<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, 2000                 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                             0-25731

                        Wells Real Estate Fund XI, L.P.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                         <C>
                    Georgia                                                   58-2250094
--------------------------------------------------          ------------------------------------------------
(State or other jurisdiction of incorporation or                (I.R.S. Employer Identification Number)
organization)

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

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

          Title of each class                                     Name of exchange on which registered
---------------------------------------------------         ------------------------------------------------
                  NONE                                                           NONE
---------------------------------------------------         ------------------------------------------------
</TABLE>

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 XI, L.P. (the "Partnership") is a Georgia public limited
partnership having Leo F. Wells, III and Wells Partners, L.P., a Georgia
non-public limited partnership, as General Partners. The Partnership was formed
on June 20, 1996, for the purpose of acquiring, developing, constructing,
owning, operating, improving, leasing and otherwise managing for investment
purposes income-producing commercial or industrial properties.

On December 31, 1997, the Partnership commenced a public offering of up to
$35,000,000 of limited partnership units ($10 per unit) pursuant to a
registration statement on Form S-11 filed under the Securities Act of 1933. The
Partnership commenced active operations on March 3, 1998, when it received and
accepted subscriptions for 125,000 units. The offering was terminated on
December 31, 1998 at which time the Partnership had sold 1,314,906 Class A
status units and 338,374 Class B status units held by a total of 1,250 and 95
Class A and B limited partners, respectively, for total limited partner capital
contributions of $16,532,802. As of December 31, 2000, the Partnership has paid
$578,648 in acquisition and advisory fees and acquisition expenses, $2,066,600
in selling commissions and organization and offering expenses, and invested
$3,357,436 in the Fund IX-X-XI-REIT Joint Venture, $2,398,767 in Fund X-XI Joint
Venture, and $8,131,351 in the Fund XI-XII-REIT Joint Venture.

Employees

The Partnership has no direct employees. The employees of Wells Capital, Inc., a
General Partner of Wells Partners, L.P., perform a full range of real estate
services including leasing and property management, accounting, asset management
and investor relations for the Partnership.

Insurance

Wells Management Company, Inc., an affiliate of the General Partners, carries
comprehensive liability and extended coverage with respect to all the properties
owned directly or indirectly by the Partnership. In the opinion of management,
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 interests in properties through equity ownership in the
following joint ventures: (i) Fund X and Fund XI Joint Venture, a joint venture
between the Partnership and Wells Real Estate

                                      -2-
<PAGE>

Fund X, L.P. (the "Fund X-XI Joint Venture"); (ii) the Fund IX-X-XI-REIT Joint
Venture, a joint venture among the Partnership, Wells Real Estate Fund IX, L.P.
("Wells Fund IX"), Wells Real Estate Fund X, L.P. ("Wells Fund X"), and Wells
Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership having
Wells Real Estate Investment Trust, Inc., as general partner (the "Fund IX-X-XI-
REIT Joint Venture"); and (iii) the Fund XI-XII-REIT Joint Venture, a joint
venture among the Partnership and Wells Real Estate Fund XII, L.P., and Wells OP
(the "Fund XI-XII REIT Joint Venture").

As of December 31, 2000, the Partnership owned interests in the following
properties through its ownership of the foregoing joint ventures: (i) a
three-story office building in Knoxville, Tennessee (the "Alstom Power
Building"), formerly the ABB Building, which is owned by the Fund IX-X-XI-REIT
Joint Venture; (ii) a two-story office building in Boulder County, Colorado (the
"Ohmeda Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture; (iii)
a three-story office building located in Broomfield, Colorado (the "360
Interlocken Building"), which is owned by the Fund IX-X-XI-REIT Joint Venture;
(iv) a one-story office building located in Oklahoma City, Oklahoma (the "Avaya
Building"), formerly the Lucent Technologies Building, which is owned by the
Fund IX-X-XI-REIT Joint Venture; (v) a single-story warehouse and office
building located in Ogden, Weber County, Utah (the "Iomega Building"), which is
owned by the Fund IX-X-XI-REIT Joint Venture; (vi) a two-story office building
located in Fremont, California (the "Fairchild Building"), which is owned by
Wells/Fremont Associates (the "Fremont Joint Venture"), a joint venture between
the Fund X-XI Joint Venture and Wells OP; (vii) a one-story office and warehouse
building located in Fountain Valley, California (the "Cort Building"), which is
owned by Wells/Orange County Associates (the "Cort Joint Venture"), a joint
venture between the Fund X-XI Joint Venture and Wells OP; (viii) a two-story
manufacturing and office building located in Fountain Inn, South Carolina (the
"EYBL CarTex Building"), which is owned by Fund XI-XII-REIT Joint Venture; (ix)
a three-story office building located in Leawood, Johnson County, Kansas (the
"Sprint Building"), which is owned by Fund XI-XII-REIT Joint Venture; (x) a
one-story office building and warehouse located in Tredyffin Township, Chester
County, Pennsylvania (the "Johnson Matthey Building"), which is owned by Fund
XI-XII-REIT Joint Venture; and (xi) a two-story office building located in Ft.
Myers, Lee County, Florida (the "Gartner Building"), which is owned by Fund
XI-XII-REIT Joint Venture.

The following table shows lease expirations during each of the next ten years as
of December 31, 2000, assuming no exercise of renewal options or termination
rights:


<TABLE>
<CAPTION>
                                                                    Partnership       Percentage
                    Number                                           Share of         of Total        Percentage
    Year of           Of           Square        Annualized         Annualized         Square          of Total
     Lease          Leases          Feet         Gross Base         Gross Base          Feet          Annualized
  Expiration       Expiring       Expiring        Rent (1)           Rent (1)         Expiring         Base Rent
--------------  -------------   ------------   --------------     --------------    -----------      -------------
<S>             <C>             <C>            <C>                <C>               <C>             <C>
     2001             0                  0       $        0         $        0           0.0%             0.0%
     2002             5             33,610          174,909             15,464           3.5              2.5
     2003(2)          2             69,146        1,003,330            205,319           7.3             14.3
     2004(3)          1             58,424          902,946             87,586           6.2             12.9
     2005(4)          1            106,750           83,710              7,401          11.2              1.2
     2006             0                  0                0                  0           0.0              0.0
     2007(5)          3            283,304        3,055,965            623,527          29.9             43.7
     2008(6)          3            289,096        1,599,096            410,387          30.5             22.8
     2009(7)          1            108,250          179,986             15,913          11.4              2.6
                -----------     ------------   --------------     --------------    -----------     ------------
                     16            948,580       $6,999,942         $1,365,597         100.0%           100.0%
                ===========     ============   ==============     ==============    ===========     ============
</TABLE>

              (1)  Average monthly gross rent over the life of the lease,
                   annualized.

                                      -3-
<PAGE>

              (2)  Expiration of Cort Furniture lease, Fountain Valley,
                   California and ODS Technologies lease, Broomfield, Colorado.

              (3)  Expiration of Fairchild lease, Fremont, California

              (4)  Expiration of Ohmeda lease, Louisville, Colorado

              (5)  Expiration of Alstom Power lease, Knoxville, Tennessee;
                   Sprint lease, Leawood, Kansas; and the Johnson Matthey lease,
                   Chester County, Pennsylvania

              (6)  Expiration of Avaya lease, Oklahoma City, Oklahoma; Gartner
                   lease, Ft. Myers, Florida; and EYBL CarTex lease, Fountain
                   Inn, South Carolina

              (7)  Expiration of Iomega lease, Ogden, Utah

The following describes the properties in which the Partnership owns an interest
as of December 31, 2000

         Fund IX-X-XI-REIT Joint Venture

         On June 11, 1998, Fund IX and Fund X Associates (the "Joint Venture"),
         a joint venture between Wells Real Estate Fund IX and Wells Real Estate
         Fund X, L.P. ("Wells Fund IX-X"), a Georgia public limited partnership,
         was amended and restated to admit the Partnership, a Georgia public
         limited partnership, and Wells Operating Partnership, L.P. ("Wells OP),
         a Delaware limited partnership having Wells Real Estate Investment
         Trust, Inc. (the "Wells REIT"), a Maryland corporation, as its General
         Partner. Wells Fund IX, Wells Fund X, Wells OP and the Wells REIT are
         all affiliates of the Partnership and its General Partners.

         The Joint Venture, which changed its name to the Fund IX-X-XI-REIT
         Joint Venture, had previously acquired and owned the following three
         properties: (i) the Alstom Power Building located in Knoxville, Knox
         County, Tennessee, (ii) the Ohmeda Building located in Louisville,
         Boulder County, Colorado, and (iii) the 360 Interlocken Building
         located in Broomfield, Boulder County, Colorado. On June 24, 1998, the
         Fund IX-X-XI-REIT Joint Venture purchased the Avaya Building located in
         Oklahoma City, Oklahoma County, Oklahoma. On July 1, 1998, Wells Fund X
         contributed the Iomega Building located in Ogden, Weber County, Utah to
         the Fund IX-X-XI-REIT Joint Venture.

         As of December 31, 2000, the Parntership had contributed $3,357,436 and
         held an approximate 8.9% equity interest in the Fund IX-X-XI-REIT Joint
         Venture. As of December 31, 2000, Wells Fund IX had an approximate
         39.1% equity interest, Wells Fund X had an approximate 48.3% equity
         interest, and Wells OP had an approximate 3.7% equity interest in the
         Fund IX-X-XI-REIT Joint Venture.

         The Alstom Power Building

         On March 20, 1997, the Fund IX-X Joint Venture began construction on a
         three-story office building containing approximately 84,404 rentable
         square feet (the "Alstom Power Building") on a 5.62 acre tract of real
         property in Knoxville, Knox County, Tennessee. The land purchase and
         construction costs totaling approximately $8,137,994 were funded by
         capital contributions of $4,221,973 by Wells Fund IX and $3,916,021 by
         Wells Fund X.

                                      -4-
<PAGE>

         Alstom Power, Inc., successor in interest to ABB Environmental Systems,
         a subsidiary of ABB, Inc., occupied its lease space of 56,012 rentable
         square feet comprising approximately 67% of the building in December
         1997. The initial term of the lease is 9 years and 11 months commencing
         in December, 1997. Alstom Power has the option under its lease to
         extend the initial term of the lease for two consecutive five year
         periods. The annual base rent payable during the initial term is
         $646,250 payable in equal monthly installments of $53,854 during the
         first five years and $728,750 payable in equal monthly installments of
         $60,729 during the last four years and 11 months of the initial term.
         The annual base rent for each extended term will be at market rental
         rates. In addition to the base rent, Alstom Power is required to pay
         additional rent equal to its share of operating expenses during the
         lease term.

         Commencing December 1, 1999, Alstom Power Environmental exercised its
         right of first refusal to lease an additional 23,992 square feet of
         space vacated by the Associates in September 1999. This addition
         increases their rentable floor area from 57,831 square feet to 81,823
         square feet. On May 19, 2000, Alstom Power, Inc. executed the third
         amendment to the lease agreement for the remaining 2,581 square feet of
         rentable floor area on the second floor of the building. Accordingly,
         Alstom Power now occupies 100% of the building and will pay base rent
         at the same terms and conditions of their original lease.

         The average effective annual rental per square foot at the Alstom Power
         Building was $14.05 for 2000, $11.82 for 1999, $9.97 for 1998, and
         $8.16 for 1997, respectively, the first year of occupancy. The
         occupancy rate at year end was 100% for 2000, 98% for 1999, and 95% for
         1998.

         Ohmeda Building

         On February 13, 1998, the Fund IX-X Joint Venture acquired a two story
         office building that was completed in 1988 with approximately 106,750
         rentable square feet (the "Ohmeda Building") on a 15-acre tract of land
         located in Louisville, Boulder County, Colorado. The purchase price for
         the Ohmeda Building was $10,325,000. The Fund IX-X Joint Venture also
         incurred additional acquisition expenses in connection with the
         purchase of the Ohmeda Building, including attorneys' fees, recording
         fees, and other closing costs. As of December 31, 2000, Wells Fund IX
         had contributed $3,460,192 and Wells Fund X had contributed $6,900,878
         towards the purchase of this building.

         The entire 106,750 rentable square feet of the Ohmeda Building is
         currently under a net lease dated February 26, 1987, as amended by
         First Amendment to Lease dated December 3, 1987, as amended by Second
         Amendment to Lease dated October 20, 1997 (the "Lease") with Ohmeda,
         Inc., a Delaware corporation. The lease was assigned to the Joint
         Venture at the closing. The lease currently expires in January 2005,
         subject to (i) Ohmeda's right to effectuate an early termination of the
         lease under the terms and conditions described below, and (ii) Ohmeda's
         right to extend the lease for two additional five year periods of time
         at the then current market rental rates.

         The monthly base rental payable under the lease is $83,709.79 through
         January 31, 2003; $87,890.83 from February 1, 2003 through January 31,
         2004; and $92,249.79 from February 1, 2004 through January 31, 2005.
         Under the lease, Ohmeda is responsible for all utilities, taxes,
         insurance, and other operating costs with respect to the Ohmeda
         Building during the term of the lease. In addition, Ohmeda shall pay a
         $21,000 per year management fee for maintenance and administrative
         services of the Ohmeda Building. The Fund IX-X-XI-REIT Joint Venture,
         as landlord, is responsible for maintenance of the roof, exterior and
         structural walls, foundation,

                                      -5-
<PAGE>

         other structural members and floor slab, provided that the landlord's
         obligation to make repairs specifically excludes items of cosmetic and
         routine maintenance such as the painting of walls.

         The average effective annual rental per square foot at the Ohmeda
         Building was $9.62 for 2000, 1999, and 1998, the first year of
         occupancy. The occupancy rate at year end was 100% for 2000, 1999, and
         1998.

         360 Interlocken Building

         On March 20, 1998 the Fund IX-X Joint Venture acquired a three-story
         multi-tenant office building containing approximately 51,974 rentable
         square feet (the "360 Interlocken Building") on a 5.1 acre tract of
         land in Broomfield, Boulder County, Colorado for a purchase price of
         $8,275,000 excluding acquisition costs. The project was funded by
         capital contributions of $6,642,466 by Wells Fund IX and $1,674,271 by
         Wells Fund X.

         The 360 Interlocken Building was completed in December 1996. The first
         floor has multiple tenants and contain 15,599 rentable square feet; the
         second floor is leased to ODS Technologies, L.P. and contains 17,146
         rentable square feet; and the third floor is leased to Transecon, Inc.
         and contains 19,229 rentable square feet.

         As stated, the entire third floor of the Interlocken building
         containing 19,229 rentable square feet is currently under lease to
         Transecon and expires in October 2001, subject to Transecon's right to
         extend for one additional term of five years upon 180 days' notice. The
         monthly lease rent payable under the Transecon lease is approximately
         $24,000 for the initial term of the lease. Under the lease Transecon is
         responsible for its share of utilities, taxes, insurance, and other
         operating expenses with respect to the Interlocken Building. In
         addition, Transecon has a right of first floor space proposed to be
         leased by the landlord.

         The entire second floor of the Interlocken building containing 17,146
         rentable square feet is currently under lease to ODS and expires in
         September 2003, subject to ODS's right to extend for one additional
         term of three years. The monthly base rent payable under the ODS lease
         is $22,100 through January 1998; $22,150 through January 1999; $22,600
         through January 2000; $23,100 through January 2001; $23,550 through
         January 2002; $24,050 through January 2003, and $245,550 through
         September 2003. The rental payments to be made by the tenant under the
         ODS lease are also secured by the assignment of a $275,000 letter of
         credit which may be drawn upon by the landlord in the event of a tenant
         default under the lease. Under the lease, ODS is responsible for its
         share of utilities, taxes, insurance, and other operating costs with
         respect to the Interlocken building.

         The average effective annual rental per square foot at the 360
         Interlocken Building was $16.23 for 2000, $15.97 for 1999 and 1998, the
         first year of occupancy. The occupancy rate at year end was 100% for
         2000, 1999, and 1998.

         Avaya Building (formerly Lucent Technologies Building)

         On May 30, 1997, the Fund IX-X Joint Venture entered into an agreement
         for the purchase and sale of real property with Wells Development
         Corporation ("Wells Development"), an affiliate of the General
         Partners, for the acquisition and development of a one-story office
         building containing 57,186 net rentable square feet on 5.3 acres of
         land (the "Avaya Building"). On June 24, 1998, the Fund IX-X Joint
         Venture purchased this property for a purchase price of $5,504,276. The
         purchase price was funded by capital contributions of $2,482,810 by the

                                      -6-
<PAGE>

         Partnership, $657,804 by Wells Fund IX, $950,392 by Wells Fund X, and
         $1,421,466 by Wells OP.

         Avaya, a world-wide leader in telecommunications technology producing a
         variety of communication products, has occupied the entire Avaya
         Building. The initial term of the lease is ten years commencing January
         5, 1998. Avaya has the option to extend the initial term of the lease
         for two additional five year periods. The annual base rent payable
         during the initial term is $508,383 payable in equal monthly
         installments of $42,365 during the first five years and $594,152
         payable in equal monthly installments of $49,513 during the second five
         years of the lease term. The annual base rent for each extendable term
         will be at market rental rates. In addition to the base rent, Avaya
         will be required to pay additional rent equal to its share of operating
         expenses during the lease term.

         The average effective annual rental per square foot at the Avaya
         Building was $10.19 for 2000, 1999, and 1998, the first year of
         occupancy. The occupancy rate at year-end was 100% for 2000, 1999, and
         1998.

         Iomega Building

         On July 1, 1998, Fund X contributed a single story warehouse and office
         building with 108,250 rentable square feet (the "Iomega Building") and
         was credited with making a capital contribution to the IX-X-XI-REIT
         Joint Venture in the amount of $5,050,425, which represents the
         purchase price of $5,025,000 plus acquisition expenses of $25,425
         originally paid by Fund X for the Iomega Building on April 1, 1998.

         The building is 100% occupied by one tenant with a ten year lease term
         that expires on July 31, 2006. The monthly base rent payable under the
         lease is $40,000 through November 12, 1999. Beginning on the 40th and
         80th months of the lease term, the monthly base rent payable under the
         lease will be increased to reflect an amount equal to 100% of the
         increase in the Consumer Price Index (as defined in the lease) during
         the preceding 40 months; provided however, that in no event shall the
         base rent be increased with respect to any one year by more than 6% or
         by less than 3% per annum, compounded annually, on a cumulative basis
         from the beginning of the lease term. The lease is a triple net lease,
         whereby the terms require the tenant to reimburse the IX-X-XI-REIT
         Joint Venture for certain operating expenses, as defined in the lease,
         related to the building.

