARTY TRANSACTIONS

     Fund II and Fund II-OW entered into a property management agreement with
     Wells Management Company, Inc. ("Wells Management"), an affiliate of Fund
     II and Fund II-OW. In consideration for supervising the management of First
     Union, Fund II and Fund II-OW will generally pay Wells Management
     management and leasing fees equal to (a) 3% of the gross revenues for
     management and 3% of the gross revenues for leasing (aggregate maximum of
     6%) plus a separate fee for the one-time initial lease-up of newly
     constructed properties in an amount not to exceed the fee customarily
     charged in arm's-length transactions by others rendering similar services
     in the same geographic area for similar properties or (b) in the case of
     commercial properties which are leased on a long-term net basis (ten or
     more years), 1% of the gross revenues except for initial leasing fees equal
     to 3% of the gross revenues over the first five years of the lease term.

     First Union incurred management and leasing fees and lease acquisition
     costs of $61,295, $45,887, and $45,887, respectively, for the years ended
     December 31, 1999, 1998, and 1997, respectively, which were paid to Wells
     Management.

 4.  COMMITMENTS AND CONTINGENCIES

     Management, after consultation with legal counsel, is not aware of any
     significant litigation or claims against First Union and its partners. In
     the normal course of business, First Union and its partners may become
     subject to such litigation or claims.

                                      F-51
<PAGE>

                           WELLS REAL ESTATE FUND II

                    (A Georgia Public Limited Partnership)


      SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

                               DECEMBER 31, 1999



<TABLE>
<CAPTION>
                                                                           Initial Cost               Costs of
                                                                     --------------------------
                                                                                  Buildings and      Capitalized
                Description              OWNERSHIP   Encumbrances      Land       Improvements      Improvements
--------------------------------------   ---------   ------------    ----------   -------------     ------------
<S>                                      <C>         <C>             <C>          <C>               <C>
THE CHARLOTTE PROPERTY (a)                  95%          None        $1,282,500    $ 7,267,500       $   588,974

880 PROPERTY (b)                            14           None         1,325,242              0         5,718,159

THE ATRIUM AT NASSAU BAY (c)                58           None         1,367,000     10,983,000         2,484,733

CHEROKEE COMMONS (d)                        52           None         1,142,663      6,462,837         2,847,156

HERITAGE PLACE AT TUCKER (e)                43           None         2,756,378              0         9,745,429

880 PROPERTY--BROOKWOOD GRILL (f)           59           None           523,319              0         1,494,717
                                                                     ----------    -----------       -----------
       Total                                                         $8,397,102    $24,713,337       $22,879,168
                                                                     ==========    ===========       ===========

<CAPTION>
                                            Gross Amount at Which Carried at December 31, 1999
                                          ------------------------------------------------------
                                                       Buildings and   Construction                Accumulated       Date of
                Description                  Land      Improvements    in Progress       Total    Depreciation     Construction
--------------------------------------    ----------   -------------   ------------  -----------  ------------     ------------
<S>                                       <C>          <C>             <C>           <C>          <C>              <C>
THE CHARLOTTE PROPERTY (a)                $1,367,856    $ 7,771,118       $     0    $ 9,138,974   $ 2,991,452          1987

880 PROPERTY (b)                           1,325,242      5,718,159             0      7,043,401     1,299,227          1996

THE ATRIUM AT NASSAU BAY (c)               1,504,743     13,306,590        23,400     14,834,733     6,236,248          1988

CHEROKEE COMMONS (d)                       1,219,704      9,232,952             0     10,452,656     3,165,778          1986

HERITAGE PLACE AT TUCKER (e)               3,260,887      9,240,920             0     12,501,807     3,405,038          1987

880 PROPERTY--BROOKWOOD GRILL (f)            745,223      1,272,813             0      2,018,036       383,745          1991
                                          ----------    -----------       -------    -----------   -----------
       Total                              $9,423,655    $46,542,552       $23,400    $55,989,607   $17,481,488
                                          ==========    ===========       =======    ===========   ===========

<CAPTION>
                                                        Life on Which
                                            Date       Depreciation Is
                Description               Acquired       Computed (g)
--------------------------------------    --------     ---------------
<S>                                       <C>          <C>
THE CHARLOTTE PROPERTY (a)                 5/09/89     20 to 25 years

