##### Index to Financial Statements

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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(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, 2003 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



Commission file number 0-25731



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WELLS REAL ESTATE FUND XI, L.P.

(Exact name of registrant as specified in its
charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-2250094                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|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                                
|                                                            
|Securities registered pursuant to Section 12 (g) of the Act:



Class A Units

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(Title of Class)



Class B Units

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(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 xNo ̈



Aggregate market value of the voting stock
held by nonaffiliates: Not Applicable



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##### Index to Financial Statements



CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS



Certain statements contained in this Form 10-K
of Wells Real Estate Fund XI, L.P. (the Partnership) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Such statements include, in particular, statements about our plans, strategies and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from
those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as
may, will, expect, intend, anticipate, estimate, believe, continue, or other similar words. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date this report is filed with the Securities and Exchange Commission. Neither the Partnership nor the general partners make any representations or warranties (expressed or implied) about the
accuracy of any such forward-looking statements. Actual results could differ materially from any forward-looking statements contained in this Form 10-K, and we do not intend to publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.



Any such
forward-looking statements are subject to known and unknown risks, uncertainties and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive and market conditions,
all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations;
provide distributions to limited partners; and maintain the value of our real estate properties, may be significantly hindered. Following are some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual
results to differ materially from those presented in certain forward-looking statements:



General economic risks



| |  |  | Adverse changes in general economic conditions or local conditions;
| | - |  | -------------------------------------------------------------------



| |  |  | Adverse economic conditions affecting the particular industry of one or more of our tenants;
| | - |  | --------------------------------------------------------------------------------------------



Real estate risks



| |  |  | Our ability to achieve appropriate occupancy levels resulting in sufficient rental amounts;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Supply of or demand for similar or competing rentable space, which may adversely impact our ability to retain or obtain new tenants at lease expiration at acceptable rental amounts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tenant ability or willingness to satisfy obligations relating to our existing lease agreements;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | Our potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | Increases in property operating expenses, including property taxes, insurance, and other costs at our properties;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Our ability to secure adequate insurance at reasonable and appropriate rates to avoid uninsured losses or losses in excess of insured amounts;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Discovery of previously undetected environmentally hazardous or other undetected adverse conditions at our properties;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



Page 1



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##### Index to Financial Statements



| |  |  | Unexpected costs of capital expenditures related to tenant build-out projects or other unforeseen capital expenditures;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Our ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any continuing obligations to us;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



Other operational risks



| |  |  | Our dependency on Wells Capital, Inc., its key personnel, and its affiliates for various administrative services;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | Wells Capital, Inc.s ability to attract and retain high-quality personnel who can provide acceptable service levels to us and generate economies of scale for us over time;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increases in our administrative operating expenses, including increased expenses associated with operating as a public company;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in governmental, tax, real estate, environmental, and zoning laws and regulations and the related costs of compliance;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our ability to prove compliance with any governmental, tax, real estate, environmental, and zoning in the event that any such position is questioned by the respective authority; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Actions of our joint venture partners including potential bankruptcy, business interests differing from ours, or other actions that may adversely impact the operations of joint
ventures.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 2



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##### Index to Financial Statements



PART I



|ITEM 1. |  | BUSINESS.
|------- |  | ---------



General



Wells Real Estate Fund XI,
L.P. (the Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia nonpublic limited partnership, serving as its general partners (the General
Partners). The Partnership was formed on June 20, 1996 for the purpose of acquiring, developing, owning, operating, improving, leasing, and managing income producing commercial properties for investment purposes. Upon subscription, limited
partners elect to have their units treated as Class A Units or Class B Units. The limited partners 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; and (c) add or remove a
general partner. A majority vote on any of the above-described matters will bind the Partnership without the concurrence of the General Partners. Each limited partnership unit has equal voting rights, regardless of class.