         On March 22, 1999, the Fund IX-X-XI-REIT Joint Venture purchased a
         four-acre tract of vacant land adjacent to the Iomega Building located
         in Ogden, Utah. This site is intended to be additional parking and a
         loading-dock area, and will include at least 400 new parking stalls and
         new site work for truck maneuver space, in accordance with the
         requirements of the tenants and the city of Ogden. The project was
         completed on July 31, 1999. The tenant, Iomega Corporation, has agreed
         to extend the term of its lease to April 30, 2009 and will pay an
         additional base rent, an amount equal to 13% per annum payable in
         monthly installments of the direct and indirect cost of acquiring the
         property and construction of improvements. This additional base rent
         commenced on May 1, 1999.

         The land was purchased at a cost of $212,000, excluding acquisition
         costs. The funds used to acquire the land and for the improvements are
         funded entirely out of capital contributions made by Wells Real Estate
         Fund XI, L.P. to the Fund IX-X-XI-REIT Joint Venture in the amount of
         $874,625. The project was completed at a total cost of $874,625.

                                      -7-
<PAGE>

         The average effective annual rental per square foot at the Iomega
         Building was $5.18 for 2000 and 1999, and $4.60 for 1998, the first
         year of occupancy. The occupancy rate at year end was 100% for 2000,
         1999, and 1998.

         Fund X-XI Joint Venture

         On July 17, 1998 the Partnership and Wells Real Estate Fund X, L.P.
         ("Wells Fund X"), a Georgia public limited partnership, affiliated with
         the Partnership through common general partners, formed a joint venture
         known as Fund X and Fund XI Associates (the "Fund X-XI Joint Venture").
         The investment objectives of Wells Fund X are substantially identical
         to those of the Partnership. As of December 31, 2000, the Partnership
         had contributed $2,398,767 and Wells Fund X had contributed $3,296,233
         for total contributions of $5,695,000 to the Fund X-Fund XI Joint
         Venture. At this time, the Partnership's equity interest in the Fund
         X-Fund XI Joint Venture is approximately 42% and Wells Fund X's equity
         interest in the Fund X-Fund XI Joint Venture is approximately 58%.

         Wells/Fremont Joint Venture - Fairchild Building

         On July 15, 1998, Wells OP entered into a joint venture agreement known
         as Wells/Fremont Associates ("Fremont Joint Venture") with Wells
         Development Corporation, a Georgia Corporation ("Wells Development").
         Wells Development is an affiliate of the Partnership and its General
         Partners. On July 21, 1998, the Fremont Joint Venture acquired the
         Fairchild Building, a 58,424 square-foot warehouse and office building
         located in Fremont, California (the "Fairchild Building"), for a
         purchase price of $8,900,000 plus acquisition expenses of approximately
         $60,000. The Partnership contributed $1,000,000, Wells Fund X
         contributed $1,000,000, and Wells OP contributed $6,900,000 towards the
         purchase of this building.

         The Fairchild Building is 100% occupied by one tenant with a seven-year
         lease term that commenced on December 1, 1997 (with an early possession
         date of October 1, 1997) and expires on November 30, 2004. The monthly
         base rent payable under the lease is $68,128 with a 3% increase on each
         anniversary of the commencement date. The lease is a triple net lease,
         whereby the terms require the tenant to reimburse the landlord for
         certain operating expenses, as defined in the lease, related to the
         building.

         On July 17,1998 a joint venture between the Partnership and Wells Fund
         X (the "Fund X-XI Joint Venture") entered into an agreement for the
         purchase and sale of Wells Development's interest in the Fremont Joint
         Venture.

         On October 8, 1998, the Fund X-XI Joint Venture exercised its rights
         under the Fremont Joint Venture Contract and purchased Wells
         Development's interest in the Fremont Joint Venture and became a joint
         venture partner with Wells OP in the ownership of the Fairchild
         Building.

         As of December 31, 2000, Wells OP had contributed $6,983,110 and held
         an approximate 78% equity percentage interest in the Fremont Joint
         Venture, and Fund X-XI Joint Venture had contributed $2,000,000 and
         held an approximate 22% equity percentage interest in the Fremont Joint
         Venture.

         The average effective annual rental per square foot at the Fairchild
         Building was $15.46 for 2000, 1999, and 1998, the first year of
         occupancy. The occupancy rate at year end was 100% for 2000, 1999, and
         1998.

                                      -8-
<PAGE>

         Wells/Orange County Joint Venture

         In July 1998, Wells OP entered into a joint venture agreement known as
         Wells/Orange County Associates ("Cort Joint Venture") with Wells
         Development Corporation. On July 31, 1998, the Cort Joint Venture
         acquired the Cort Building for a purchase price of $6,400,000 plus
         acquisition expenses of approximately $150,000. The Partnership
         contributed $1,398,767, Wells Fund X contributed $2,296,233, and Wells
         OP contributed $2,871,430 towards the purchase of this building.

         The Cort Building is a 52,000-square-foot warehouse and office building
         located in Fountain Valley California. The building is 100% occupied by
         one tenant with a 15-year lease term that commenced on November 1, 1988
         and expires on October 31, 2003. The monthly base rent payable under
         the lease is $63,247 through April 30, 2001, at which time the monthly
         base rent will be increased 10% to $69,574 for the remainder of the
         lease term. The lease is a triple net lease, whereby the terms require
         the tenant to reimburse the Cort Joint Venture for certain operating
         expenses, as defined in the lease, related to the building.

         On July 30, 1998, the Fund X-XI Joint Venture entered into an Agreement
         for the Purchase and Sale of Wells Development's interest in the Cort
         Joint Venture. On September 1, 1998, the Fund X-XI Joint Venture
         exercised its rights under the Cort JV Contract and purchased Wells
         Development's interest in the Cort Joint Venture and became a joint
         venture partner with Wells OP in the ownership of the Cort Furniture
         Building.

         As of December 31, 2000, the Wells Operating Partnership had made total
         capital contributions of $2,871,430 and held an approximate 44% equity
         percentage interest in the Cort Joint Venture, and the Fund X-XI Joint
         Venture had contributed $3,695,000 and held an approximate 56% equity
         percentage interest in the Cort Joint Venture.

         The average effective annual rental per square foot at the Cort
         Building was $15.30 for 2000, 1999, and 1998, the first year of
         occupancy. The occupancy rate at year end was 100% for 2000, 1999, and
         1998.

         Fund XI-XII-REIT Joint Venture

         On June 21, 1999, Fund XI-REIT Joint Venture, a joint venture between
         the Partnership and Wells Operating Partnership, L.P. ("Wells OP"), a
         Delaware limited partnership, was amended and restated to admit the
         Wells Real Estate Fund XII L.P. ("Wells Fund XII"), a Georgia public
         limited partnership. Wells Fund XII and Wells OP are all affiliates of
         the Partnership and its general partners. The XI-REIT Joint Venture
         which changed its name to Wells Fund XI-XII-REIT Joint Venture had
         previously acquired and owned the EYBL CarTex Building located in
         Greenville, South Carolina. As of December 31, 2000, the Partnership
         had contributed $8,131,351 for an approximate 26.1% equity interest in
         the Fund XI-XII-REIT Joint Venture, Wells Fund XII had made capital
         contributions of $5,300,000 for an approximate 17.1% equity interest,
         and Wells OP had contributed $17,585,310 for an approximate 56.8%
         interest in the Fund XI-XII-REIT Joint Venture.

         EYBL CarTex Building

         On May 18, 1999, Wells Real Estate, LLC-SC I ("Wells LLC"), a Georgia
         limited liability company wholly owned by the Wells Fund XI-XII-REIT
         Joint Venture, acquired a manufacturing and office building located in
         Fountain Inn, unincorporated Greenville County, South Carolina

                                      -9-
<PAGE>

         (the "EYBL CarTex Building"). Wells LLC purchased the EYBL CarTex
         Building from Liberty Property Limited Partnership, a Pennsylvania
         limited partnership.

         The rights under the Contract were assigned by Wells Capital, Inc., an
         affiliate of the Partnership and the original purchaser under the
         Contract, to Wells LLC at closing. The purchase price for the EYBL
         CarTex Building was $5,085,000. Wells LLC also incurred additional
         acquisitions expenses in connection with the purchase of the EYBL
         CarTex Building including attorney's fees, recording fees, and other
         closing costs, of approximately $37,000. The purchase cost was funded
         by capital contributions of $1,530,000 by the Partnership and
         $3,591,827 by Wells OP.

         The EYBL CarTex Building is a manufacturing and office building
         consisting of a total of 169,510 square feet comprised of approximately
         140,580 square feet of manufacturing space, 25,300 square feet of
         two-story office space and 3,360 square feet of cafeteria/training
         space. An addition was constructed to the EYBL CarTex Building in 1989,
         which consisted of an additional 64,000 square feet of warehouse space.

         The entire 169,510 rentable square feet of the EYBL CarTex Building is
         currently under an Agreement of Lease (the "Lease") with EYBL CarTex,
         Inc., a South Carolina corporation ("EYBL CarTex"). The Lease was
         assigned to Wells LLC at the closing. The initial term of the Lease is
         ten years which commenced on March 1, 1998 and expires in February
         2008. EYBL CarTex has the right to extend the Lease for two additional
         five year periods of time. Each extension option must be exercised by
         giving notice to the landlord at least 12 months prior to the
         expiration date of the then current lease term. The annual lease rent
         payable during the first four years of the lease is $508,530 in equal
         monthly installments of $42,377.50. The annual lease rent for years
         five and six is $550,907.50, year seven and eight is $593,285, and
         years nine and ten is $610,236.

         Under the lease, EYBL CarTex is required to pay as additional rent all
         real estate taxes, special assessments, utilities, taxes, insurance,
         and other operating costs with respect to the EYBL CarTex Building
         during the term of the Lease. In addition, EYBL CarTex is responsible
         for all routine maintenance and repairs to the EYBL CarTex Building.
         Wells LLC, as landlord, is responsible for maintenance of the footings
         and foundations and the structural steel columns and girders associated
         with the building.

         Pursuant to a lease commission agreement dated February 12, 1998
         between the Seller and The McNamara Company, Inc., Wells LLC is
         required to pay on or before March 1 of each year an amount equal to
         $13,787 as a brokerage fee to the McNamara Company, Inc. through March
         1, 2007.

         The average effective annual rental per square foot at the EBYL CarTex
         Building was $3.31 for 2000 and 1999, the first year of occupancy. The
         occupancy rate at year end was 100% for 2000 and 1999.

         The Sprint Building

         On July 2, 1999, the Fund XI-XII-REIT Joint Venture acquired a
         three-story office building with approximately 68,900 rentable square
         feet on a 7.12-acre tract of land located in Leawood, Johnson County,
         Kansas, from Bridge Information Systems America, Inc.

         The purchase price for the Sprint Building was $9,500,000. The Fund
         XI-XII-REIT Joint Venture also incurred additional acquisition expenses
         in connection with the purchase of the

                                      -10-
<PAGE>

         Sprint Building, including attorneys' fees, recording fees, and other
         closing costs, of approximately $46,210. As of December 31, 2000, the
         Partnership had contributed $3,000,000, Wells Fund XII had contributed
         $1,000,000 and Wells OP had contributed $5,500,000 to the purchase of
         this property.

         The entire 68,900 rentable square feet of the Sprint Building is
         currently under a net lease agreement with Sprint Communications, Inc.
         ("Sprint") dated February 14, 1997. The landlord's interest in the
         lease was assigned to the Fund XI-XII-REIT Joint Venture at the
         closing. The initial term of the lease is ten years which commenced on
         May 19, 1997 and expires on May 18, 2007. Sprint has the right to
         extend the lease for two additional five-year periods of time. The
         monthly base rent payable under the lease is $83,254.17 through May 18,
         2002 and $91,866.67 for the remainder of the lease term. The monthly
         base rent payable for each extended term of the lease will be equal to
         95% of the then "current market rate" which is calculated as a
         full-service rental rate less anticipated annual operating expenses on
         a rentable square foot basis charged for space of comparable location,
         size, and conditions in comparable office buildings in the suburban
         south Kansas City, Missouri, and south Johnson County, Kansas areas.

         Under the lease, Sprint is required to pay as additional rent all real
         estate taxes, special assessments, utilities, taxes, insurance, and
         other operating costs with respect to the Sprint Building during the
         term of the Lease. In addition, Sprint is responsible for all routine
         maintenance and repairs including the interior mechanical and
         electrical systems, the HVAC system, the parking lot, and the
         landscaping to the Sprint Building. The Fund XI-XII-REIT Joint Venture,
         as landlord, is responsible for repair and replacement of the exterior,
         roof, foundation, and structure.

         The lease contains a termination option which may be exercised by
         Sprint effective as of May 18, 2004 provided that Sprint has not
         exercised either expansion option, as described below. Sprint must
         provide notice to the Fund XI-XII-REIT Joint Venture of its intent to
         exercise its termination option on or before August 21, 2003. If Sprint
         exercises its termination option, it will be required to pay the Fund
         XI-XII-REIT Joint Venture a termination payment equal to $6.53 per
         square foot, or $450,199.

         Sprint also has an expansion option for an additional 20,000 square
         feet of office space which may be exercised in two expansion phases.
         Sprint's expansion rights involve building on unfinished grounded-level
         space that is currently used as covered parking within the existing
         building footprint and shell. At each exercise of an expansion option,
         the remaining lease term will be extended to be a minimum of an
         additional five years from the date of the completion of such expansion
         space.

         The average effective annual rental per square foot at the Sprint
         Building was $15.44 for 2000 and 1999, the first year of occupancy. The
         occupancy rate at year end was 100% for 2000 and 1999.

         The Johnson Matthey Building

         On August 17, 1999, the Fund XI-XII-REIT Joint Venture acquired a
         research and development office and warehouse building (the "Johnson
         Matthey Building") located in Chester County, Pennsylvania, from
         Alliance Commercial Properties Ltd.

         The purchase price paid for the Johnson Matthey Building was
         $8,000,000. The Fund XI-XII-REIT Joint Venture also incurred additional
         acquisition expenses in connection with the

                                      -11-
<PAGE>

         purchase of the Johnson Matthey Building, including attorneys' fees,
         recording fees, and other closing costs, of approximately $50,000. The
         purchase of the building was funded by capital contributions of
         $3,494,727 by the Partnership, $1,500,000 by Wells Fund XII and
         $3,061,594 by Wells OP.

         The Johnson Matthey Building is a 130,000 square foot research and
         development office and warehouse building that was first constructed in
         1973 as a multi-tenant facility. It was subsequently converted into a
         single-tenant facility in 1998. The site consists of a ten-acre tract
         of land located at 434-436 Devon Park Drive in the Tredyffrin Township,
         Chester County, Pennsylvania.

         The entire 130,000 rentable square feet of the Johnson Matthey Building
         is currently leased to Johnson Matthey. The Johnson Matthey lease was
         assigned to the Fund XI-XII-REIT Joint Venture at the closing with the
         result that the joint venture is now the landlord under the lease. The
         annual base rent payable under the Johnson Matthey lease for the
         remainder of the lease term is as follows: year three--$789,750, year
         four--$809,250, year five--$828,750, year six--$854,750, year
         seven--$874,250, year eight--$897,000, year nine--$916,500, and year
         ten--$939,250. The current lease term expires in June 2007. Johnson
         Matthey has the right to extend the lease for two additional three-year
         periods of time.

         Under the lease, Johnson Matthey is required to pay as additional rent
         all real estate taxes, special assessments, utilities, taxes,
         insurance, and other operating costs with respect to the Johnson
         Matthey Building during the term of the lease. In addition, Johnson
         Matthey is responsible for all routine maintenance and repairs to the
         Johnson Matthey Building. The Fund XI-XII-REIT Joint Venture, as
         landlord, is responsible for maintenance of the footings and
         foundations and the structural steel columns and girders associated
         with the building.

         Johnson Matthey has a right of first refusal to purchase the Johnson
         Matthey Building in the event that the Fund XI-XII-REIT Joint Venture
         desires to sell the building to an unrelated third party. The joint
         venture must give Johnson Matthey written notice of its intent to sell
         the Johnson Matthey Building, and Johnson Matthey will have ten days
         from the date of such notice to provide written notice of its intent to
         purchase the building. If Johnson Matthey exercises its right of first
         refusal, it must purchase the Johnson Matthey Building on the same
         terms contained in the offer.

         The average effective annual rental per square foot at the Johnson
         Matthey Building was $6.67 for 2000 and 1999, the first two years of
         occupancy. The occupancy rate of year end was 100% for 2000 and 1999.

         The Gartner Building

         On September 20, 1999, the Fund XI-XII-REIT Joint Venture acquired a
         two-story office building with approximately 62,400 rentable square
         feet on a 4.9-acre tract of land located at 12600 Gateway Boulevard in
         Fort Myers, Lee County, Florida, from Hogan Triad Ft. Myers I, Ltd., a
         Florida limited partnership.

         The rights under the contract were assigned by Wells Capital, Inc., the
         original purchaser under the contract, to the Fund XI-XII-REIT Joint
         Venture at closing. The purchase price for the Gartner Building was
         $8,320,000. The Fund XI-XII-REIT Joint Venture also incurred additional
         acquisition expenses in connection with the purchase of the Gartner
         Building, including attorneys' fees, recording fees, and other closing
         costs, of approximately $27,600. The purchase

                                      -12-
<PAGE>

         was funded by capital contributions of $106,554 by the Partnership,
         $2,800,000 by Wells Fund XII and $5,441,064 by Wells OP.

         The entire 62,400 rentable square feet of the Gartner Building is
         currently under a net lease agreement with Gartner dated July 30, 1997
         (the "Gartner Lease"). The landlord's interest in the Gartner Lease was
         assigned to the Fund XI-XII-REIT Joint Venture at the closing.