880 PROPERTY (b)                           1/31/90     20 to 25 years

THE ATRIUM AT NASSAU BAY (c)               4/03/89     12 to 25 years

CHEROKEE COMMONS (d)                       6/09/87     20 to 25 years

HERITAGE PLACE AT TUCKER (e)               9/04/86     20 to 25 years

880 PROPERTY--BROOKWOOD GRILL (f)          3/27/91     20 to 25 years
       Total
</TABLE>

               (a) The Charlotte Property is a two-story office building located
                   in Charlotte, North Carolina. It is owned by Fund II and II-
                   OW. The Partnership owned a 95% interest in Fund II and II-OW
                   at December 31, 1999.
               (b) The 880 Property is an office-retail shopping center located
                   in Roswell, Georgia. It is owned by Fund II, III, VI, and VII
                   Associates.
               (c) The Atrium at Nassau Bay is a four-story office building
                   located in Houston, Texas. It is owned by Fund II and III
                   Associates--The Atrium.
               (d) Cherokee Commons is a retail shopping center located in
                   Cherokee County, Georgia. It is owned by Fund I, II, II-OW,
                   VI, and VII Associates--Cherokee.
               (e) Heritage Place at Tucker is a center offering retail,
                   shopping, and commercial office space located in Tucker,
                   Georgia. It is owned by Fund I and II--Tucker.
               (f) The 880 Property--Brookwood Grill is a 7,440-square-foot
                   restaurant located in Fulton County, Georgia. It is owned by
                   Fund II and III Associates.
               (g) Depreciation lives used for buildings were 40 years through
                   September 1995, changed to 25 years thereafter. Depreciation
                   lives used for land improvements are 12 to 20 years.

                                      S-1
<PAGE>

                           WELLS REAL ESTATE FUND II

                    (A Georgia Public Limited Partnership)


      SCHEDULE III--REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION

                               DECEMBER 31, 1999


<TABLE>
<CAPTION>
                                                               Accumulated
                                                    Cost      Depreciation
                                                -----------   ------------
<S>                                             <C>           <C>
BALANCE AT DECEMBER 31, 1996                    $53,875,834    $10,058,938

   1997 additions                                 1,989,779      2,404,063
   1997 deductions                                 (382,775)      (109,508)
                                                -----------   ------------
BALANCE AT DECEMBER 31, 1997                     55,482,838     12,353,493

   1998 additions                                   254,357      2,549,499
                                                -----------   ------------
BALANCE AT DECEMBER 31, 1998                     55,737,195     14,902,992

   1999 additions                                   252,412      2,578,496
                                                -----------   ------------
BALANCE AT DECEMBER 31, 1999                    $55,989,607    $17,481,488
                                                ===========   ============
</TABLE>

                                      S-2
<PAGE>

                                 EXHIBIT INDEX
                                 -------------

                          (Wells Real Estate Fund II)

  The following documents are filed as exhibits to this report.  Those exhibits
previously filed and incorporated herein by reference are identified below by an
asterisk.  For each such asterisked exhibit, there is shown below the
description of the previous filing.  Exhibits which are not required for this
report are omitted.

<TABLE>
<CAPTION>
Exhibit                                                 Sequential
Number     Description of Document                      Page Number
---------  -----------------------                      -----------
<S>        <C>                                          <C>

*4         First Restated and Amended Certificate         N/A
           and Agreement of Limited Partnership of
           Wells Real Estate Fund II (Registration
           Statement of Wells Real Estate Fund II,
           Exhibit B to the Prospectus, File No.
           33-7395)

*10(a)     Management Agreement between Registrant        N/A
           and Wells Management Company, Inc. (Exhibit
           to Form 10-K of Wells Real Estate Fund II
           for the fiscal year ended December 31, 1990,
           File No. 0-16518)

*10(b)     Leasing and Tenant Coordination Agreement      N/A
           between Registrant and Wells Management
           Company, Inc. (Exhibit to Form 10-K of
           Wells Real Estate Fund II for the fiscal
           year ended December 31, 1990, File No.
           0-16518)

*10(c)     Purchase Agreement for the acquisition         N/A
           of Heritage Place at Tucker dated
           April 25, 1986 (Exhibit 10(f) to Form 10-K
           of Wells Real Estate Fund I for the
           fiscal year ended December 31, 1990,
           File No. 0-14463)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit                                                Sequential
Number    Description of Document                      Page Number
--------- -----------------------                      -----------
<S>        <C>                                          <C>

*10(d)    Joint Venture Agreement of Fund I and            N/A
          Fund II Tucker dated January 9, 1987
          (Exhibit 10(g) to Form 10-K of Wells Real
          Estate Fund I for the fiscal year ended
          December 31, 1990, File No. 0-14463)

*10(e)    Purchase Agreement for the acquisition           N/A
          of the Cherokee Commons Shopping Center
          dated December 31, 1986 (Exhibit 10(h) to
          Form 10-K of Wells Real Estate Fund I
          for the fiscal year ended December 31,
          1990, File No. 0-14463)

*10(f)    Joint Venture Agreement of Fund I and            N/A
          Fund II Cherokee dated June 27, 1987
          (Exhibit 10(i) to Form 10-K of Wells Real
          Estate Fund I for the fiscal year ended
          December 31, 1990, File No. 0-14463)

*10(g)    Fund II - Fund II-OW Joint Venture               N/A
          Agreement dated March 1, 1988 (Exhibit to
          Form 10-K of Wells Real Estate Fund II for
          the fiscal year ended December 31, 1990,
          File No. 0-16518)

*10(h)    Lease with IBM dated March 17, 1987              N/A
          (Exhibit to Form 10-K of Wells Real
          Estate Fund II for the fiscal year ended
          December 31, 1990, File No. 0-16518)