On December 31, 1997, the Partnership commenced an offering of up to $35,000,000 of Class A
or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units
on March 3, 1998. The offering was terminated on December 30, 1998, at which time the Partnership had sold approximately 1,302,942 Class A Units and 350,338 Class B Units representing capital contributions of $16,532,802 from investors who were
admitted to the Partnership as limited partners.



Management believes that the
Partnership would ideally operate through the course of the following five key life cycle phases. The time spent in each phase is dependent upon various economic, industry, market, and other internal/external factors. Some overlap naturally exists
in the transition from one phase to the next.



| |  |  | Fund-raising phase
| | - |  | ------------------



| |  |  | The period during which the Partnership is raising capital through the sale and issuance of limited partner units to the public
| |  |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Investing phase
| | - |  | ---------------



| |  |  | The period during which the Partnership invests the capital raised during the fund-raising phase, less upfront fees, into the acquisition of real estate assets
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Holding phase
| | - |  | -------------



| |  |  | The period during which real estate assets are owned and operated by the Partnership during the initial lease terms of the tenants
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Positioning-for-sale phase
| | - |  | --------------------------



| |  |  | The period during which the leases in place at the time of acquisition expire and, thus, the Partnership expends time, effort, and funds to re-lease such space to existing and/or
new tenants. Following the holding phase, the Partnership continues to own and operate the real estate assets, evaluate various options for disposition, and market the real estate assets for sale
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 3



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##### Index to Financial Statements



| |  |  | Disposition and Liquidation phase
| | - |  | ---------------------------------



| |  |  | The period during which the Partnership sells its real estate investments and distributes net sales proceeds to the partners
| |  |  | ----------------------------------------------------------------------------------------------------------------------------



Currently, management believes that the Partnership is in the holding phase. Accordingly, we
will focus resources on managing the Partnerships existing portfolio and locating suitable replacement tenants for vacant space as necessary.



Cash management is a chief area of focus for the Partnership. Historically, the Partnership has not taken out borrowings from third party lenders and, while operating
cash flows and net property sales proceeds are withheld to provide for known events from time to time, the Partnership does not maintain as a general rule cash reserves for unknown events. Instead, management prefers to maximize operating cash flows
distributed to investors commensurate with the period earned; however, it is likely that, during the positioning-for-sale phase, the Partnership will be required to use cash flow from operations and/or net sale proceeds from the sale of the
Partnerships properties, which would otherwise be available for distribution to limited partners, to fund tenant improvements, leasing commissions and other leasing costs associated with the re-leasing of the Partnerships properties. The
Partnerships cash needs evolve during the course of its life cycle and, accordingly, volatility in operating returns is a natural and expected part of the process.



Employees



The Partnership has no direct employees. The employees of Wells Capital, Inc. (Wells Capital), the general partner of Wells Partners, and Wells Management
Company, Inc. (Wells Management), an affiliate of the General Partners, perform a full range of real estate services including leasing and property management, accounting, asset management and investor relations for the Partnership. See
Item 11, Compensation of General Partners and Affiliates, for a summary of the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 2003.



Insurance



Wells Management carries comprehensive liability and extended coverage with respect to the properties owned by the Partnership through its
interest in joint ventures. In the opinion of management, all such 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.



Page 4



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##### Index to Financial Statements