         The initial term of the Gartner Lease is ten years which commenced on
         February 1, 1998 and expires on January 31, 2008. Gartner has the right
         to extend the Gartner Lease for two additional five-year periods of
         time. The yearly base rent payable for the remainder of the Gartner
         Lease term is $642,798 through January 2000, $790,642 through January
         2001, and thereafter will increase by 2.5% through the remainder of the
         Gartner Lease.

         Under the Gartner Lease, Gartner is required to pay as additional rent
         all real estate taxes, special assessments, utilities, taxes,
         insurance, and other operating costs with respect to the Gartner
         Building during the term of the Gartner Lease. In addition, Gartner is
         responsible for all routine maintenance and repairs to the Gartner
         Building. The Fund XI-XII-REIT Joint Venture, as landlord, is
         responsible for repair and replacement of the roof, structure, and
         paved parking areas.

         Gartner also has two expansion options for additional buildings under
         the Gartner Lease. The two option plans are described in the Gartner
         Lease as the "Small Option Building" and the "Large Option Building."

         The "Small Option Building" expansion option allows Gartner the ability
         to expand into a separate, free-standing facility on the property
         containing between 30,000 and 32,000 rentable square feet to be
         constructed by the Fund XI-XII-REIT Joint Venture. Gartner may exercise
         its expansion right for the "Small Option Building" by providing notice
         in writing to the Fund XI-XII-REIT Joint Venture on or before February
         15, 2002.

         The "Large Option Building" expansion option allows Gartner the ability
         to expand into a separate, free-standing facility on the property
         containing between 60,000 and 75,000 rentable square feet to be
         constructed by the Fund XI-XII-REIT Joint Venture. Gartner may exercise
         its expansion right for the Small Option Building" by providing notice
         in writing to the Fund XI-XII-REIT Joint Venture on or before February
         15, 2002.

         The average effective annual rental per square foot at the Gartner
         Building was $13.68 for 2000 and 1999, the first year of occupancy. The
         occupancy rate at year end was 100% for 2000 and 1999.

ITEM 3.   LEGAL PROCEEDINGS

There were no material pending legal proceedings or proceedings known to be
contemplated by governmental authorities involving the Partnership during 2000.

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

No matters were submitted to a vote of the Limited Partners during the year
2000.

                                      -13-
<PAGE>

                                    PART II

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

The offering for sale of Units in the Partnership terminated on December 30,
1998, at which time the Partnership had 1,314,906 outstanding Class A status
units held by a total of 1,250 Limited Partners and 338,374 outstanding Class B
status units held by a total of 95 Limited Partners. As of February 28, 2001,
the Partnership had 1,341,356 outstanding Class A Units held by a total of 1,255
Limited Partners and 311,924 outstanding Class B Units held by a total of 86
Limited Partners. The capital contribution per unit is $10.00. There is no
established public trading 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 have estimated the investment value of properties held by
the Partnership as of December 31, 2000 to be $9.62 per A unit and $11.42 per B
unit based on market conditions existing in early December 2000. The methodology
used for this valuation was to estimate the amount a holder of Partnership Units
would receive if the Partnership's properties were all sold in the ordinary
course of business as of December 31, 2000, and the proceeds from such sales
(without reduction for selling expenses), together with Partnership funds held
as of such date, were distributed in a liquidation of the Partnership. 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 in such an undertaking. The valuation does not include any
fractional interest valuation.

Class A status limited partners are entitled to a distribution from net cash
from operations, as defined in the partnership agreement to mean cash flow, less
adequate cash reserves for other obligations of the Partnership for which there
is no provision, on a per Unit basis until they have received distributions in
each fiscal year of the Partnership equal to 10% of their adjusted capital
contributions. After this preference is satisfied, the General Partners will
receive an amount of net cash from operations equal to 10% of the total amount
of net cash from operations distributed. Thereafter, the Limited Partners
holding Class A status units will receive 90% of net cash from operations and
the General Partners will receive 10%. No net cash from operations will be
distributed to Limited Partners holding Class B status units. Holders of Class A
status units will, except in limited circumstances, be allocated none of the
Partnership's net loss, depreciation and amortization deductions. These
deductions will be allocated to the Class B Status Units, until their capital
account balances have been reduced to zero. No distributions have been made to
the General Partners as of December 31, 2000.

Cash available for distribution to the Limited Partners is distributed on a
quarterly basis unless Limited Partners select to have their cash distributed
monthly. Cash distributions made to Class A status limited partners during 1999
and 2000 and were as follows:

                                      -14-
<PAGE>

<TABLE>
<CAPTION>
                      Distribution                     Per Class A Unit
                                                  -------------------------
                      for Quarter                  Total Cash    Investment      Return of      General
                                                                -------------
                         Ended                    Distributed      Income         Capital       Partner
        ----------------------------------------  ------------  -------------  ------------  ------------
        <S>                                       <C>           <C>            <C>           <C>
        March 31, 1999                               $195,440       $0.15           $0.00          $0.00
        June 30, 1999                                 196,635        0.15            0.00           0.00
        September 30, 1999                            262,930        0.20            0.00           0.00
        June 30, 1999                                 275,736        0.21            0.00           0.00
        March 31, 2000                                300,802        0.23            0.00           0.00
        June 30, 2000                                 310,189        0.23            0.00           0.00
        September 30, 2000                            318,572        0.24            0.00           0.00
        December 31, 2000                             326,954        0.24            0.00           0.00
</TABLE>

The fourth quarter distribution was accrued for accounting purposes in 2000, and
was not actually paid to Limited Partners until February, 2001. Although there
is no assurance, the General Partners anticipate that cash distributions to
Limited Partners holding Class A Status Units will continue in 2001 at a level
at least comparable with 2000 cash distributions on an annual basis.

ITEM 6.   SELECTED FINANCIAL DATA

The following sets forth a summary of the selected financial data for the fiscal
year ended December 31, 2000, 1999, and 1998:

<TABLE>
<CAPTION>
                                                                2000            1999            1998
                                                             -----------     -----------     -----------
        <S>                                                  <C>             <C>             <C>
        Total assets                                         $14,131,924     $14,440,800     $14,844,515
        Total revenues                                           975,850         766,586         262,729
        Net income                                               895,989         630,528         143,295
        Net loss allocated to General Partners                         0               0            (500)
        Net income allocated to Class A Limited
           Partners                                            1,381,547       1,009,368         254,862
        Net loss allocated to Class B Limited Partners          (485,558)       (378,840)       (111,067)
        Net income per weighted average (1) Class A
           Limited Partner unit                              $      1.03     $      0.77    $       0.50
        Net loss per weighted average (1) Class B
           Limited Partner unit                                    (1.55)          (1.12)          (0.77)
        Cash distribution per weighted average (1)
           Class A Limited Partner unit:
              Investment income                                     0.94            0.71            0.30
              Return of capital                                     0.00            0.00            0.00
</TABLE>

        (1)    The weighted average unit is calculated by averaging units over
               the period they are outstanding during the time units were being
               purchased by Limited Partners in the Partnership.

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

                                      -15-
<PAGE>

differ materially from any forward-looking statement made in this 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

The Partnership commenced active operations on March 3, 1998, when it received
and accepted subscriptions for 125,000 units. An aggregate requirement of
$2,500,000 of offering proceeds was reached on March 30, 1998, thus allowing for
the admission of New York and Pennsylvania investors into the Partnership. As of
December 31, 2000, the Partnership had 1,336,906 Class A status units and
316,374 Class B status units, held by a total of 1,255 Class A and 90 Class B
limited partners, for total limited partner contributions of $16,532,802. After
payment of $578,648 in acquisition and advisory fees and acquisition expenses,
payment of $2,066,600 in selling commissions and organization and offering
expenses, the Partnership invested $3,357,436 in the Fund IX-X-XI-REIT Joint
Venture, $2,398,767 in Fund X-XI Joint Venture, and $8,131,351 in the Fund
XI-XII-REIT Joint Venture.

Gross revenues of the Partnership increased to $975,850 from $766,586 and
$262,729 for the years ended December 31, 2000, 1999, and 1998, respectively.
This increase in revenues was attributable primarily to an increase in equity in
income of joint ventures as the Partnership invested in four additional joint
venture properties offset partially by decreased interest income earned on funds
held by the Partnership prior to investment in properties.

Expenses of the Partnership were $79,861 for the year ended December 31, 2000,
$136,058 for the year ended December 31, 1999, and $119,434 for the year ended
December 31, 1998, and consisted primarily of legal, accounting, and partnership
administrative costs. In conformity with the recent accounting pronouncements
outlined below, organizational costs, which were previously capitalized, were
completely written off in 1999, hence the increase in total expenses for 1999
over 1998. Net income of the Partnership was $895,989, $630,528, and $143,295
for the years ended December 31, 2000, 1999, and 1998, respectively.

Recent Accounting Pronouncements

Effective April 3, 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities." SOP 98-5 is effective for fiscal years beginning after December 15,
1998, and initial application is required to be reported as a cumulative effect
of change in accounting principle. This SOP provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs of
start-up activities and organization costs to be expensed as incurred. Adoption
of this Statement by the Partnership in the first quarter of 1999 resulted in
the write-off of certain capitalized organization costs.

                                      -16-
<PAGE>

Property Operations

As of December 31, 2000, the Partnership owned interests in the following
operational properties:

        The Alstom Power-Knoxville Building (formerly the ABB Building)
                          IX-X-XI-REIT Joint Venture


<TABLE>
<CAPTION>
                                                                                  For the Years Ended
                                                                  --------------------------------------------------
                                                                                     December 31
                                                                  --------------------------------------------------
                                                                        2000               1999             1998
                                                                  --------------      ------------       ----------
<S>                                                               <C>                 <C>                <C>
Revenues:                                                            $ 1,185,573      $    987,327        $ 836,746
    Rental income                                                         73,676            58,768           20,192
                                                                   -------------      ------------       ----------
    Interest income                                                    1,259,249         1,046,095          856,938
                                                                   -------------      ------------       ----------
Expenses:
    Depreciation                                                         394,998           537,799          475,020
    Management and leasing expense                                       149,378           120,325          107,338
    Operating costs, net of reimbursements                               (77,526)           (2,532)         (40,641)
                                                                   -------------      ------------       ----------
                                                                         466,850           655,592          541,717
                                                                   -------------      ------------       ----------
Net income                                                           $   792,399      $    390,503        $ 315,221
                                                                   =============      ============       ==========

Occupied percentage                                                          100%               98%              95%
                                                                   =============      ============       ==========

Partnership ownership percentage                                            8.84%              8.9%            6.7%
                                                                   =============      ============       ==========

Cash distributed to the Partnership                                  $   104,796      $     78,795        $  36,360
                                                                   =============      ============       ==========

Net income allocated to the Partnership                              $    70,138      $     32,707        $  16,508
                                                                   =============      ============       ==========
</TABLE>

Rental income increased in 2000, over 1999 and 1998, due primarily to the
increased occupancy level of the property. Other operating expenses were
negative for 2000, 1999, and 1998 due to an offset of tenant reimbursements in
operating costs, as well as management and leasing reimbursements. Tenants are
billed an estimated amount for current year common area maintenance which is
then reconciled the following year and the difference billed to the tenant.
Total expenses decreased in 2000, due to a decrease in depreciation expense, but
increased for 1999, over 1998, due to increased depreciation and management and
leasing fees as the building was leased up. The decrease in depreciation
resulted from an accelerated depreciation on tenant improvement for a short-term
lease in 1999 for 23,092 square feet.

Cash distributions and net income allocated to the Partnership increased in
2000, over prior year levels, due to a combination of increased rental income
and decreased operating expenses. The Alstom Power-Knoxville Building incurred
property taxes of $63,198 for 2000, $47,616 for 1999, and $36,771 for 1998.

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

                                      -17-
<PAGE>

         The Avaya Building (formerly Lucent Technologies Building)--
                        Fund IX-X-XI-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                                                     Seven Months
                                                                       For the Years Ended              Ended
                                                                  ------------------------------
                                                                           December 31               December 31,
                                                                  ------------------------------
                                                                       2000            1999              1998
                                                                  ------------      ------------     -----------
<S>                                                               <C>               <C>              <C>
Revenues:
    Rental income                                                     $ 583,009        $ 583,009       $ 291,508
                                                                   ------------     ------------     -----------
Expenses:
    Depreciation                                                        183,204          183,204         106,871
    Management and leasing expenses                                      21,479           21,479          11,281
    Operating costs, net of reimbursements                               12,753           15,809           9,883
                                                                   ------------     ------------     -----------
                                                                        217,436          220,492         128,035
                                                                   ------------     ------------     -----------
Net income                                                            $ 365,573        $ 362,517       $ 163,473
                                                                   ============     ============     ===========

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

Partnership's ownership percentage                                         8.84%             8.9%            6.7%
                                                                   ============     ============     ===========

Cash distribution to the Partnership                                  $  44,586        $  42,442       $  26,677
                                                                   ============     ============     ===========

Net income allocated to the Partnership                               $  32,356        $  30,779       $  11,025
                                                                   ============     ============     ===========
</TABLE>

Rental income, depreciation and management, and leasing fees remained stable in
2000, as compared to 1999, while other operating expenses are slightly lower,
due primarily to a one-time charge for consulting fees in 1999, which did not
occur in 2000. Net income and cash distribution allocated to the Partnership
increased in 2000, compared to 1999, due primarily to the increase in net
income. The tenant is responsible for property taxes. Since the Avaya Building
was purchased in June 1998, comparative income and expense figures are available
for only seven months of 1998.

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

                                      -18-
<PAGE>

             The Ohmeda Building--Fund IX-X-XI-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                                                   Eleven Months
                                                                   For the Years Ended                 Ended
                                                            ----------------------------------
                                                                       December 31                  December 31,
                                                            ----------------------------------
                                                                  2000              1999                1998
                                                            --------------     ---------------      -------------
<S>                                                         <C>                <C>                   <C>
Revenues:
    Rental income                                              $ 1,027,314       $ 1,027,314           $ 898,901
                                                            --------------     ---------------      -------------
Expenses:
    Depreciation                                                   326,305           326,304             299,112
    Management and leasing expenses                                 54,482            46,911              41,688
    Operating costs, net of reimbursements                          65,152           (15,183)              2,863
                                                            --------------     ---------------      -------------
                                                                   445,939           358,032             343,663
                                                            --------------     ---------------      -------------
Net income                                                     $   581,375       $   669,282           $ 555,238
                                                            ==============     ===============      =============

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

Partnership's ownership percentage                                    8.84%              8.9%                6.7%
                                                            ==============     ===============      =============

Cash distribution to the Partnership                           $    78,316       $    82,761           $  38,113
                                                            ==============     ===============      =============

Net income allocated to the Partnership                        $    51,452       $    56,955           $  25,656
                                                            ==============     ===============      =============
</TABLE>

Rental income remained stable in 2000, as compared to 1999. Total expenses
increased significantly due in part to a significant rise in real estate taxes,
which stemmed from the revaluation of the property by Boulder County authorities
in 1999. A later reduction in taxes resulting from an appeal in 2000 was offset
by a common area maintenance reimbursement credit to the tenant. The Ohmeda
Building incurred property taxes of $227,495 for 2000, $249,707 for 1999, and
$143,962 for 1998.

Cash distributions and net income allocated to the Partnership decreased in
2000, as compared to 1999, due to a decrease in net income resulting from the
increase in expenses discussed above. The Partnership's percentage ownership
interest in the Fund IX-X-XI-REIT Joint Venture decreased due to additional
capital contributions made by Fund IX and Fund X.

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

                                      -19-
<PAGE>

         The 360 Interlocken Building--Fund IX-X-XI-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                                                      Ten Months
                                                                        For the Years Ended             Ended
                                                                   ------------------------------
                                                                            December 31              December 31,
                                                                   ------------------------------
                                                                        2000            1999             1998
                                                                   -------------    --------------   ------------
<S>                                                                <C>              <C>              <C>
Revenues:
    Rental income                                                      $ 843,675       $ 829,827       $ 665,405
    Interest income                                                            0               0             246
                                                                     -----------     -----------     -----------
                                                                         843,675         829,827         665,651
Expenses:
    Depreciation                                                         286,680         286,680         238,299
    Management and leasing expenses                                      108,275          73,129          55,130
    Operating costs, net of reimbursements                               (75,208)         42,431         (55,654)
                                                                     -----------     -----------     -----------
                                                                         319,747         402,240         237,775
                                                                     -----------     -----------     -----------
Net income                                                             $ 523,928       $ 427,587       $ 427,876
                                                                     ===========     ===========     ===========

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

Partnership's ownership percentage                                          8.84%            8.9%            6.7%
                                                                     ===========     ===========     ===========

Cash distribution to Partnership                                       $  72,155       $  60,233       $  31,653
                                                                     ===========     ===========     ===========

Net income allocated to Partnership                                    $  46,374       $  36,366       $  21,963
                                                                     ===========     ===========     ===========
</TABLE>

Rental income increased due to a tenant occupying additional space previously
leased to another tenant at a lower rate. Other operating expenses are negative
due to an offset of tenant reimbursements in operating costs, as well as
management and leasing fee reimbursement. Tenants are billed an estimated amount
for current year common area maintenance which is then reconciled the following
year and the difference billed to the tenants. Management and leasing expenses
increased in 2000, as compared to 1999, due to differences in adjustments for
prior year billings to tenants. The 360 Interlocken Building incurred property
taxes of $268,744 for 2000, $244,025 for 1999, and $96,747 for 1998.

Net income and cash distributions allocated to the Partnership increased in
2000, as compared to 1999, due primarily to the increase in net income.