*10(i)    Purchase Agreement for the Acquisition           N/A
          of the Atrium at Nassau Bay dated
          March 1, 1989 (Exhibit to Form 10-K of
          Wells Real Estate Fund II for the fiscal
          year ended December 31, 1990, File
          No. 0-16518)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit                                                Sequential
Number    Description of Document                      Page Number
--------- -----------------------                      -----------
<S>       <C>                                          <C>

*10(j)    Joint Venture Agreement of Fund II and              N/A
          Fund III Associates dated March 1, 1989
          (Exhibit to Post-Effective Amendment
          No. 2 to Registration Statement of
          Wells Real Estate Fund III, L.P.,
          File No. 33-24063)

*10(k)    First Amendment to Joint Venture Agreement          N/A
          of Fund II and Fund III Associates dated
          April 1, 1989 (Exhibit to Form 10-K of
          Wells Real Estate Fund II for the fiscal
          year ended December 31, 1990, File
          No. 0-16518)

*10(l)    Leases with Lockheed Engineering and                N/A
          Sciences Company, Inc. (Exhibit to Form
          10-K of Wells Real Estate Fund II for
          the fiscal year ended December 31, 1990,
          File No. 0-16518)

*10(m)    Cost Sharing Agreement between Registrant,          N/A
          Wells Fund II-OW and the Fund II - Fund
          II-OW Joint Venture dated January 1,
          1990 (Exhibit to Form 10-K of Wells Real
          Estate Fund II for the fiscal year ended
          December 31, 1990, File No. 0-16518)

*10(n)    Amended and Restated Joint Venture Agreement        N/A
          of Fund I and Fund II Tucker-Cherokee dated
          January 1, 1991 (Exhibit 10(j) to Form 10-K
          of Wells Real Estate Fund I for the fiscal
          year ended December 31, 1991, File No. 0-14463)

*10(o)    Amended and Restated Joint Venture Agreement        N/A
          of Fund II and Fund III Associates (Exhibit
          to Form 10-K of Wells Real Estate Fund II
          for the fiscal year ended December 31, 1991,
          File No. 0-16518)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit                                                     Sequential
Number    Description of Document                           Page Number
--------- -----------------------                           -----------
<S>       <C>                                               <C>
*10(p)    Land and Building Lease Agreement between              N/A
          Fund II and Fund II-OW and Brookwood Grill
          of Roswell, Inc. (Exhibit to Form 10-K of
          Wells Real Estate Fund II for the fiscal
          year ended December 31, 1991, File No. 0-16518)

*10(q)    Assignment and Assumption of Lease dated               N/A
          September 20, 1991 between Fund II and Fund
          II-OW and Fund II and Fund III Associates
          (Exhibit to Form 10-K of Wells Real Estate
          Fund II for the fiscal year ended December 31,
          1991, File No. 0-16518)

*10(r)    Lease Modification Agreement No. 3 with                N/A
          The Kroger Co. dated December 21, 1993
          (Exhibit 10(k) to Form 10-K of Wells
          Real Estate Fund I for the fiscal year
          ended December 31, 1993, File No. 0-14463)

*10(s)    Lease Agreement with First Union National              N/A
          Bank of N.C. dated March 31, 1994, and
          First Amendment to Lease Agreement dated
          April 14, 1994 (Exhibit to Form 10-K of
          Wells Real Estate Fund II for the fiscal
          year ended December 31, 1994, File
          No. 0-16518)

*10(t)    Joint Venture Agreement of Fund II, III,               N/A
          VI and VII Associates dated January 10,
          1995 (Exhibit to Form 10-K of Wells Real
          Estate Fund VI, L.P. for the fiscal year
          ended December 31, 1995, File No. 0-23656)

*10(u)    Joint Venture Agreement of Fund I, II,                 N/A
          II-OW, VI and VII Associates dated
          August 1, 1995 (Exhibit to Form 10-K of
          Wells Real Estate Fund VI, L.P. for the
          fiscal year ended December 31, 1995,
          File No. 0-23656)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit                                                Sequential
Number    Description of Document                      Page Number
--------- -----------------------                      -----------
<S>       <C>                                          <C>
*10(v)    First Amendment to Amended and Restated           N/A
          Joint Venture Agreement of Fund I and
          Fund II Tucker (formerly Fund I and
          Fund II Tucker-Cherokee) dated August 1,
          1995 (Exhibit 10(m) to Form 10-K of
          Wells Real Estate Fund I for the fiscal
          year ended December 31, 1995, File
          No. 0-14463)

*10(w)    Custodial Agency Agreement between Wells          N/A
          Real Estate Fund II and NationsBank of
          Georgia, N.A. dated January 10, 1995
          (Exhibit to Form 10-K of Wells Real
          Estate Fund II for the fiscal year ended
          December 31, 1995, File No. 0-16518)

*10(x)    Amended and Restated Custodial Agency             N/A
          Agreement between Wells Real Estate
          Fund II and NationsBank of Georgia, N.A.
          dated August 1, 1995 (Exhibit to Form
          10-K of Wells Real Estate Fund II for
          the fiscal year ended December 31, 1995,
          File No. 0-16518)

</TABLE>