|ITEM 2. |  | PROPERTIES.
|------- |  | -----------



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



|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                                |      |  |     |      |  |     |      |  |     |      |  |     |  
|------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---- |  | --- | ---- |  | --- | ---- |  | --- | ---- |  | --- | -
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  | Occupancy % as of December 31, |     
|Joint Venture                                                                        |  | Joint Venture Partners                                                                                         |  | Properties |  | 2003                                                                                                                                                          |  |                                | 2002 |  |     | 2001 |  |     | 2000 |  |     | 1999 | 
|The Fund IX, Fund X, Fund XI and REIT Joint Venture (Fund IX-X-XI-REIT Associates) |  |   Wells Real Estate Fund IX, L.P.   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P.        |  | 1.         |  | Alstom Power-Knoxville Building A three-story office
building located in Knoxville, Tennessee                                                                 |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 98  | %
|                                                                                     |  |   Wells Operating Partnership, L.P.***                                                                        |  | 2.         |  | 360 Interlocken Building A three-story office
building located in Boulder County, Colorado                                                                    |  | 70                             | %    |  | 75  | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 3.         |  | Avaya Building A one-story office building located in
Oklahoma City, Oklahoma                                                                                 |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 4.         |  | Iomega Building A single-story warehouse and office
building located in Ogden, Weber County, Utah                                                             |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 5.         |  | Ohmeda Building A two-story office building located
in Louisville, Boulder County, Colorado                                                                   |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|Wells/Orange County Associates (Fund X-XI-REIT
Associates  Orange County)         |  |   Fund X and Fund XI Associates (Fund X-XI Associates)*   Wells Operating Partnership, L.P.***             |  | 6.         |  | Cort Building** A one-story office and warehouse
building located in Fountain Valley, California                                                              |  | -                              |      |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|Wells/Fremont Associates (Fund X-XI-REIT Associates  Fremont)                     |  |   Fund X-XI Associates*   Wells Operating Partnership, L.P.***                                               |  | 7.         |  | Fairchild Building A two-story warehouse and office
building located in Fremont, California                                                                   |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|The Wells Fund XI-Fund XII-REIT Joint Venture (Fund XI-XII-REIT Associates)        |  |   Wells Real Estate Fund XI, L.P.   Wells Real Estate Fund XII, L.P.   Wells Operating Partnership, L.P.*** |  | 8.         |  | 111 Southchase Boulevard (formerly known as the EYBL CarTex Building) A two-story manufacturing and office building located in Fountain Inn, South Carolina |  | 0                              | %    |  | 0   | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 9.         |  | Sprint Building A three-story office building located
in Leawood, Johnson County, Kansas                                                                      |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 10.        |  | Johnson Matthey Building A one-story office building
and warehouse located in Tredyffin Township, Chester County, Pennsylvania                                |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %
|                                                                                     |  |                                                                                                                |  |            |  |                                                                                                                                                               |  |                               
|                                                                                     |  |                                                                                                                |  | 11.        |  | Gartner Building A two-story office building located
in Ft. Myers, Lee County, Florida                                                                        |  | 100                            | %    |  | 100 | %    |  | 100 | %    |  | 100 | %    |  | 100 | %



|* |  | The Partnership and Wells Real Estate Fund X, L.P., a Georgia public limited partnership affiliated with the Partnership through common general partners, entered into a joint
venture agreement with the Partnership known as Fund X-XI Associates
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** |  | This property was sold in September 2003.
|-- |  | -----------------------------------------

|*** |  | Wells Operating Partnership, L.P. is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells REIT) serving as its general partner; Wells
REIT is a Maryland corporation that qualifies as a real estate investment trust.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 5



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##### Index to Financial Statements



Each of the aforementioned properties was
acquired on an all-cash basis. The investment objectives of each of the joint venture partners listed in the above table are substantially identical to those of the Partnership. The Partnership does not have control over the operations of the Joint
Ventures; however, it does exercise significant influence. Accordingly, investments in the Joint Ventures are recorded using the equity method of accounting.