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

                                      -20-
<PAGE>

              The Iomega Building-Fund IX-X-XI-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                                                     Nine Months
                                                                       For the Years Ended              Ended
                                                                  ------------------------------
                                                                           December 31               December 31,
                                                                  ------------------------------
                                                                       2000            1999              1998
                                                                  ------------     -------------     ------------
<S>                                                               <C>              <C>               <C>
Revenues:
    Rental income                                                     $ 673,000       $ 560,906         $ 373,420
                                                                  -------------    ------------       -----------
Expenses:
    Depreciation                                                        220,248         204,925           145,975
    Management and leasing expenses                                      29,159          24,295            23,058
    Operating costs, net of reimbursements                               17,725           9,368            (4,579)
                                                                  -------------    ------------       -----------
                                                                        267,132         238,588           164,454
                                                                  -------------    ------------       -----------
Net income                                                            $ 405,868       $ 322,318         $ 208,966
                                                                  =============    ============       ===========

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

Partnership's ownership percentage                                         8.84%            8.9%              6.7%
                                                                  =============    ============       ===========

Cash distribution to the Partnership                                  $  53,706       $  43,660         $  15,803
                                                                  =============    ============       ===========

Net income allocated to the Partnership                               $  35,922       $  27,511         $  10,197
                                                                  =============    ============       ===========
</TABLE>

Rental income increased in 2000, as compared to 1999, due primarily to
completion of the parking lot complex in the second quarter of 1999. Total
expenses increased in 2000, over 1999, due to an increase in depreciation and
real estate tax expenses relating to the new parking lot. Other operating
expenses for 1998 are negative due to tenant reimbursement reflected in this
category, which includes management and leasing expense reimbursement. The
Iomega Building incurred property taxes of $76,754 for 2000, $73,020 for 1999,
and $44,559 for 1998, the first year of occupancy.

Net income and cash distribution allocated to the Partnership increased in 2000,
as compared to 1999, due primarily to the increase in net income.

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

                                      -21-
<PAGE>

                    Wells/Fremont Joint Venture (Fairchild)

<TABLE>
<CAPTION>
                                                                                                       Six Months
                                                                         For the Years Ended             Ended
                                                                   -------------------------------
                                                                             December 31              December 31,
                                                                   -------------------------------
                                                                        2000              1999            1998
                                                                   -------------      ------------    ------------
<S>                                                                <C>                <C>             <C>
Revenues:
    Rental income                                                      $ 902,946         $ 902,946       $ 401,058
    Interest income                                                            0                 0           3,896
                                                                    ------------      ------------    ------------
                                                                         902,946           902,946         404,954
                                                                    ------------      ------------    ------------
Expenses:
    Depreciation                                                         285,527           285,526         142,720
    Management and leasing expenses                                       36,787            37,355          16,726
    Interest expense                                                           0                 0          73,919
    Other operating expenses, net of reimbursements                       17,499            20,891           9,670
                                                                    ------------      ------------    ------------
                                                                         339,813           343,772         243,035
                                                                    ------------      ------------    ------------
Net income                                                             $ 563,133         $ 559,174       $ 161,919
                                                                    ============      ============    ============

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

Partnership's ownership percentage                                           9.7%              9.7%            9.7%
                                                                    ============      ============    ============

Cash distribution to the Partnership                                   $  79,236         $  76,544       $  21,314
                                                                    ============      ============    ============

Net income allocated to the Partnership                                $  54,601         $  54,217       $  19,724
                                                                    ============      ============    ============
</TABLE>

The Partnership owns 42% in the Fund X-XI Joint Venture but owns 9.7% in the
Fairchild Building.

Rental income, net income, and cash distributions to the Partnership are
relatively stable for the year ended December 31, 2000, as compared to 1999.
Since the Fremont Building was purchased in July of 1998, comparable income and
expense figures are available for only six months of 1998. For further
information, refer to Item 2.

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

                                      -22-
<PAGE>

                       Wells/Orange County Joint Venture

<TABLE>
<CAPTION>
                                                                                                      Five Months
                                                                         For the Years Ended             Ended
                                                                   -------------------------------
                                                                             December 31              December 31,
                                                                   -------------------------------
                                                                        2000             1999            1998
                                                                   -------------     -------------    -----------
<S>                                                                <C>               <C>              <C>
Revenues:
    Rental income                                                    $   795,545        $  795,545     $  331,477
    Interest income                                                            0                 0            448
                                                                     -----------        ----------     ----------
                                                                         795,545           795,545        331,925
                                                                     -----------        ----------     ----------
Expenses:
    Depreciation                                                         186,564           186,565         92,087
    Management and leasing expenses                                       30,915            30,360         12,734
    Interest expense                                                           0                 0         29,472
    Other operating expenses, net of reimbursements                        9,104            27,667          6,218
                                                                     -----------        ----------     ----------
                                                                         226,583           244,592        140,511
                                                                     -----------        ----------     ----------
Net income                                                           $   568,962        $  550,953     $  191,414
                                                                     ===========        ==========     ==========

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

Partnership's ownership percentage                                          23.5%             23.5%          23.5%
                                                                     ===========        ==========     ==========

Cash distribution to the Partnership                                 $   169,194        $  159,050     $   57,258
                                                                     ===========        ==========     ==========

Net income allocated to the Partnership                              $   133,559        $  129,654     $   36,652
                                                                     ===========        ==========     ==========
</TABLE>

The Partnership owns 42% of the Fund X-XI Joint Venture but owns 23.5% of the
Cort Building.

Rental income remained stable in 2000, as compared to 1999. Other operating
expense decreased for the year ended December 31, 2000, as compared to 1999, due
to tenant billing of 2000 and 1999 insurance.

Since the Cort Building was purchased in July 1998, comparable income and
expense figures for the prior year are available for only five months. The
tenant is responsible for property taxes.

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

                                      -23-
<PAGE>

              EYBL CarTex Building/Fund XI-XII-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                        For the Year
                                                                           Ended              Eight Months Ended
                                                                   ----------------------    --------------------
                                                                     December 31, 2000         December 31, 1999
                                                                   ----------------------    --------------------
<S>                                                                <C>                       <C>
Revenues:
    Rental income                                                          $ 560,355                $ 350,221
    Interest income                                                            2,814                        0
                                                                      --------------             ------------
                                                                             563,169                  350,221
                                                                      --------------             ------------
Expenses:
    Depreciation                                                             199,602                  133,072
    Management and leasing expenses                                           36,896                   20,384
    Operating costs, net of reimbursements                                    21,243                   10,868
                                                                      --------------             ------------
                                                                             257,741                  164,324
                                                                      --------------             ------------
Net income                                                                 $ 305,428                $ 185,897
                                                                      ==============             ============

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

Partnership's ownership percentage                                              26.1%                    26.1%
                                                                      ==============             ============

Cash distribution to the Partnership                                       $ 118,504                $  81,768
                                                                      ==============             ============

Net income allocated to the Partnership                                    $  79,862                $  53,319
                                                                      ==============             ============
</TABLE>

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

Since the EYBL CarTex Building was purchased in May of 1999, comparative income
and expense figures are available for only eight months of 1999.

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

                                      -24-
<PAGE>

                Sprint Building/Fund XI-XII-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                      For the Year                 Six Months
                                                                                            ----------------------
                                                                          Ended                      Ended
                                                                   -------------------      ----------------------
                                                                     December 31, 2000         December 31, 1999
                                                                   -------------------      ----------------------
<S>                                                                <C>                      <C>
Revenues:
    Rental income                                                       $  1,063,988                $  531,993
                                                                      --------------           ---------------
Expenses:
    Depreciation                                                             327,114                   163,553
    Management and leasing expenses                                           44,957                    18,732
    Operating costs, net of reimbursements                                    20,095                     6,069
                                                                      --------------           ---------------
                                                                             392,166                   188,354
                                                                      --------------           ---------------
Net income                                                               $   671,822                $  343,639
                                                                      ==============           ===============

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

Partnership's ownership percentage                                              26.1%                     26.1%
                                                                      ==============           ===============

Cash distribution to the Partnership                                     $   244,222                $  134,825
                                                                      ==============           ===============

Net income allocated to the Partnership                                  $   175,667                $   98,273
                                                                      ==============           ===============
</TABLE>

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

Since the Sprint Building was purchased in July 1999, comparative income and
expense figures are available for only six months of 1999.

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

                                      -25-
<PAGE>

            Johnson Matthey Building/Fund XI-XII-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                        For the Year             Five Months
                                                                                            ----------------------
                                                                          Ended                     Ended
                                                                   --------------------     ----------------------
                                                                     December 31, 2000         December 31, 1999
                                                                   --------------------     ----------------------
<S>                                                                <C>                      <C>
Revenues:
    Rental income                                                           $  867,646                 $  325,368
                                                                      ----------------           ----------------
Expenses:
    Depreciation                                                               255,475                    106,461
    Management and leasing expenses                                             36,194                     11,846
    Operating expenses, net of reimbursements                                   12,926                      4,841
                                                                      ----------------           ----------------
                                                                               304,595                    123,148
                                                                      ----------------           ----------------
Net income                                                                  $  563,051                 $  202,220
                                                                      ================           ================

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

Partnership's ownership percentage                                                26.1%                      26.1%
                                                                      ================           ================

Cash distribution to the Partnership                                        $  196,209                 $   83,845
                                                                      ================           ================

Net income allocated to the Partnership                                     $  147,226                 $   56,720
                                                                      ================           ================
</TABLE>

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

Since the Johnson Matthey Building was purchased in August 1999, comparative
income and expense figures are available for only five months of 1999.

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

                                      -26-
<PAGE>

              The Gartner Building/Fund XI-XII-REIT Joint Venture

<TABLE>
<CAPTION>
                                                                        For the Year              Four Months
                                                                                              -------------------
                                                                           Ended                    Ended
                                                                    -------------------       -------------------
                                                                     December 31, 2000         December 31, 1999
                                                                    -------------------       -------------------
<S>                                                                 <C>                       <C>
Revenues:
    Rental income                                                          $   853,943               $   235,863
                                                                       ---------------            --------------
Expenses:
    Depreciation                                                               310,490                   103,496
    Management and leasing expenses                                             39,189                     8,268
    Other operating expenses, net of reimbursements                            (33,991)                    2,783
                                                                       ---------------            --------------
                                                                               315,688                   114,547
                                                                       ---------------            --------------
Net income                                                                  $  538,255               $   121,316
                                                                       ===============            ==============

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

Partnership's ownership percentage                                                26.1%                     26.1%
                                                                       ===============            ==============

Cash distribution to the Partnership                                        $  202,158               $    43,904
                                                                       ===============            ==============

Net income allocated to the Partnership                                     $  140,743               $    31,722
                                                                       ===============            ==============
</TABLE>

Other operating expenses are negative due to an offset of tenant reimbursements
in operating costs both for 2000 as well as the fourth quarter of 1999. Since
the building was purchased in September of 1999, the Partnership could not
estimate the amount to be billed for 1999 until the first quarter of 2000.

The Gartner Building incurred property taxes of $7,260 on the undeveloped lot
for 2000. The tenant is responsible for the real estate taxes on the developed
lot.

Since the Gartner Building was purchased in September 1999, comparative income
and expense figures are available for only five months of 1999.

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

                                      -27-
<PAGE>

Liquidity and Capital Resources

The Partnership commenced active operations on March 3, 1998, when it received
and accepted subscriptions for 125,000 units. The Partnership terminated its
offering on December 30, 1998, the Partnership raised $16,532,802 in capital
through the sale of 1,653,280 units. After payment of $578,648 in acquisition
and advisory fees and acquisition expenses, payment of $2,066,600 in selling
commissions and organizational and offering expenses, the Partnership invested
$3,357,436 in Fund IX-X-XI-REIT Joint Venture, $2,398,767 in the Fund X-XI Joint
Venture, and $8,131,351 in the Fund XI-XII-REIT Joint Venture

The Partnership's net cash (used in) provided by operating activities of
$(72,925) in 2000, $40,906 in 1999, and $(50,858) in 1998 is due primarily to
equity in income of joint ventures and interest income earned on funds held by
the Partnership prior to investment in properties. Net cash provided by
investing activities of $1,333,337 in 2000 as compared to net cash used in
investing activities of ($8,300,585) in 1999 up from ($5,310,208) in 1998. This
was primarily the result of the Partnership investing all proceeds in the joint
ventures and increased distributions from its Joint Ventures. The net cash used
in financing activities of $1,205,303 in 2000 and $1,010,770 in 1999 as compared
to $14,653,266 which was provided by financing activities in 1998 was as a
result of the offering being terminated in 1998, as well as distributions to
partners from accumulated earnings which was greater in 2000 and 1999.

The Partnership's distributions to holders of Class A status units for the 4th
quarter ended December 31, 2000 were paid in February, 2001. Although there is
no assurance, the Partnership anticipates that distributions will continue to be
paid on a quarterly basis from such sources on a level at least consistent with
2000. No cash distributions were paid to holders of Class B status units in
2000.

The Partnership expects to continue to meet its short-term liquidity
requirements generally through net cash provided by operations which the
Partnership believes will continue to be adequate to meet both operating
requirements and distributions to limited partners. At this time, given the
nature of the joint ventures and properties in which the Partnership has
invested, there are no known improvements or renovations to the properties
expected to be funded from cash flow from operations.

Since properties are acquired on an all-cash basis, the Partnership has no
permanent long-term liquidity requirements.

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 tenant leases executed by the Partnership to protect the Partnership
from the impact of inflation. These leases contain common area maintenance
charges ("CAM charges"), real estate tax and insurance reimbursements on a per
square foot bases, 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.

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.

                                      -28-
<PAGE>

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 2000.

                                      -29-
<PAGE>

                                   PART III

ITEM 10.  GENERAL PARTNERS OF THE PARTNERSHIP

Wells Partners, L.P.

Wells Partners, L.P. is a private Georgia limited partnership formed on October
25, 1990. The sole General Partner of Wells Partners, L.P. is Wells Capital,
Inc., a Georgia Corporation. The executive offices of Wells Capital, Inc. are
located at 6200 The Corners Parkway, Norcross, Georgia 30092.

Leo F. Wells, III.

Mr. Wells is a resident of Atlanta, Georgia, is 57 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, Inc. He
is also the President, sole Director and sole shareholder of Wells Real Estate
Investment Funds, Inc., the parent corporation of Wells Capital, Inc. Mr. Wells
is also 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 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 all 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.

The following table summarizes the compensation and fees paid to the General
Partners and their affiliates during the year ended December 31, 2000:

<TABLE>
<CAPTION>
                      (A)                                                (B)                                   (C)
                                                                                                         --------------
               Name of Individual                             Capacities in Which Served                      Cash
                                                                                                         --------------
               or Number in Group                                Form of Compensation                     Compensation
------------------------------------------------        ----------------------------------------         --------------
<S>                                                     <C>                                              <C>
                                                        Property Manager-Management and Leasing
Wells Management Company, Inc.                          Fees                                                $75,700(1)
</TABLE>

         (1)   These fees are not paid directly by the Partnership but are paid
               by the joint venture entities which owns the various properties
               with respect to which the property management and leasing
               services relate and include management and leasing fees.

ITEM 11.  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.

                                      -30-
<PAGE>

Set forth below is the security ownership of management as of December 31, 2000.

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

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The 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 are as follows:

Interest in Partnership Cash Flow and Net Sale Proceeds

The General Partners will receive a subordinated participation in net cash flow
from operations equal to 10% of net cash flow after the Limited Partners holding
Class A status units have received preferential distributions equal to 10% of
their adjusted capital accounts in each fiscal year. The General Partners will
also receive a subordinated participation in net sales proceeds and net
financing proceeds equal to 20% of residual proceeds available for distribution
after Limited Partners holding Class A status units have received a return of
their adjusted capital contributions plus a 10% cumulative return on their
adjusted capital contributions and Limited Partners holding Class B Units have
received a return of their adjusted capital contributions plus a 15% cumulative
return on their adjusted capital contributions; provided, however, that in no
event shall the General Partners receive in the aggregate in excess of 15% of
net sales proceeds and net financing proceeds remaining after payments to
limited partners from such proceeds of amounts equal to the sum of their
adjusted capital contributions plus a 6% cumulative return on their adjusted
capital contributions. The General Partners did not receive any distributions
from net cash flow from operations or net sales proceeds for the year ended
December 31, 2000.

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 the lessor of (a) fees that would be paid to a comparable
outside firm or (b) 4.5% of the gross revenues generally paid over the life of
the lease plus a separate competitive fee for the one-time initial lease-up of
newly constructed properties generally paid in conjunction with the receipt of
the first month's rent. In the case of commercial properties which are leased on
a long-term (ten or more years) net lease basis, the maximum property management
fee from such leases shall be 1% of the gross revenues generally paid over the
life of the leases except for a one-time initial leasing fee of 3% of the gross
revenues on each lease payable over the first five full years of the original
lease term.

Wells Management Company, Inc. received $75,700 in cash compensations for the
year ended December 31, 2000.

                                      -31-
<PAGE>

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. During 2000, no real estate
commissions were paid to the General Partners or their affiliates.

           (THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)

                                      -32-
<PAGE>

                                    PART IV

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)1.   The financial statements are contained on pages F-2 through F-29 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.   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 during the fourth quarter of 2000.

(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.


           (THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)

                                      -33-
<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
2001.

                                      Wells Real Estate Fund XI, L.P.
                                      (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, 2001
                              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.

                                      -34-
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

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

Balance Sheets as of December 31, 2000 and 1999                                                                 F3

Statements of Income for the Years ended December 31, 2000, 1999, and 1998                                      F4

Statements of Partners' Capital for the Years Ended December 31, 2000, 1999, and 1998                           F5

Statements of Cash Flows for the Years Ended December 31, 2000, 1999, and 1998                                  F6

Notes to Financial Statements for December 31, 2000, 1999, and 1998                                             F7
</TABLE>

                                      F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Wells Real Estate Fund XI, L.P.:


We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND XI,
L.P. (a Georgia public limited partnership) as of December 31, 2000, and 1999
and the related statements of income, partners' capital, and cash flows for each
of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Partnership'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 Wells Real Estate Fund XI, L.P.
as of December 31, 2000 and 1999 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP






Atlanta, Georgia

January 30, 2001

                                      F-2
<PAGE>

                        WELLS REAL ESTATE FUND XI, L.P.

                    (A Georgia Public Limited Partnership)

                                BALANCE SHEETS

                          DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                           ASSETS

                                                                                         2000             1999
                                                                                     -----------       -----------
<S>                                                                                  <C>               <C>
INVESTMENT IN JOINT VENTURES                                                         $13,698,627       $14,093,790

CASH AND CASH EQUIVALENTS                                                                 77,460            22,351

DUE FROM AFFILIATES                                                                      343,825           314,099

ACCOUNTS RECEIVABLE                                                                       12,012            10,560
                                                                                     -----------       -----------
              Total assets                                                           $14,131,924       $14,440,800
                                                                                     ===========       ===========

                                     LIABILITIES AND PARTNERS' CAPITAL

LIABILITIES:
    Due to affiliate                                                                 $    65,000       $    65,000
    Partnership distributions payable                                                    326,952           275,737
    Accounts payable                                                                         438                 0
                                                                                     -----------       -----------
              Total liabilities                                                          392,390           340,737
                                                                                     -----------       -----------
COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
    Limited partners:
       Class A--1,341,356 units and 1,336,906 units as of December 31, 2000
           and 1999, respectively                                                     11,993,987        11,804,940
       Class B--311,924 units and 316,374 units as of December 31, 2000 and
           1999, respectively                                                          1,745,547         2,295,123
                                                                                     -----------       -----------
              Total partners' capital                                                 13,739,534        14,100,063
                                                                                     -----------       -----------
              Total liabilities and partners' capital                                $14,131,924       $14,440,800
                                                                                     ===========       ===========
</TABLE>



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

                                      F-3
<PAGE>

                        WELLS REAL ESTATE FUND XI, L.P.

                    (A Georgia Public Limited Partnership)

                              STATEMENTS OF INCOME

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998


<TABLE>
<CAPTION>
                                                                           2000             1999            1998
                                                                        -----------     -----------      ---------
<S>                                                                     <C>             <C>              <C>
REVENUES:
    Equity in income of joint ventures                                  $   967,900     $   607,579      $ 142,163
    Interest income                                                           7,950         159,007        120,566
                                                                        -----------     -----------      ---------
                                                                            975,850         766,586        262,729
                                                                        -----------     -----------      ---------
EXPENSES:
    Partnership administration                                               45,050          51,047         46,649
    Legal and accounting                                                     22,939          51,565         64,052
    Amortization of organizational costs                                          0          25,000          6,250
    Computer costs                                                           11,872           8,446          2,483
                                                                        -----------     -----------      ---------
                                                                             79,861         136,058        119,434
                                                                        -----------     -----------      ---------
NET INCOME                                                              $   895,989     $   630,528      $ 143,295
                                                                        ===========     ===========      =========


NET LOSS ALLOCATED TO GENERAL PARTNERS                                  $         0     $         0      $    (500)
                                                                        ===========     ===========      =========

NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS                        $ 1,381,547     $ 1,009,368      $ 254,862
                                                                        ===========     ===========      =========

NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS                          $  (485,558)    $  (378,840)     $(111,067)
                                                                        ===========     ===========      =========

NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT            $      1.03     $      0.77      $    0.50
                                                                        ===========     ===========      =========

NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT              $     (1.55)    $     (1.12)     $   (0.77)
                                                                        ===========     ===========      =========

CASH DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER
    UNIT                                                                $      0.94     $      0.71      $    0.30
                                                                        ===========     ===========      =========
</TABLE>


       The accompanying notes are an integral part of these statements.

                                      F-4
<PAGE>

                        WELLS REAL ESTATE FUND XI, L.P.

                    (A Georgia Public Limited Partnership)


                        STATEMENTS OF PARTNERS' CAPITAL

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                                      Limited Partners                                     Total
                                                  -------------------------------------------------------
                                                          Class A                        Class B              General    Partners'
                                                  -------------------------     -------------------------
                                       Original     Units          Amount         Units          Amount       Partner     Capital
                                       --------   ---------     -----------     --------       ----------    --------   -----------
<S>                                    <C>        <C>           <C>             <C>            <C>           <C>        <C>
BALANCE, December 31, 1997              $ 100             0     $         0            0       $        0      $ 500    $       600

    Net income (loss)                       0             0         254,862            0         (111,067)      (500)       143,295
    Partnership distributions               0             0        (240,881)           0                0          0       (240,881)
    Limited partner contributions           0     1,302,942      13,029,423      350,338        3,503,378          0     16,532,801
    Sales commissions and discounts         0             0      (1,237,834)           0         (332,821)         0     (1,570,655)
    Other offering expenses                 0             0        (366,255)           0          (98,479)         0       (464,734)
                                       --------   ---------     -----------     --------       ----------    --------   -----------
BALANCE, December 31, 1998                100     1,302,942      11,439,315      350,338        2,961,011          0     14,400,426

    Net income (loss)                       0             0       1,009,368            0         (378,840)         0        630,528
    Partnership distributions               0             0        (930,791)           0                0          0       (930,791)
    Class B conversions                     0        33,964         287,048      (33,964)        (287,048)         0              0
    Return of capital                    (100)            0               0            0                0          0           (100)
                                       --------   ---------     -----------     --------       ----------    --------   -----------
BALANCE, December 31, 1999                  0     1,336,906      11,804,940      316,374        2,295,123          0     14,100,063

    Net income (loss)                       0             0       1,381,547            0         (485,558)         0        895,989
    Partnership distributions               0             0      (1,256,518)           0                0          0     (1,256,518)
    Class B conversions                     0         4,450          64,018       (4,450)         (64,018)         0              0
                                       --------   ---------     -----------     --------       ----------    --------   -----------
BALANCE, December 31, 2000              $   0     1,341,356     $11,993,987      311,924       $1,745,547      $   0    $13,739,534
                                       ========   =========     ===========     ========       ==========    ========   ===========
</TABLE>


         The accompanying notes are an integral part of these statements.

                                      F-5
<PAGE>

                         WELLS REAL ESTATE FUND XI, L.P.

                    (A Georgia Public Limited Partnership)

                           STATEMENTS OF CASH FLOWS

             FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

<TABLE>
<CAPTION>
                                                                         2000            1999             1998
                                                                     -----------      -----------    -------------
<S>                                                                  <C>              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                       $   895,989      $   630,528    $     143,295
                                                                     -----------      -----------    -------------
    Adjustments to reconcile net income to net cash (used
       in) provided by operating activities:
           Equity in income of joint venture                            (967,900)        (607,579)        (142,163)
           Amortization of organizational costs                                0           25,000            6,250
           Changes in assets and liabilities:
              Accounts receivable                                         (1,452)          16,430          (26,990)
              Accounts payable                                               438                0                0
              Due to affiliates                                                0          (23,473)               0
              Organizational costs                                             0                0          (31,250)
                                                                     -----------      -----------    -------------
                 Total adjustments                                      (968,914)        (589,622)        (194,153)
                                                                     -----------      -----------    -------------
                 Net cash (used in) provided by operating
                     activities                                          (72,925)          40,906          (50,858)
                                                                     -----------      -----------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Investment in joint venture                                                0       (9,005,979)      (4,881,576)
    Distributions received from joint ventures                         1,333,337          705,394          102,662
    Deferred project costs paid                                                0                0         (531,294)
                                                                     -----------      -----------    -------------
                 Net cash provided by (used in) investing
                     activities                                        1,333,337       (8,300,585)      (5,310,208)
                                                                     -----------      -----------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Limited partners' contributions                                            0                0       16,532,801
    Sales commissions and discounts paid                                       0         (214,609)      (1,356,046)
    Offering costs paid                                                        0                0         (423,615)
    Distributions to partners in excess of accumulated
       earnings                                                                0          (10,816)               0
    Distributions to partners from accumulated earnings               (1,205,303)        (785,245)         (99,874)
    Return of capital                                                          0             (100)               0
                                                                     -----------      -----------    -------------
                 Net cash (used in) provided by financing
                     activities                                       (1,205,303)      (1,010,770)      14,653,266
                                                                     -----------      -----------    -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      55,109       (9,270,449)       9,292,200

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                              22,351        9,292,800              600
                                                                     -----------      -----------    -------------
CASH AND CASH EQUIVALENTS, END OF YEAR                               $    77,460      $    22,351    $   9,292,800
                                                                     ===========      ===========    =============
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
       Deferred project costs contributed to joint ventures          $         0      $   375,246    $     203,402
                                                                     ===========      ===========    =============
</TABLE>


       The accompanying notes are an integral part of these statements.

                                      F-6
<PAGE>

                        WELLS REAL ESTATE FUND XI, L.P.

                    (A Georgia Public Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

                       DECEMBER 31, 2000, 1999, AND 1998

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Business

     Wells Real Estate Fund XI, L.P. (the "Partnership") is a public limited
     partnership organized on June 20, 1996 under the laws of the state of
     Georgia. The general partners are Leo F. Wells, III and Wells Partners,
     L.P., a Georgia nonpublic limited partnership. The Partnership has two
     classes of limited partnership units. Upon subscription for units, each
     limited partner must elect whether to have their units treated as Class A
     units or Class B units. Thereafter, limited partners shall have the right
     to change their prior elections to have some or all of their units treated
     as Class A units or Class B units one time during each quarterly accounting
     period. Limited partners may vote to, among other things: (a) amend the
     partnership agreement, subject to certain limitations, (b) change the
     business purpose or investment objectives of the Partnership, (c) remove a
     general partner, (d) elect a new general partner, (e) dissolve the
     Partnership, and (f) approve a sale of assets, subject to certain
     limitations. A majority vote on any of the described matters will bind the
     Partnership, without concurrence of the general partners. Each limited
     partnership unit has equal voting rights, regardless of class. The
     Partnership commenced operations as of March 3, 1998.

     The Partnership was formed to acquire and operate commercial real estate
     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, Wells Real Estate Fund IX,
     L.P. ("Wells Fund IX"), Wells Real Estate Fund X, L.P. ("Wells Fund X"),
     and Wells Operating Partnership, L.P. (the "Operating Partnership"), a
     Delaware limited partnership having Wells Real Estate Investment Trust,
     Inc. ("Wells REIT"), a Maryland corporation, as its general partner, which
     is referred to as "Fund IX, X, XI, and REIT Joint Venture." The Partnership
     also owns two properties through a joint venture between the Partnership
     and Wells Fund X, referred to as "Fund X and XI Associates." In addition,
     the Partnership owns an interest in several properties through a joint
     venture between the Partnership, Wells Real Estate Fund XII, L.P. ("Wells
     Fund XII") and the Operating Partnership, which is referred to as Fund XI,
     XII, and REIT Joint Venture.

     Through its investment in Fund IX, X, XI, and REIT Joint Venture, the
     Partnership owns interests in the following properties: (i) a three-story
     office building in Knoxville, Tennessee (the "Alstom Power Building,"
     formerly the ABB Building), (ii) a two-story office building in Louisville,
     Colorado (the "Ohmeda Building"), (iii) a three-story office building in
     Broomfield, Colorado (the "360 Interlocken Building"), (iv) a one-story
     warehouse facility in Ogden, Utah (the "Iomega Corporation Building"), and
     (v) a one-story office building in Oklahoma City, Oklahoma (the "Avaya
     Building," formerly the Lucent Technologies Building).

     The following properties are owned by Fund X and XI Associates through
     investment in joint ventures with the Operating Partnership: (i) a one-
     story office and warehouse building in Fountain Valley, California (the
     "Cort Building") and (ii) a warehouse and office building in Fremont,
     California (the "Fairchild Building").

     Through its investment in Fund XI, XII, and REIT Joint Venture, the
     Partnership owns interests in the following properties: (i) a two-story
     manufacturing and office building in Greenville County, South

                                      F-7
<PAGE>

     Carolina (the "EYBL Cartex Building"), (ii) a three-story office building
     in Leawood, Kansas (the "Sprint Building"), (iii) an office and warehouse
     building in Chester County, Pennsylvania (the "Johnson Matthey Building"),
     and (iv) a two-story office building in Fort Myers, Florida (the "Gartner
     Building").

     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 carrying values of real estate are based on management's current intent
     to hold the real estate assets as long-term investments. 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 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, as defined by the partnership agreement,
     will be distributed to the limited partners on a quarterly basis. In
     accordance with the partnership agreement, distributions are paid first to
     limited partners holding Class A units until they have received a 10% per
     annum return on their net capital contributions, as defined. Then, such
     distributions are paid to the general partners until they have received 10%
     of the total amount distributed thus far. Any remaining cash available for
     distribution is split 90% to the limited partners holding Class A units and
     10% to the general partners. No such distributions will be made to the
     limited partners holding Class B units.

     Distribution of Sales Proceeds

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

          .    To limited partners holding units which at any time have been
               treated as Class B units until they receive an amount necessary
               to equal the net cash available for distribution received by the
               limited partners holding Class A units

          .    To limited partners on a per unit basis until each limited
               partner has received 100% of their net capital contributions, as
               defined

          .    To all limited partners on a per unit basis until they receive a
               cumulative 10% per annum return on their net capital
               contributions, as defined

          .    To limited partners on a per unit basis until they receive an
               amount equal to their preferential limited partner return
               (defined as the sum of a 10% per annum cumulative return on net
               capital contributions for all periods during which the units were
               treated as Class A units and a 15% per annum cumulative return on
               net capital contributions for all periods during which the units
               were treated as Class B units)

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

                                      F-8
<PAGE>

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

          .    Thereafter, 80% to the limited partners on a per unit basis and
               20% to the general partners

     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
     proportion that net cash from operations is distributed to the partners. To
     the extent the Partnership's net income in any year exceeds net cash from
     operations, it will be allocated 99% to the limited partners holding Class
     A units 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 the qualified income offset
     provisions of the partnership agreement; (b) allocations to partners having
     negative capital accounts until all negative capital accounts have been
     restored to zero; and (c) allocations to limited partners holding Class B
     units in amounts equal to the deductions for depreciation and amortization
     previously allocated to them with respect to the specific partnership
     property sold, but not in excess of the amount of gain on sale recognized
     by the Partnership with respect to the sale of such property.

     Investment in Joint Ventures

          Basis of Presentation

          The Partnership does not have control over the operations of the joint
          ventures; however, it does exercise significant influence.
          Accordingly, the Partnership's investment in the joint ventures is
          recorded using the equity method of accounting.

          Real Estate Assets

          Real estate assets held by the joint ventures are stated at cost less
          accumulated depreciation. Major improvements and betterments are
          capitalized when they extend the useful life of the related asset. All
          repair 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 the joint ventures as of December 31, 2000.

                                      F-9
<PAGE>

          Depreciation for building and improvements is calculated using the
          straight-line method over 25 years. Tenant improvements are amortized
          over the life of the related lease or the life of the asset, whichever
          is shorter.

          Revenue Recognition

          All leases on real estate assets held by the joint ventures 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 the joint ventures 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 ventures 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.

     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
     approximate 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, 2000, 1999, and 1998 is computed based on the weighted
     average number of units outstanding during the period.

     Reclassifications

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

2.   DEFERRED PROJECT COSTS

     The Partnership paid a percentage of limited partner contributions to Wells
     Capital, Inc. (the "Company"), the general partner of Wells Partners, for
     acquisition and advisory fees and expenses. These payments, as stipulated
     by the partnership agreement can be up to 3.5% of the limited partner
     contributions, subject to certain overall limitations contained in the
     partnership agreement. Aggregate fees paid through December 31, 2000 were
     $578,648 and amounted to 3.5% of the limited partners' contributions
     received. These fees are allocated to specific properties as they are
     purchased or developed and are included in capitalized assets of the joint
     ventures.

3.   DEFERRED OFFERING COSTS

     Offering expenses, to the extent they exceed 3% of gross proceeds, will be
     paid by the Company and not by the Partnership. Offering expenses do not
     include sales or underwriting commissions but do include such costs as
     legal and accounting fees, printing costs, and other offering expenses.

                                      F-10
<PAGE>

     As of December 31, 2000, the Company paid offering expenses on behalf of
     the Partnership in the aggregate amount of $935,771 of which the Company
     was reimbursed $495,979, which did not exceed the 3% limitation. The
     Company absorbed $390,651 and $49,141 of the remaining offering expenses
     which exceeded the 3% limitation during 1999 and 1998, respectively.

4.   RELATED-PARTY TRANSACTIONS

     Due from affiliates at December 31, 2000, 1999, and 1998 represent the
     Partnership's share of cash to be distributed from its joint venture
     investments for the fourth quarter of 2000, 1999, and 1998:

<TABLE>
<CAPTION>
                                                                      2000          1999           1998
                                                                   ---------     ---------     ---------
        <S>                                                        <C>           <C>           <C>
        Fund IX, X, XI, and REIT Joint Venture                     $  89,332     $  76,413     $  59,692
        Fund X and XI Associates                                      62,940        59,768        67,000
        Fund XI, XII, and REIT                                       191,553       177,918             0
                                                                   ---------     ---------     ---------
                                                                   $ 343,825     $ 314,099     $ 126,692
                                                                   =========     =========     =========
</TABLE>

     In December 2000, 1999, and 1998, the Partnership received distributions
     from Fund IX-X-XI and REIT Joint Venture and Fund X and XI Associates,
     which are included in due to affiliate at December 31, 2000, 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 and leasing of
     the Partnership's properties, the Partnership will pay Wells Management
     management and leasing fees equal to the lesser of (a) fees that would be
     paid to a comparable outside firm, or (b) 4.5% of the gross revenues
     generally paid over the life of the lease plus a separate competitive fee
     for the one-time initial lease-up of newly constructed properties generally
     paid in conjunction with the receipt of the first month's rent. In the case
     of commercial properties which are leased on a long-term net basis (ten or
     more years), the maximum property management fee from such leases shall be
     1% of the gross revenues generally paid over the life of the leases except
     for a one-time initial leasing fee of 3% of the gross revenues on each
     lease payable over the first five full years of the original lease term.

     The Partnership incurred management and leasing fees and lease acquisition
     costs, at the joint venture level, of $75,700, $45,039, and $14,281 for the
     years ended December 31, 2000, 1999, and 1998, 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 in other Wells Real Estate
     Funds. As such, there may exist conflicts of interest where the general
     partners in the capacity as general partners for other Wells Real Estate
     Funds may be in competition with the Partnership for tenants in similar
     geographic markets.