As of December 31, 2003, the lease expirations scheduled during each of the following ten years for all properties in which the Partnership held an interest through the
Joint Ventures, assuming no exercise of renewal options or termination rights, are summarized below:



|                         |  |                           |  |                      |  |                            |           |                                                 |   |                                          |  |       |                                          |  |       |  
|------------------------ |  | ------------------------- |  | -------------------- |  | -------------------------- | --------- | ----------------------------------------------- | - | ---------------------------------------- |  | ----- | ---------------------------------------- |  | ----- | -
|Year of Lease Expiration |  | Number of Leases Expiring |  | Square Feet Expiring |  | Annualized Gross Base Rent |           | Partnership Share of Annualized Gross Base Rent |   | Percentage of Total Square Feet Expiring |  |       | Percentage of Total Annualized Base Rent | 
|2004(1)                  |  | 3                         |  | 211,728              |  | $                          | 3,200,057 |                                                 | $ | 379,975                                  |  | 29.7  | %                                        |  | 38.5  | %
|2005(2)                  |  | 2                         |  | 142,909              |  |                            | 2,009,888 |                                                 |   | 98,578                                   |  | 20.1  |                                          |  | 24.2  |  
|2007(3)                  |  | 1                         |  | 130,000              |  |                            | 939,250   |                                                 |   | 245,144                                  |  | 18.2  |                                          |  | 11.3  |  
|2008(4)                  |  | 2                         |  | 119,586              |  |                            | 1,562,580 |                                                 |   | 245,294                                  |  | 16.8  |                                          |  | 18.8  |  
|2009(5)                  |  | 1                         |  | 108,250              |  |                            | 589,369   |                                                 |   | 54,740                                   |  | 15.2  |                                          |  | 7.2   |  
|                         |  |                           |  |                      |  |                            |           |                                                 |   |                                          |  |       |                                          |  |       |  
|                         |  | 9                         |  | 712,473              |  | $                          | 8,301,144 |                                                 | $ | 1,023,731                                |  | 100.0 | %                                        |  | 100.0 | %
|                         |  |                           |  |                      |  |                            |           |                                                 |   |                                          |  |       |                                          |  |       |  



|(1) |  | Fairchild lease (approximately 58,000 square feet), Alstom Power lease (approximately 84,000 square feet), and Sprint lease (approximately 69,000 square feet).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Ohmeda lease (approximately 107,000 square feet) and GAIAM lease at the 360 Interlocken Building (approximately 36,000 square feet).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Johnson Matthey lease (approximately 130,000 square feet).
|--- |  | ----------------------------------------------------------

|(4) |  | Avaya lease (approximately 57,000 square feet) and Gartner lease (approximately 62,000 square feet).
|--- |  | ----------------------------------------------------------------------------------------------------

|(5) |  | Iomega lease (approximately 108,000 square feet).
|--- |  | -------------------------------------------------



The Joint Ventures and properties in which the Partnership owns an interest during the periods presented are further described below:



Fund IX-X-XI-REIT Associates



On June 11, 1998, the Wells Real Estate Fund IX, L.P. and Wells Real Estate Fund X, L.P.
entered into a joint venture agreement known as Fund IX and Fund X Associates (Fund IX-X Associates), which was subsequently amended, restated and renamed as Fund IX-X-XI-REIT Associates upon the admission of the Partnership and Wells
Operating Partnership, L.P. as joint venture partners.



Prior to amending and
restating the joint venture agreement, Fund IX-X Associates acquired and owned the following three properties: (i) the Alstom Power-Knoxville Building; (ii) the Ohmeda Building; and (iii) the 360 Interlocken Building. On June 24, 1998, Fund
IX-X-XI-REIT Associates purchased the Avaya Building, a one-story office building. On July 1, 1998, Wells Real Estate Fund X, L.P. contributed the Iomega Building, a single-story warehouse and office building including approximately 108,000 rentable
square feet, to Fund IX-X-XI-REIT Associates, which was recorded as a capital contribution.



As of December 31, 2003, the Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P., the Partnership, and Wells Operating Partnership, L.P. held equity interests of approximately 39%, 48%, 9%, and 4%,



Page 6



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##### Index to Financial Statements



respectively, in the following five
properties based on their respective cumulative capital contributions to Fund IX-X-XI-REIT Associates:



Alstom Power  Knoxville Building



On March 20, 1997, Fund IX-X Associates began construction of the Alstom Power  Knoxville Building, a three-story office building comprised of approximately 84,400 rentable square feet located on a 5.62-acre tract of real property in
Knoxville, Knox County, Tennessee.



Alstom Power, Inc. (Alstom
Power) took occupancy of approximately 57,800 rentable square feet in December 1997 upon which the initial term of its nine years and eleven months lease commenced. Alstom Power has the option to extend the initial term of its lease for two
consecutive five-year periods. The annual base rent payable during the initial term is $646,250 for the first five years and $728,750 for the last four years and eleven months of the initial term. The annual base rent payable for each extended term
will be assessed at the then currently prevailing market rental rates. In addition to 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 exercised its right of first refusal to lease an
additional 23,992 square feet of space, and executed the third amendment to its lease on May 19, 2000 to lease the remaining 2,581 rentable square feet on the second floor of the building. Thus, Alstom Power currently occupies 100% of the building
and pays rent thereon according to the terms and conditions of the original lease.



On December 29, 2003, Alstom Power notified Fund IX-X-XI-REIT Associates of its intention to prematurely terminate its lease and vacate the building effective December 31, 2004. As a result of the early termination, Alstom Power will incur
a penalty of $2,403,950 payable to Fund IX-X-XI-REIT Associates, which will be due on September 30, 2004.



The average effective annual rental rate per square foot at the Alstom Power  Knoxville Building was $13.22 for 2003, $13.67 for 2002, $13.83 for 2001, $14.05 for 2000, and $11.82 for 1999.



360 Interlocken Building



On March 20, 1998 Fund IX-X Associates acquired the 360 Interlocken Building, a three-story
multi-tenant office building containing approximately 52,000 rentable square feet located on a 5.1-acre tract of land in Broomfield, Broomfield County, Colorado.



The second and third floors of the 360 Interlocken Building are currently occupied by one major tenant, GAIAM, Inc. (GAIAM). The
initial term of the GAIAM lease expired on March 31, 2002 and was renewed and extended through May 31, 2005. GAIAM took over an additional 12,223 square feet upon the expiration of the ODS Technologies lease on October 1, 2003. Thus, currently,
GAIAM occupies approximately 36,000 square feet (or 70% of the building). Beginning October 1, 2003, the annual rent for the remaining term of the GAIAM lease is $885,172 per year with a 2% increase beginning June 1, 2004. All tenants in the 360
Interlocken Building are responsible for paying a pro-rata share of the increases in taxes, utilities, insurance, and other operating costs over the respective base year as defined in their leases.



Currently, Wells Management is actively pursuing prospective tenants to lease the vacant
space at the 360 Interlocken Building, which encompasses approximately 30% of the premises. Fund IX-X-XI Associates executed a lease with Culver Financial to occupy 4,832 square feet (or 9% of the building) for 84 months commencing on December 12,
2003. The lease allows for free rent during the first six months of the lease term.



Page 7



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##### Index to Financial Statements



Thereafter, monthly base rent of $6,443 is
payable through November 30, 2004. Beginning December 1, 2004, monthly base rent will increase by $403 annually through the end of the lease term.



The average effective annual rental rate per square foot at the 360 Interlocken Building was $16.37 for 2003, $18.49 for 2002, $16.12 for 2001, $16.23 for 2000, and
$15.97 for 1999.



Avaya Building



On June 24, 1998, Fund IX-X-XI-REIT Associates acquired the Avaya Building from Wells
Development Corporation, an affiliate of the General Partners. The Avaya Building, a one-story office building containing 57,186 net rentable square feet on 5.3 acres of land.



Avaya occupies the entire Avaya Building under the initial lease term of ten years, which commenced January 5, 1998. Avaya has the option to
extend the initial term for two additional five-year periods. The annual base rent payable during the initial term is $508,383 for the first five years and $594,152 for the second five years of the lease term. The annual base rent payable for each
extended term will be assessed at the respective currently prevailing market rental rates. In addition to base rent, Avaya is required to reimburse the landlord for its pro-rata share of operating expenses.