                                      F-11
<PAGE>

5.   INVESTMENT IN JOINT VENTURES

     The Partnership's investment and percentage ownership in joint ventures at
     December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                               2000                         1999
                                                                   -------------------------   ----------------------------
                                                                      Amount        Percent        Amount         Percent
                                                                   ------------  -----------   ------------    ------------
     <S>                                                           <C>           <C>           <C>             <C>
     Fund IX, X, XI, and REIT Joint Venture                        $  3,191,093        9%      $  3,308,403         9%
     Fund X and XI Associates                                         2,359,273       42          2,419,535        42
     Fund XI, XII, and REIT                                           8,148,261       26          8,365,852        26
                                                                   ------------                ------------
                                                                   $ 13,698,627                $ 14,093,790
                                                                   ============                ============
</TABLE>

     The following is a rollforward of the Partnership's investment in joint
     ventures for the years ended December 31, 2000, 1999, and 1998:

<TABLE>
<CAPTION>
                                                                            2000              1999              1998
                                                                         ------------      ------------      -----------
     <S>                                                                 <C>               <C>               <C>
     Investment in joint ventures, beginning of year                     $ 14,093,790      $  4,997,787      $         0
          Equity in income of joint ventures                                  967,900           607,579          142,163
          Contributions to joint ventures                                           0         9,381,187        5,084,978
          Distributions from joint ventures                                (1,363,063)         (892,763)        (229,354)
                                                                         ------------      ------------      -----------
     Investment in joint ventures, end of year                           $ 13,698,627      $ 14,093,790      $ 4,997,787
                                                                         ============      ============      ===========
</TABLE>

     Fund IX, X, XI, and REIT Joint Venture

     On March 20, 1997, Wells Fund IX and Wells Fund X entered into a joint
     venture agreement. The joint venture, Fund IX and X Associates, was formed
     to acquire, develop, operate, and sell real properties. On March 20, 1997,
     Wells Fund IX contributed a 5.62-acre tract of real property in Knoxville,
     Tennessee, and improvements thereon, known as the Alstom Power Building, to
     the Fund IX and X Associates joint venture. An 84,404 square-foot, three-
     story building was constructed and commenced operations at the end of 1997.

     On February 13, 1998, the joint venture purchased a two-story office
     building, known as the Ohmeda Building, in Louisville, Colorado. On March
     20, 1998, the joint venture purchased a three-story office building, known
     as the 360 Interlocken Building, in Broomfield, Colorado. On April 1, 1998,
     Wells Fund X purchased a one-story warehouse facility, known as the Iomega
     Corporation Building, in Ogden, Utah. On June 11, 1998, Fund IX and X
     Associates was amended and restated to admit the Partnership and the
     Operating Partnership. The joint venture was renamed Fund IX, X, XI, and
     REIT Joint Venture. On June 24, 1998, the new joint venture purchased a
     one-story office building, known as the Avaya Building, in Oklahoma City,
     Oklahoma. On July 1, 1998, Wells Fund X contributed the Iomega Corporation
     Building to Fund IX, X, XI, and REIT Joint Venture.

                                      F-12
<PAGE>

     Following are the financial statements for the Fund IX, X, XI, and REIT
     Joint Venture:

                  The Fund IX, X, XI, and REIT Joint Venture
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                    Assets

                                                                                             2000              1999
                                                                                         ------------      ------------
     <S>                                                                                 <C>               <C>
     Real estate assets, at cost:
         Land                                                                            $  6,698,020      $  6,698,020
         Building and improvements, less accumulated depreciation of
            $4,203,502 in 2000 and $2,792,068 in 1999                                      28,594,768        29,878,541
                                                                                         ------------      ------------
                   Total real estate assets                                                35,292,788        36,576,561
     Cash and cash equivalents                                                              1,500,044         1,146,874
     Accounts receivable                                                                      422,243           554,965
     Prepaid expenses and other assets                                                        487,276           526,409
                                                                                         ------------      ------------
                   Total assets                                                          $ 37,702,351      $ 38,804,809
                                                                                         ============      ============

                                         Liabilities and Partners' Capital

     Liabilities:
         Accounts payable and accrued liabilities                                        $    568,517      $    613,574
         Refundable security deposits                                                          99,279            91,340
         Due to affiliates                                                                      9,595             6,379
         Partnership distributions payable                                                    931,151           804,734
                                                                                         ------------      ------------
                   Total liabilities                                                        1,608,542         1,516,027
                                                                                         ------------      ------------
     Partners' capital:
         Wells Real Estate Fund IX                                                         14,117,803        14,590,626
         Wells Real Estate Fund X                                                          17,445,277        18,000,869
         Wells Real Estate Fund XI                                                          3,191,093         3,308,403
         Wells Operating Partnership, L.P.                                                  1,339,636         1,388,884
                                                                                         ------------      ------------
                   Total partners' capital                                                 36,093,809        37,288,782
                                                                                         ------------      ------------
                   Total liabilities and partners' capital                               $ 37,702,351      $ 38,804,809
                                                                                         ============      ============
</TABLE>

                                      F-13
<PAGE>

                  The Fund IX, X, XI, and REIT Joint Venture
                           (A Georgia Joint Venture)
                             Statements of Income
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                                 2000             1999            1998
                                                                              ----------       ----------      ----------
     <S>                                                                      <C>              <C>             <C>
     Revenues:
         Rental income                                                        $4,198,388       $3,932,962      $2,945,980
         Other income                                                            116,129           61,312               0
         Interest income                                                          73,676           58,768          20,438
                                                                              ----------       ----------      ----------
                                                                               4,388,193        4,053,042       2,966,418
                                                                              ----------       ----------      ----------
     Expenses:
         Depreciation                                                          1,411,434        1,538,912       1,216,293
         Management and leasing fees                                             362,774          286,139         226,643
         Operating costs, net of reimbursements                                 (154,001)         (43,501)       (140,506)
         Property administration expense                                          78,420           63,311          34,821
         Legal and accounting                                                     20,423           35,937          15,351
                                                                              ----------       ----------      ----------
                                                                               1,719,050        1,880,798       1,352,602
                                                                              ----------       ----------      ----------
     Net income                                                               $2,669,143       $2,172,244      $1,613,816
                                                                              ==========       ==========      ==========

     Net income allocated to Wells Real Estate Fund IX                        $1,045,094       $  850,072      $  692,116
                                                                              ==========       ==========      ==========

     Net income allocated to Wells Real Estate Fund X                         $1,288,629       $1,056,316      $  787,481
                                                                              ==========       ==========      ==========

     Net income allocated to Wells Real Estate Fund XI                        $  236,243       $  184,355      $   85,352
                                                                              ==========       ==========      ==========

     Net income allocated to Wells Operating Partnership, L.P.                $   99,177       $   81,501      $   48,867
                                                                              ==========       ==========      ==========
</TABLE>

                  The Fund IX, X, XI, and REIT Joint Venture
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                                               Wells
                                                 Wells Real     Wells Real     Wells Real    Operating        Total
                                                   Estate         Estate         Estate     Partnership,    Partners'
                                                  Fund IX         Fund X         Fund XI        L.P.         Capital
                                               -------------  ------------   ------------- -------------  -------------
     <S>                                       <C>            <C>            <C>           <C>            <C>
     Balance, December 31, 1997                 $  3,702,793   $  3,662,803   $         0   $         0    $  7,365,596
        Net income                                   692,116        787,481        85,352        48,867       1,613,816
        Partnership contributions                 11,771,312     15,613,477     2,586,262     1,480,741      31,451,792
        Partnership distributions                 (1,206,121)    (1,356,622)     (150,611)      (86,230)     (2,799,584)
                                               -------------  -------------  ------------  ------------   -------------
     Balance, December 31, 1998                   14,960,100     18,707,139     2,521,003     1,443,378      37,631,620
        Net income                                   850,072      1,056,316       184,355        81,501       2,172,244
        Partnership contributions                    198,989              0       911,027             0       1,110,016
        Partnership distributions                 (1,418,535)    (1,762,586)     (307,982)     (135,995)     (3,625,098)
                                               -------------  -------------  ------------  ------------   -------------
     Balance, December 31, 1999                   14,590,626     18,000,869     3,308,403     1,388,884      37,288,782
        Net income                                 1,045,094      1,288,629       236,243        99,177       2,669,143
        Partnership contributions                     46,122         84,317             0             0         130,439
        Partnership distributions                 (1,564,039)    (1,928,538)     (353,553)     (148,425)     (3,994,555)
                                               -------------  -------------  ------------  ------------   -------------
     Balance, December 31, 2000                 $ 14,117,803   $ 17,445,277   $ 3,191,093   $ 1,339,636    $ 36,093,809
                                               =============  =============  ============  ============   =============
</TABLE>

                                      F-14
<PAGE>

                  The Fund IX, X, XI, and REIT Joint Venture
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
           for the Years Ended December 31, 2000, and 1999, and 1998

<TABLE>
<CAPTION>
                                                                              2000            1999             1998
                                                                           ----------      ----------      ------------
     <S>                                                                   <C>             <C>             <C>
     Cash flows from operating activities:
         Net income                                                        $2,669,143      $2,172,244      $  1,613,816
                                                                           ----------      ----------      ------------
         Adjustments to reconcile net income to net cash provided
            by operating activities:
                Depreciation                                                1,411,434       1,538,912         1,216,293
                Changes in assets and liabilities:
                   Accounts receivable                                        132,722        (421,708)          (92,745)
                   Prepaid expenses and other assets                           39,133         (85,281)         (111,818)
                   Accounts payable, accrued liabilities and
                      refundable security deposits                            (37,118)        295,177            29,967
                   Due to affiliates                                            3,216           1,973             1,927
                                                                           ----------      ----------      ------------
                      Total adjustments                                     1,549,387       1,329,073         1,043,624
                                                                           ----------      ----------      ------------

                      Net cash provided by operating activities             4,218,530       3,501,317         2,657,440
                                                                           ----------      ----------      ------------
     Cash flows from investing activities:
         Investment in real estate                                           (127,661)       (930,401)      (24,788,070)
                                                                           ----------      ----------      ------------
     Cash flows from financing activities:
         Distributions to joint venture partners                           (3,868,138)     (3,820,491)       (1,799,457)
         Contributions received from partners                                 130,439       1,066,992        24,970,373
                                                                           ----------      ----------      ------------
                      Net cash (used in) provided by financing
                          activities                                       (3,737,699)     (2,753,499)       23,170,916
                                                                           ----------      ----------      ------------
     Net increase (decrease) in cash and cash equivalents                     353,170        (182,583)        1,040,286
     Cash and cash equivalents, beginning of year                           1,146,874       1,329,457           289,171
                                                                           ----------      ----------      ------------
     Cash and cash equivalents, end of year                                $1,500,044      $1,146,874      $  1,329,457
                                                                           ==========      ==========      ============

     Supplemental disclosure of noncash activities:


         Deferred project costs contributed to joint venture               $        0      $   43,024      $  1,470,780
                                                                           ==========      ==========      ============

         Contribution of real estate assets to joint venture               $        0      $        0      $  5,010,639
                                                                           ==========      ==========      ============
</TABLE>


     Fund X and XI Associates


     On July 17, 1998, the Partnership and Wells Fund XI entered into a joint
     venture agreement. The joint venture, Fund X and XI Associates, was formed
     to acquire, develop, operate, and sell real properties. On July 15, 1998,
     the Operating Partnership entered into a joint venture agreement with Wells
     Development Corporation, referred to as Wells/Fremont Associates. On July
     21, 1998, Wells/Fremont Associates acquired a 58,424-square-foot warehouse
     and office building located in Fremont, California, known as the Fairchild
     Building.

     On October 1998, Fund X and XI Associates acquired Wells Development
     Corporation's interest in Wells/Fremont Associates which resulted in Fund X
     and XI Associates becoming a joint venture partner with the Operating
     Partnership in the ownership of the Fairchild Building.

     On July 27, 1998, the Operating Partnership entered into a joint venture
     agreement with Wells Development Corporation, referred to as Wells/Orange
     County Associates. On July 31, 1998, Wells/Orange County Associates
     acquired a 52,000-square-foot warehouse and office building located in
     Fountain Valley, California, known as the Cort Building.

                                      F-15
<PAGE>

     During 1998, Fund X and XI Associates acquired Wells Development
     Corporation's interest in Wells/Orange County Associates which resulted in
     Fund X and XI Associates becoming a joint venture partner with the
     Operating Partnership in the ownership of the Cort Building.

     Following are the financial statements for Fund X and XI Associates:

                           Fund X and XI Associates
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                 Assets

                                                                                                2000             1999
                                                                                             ----------      ----------
     <S>                                                                                     <C>             <C>
     Investment in joint ventures                                                            $5,618,953      $5,760,615
     Due from affiliates                                                                        149,218         142,299
                                                                                             ----------      ----------
                   Total assets                                                              $5,768,171      $5,902,914
                                                                                             ==========      ==========

                                     Liabilities and Partners' Capital

     Liabilities:
         Partnership distributions payable                                                   $  149,218      $  142,299
                                                                                             ----------      ----------
     Partners' capital:
         Wells Real Estate Fund X                                                             3,259,680       3,341,081
         Wells Real Estate Fund XI                                                            2,359,273       2,419,534
                                                                                             ----------      ----------
                   Total partners' capital                                                    5,618,953       5,760,615
                                                                                             ----------      ----------
                   Total liabilities and partners' capital                                   $5,768,171      $5,902,914
                                                                                             ==========      ==========
</TABLE>

                           Fund X and XI Associates
                           (A Georgia Joint Venture)
                             Statements of Income
             for the Years Ended December 31, 2000, 1999, and 1998


<TABLE>
<CAPTION>
                                                                                    2000           1999          1998
                                                                                  --------       --------      --------
     <S>                                                                          <C>            <C>           <C>
     Equity in income of joint ventures                                           $447,193       $436,158      $138,885
     Expenses                                                                            0              0             0
                                                                                  --------       --------      --------
                   Net income                                                     $447,193       $436,158      $138,885
                                                                                  ========       ========      ========

     Net income allocated to Wells Real Estate Fund X                             $259,034       $252,966     $  82,074
                                                                                  ========       ========     =========

     Net income allocated to Wells Real Estate Fund XI                            $188,159       $183,192     $  56,811
                                                                                  ========       ========     =========
</TABLE>

                                      F-16
<PAGE>

                           Fund X and XI Associates
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                           Wells Real      Wells Real         Total
                                                                             Estate          Estate         Partners'
                                                                             Fund X          Fund XI         Capital
                                                                          ------------    ------------    ------------
     <S>                                                                  <C>             <C>             <C>
     Balance, December 31, 1997                                            $         0      $        0      $        0
         Net income                                                             82,074          56,811         138,885
         Partnership contributions                                           3,447,890       2,498,716       5,946,606
         Partnership distributions                                            (109,827)        (78,743)       (188,570)
                                                                           -----------      ----------      ----------
     Balance, December 31, 1998                                              3,420,137       2,476,784       5,896,921
         Net income                                                            252,966         183,192         436,158
         Partnership distributions                                            (332,022)       (240,442)       (572,464)
                                                                           -----------      ----------      ----------
     Balance, December 31, 1999                                              3,341,081       2,419,534       5,760,615
         Net income                                                            259,034         188,159         447,193
         Partnership distributions                                            (340,435)       (248,420)       (588,855)
                                                                           -----------      ----------      ----------
     Balance, December 31, 2000                                            $ 3,259,680      $2,359,273      $5,618,953
                                                                           ===========      ==========      ==========
</TABLE>


                           Fund X and XI Associates
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                                   2000          1999           1998
                                                                               ------------  -----------   -------------
     <S>                                                                       <C>           <C>           <C>
     Cash flows from operating activities:
         Net income                                                             $ 477,193     $ 436,158      $   138,885
         Adjustments to reconcile net income to net cash provided by
            operating activities:
                Equity in income of joint ventures                               (477,193)     (436,158)        (138,885)
                                                                               ----------    ----------    -------------
                   Net cash provided by operating activities                            0             0                0
                                                                               ----------    ----------    -------------
     Cash flows from investing activities:
         Distributions received from joint ventures                               581,936       572,285           46,450
         Investment in joint ventures                                                   0             0       (5,695,000)
                                                                               ----------    ----------    -------------
                   Net cash provided by (used in) investing activities            581,936       572,285       (5,648,550)
                                                                               ----------    ----------    -------------
     Cash flows from financing activities:
         Contributions received from partners                                           0             0        5,695,000
         Distributions to joint venture partners                                 (581,936)     (572,285)         (46,450)
                                                                               ----------    ----------    -------------
                   Net cash (used in) provided by financing activities           (581,936)     (572,285)       5,648,550
                                                                               ----------    ----------    -------------
     Net increase in cash and cash equivalents                                          0             0                0
     Cash and cash equivalents, beginning of year                                       0             0                0
                                                                               ----------    ----------    -------------
     Cash and cash equivalents, end of year                                     $       0     $       0      $         0
                                                                               ==========    ==========    =============
     Supplemental disclosure of noncash activities:

         Deferred project costs contributed to joint venture                    $       0     $       0      $   251,606
                                                                               ==========    ==========    =============
</TABLE>

                                      F-17
<PAGE>

Fund X and XI Associates' investment and percentage ownership in joint ventures
at December 31, 2000 and 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                         2000                      1999
                                                               -----------------------    -----------------------
                                                                Amount        Percent       Amount        Percent
                                                               ----------   ----------    ------------ ----------
<S>                                                            <C>          <C>           <C>          <C>
Wells/Orange County Associates                                 $3,647,758        56%        $3,732,262     56%
Wells/Fremont Associates                                        1,971,195        22          2,028,353     22
                                                               ----------                 ------------
                                                               $5,618,953                   $5,760,615
                                                               ==========                 ============
</TABLE>

The following is a rollforward of Fund X and XI Associates' investment in joint
ventures for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                                 2000             1999
                                                                              ----------       ----------
        <S>                                                                   <C>              <C>
        Investment in joint venture, beginning or year                        $ 5,760,615      $5,896,921
        Equity in income of joint venture                                         447,193         436,158
        Distributions from joint venture                                         (588,855)       (572,464)
                                                                              -----------      ----------
        Investment in joint venture, end of year                              $ 5,618,953      $5,760,615
                                                                              ===========      ==========
</TABLE>

Following are the financial statements for Wells/Orange County Associates:

                        Wells/Orange County Associates
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                     Assets

                                                                                           2000            1999
                                                                                        ----------      ----------
<S>                                                                                     <C>             <C>
Real estate assets, at cost:
    Land                                                                                $2,187,501      $2,187,501
    Building, less accumulated depreciation of $465,216 in 2000 and
       $278,652 in 1999                                                                  4,198,899       4,385,463
                                                                                        ----------      ----------
              Total real estate assets                                                   6,386,400       6,572,964
Cash and cash equivalents                                                                  119,038         176,666
Accounts receivable                                                                         99,154          49,679
                                                                                        ----------      ----------
              Total assets                                                              $6,604,592      $6,799,309
                                                                                        ==========      ==========