The average effective annual rental rate per square foot at the Avaya Building was $10.18 for
2003, $10.32 for 2002, and $10.19 for 2001, 2000, 1999, and 1998.



Iomega
Building



On July 1, 1998, Wells Real Estate Fund X, L.P. contributed
the Iomega Building, a single-story warehouse and office building including approximately 108,250 rentable square feet located in Ogden, Utah to Fund IX-X-XI-REIT Associates.



The building is 100% occupied by Iomega Corporation under a ten-year lease, which expires on July 31, 2006. Monthly base rent of $40,000 was
payable through November 12, 1999. Beginning in 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. Monthly base rent increased to $44,996 effective November 1999 and was readjusted effective March 2003, the 80th month of the lease term, to the current monthly base rent of $49,114. The lease is an economic triple-net lease,
whereby the terms require the tenant to reimburse Fund IX-X-XI-REIT Associates for certain operating expenses, as defined in the lease.



On March 22, 1999, Fund IX-X-XI-REIT Associates purchased a four-acre tract of vacant land adjacent to the Iomega Building for a gross purchase price of $212,000. Wells
Real Estate Fund IX, L.P. funded this acquisition and related land improvement costs and, accordingly, was credited with a capital contribution to Fund IX-X-XI-REIT Associates of $874,625. This site was developed into an additional parking and
loading-dock area, including 400 new parking stalls and was completed on July 31, 1999. Iomega Corporation has extended its lease term through April 30, 2009 and, in connection therewith, will pay additional annual base rent of $113,700 related to
the parking lot area.



The average effective annual rental rate per square foot
at the Iomega Building was $6.40 for 2003, $6.36 for 2002, $6.22 for 2001 and 2000, and $5.18 for 1999, the first year of ownership.



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##### Index to Financial Statements



Ohmeda Building



On February 13, 1998, Fund IX-X Associates acquired the Ohmeda Building, a two-story office
building with approximately 106,750 rentable square feet located on a 15-acre tract of land located in Louisville, Boulder County, Colorado.



The entire 106,750 rentable square feet of the Ohmeda Building is currently under a net lease with Ohmeda, Inc. (Ohmeda), which expires in January 2005,
subject to (i) Ohmedas right to effect 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 at the then current market rental
rates.



Monthly base rent payable is $83,710 through January 31, 2003; $87,891
from February 1, 2003 through January 31, 2004; and $92,250 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 is required to pay a $21,000 per year management fee to Fund IX-X-XI-REIT Associates, as landlord, for maintenance and administrative services of the Ohmeda Building. Fund IX-X-XI-REIT
Associates is responsible for maintenance of the roof, exterior and structural walls, foundation, 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 rate per square foot at the Ohmeda Building was $9.62 for 2003, $9.64 for 2002, and $9.62 for 2001, 2000 and 1999, the first year of ownership.



Fund X-XI Associates



On July 15, 1998, Fund X-XI Associates was formed for the purpose of owning and operating commercial properties. As of December 31, 2003, Wells Real Estate Fund X, L.P. and the Partnership owned equity interests of
approximately 58% and 42%, respectively, in Fund X-XI Associates based on their respective cumulative capital contributions thereto.



Fund X-XI-REIT Associates  Orange County



On July 27, 1998, Wells Operating Partnership, L.P. entered into a joint venture agreement with Wells Development Corporation referred to as Wells/Orange County
Associates, which acquired a 52,000-square-foot warehouse and office building located in Fountain Valley, California and known as the Cort Building shortly thereafter. On July 30, 1998, Fund X-XI Associates acquired Wells Development
Corporations interest in Wells/Orange County Associates, at which time this joint venture became known as Fund X-XI-REIT Associates  Orange County.