                         Liabilities and Partners' Capital

Liabilities:
    Accounts payable                                                                    $    1,000      $        0
    Partnership distributions payable                                                      128,227         173,935
                                                                                        ----------      ----------
              Total liabilities                                                            129,227         173,935
                                                                                        ----------      ----------
Partners' capital:
    Wells Operating Partnership, L.P.                                                    2,827,607       2,893,112
    Fund X and XI Associates                                                             3,647,758       3,732,262
                                                                                        ----------      ----------
              Total partners' capital                                                    6,475,365       6,625,374
                                                                                        ----------      ----------
              Total liabilities and partners' capital                                   $6,604,592      $6,799,309
                                                                                        ==========      ==========
</TABLE>

                                      F-18
<PAGE>

                        Wells/Orange County Associates
                           (A Georgia Joint Venture)
                             Statements of Income
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                              2000          1999          1998
                                                                            ---------     ---------     ---------
<S>                                                                         <C>           <C>            <C>
Revenues:
    Rental income                                                           $ 795,545     $ 795,545     $ 331,477
    Interest income                                                                 0             0           448
                                                                            ---------     ---------     ---------
                                                                              795,545       795,545       331,925
                                                                            ---------     ---------     ---------
Expenses:
    Depreciation                                                              186,564       186,565        92,087
    Management and leasing fees                                                30,915        30,360        12,734
    Operating costs, net of reimbursements                                      5,005        22,229         2,288
    Interest                                                                        0             0        29,472
    Legal and accounting                                                        4,100         5,439         3,930
                                                                            ---------     ---------     ---------
                                                                              226,584       244,593       140,511
                                                                            ---------     ---------     ---------
Net income                                                                  $ 568,961     $ 550,952     $ 191,414
                                                                            =========     =========     =========

Net income allocated to Wells Operating Partnership, L.P.                   $ 248,449     $ 240,585     $  91,978
                                                                            =========     =========     =========

Net income allocated to Fund X and XI Associates                            $ 320,512     $ 310,367     $  99,436
                                                                            =========     =========     =========
</TABLE>

                        Wells/Orange County Associates
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                       Wells
                                                                     Operating           Fund X          Total
                                                                   Partnership,          and XI        Partners'
                                                                       L.P.            Associates       Capital
                                                                  ---------------     -------------   -------------
<S>                                                               <C>                 <C>             <C>
Balance, December 31, 1997                                        $             0     $           0   $           0
    Net income                                                             91,978            99,436         191,414
    Partnership contributions                                           2,991,074         3,863,272       6,854,346
    Partnership distributions                                            (124,435)         (145,942)       (270,377)
                                                                  ---------------     -------------   -------------
Balance, December 31, 1998                                              2,958,617         3,816,766       6,775,383
    Net income                                                            240,585           310,367         550,952
    Partnership distributions                                            (306,090)         (394,871)       (700,961)
                                                                  ---------------     -------------   -------------
Balance, December 31, 1999                                              2,893,112         3,732,262       6,625,374
    Net income                                                            248,449           320,512         568,961
    Partnership distributions                                            (313,954)         (405,016)       (718,970)
                                                                  ---------------     -------------   -------------
Balance, December 31, 2000                                        $     2,827,607     $   3,647,758   $   6,475,365
                                                                  ===============     =============   =============
</TABLE>

                                      F-19
<PAGE>

                        Wells/Orange County Associates
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
             for the Years Ended December 31, 2000, 1999, and 1998


<TABLE>
<CAPTION>
                                                                            2000         1999             1998
                                                                        -----------   -----------      -----------
<S>                                                                     <C>           <C>              <C>
Cash flows from operating activities:
    Net income                                                          $   568,961   $   550,952      $   191,414
                                                                        -----------   -----------      -----------
    Adjustments to reconcile net income to net cash provided by
       operating activities:
           Depreciation                                                     186,564       186,565           92,087
           Changes in assets and liabilities:
              Accounts receivable                                           (49,475)      (36,556)         (13,123)
              Accounts payable                                                1,000        (1,550)           1,550
                                                                        -----------   -----------      -----------
                 Total adjustments                                          138,089       148,459           80,514
                                                                        -----------   -----------      -----------
                 Net cash provided by operating activities                  707,050       699,411          271,928
                                                                        -----------   -----------      -----------
Cash flows from investing activities:

    Investment in real estate                                                     0             0       (6,563,700)
                                                                        -----------   -----------      -----------
Cash flows from financing activities:
    Issuance of note payable                                                      0             0        4,875,000
    Payment of note payable                                                       0             0       (4,875,000)
    Distributions to partners                                              (764,678)     (703,640)         (93,763)
    Contributions received from partners                                          0             0        6,566,430
                                                                        -----------   -----------      -----------
                 Net cash (used in) provided by financing
                     activities                                            (764,678)     (703,640)       6,472,667
                                                                        -----------   -----------      -----------
Net (decrease) increase in cash and cash equivalents                        (57,628)       (4,229)         180,895
Cash and cash equivalents, beginning of year                                176,666       180,895                0
                                                                        -----------   -----------      -----------
Cash and cash equivalents, end of year                                  $   119,038   $   176,666      $   180,895
                                                                        ===========   ===========      ===========

Supplemental disclosure of noncash activities:
    Deferred project costs contributed to joint venture                 $         0   $         0      $   287,916
                                                                        ===========   ===========      ===========
</TABLE>

                                      F-20
<PAGE>

Following are the financial statements for Wells/Fremont Associates:

                           Wells/Fremont Associates
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 2000 and 1999


<TABLE>
<CAPTION>
                                    Assets

                                                                                           2000            1999
                                                                                       -----------      ----------
<S>                                                                                    <C>              <C>
Real estate assets, at cost:
    Land                                                                               $ 2,219,251      $2,219,251
    Building, less accumulated depreciation of $713,773 in 2000 and
       $428,246 in 1999                                                                  6,424,385       6,709,912
                                                                                       -----------      ----------
              Total real estate assets                                                   8,643,636       8,929,163
Cash and cash equivalents                                                                   92,564         189,012
Accounts receivable                                                                        126,433          92,979
                                                                                       -----------      ----------
              Total assets                                                             $ 8,862,633      $9,211,154
                                                                                       ===========      ==========

                        Liabilities and Partners' Capital

Liabilities:
    Accounts payable                                                                   $     3,016      $    2,015
    Due to affiliate                                                                         7,586           5,579
    Partnership distributions payable                                                       89,549         186,997
                                                                                       -----------      ----------
              Total liabilities                                                            100,151         194,591
                                                                                       -----------      ----------
Partners' capital:
    Wells Operating Partnership, L.P.                                                    6,791,287       6,988,210
    Fund X and XI Associates                                                             1,971,195       2,028,353
                                                                                       -----------      ----------
              Total partners' capital                                                    8,762,482       9,016,563
                                                                                       -----------      ----------
              Total liabilities and partners' capital                                  $ 8,862,633      $9,211,154
                                                                                       ===========      ==========
</TABLE>

                                      F-21
<PAGE>

                           Wells/Fremont Associates
                           (A Georgia Joint Venture)
                             Statements of Income
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                              2000           1999          1998
                                                                            ---------      ---------     ---------
<S>                                                                         <C>            <C>           <C>
Revenues:
    Rental income                                                           $ 902,946      $ 902,946     $ 401,058
    Interest income                                                                 0              0         3,896
                                                                            ---------      ---------     ---------
                                                                              902,946        902,946       404,954
                                                                            ---------      ---------     ---------
Expenses:
    Depreciation                                                              285,527        285,526       142,720
    Management and leasing fees                                                36,787         37,355        16,726
    Operating costs, net of reimbursements                                     13,199         16,006         3,364
    Interest                                                                        0              0        73,919
    Legal and accounting                                                        4,300          4,885         6,306
                                                                            ---------      ---------     ---------
                                                                              339,813        343,772       243,035
                                                                            ---------      ---------     ---------
Net income                                                                  $ 563,133      $ 559,174     $ 161,919
                                                                            =========      =========     =========

Net income allocated to Wells Operating Partnership, L.P.                   $ 436,452      $ 433,383     $ 122,470
                                                                            =========      =========     =========

Net income allocated to Fund X and XI Associates                            $ 126,681      $ 125,791     $  39,449
                                                                            =========      =========     =========
</TABLE>

                           Wells/Fremont Associates
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                      Wells
                                                                    Operating           Fund X             Total
                                                                   Partnership,         and XI           Partners'
                                                                       L.P.           Associates          Capital
                                                                  --------------     -------------      -----------
<S>                                                               <C>                <C>                <C>
Balance, December 31, 1997                                        $            0     $           0      $         0
    Net income                                                           122,470            39,449          161,919
    Partner contributions                                              7,274,075         2,083,334        9,357,409
    Partnership distributions                                           (229,863)          (42,628)        (272,491)
                                                                  --------------     -------------      -----------
Balance, December 31, 1998                                             7,166,682         2,080,155        9,246,837
    Net income                                                           433,383           125,791          559,174
    Partnership distributions                                           (611,855)         (177,593)        (789,448)
                                                                  --------------     -------------      -----------
Balance, December 31, 1999                                             6,988,210         2,028,353        9,016,563
    Net income                                                           436,452           126,681          563,133
    Partnership distributions                                           (633,375)         (183,839)        (817,214)
                                                                  --------------     -------------      -----------
Balance, December 31, 2000                                        $    6,791,287     $   1,971,195      $ 8,762,482
                                                                  ==============     =============      ===========
</TABLE>

                                      F-22
<PAGE>

                           Wells/Fremont Associates
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
             for the Years Ended December 31, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                                             2000          1999             1998
                                                                          ----------     ---------       ----------
<S>                                                                       <C>            <C>             <C>
Cash flows from operating activities:
    Net income                                                            $  563,133     $ 559,174       $  161,919
                                                                          ----------     ---------       ----------
    Adjustments to reconcile net income to net cash provided by
       operating activities:
           Depreciation                                                      285,527       285,526          142,720
           Changes in assets and liabilities:
              Accounts receivable                                            (33,454)      (58,237)         (34,742)
              Accounts payable                                                 1,001        (1,550)           3,565
              Due to affiliate                                                 2,007         3,527            2,052
                                                                          ----------     ---------       ----------
                 Total adjustments                                           255,081       229,266          113,595
                                                                          ----------     ---------       ----------
                 Net cash provided by operating activities                   818,214       788,440          275,514
                                                                          ----------     ---------       ----------
Cash flows from investing activities:
    Investment in real estate                                                      0             0       (8,983,111)
                                                                          ----------     ---------       ----------
Cash flows from financing activities:
    Issuance of note payable                                                       0             0        5,960,000
    Payment of note payable                                                        0             0       (5,960,000)
    Distributions to partners                                               (914,662)     (791,940)         (83,001)
    Contributions received from partners                                           0             0        8,983,110
                                                                          ----------     ---------       ----------
                 Net cash (used in) provided by financing
                     activities                                             (914,662)     (791,940)       8,900,109
                                                                          ----------     ---------       ----------
Net (decrease) increase in cash and cash equivalents                         (96,448)       (3,500)         192,512
Cash and cash equivalents, beginning of year                                 189,012       192,512                0
                                                                          ----------     ---------       ----------
Cash and cash equivalents, end of year                                    $   92,564     $ 189,012       $  192,512
                                                                          ==========     =========       ==========

Supplemental disclosure of noncash activities:
    Deferred project costs contributed to joint venture                   $        0     $       0       $  374,299
                                                                          ==========     =========       ==========
</TABLE>

Fund XI, XII, and REIT Joint Venture

On May 1, 1999, the Partnership entered into a joint venture with Wells Fund XII
and the Operating Partnership. On May 18, 1999, the joint venture purchased a
169,510 square foot, two-story manufacturing and office building, known as EYBL
CarTex, in Fountain Inn, South Carolina. On July 21, 1999, the joint venture
purchased a 68,900 square foot, three-story office building, known as the Sprint
Building, in Leawood, Kansas. On August 17, 1999, the joint venture purchased a
130,000 square foot office and warehouse building, known as the Johnson Matthey
Building, in Chester County Pennsylvania. On September 20, 1999, the joint
venture purchased a 62,400 square foot two-story office building, known as the
Gartner Building, in Fort Myers, Florida.

                                      F-23
<PAGE>

     Following are the financial statements for the Fund XI, XII, and REIT Joint
     Venture:

                   The Fund XI, XII, and REIT Joint Venture
                           (A Georgia Joint Venture)
                                Balance Sheets
                          December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                        Assets

                                                                                        2000             1999
                                                                                   -------------     ------------
<S>                                                                                <C>               <C>
     Real estate assets, at cost:
         Land                                                                      $   5,048,797     $  5,048,797
         Building and improvements, less accumulated depreciation of
             $1,599,262 in 2000 and $506,582 in 1999                                  25,719,189       26,811,869
                                                                                   -------------     ------------
                   Total real estate assets                                           30,767,986       31,860,666
     Cash and cash equivalents                                                           541,089          766,278
     Accounts receivable                                                                 394,314          133,777
     Prepaid assets and other expenses                                                    26,486           26,486
                                                                                   -------------     ------------
                   Total assets                                                    $  31,729,875     $ 32,787,207
                                                                                   =============     ============
                       Liabilities and Partners' Capital

     Liabilities:
         Accounts payable                                                          $     114,180     $    112,457
         Partnership distributions payable                                               453,395          680,294
                                                                                   -------------     ------------
                                                                                         597,575          792,751
                                                                                   -------------     ------------
     Partners' capital:
         Wells Real Estate Fund XI                                                     8,148,261        8,365,852
         Wells Real Estate Fund XII                                                    5,325,424        5,467,634
         Wells Operating Partnership, L.P.                                            17,688,615       18,160,970
                                                                                   -------------     ------------
                   Total partners' capital                                            31,162,300       31,994,456
                                                                                  --------------     ------------
                  Total liabilities and partners' capital                         $   31,729,875     $ 32,787,207
                                                                                  --------------     ------------
</TABLE>

                                      F-24
<PAGE>

                   The Fund XI, XII, and REIT Joint Venture
                           (A Georgia Joint Venture)
                             Statements of Income
                for the Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                            2000                 1999
                                                                        -----------        -------------
     <S>                                                                <C>                <C>
     Revenues:
         Rental income                                                  $ 3,345,932         $ 1,443,446
         Interest income                                                      2,814                   0
         Other income                                                           440                  57
                                                                        -----------         -----------
                                                                          3,349,186           1,443,503
                                                                        -----------         -----------
     Expenses:
         Depreciation                                                     1,092,680             506,582
         Management and leasing fees                                        157,236              59,230
         Operating costs, net of reimbursements                             (24,798)              6,433
         Property administration                                             30,787              14,185
         Legal and accounting                                                14,725               4,000
                                                                        -----------         -----------
                                                                          1,270,630             590,430
                                                                        -----------         -----------
     Net income                                                         $ 2,078,556         $   853,073
                                                                        ===========         ===========

     Net income allocated to Wells Real Estate Fund XI                  $   543,497         $   240,031
                                                                        ===========         ===========

     Net income allocated to Wells Real Estate Fund XII                 $   355,211         $   124,542
                                                                        ===========         ===========

     Net income allocated to Wells Operating Partnership, L.P.          $ 1,179,848         $   488,500
                                                                        ===========         ===========
</TABLE>

                   The Fund XI, XII, and REIT Joint Venture
                           (A Georgia Joint Venture)
                        Statements of Partners' Capital
                for the Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                         Wells
                                                     Wells Real       Wells Real       Operating          Total
                                                       Estate          Estate         Partnership,       Partners'
                                                      Fund XI         Fund XII            L.P.           Capital
                                                    -----------     -------------    -------------    -------------
     <S>                                            <C>             <C>              <C>              <C>
     Balance, December 31, 1998                     $        0      $        0       $         0      $         0
         Net income                                    240,031         124,542           488,500          853,073
         Partnership contributions                   8,470,160       5,520,835        18,376,267       32,367,262
         Partnership distributions                    (344,339)       (177,743)         (703,797)      (1,225,879)
                                                    ----------      ----------       -----------      -----------
     Balance, December 31, 1999                      8,365,852       5,467,634        18,160,970       31,994,456
         Net income                                    543,497         355,211         1,179,848        2,078,556
         Partnership distributions                    (761,088)       (497,421)       (1,652,203)      (2,910,712)
                                                    ----------      ----------       -----------      -----------
     Balance, December 31, 2000                     $8,148,261      $5,325,424       $17,688,615      $31,162,300
                                                    ==========      ==========       ===========      ===========
</TABLE>

                                      F-25
<PAGE>

                   The Fund XI, XII, and REIT Joint Venture
                           (A Georgia Joint Venture)
                           Statements of Cash Flows
                for the Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                            2000              1999
                                                                                        -----------      ------------
   <S>                                                                                  <C>              <C>
   Cash flows from operating activities:
       Net income                                                                       $ 2,078,556      $    853,073
                                                                                        -----------      ------------
       Adjustments to reconcile net income to net cash provided by
          operating activities:
              Depreciation                                                                1,092,680           506,582
              Changes in assets and liabilities:
                 Accounts receivable                                                       (260,537)         (133,777)
                 Prepaid expenses and other assets                                                0           (26,486)
                 Accounts payable                                                             1,723           112,457
                                                                                        -----------      ------------
                    Total adjustments                                                       833,866           458,776
                                                                                        -----------      ------------
                    Net cash provided by operating activities                             2,912,422         1,311,849
                                                                                        -----------      ------------
   Cash flows from financing activities:
       Distributions to joint venture partners                                           (3,137,611)         (545,571)
                                                                                        -----------      ------------
   Net (decrease) increase in cash and cash equivalents                                    (225,189)          766,278
                                                                                        -----------      ------------
   Cash and cash equivalents, beginning of year                                             766,278                 0
                                                                                        -----------      ------------
   Cash and cash equivalents, end of year                                               $   541,089      $    766,278
                                                                                        ===========      ============
   Supplemental disclosure of noncash activities:
       Deferred project costs contributed to joint venture                              $         0      $  1,294,686
                                                                                        ===========      ============

       Contribution of real estate assets to joint venture                              $         0      $ 31,072,562
                                                                                        ===========      ============
</TABLE>

6. INCOME TAX BASIS NET INCOME AND PARTNERS' CAPITAL

   The Partnership's income tax basis net income for the years ended December
   31, 2000, 1999, and 1998 is calculated as follows:

<TABLE>
<CAPTION>
                                                                                  2000           1999           1998
                                                                                ---------      ---------     ----------
<S>                                                                             <C>            <C>           <C>
   Financial statement net income                                                $895,989       $630,528      $143,295
   Increase (decrease) in net income resulting from:
       Depreciation expense for financial reporting purposes in excess
          of amounts for income tax purposes                                      139,862        135,648        45,158
       Expenses deducted for financial reporting purposes, capitalized
          for income tax purposes                                                     475            502           347
       Rental income accrued for financial reporting purposes in
          excess of amounts for income tax purposes                               (91,551)       (62,570)      (11,108)
                                                                                 --------       --------      --------
   Income tax basis net income                                                   $944,775       $704,108      $177,692
                                                                                 ========       ========      ========
</TABLE>


   The Partnership's income tax basis partners' capital at December 31, 2000,
   1999, and 1998 is computed as follows:

                                      F-26
<PAGE>

<TABLE>
<CAPTION>
                                                                         2000              1999              1998
                                                                      -----------       -----------       -----------
<S>                                                                   <C>               <C>               <C>
   Financial statements partners' capital                             $13,739,534       $14,100,063       $14,400,426
   Increase (decrease) in partners' capital resulting from:
          Depreciation expense for financial reporting
              purposes in excess of amounts for income tax
              purposes                                                    320,668           180,806            45,158
          Capitalization of syndication costs for income tax
              purposes, which are accounted for as cost of
              capital for financial reporting purposes                  2,035,389         2,035,389         2,035,389
          Accumulated rental income accrued for financial
              reporting purposes in excess of amounts for
              income tax purposes                                        (165,229)          (73,678)          (11,108)
          Accumulated expenses deducted for financial
              reporting purposes, capitalized for income tax
              purposes                                                      1,324               849               347
          Partnership's distributions payable                             326,952           275,737           141,007
                                                                      -----------       -----------       -----------
   Income tax basis partners' capital                                 $16,258,638       $16,519,166       $16,611,219
                                                                      ===========       ===========       ===========
</TABLE>

7. 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, 2000 is as follows:

                 Year ended December 31:
                     2001                                    $1,485,742
                     2002                                     1,295,367
                     2003                                     1,346,701
                     2004                                     1,297,359
                     2005                                     1,133,207
                 Thereafter                                   2,094,111
                                                             ----------
                                                             $8,652,487
                                                             ==========

   Four tenants contributed 17%, 13%, 13%, and 13% of rental income. In
   addition, four tenants will contribute 19%, 17%, 17%, and 12% of future
   minimum rental income.

   The future minimum rental income due Fund IX, X, XI, and REIT Joint Venture
   under noncancelable operating leases at December 31, 2000 is as follows:

                 Year ended December 31:
                     2001                                   $ 4,413,780
                     2002                                     3,724,218
                     2003                                     3,617,437
                     2004                                     3,498,478
                     2005                                     2,482,821
                 Thereafter                                   5,436,524
                                                            -----------
                                                            $23,173,258
                                                            ===========

   Four tenants contributed 25%, 24%, 13%, and 13% of rental income for the year
   ended December 31, 2000. In addition, four tenants will contribute 38%, 21%,
   20%, and 19% of future minimum rental income.

                                      F-27
<PAGE>

The future minimum rental income due Wells/Orange County Associates under
noncancelable operating leases at December 31, 2000 is as follows:

                 Year ended December 31:
                     2001                            $  809,580
                     2002                               834,888
                     2003                               695,740
                                                     ----------
                                                     $2,340,208
                                                     ==========

One tenant contributed 100% of rental income for the year ended December 31,
2000 and will contribute 100% of future minimum rental income.

The future minimum rental income due Wells/Fremont Associates under
noncancelable operating leases at December 31, 2000 is as follows:

                 Year ended December 31:
                     2001                          $  869,492
                     2002                             922,444
                     2003                             950,118
                     2004                             894,832
                                                   ----------
                                                   $3,636,886
                                                   ==========

One tenant contributed 100% of rental income for the year ended December 31,
2000 and will contribute 100% of future minimum rental income.

The future minimum rental income due from XI, XII and REIT under noncancelable
operating leases at December 31, 2000 is as follows:

                 Year ended December 31:
                     2001                          $ 3,135,340
                     2002                            2,598,606
                     2003                            2,946,701
                     2004                            3,445,193
                     2005                            3,495,155
                     Thereafter                      6,169,579
                                                   -----------
                                                   $21,790,574
                                                   ===========

Four tenants contributed approximately 30%, 24%, 23%, and 15% of rental income
for the year ended December 31, 2000. In addition, four tenants will contribute
approximately 28%, 27%, 26%, and 19% of future minimum rental income.

                                      F-28
<PAGE>

8.  QUARTERLY RESULTS (UNAUDITED)

    Presented below is a summary of the unaudited quarterly financial
    information for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                              2000 Quarters Ended
                                                       ---------------------------------------------------------------
                                                         March 31       June 30        September 30       December 31
                                                       -----------     ---------       ------------       ------------
<S>                                                    <C>             <C>             <C>                <C>
     Revenues                                           $ 237,447      $ 241,195         $ 250,198          $ 247,010
     Net income                                           212,249        217,494           236,236            230,010
     Net income allocated to Class A limited
         partners                                         334,569        340,881           365,268            340,829
     Net loss allocated to Class B limited
         partners                                        (122,320)      (123,387)         (129,032)          (110,819)
     Net income per weighted average Class A
         limited partner unit outstanding (a)           $    0.25      $    0.25         $    0.27          $    0.25
     Net loss per weighted average Class B
         limited partner unit outstanding (a)               (0.39)         (0.39)            (0.41)             (0.35)
     Cash distribution per weighted average
         Class A limited partner unit outstanding            0.23           0.23              0.24               0.24
</TABLE>

         (a)  The totals of the four quarterly amounts for the year ended
              December 31, 2000 do not equal the totals for the year. This
              difference results from the use of a weighted average to compute
              the number of units outstanding for each quarter and the year.

<TABLE>
<CAPTION>
                                                                             1999 Quarters Ended
                                                      ---------------------------------------------------------------
                                                        March 31       June 30        September 30       December 31
                                                      -----------    ----------      --------------    --------------
<S>                                                   <C>            <C>             <C>               <C>
     Revenues                                           $160,499      $172,481        $ 218,150          $ 215,456
     Net income                                          125,995       136,013          187,312            181,208
     Net income allocated to Class A limited
         partners                                        174,372       199,995          313,127            321,874
     Net loss allocated to Class B limited
         partners                                        (48,377)      (63,983)        (125,815)          (140,665)
     Net income per weighted average Class A
         limited partner unit outstanding (a)           $   0.13      $   0.15        $    0.24          $    0.24
     Net loss per weighted average Class B
         limited partner unit outstanding (a)              (0.14)        (0.19)           (0.37)             (0.45)
     Cash distribution per weighted average
         Class A limited partner unit outstanding           0.15          0.15             0.20               0.21
</TABLE>

9.   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-29
<PAGE>

                                 EXHIBIT INDEX

                       (Wells Real Estate Fund XI, L.P.)

     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.

Exhibit
Number    Description of Document
------    -----------------------
*3(a)     Amended and Restated Agreement of Limited Partnership of Wells Real
          Estate Fund XI, L.P. (Exhibit 3(a) to Form S-11 Registration Statement
          of Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.,
          as amended to date, Commission File No. 333-7979)

*3(b)     Certificate of Limited Partnership of Wells Real Estate Fund XI, L.P.
          (Exhibit 3(c) to Form S-11 Registration Statement of Wells Real Estate
          Fund X, L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
          Commission File No. 333-7979)

*10(a)    Leasing and Tenant Coordinating Agreement with Wells Management
          Company, Inc. (Exhibit 10(d) to Form S-11 Registration Statement of
          Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
          amended to date, Commission File No. 333-7979)

*10(b)    Management Agreement with Wells Management Company, Inc. (Exhibit
          10(e) to Form S-11 Registration Statement of Wells Real Estate Fund X,
          L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
          Commission File No. 333-7979)

*10(c)    Custodial Agency Agreement with The Bank of New York (Exhibit 10(f) to
          Form S-11 Registration Statement of Wells Real Estate Fund X, L.P. and
          Wells Real Estate Fund XI, L.P., as amended to date, Commission File
          No. 333-7979)

*10(d)    Joint Venture Agreement of Fund IX and Fund X Associates dated March
          20, 1997 (Exhibit 10(g) to Post-Effective Amendment No. 1 to Form S-11
          Registration Statement of Wells Real Estate Fund X, L.P. and Wells
          Real Estate Fund XI, L.P., as amended to date, Commission File
          No. 333-7979)
<PAGE>

*10(e)    Lease Agreement for the ABB Building dated December 10, 1996, between
          Wells Real Estate Fund IX, L.P. and ABB Flakt, Inc. (Exhibit 10(kk) to
          Post-Effective Amendment No. 13 to Form S-11 Registration Statement of
          Wells Real Estate Fund VIII, L.P. and Wells Real Estate Fund IX, L.P.,
          as amended to date, Commission File No. 33-83852)

*10(f)    Development Agreement relating to the ABB Building dated December 10,
          1996, between Wells Real Estate Fund IX, L.P. and ADEVCO Corporation
          (Exhibit 10(ll) to Post-Effective Amendment No. 13 to Form S-11
          Registration Statement of Wells Real Estate Fund VIII, L.P. and Wells
          Real Estate Fund IX, L.P., as amended to date, Commission File
          No. 33-83852)

*10(g)    Owner-Contractor Agreement relating to the ABB Building dated November
          1, 1996, between Wells Real Estate Fund IX, L.P. and Integra
          Construction, Inc. (Exhibit 10(mm) to Post-Effective Amendment No. 13
          to Form S-11 Registration Statement of Wells Real Estate Fund VIII,
          L.P. and Wells Real Estate Fund IX, L.P., as amended to date,
          Commission File No. 33-83852)

*10(h)    Agreement for the Purchase and Sale of Real Property relating to the
          Lucent Technologies Building dated May 30, 1997, between Fund IX and
          Fund X Associates and Wells Development Corporation (Exhibit 10(k) to
          Post-Effective Amendment No. 2 to Form S-11 Registration Statement of
          Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
          amended to date, Commission File No. 333-7979)

*10(i)    Net Lease Agreement for the Lucent Technologies Building dated May 30,
          1997 (Exhibit 10(l) to Post-Effective Amendment No. 2 to Form S-11
          Registration Statement of Wells Real Estate Fund X, L.P. and Wells
          Real Estate Fund XI, L.P., as amended to date, Commission File
          No. 333-7979)

*10(j)    Development Agreement relating to the Lucent Technologies Building
          dated May 30, 1997, between Wells Development Corporation and ADEVCO
          Corporation (Exhibit 10(m) to Post-Effective Amendment No. 2 to Form
          S-11 Registration Statement of Wells Real Estate Fund X, L.P. and
          Wells Real Estate Fund XI, L.P., as amended to date, Commission File
          No. 333-7979)

*10(k)    First Amendment to Net Lease Agreement for the Lucent Technologies
          Building dated March 30, 1998 (Exhibit 10.10(a) to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-32099)
<PAGE>

*10(l)    Amended and Restated Joint Venture Agreement of The Fund IX, Fund X,
          Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint Venture")
          dated July 11, 1998 (Exhibit 10.4 to Form S-11 Registration Statement
          of Wells Real Estate Investment Trust, Inc., as amended to date,
          Commission File No. 333-32099)

*10(m)    Agreement for the Purchase and Sale of Real Property relating to the
          Ohmeda Building dated November 14, 1997 between Lincor Centennial,
          Ltd. and Wells Real Estate Fund X, L.P. (Exhibit 10.6 to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-32099)

*10(n)    Agreement for the Purchase and Sale of Property relating to the 360
          Interlocken Building dated February 11, 1998 between Orix Prime West
          Broomfield Venture and Wells Development Corporation (Exhibit 10.7 to
          Form S-11 Registration Statement of Wells Real Estate Investment
          Trust, Inc., as amended to date, Commission File No. 333-32099)

*10(o)    Purchase and Sale Agreement relating to the Iomega Building dated
          February 4, 1998 with SCI Development Services Incorporated (Exhibit
          10.11 to Form S-11 Registration Statement of Wells Real Estate
          Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(p)    Lease Agreement for the Iomega Building dated April 9, 1996 (Exhibit
          10.12 to Form S-11 Registration Statement of Wells Real Estate
          Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(q)    Agreement for the Purchase and Sale of Property relating to the
          Fairchild Building dated June 8, 1998 (Exhibit 10.13 to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-32099)

*10(r)    Restatement of and First Amendment to Agreement for the Purchase and
          Sale of Property relating to the Fairchild Building dated July 1, 1998
          (Exhibit 10.14 to Form S-11 Registration Statement of Wells Real
          Estate Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(s)    Joint Venture Agreement of Wells/Fremont Associates (the "Fremont
          Joint Venture") dated July 15, 1998 between Wells Development
          Corporation and Wells Operating Partnership, L.P. (Exhibit 10.17 to
          Form S-11 Registration Statement of Wells Real Estate Investment
          Trust, Inc., as amended to date, Commission File No. 333-32099)
<PAGE>

*10(t)    Joint Venture Agreement of Fund X and Fund XI Associates dated July
          15, 1998 (Exhibit 10.18 to Form S-11 Registration Statement of Wells
          Real Estate Investment Trust, Inc., as amended to date, Commission
          File No. 333-32099)

*10(u)    Agreement for the Purchase and Sale of Joint Venture Interest relating
          to the Fremont Joint Venture dated July 17, 1998 between Wells
          Development Corporation and Fund X and Fund XI Associates (Exhibit
          10.19 to Form S-11 Registration Statement of Wells Real Estate
          Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(v)    Lease Agreement for the Fairchild Building dated September 19, 1997
          between the Fremont Joint Venture (as successor in interest by
          assignment) and Fairchild Technologies USA, Inc. (Exhibit 10.20 to
          Form S-11 Registration Statement of Wells Real Estate Investment
          Trust, Inc., as amended to date, Commission File No. 333-32099)

*10(w)    First Amendment to Joint Venture Agreement of Wells/Fremont Associates
          dated October 8, 1998 (Exhibit 10(w) to Form 10-K of Wells Real Estate
          Fund X, L.P. for the fiscal year ended December 31, 1998, Commission
          File No. 0-23719)

*10(x)    Purchase and Sale Agreement and Joint Escrow Instructions relating to
          the Cort Furniture Building dated June 12, 1998 between the Cort Joint
          Venture (as successor in interest by assignment) and Spencer Fountain
          Valley Holdings, Inc. (Exhibit 10.21 to Form S-11 Registration
          Statement of Wells Real Estate Investment Trust, Inc., as amended to
          date, Commission File No. 333-32099)

*10(y)    First Amendment to Purchase and Sale Agreement and Joint Escrow
          Instructions relating to the Cort Furniture Building dated July 16,
          1998 between the Cort Joint Venture (as successor in interest by
          assignment) and Spencer Fountain Valley Holdings, Inc. (Exhibit 10.22
          to Form S-11 Registration Statement of Wells Real Estate Investment
          Trust, Inc., as amended to date, Commission File No. 333-32099)

*10(z)    Joint Venture Agreement of Wells/Orange County Associates (the "Cort
          Joint Venture") dated July 27, 1998 between Wells Development
          Corporation and Wells Operating Partnership, L.P. (Exhibit 10.25 to
          Form S-11 Registration Statement of Wells Real Estate Investment
          Trust, Inc., as amended to date, Commission File No. 333-32099)

*10(aa)   Agreement for the Purchase and Sale of Joint Venture Interest relating
          to the Cort Joint Venture dated July 30, 1998 between Wells
          Development Corporation and Fund X and Fund XI Associates (Exhibit
<PAGE>

          10.26 to Form S-11 Registration Statement of Wells Real Estate
          Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(bb)   First Amendment to Joint Venture Agreement of Wells/Orange County
          Associates dated September 1, 1998 (Exhibit 10(dd) to Form 10-K of
          Wells Real Estate Fund X, L.P. for the fiscal year ended December 31,
          1998, Commission File No. 0-23719)

*10(cc)   Temporary Lease Agreement for remainder of the ABB Building dated
          September 10, 1998 between the IX-X-XI-REIT Joint Venture and
          Associates Housing Finance, LLC (Exhibit 10.35 to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-32099)

*10(dd)   Amended and Restated Joint Venture Partnership Agreement of The Wells
          Fund XI - Fund XII - REIT Joint Venture (Exhibit 10.29 to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-83933)

*10(ee)   Agreement of Sale and Purchase relating to the EYBL CarTex Building
          (Exhibit 10.54 to Form S-11 Registration Statement of Wells Real
          Estate Investment Trust, Inc., as amended to date, Commission File
          No. 333-32099)

*10(ff)   Agreement of Purchase and Sale for the Sprint Building (Exhibit 10.5
          to Form S-11 Registration Statement of Wells Real Estate Fund XII,
          L.P., as amended to date, Commission File No. 33-66657)

*10(gg)   Agreement of Sale and Purchase for the Johnson Matthey Building
          (Exhibit 10.6 to Form S-11 Registration Statement of Wells Real Estate
          Fund XII, L.P., as amended to date, Commission File No. 33-66657)

*10(hh)   Fifth Amendment to Lease for the Johnson Matthey Building (Exhibit
          10.7 to Form S-11 Registration Statement of Wells Real Estate Fund
          XII, L.P., as amended to date, Commission File No. 33-66657)

*10(ii)   Agreement of Purchase and Sale relating to the Gartner Building
          (Exhibit 10.63 to Form S-11 Registration Statement of Wells Real
          Estate Investment Trust, Inc., as amended to date, Commission File
          No. 333-32009)
<PAGE>

*10(jj)   Lease Agreement for the Gartner Building (Exhibit 10.64 to Form S-11
          Registration Statement of Wells Real Estate Investment Trust, Inc., as
          amended to date, Commission File No. 333-32099)