Cort Building



The Cort Building is a 52,000-square-foot warehouse and office building located in Fountain Valley, California. The building was leased to one tenant over a fifteen-year lease term, which commenced on November 1, 1988
and was to expire on October 31, 2003. The monthly base rent payable under the Cort lease was $69,574 through October 31, 2003. The Cort lease was an economic triple net lease, whereby Cort was required to reimburse Fund X-XI-REIT Associates 
Orange County for certain operating expenses, as defined in the lease.



On
September 11, 2003, Fund X-XI-REIT Associates  Orange County sold the Cort Building to an unrelated third party for a gross sales price of $5,770,000. As a result of the sale, net proceeds of approximately $1,305,000 and loss of approximately
$90,000 were allocated to the Partnership.



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##### Index to Financial Statements



The average effective annual rental rate per
square foot at the Cort Building was $10.62 for 2003, and $15.30 for 2002, 2001, 2000, and 1999, the first year of ownership.



Fund X-XI-REIT Associates  Fremont



On July 15, 1998, Wells Operating Partnership, L.P. entered into a joint venture agreement with Wells Development Corporation referred to as Wells/Fremont Associates,
which acquired a 58,424-square-foot, two-story manufacturing and office building located in Fremont, California and known as the Fairchild Building shortly thereafter. On October 8, 1998, Fund X-XI Associates acquired Wells Development
Corporations interest in Wells/Fremont Associates, at which time this joint venture became known as Fund X-XI-REIT Associates  Fremont.



Fairchild Building



The Fairchild Building is 100% leased to one tenant under a seven-year lease term, which commenced on December 1, 1997 and expires on November 30, 2004. Under the lease,
initial monthly base rent payable is $68,128 with a 3% increase on each anniversary of the commencement date. The lease is an economic 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.



The average effective annual
rental rate per square foot at the Fairchild Building was $15.45 for 2003, and $15.46 for 2002, 2001, 2000, and 1999, the first year of ownership.



Fund XI-XII-REIT Associates



On June 21, 1999, the Wells Fund XI-REIT Joint Venture (Fund XI-REIT Associates), a joint venture between the Partnership and Wells Operating Partnership,
L.P., was amended and restated to admit Wells Real Estate Fund XII, L.P. and became known as Fund XI-XII-REIT Associates. As of December 31, 2003, the Partnership, Wells Real Estate Fund XII, L.P., and Wells Operating Partnership, L.P. owned equity
interests of approximately 26%, 17%, and 57%, respectively, in the following four properties based on their respective cumulative capital contributions to Fund XI-XII-REIT Associates:



111 Southchase Boulevard



On May 18, 1999, Fund XI-XII-REIT Associates purchased the 111 Southchase Boulevard, a manufacturing and office building located in Fountain Inn, unincorporated
Greenville County, South Carolina.



111 Southchase Boulevard is a manufacturing
building including approximately 169,000 rentable square feet, comprised of approximately 141,000 square feet of manufacturing space, 25,000 square feet of two-story office space, and 3,000 square feet of cafeteria/training space. The entire 169,000
rentable square feet of 111 Southchase Boulevard was under lease with EYBL CarTex, Inc. (EYBL CarTex), a South Carolina corporation, for ten years commencing on March 1, 1998. EYBL CarTex had the right to extend the lease for two
additional five-year periods. The annual rent payable was $508,530 for the first four years, $550,907 for years five and six, $593,285 for years seven and eight, and $610,236 for years nine and ten.



The sole tenant of 111 Southchase Boulevard vacated in November 2002 and is currently in
default under the terms of the lease agreement as a result of failing to pay rent beginning in December 2002. Fund XI-XII-REIT Associates is currently pursuing legal actions to collect the delinquent rent due under this lease, while actively



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##### Index to Financial Statements



seeking prospective tenants and marketing
the property for re-leasing. Rental revenue reductions associated with the vacant space approximate $650,000 annually.



The average effective annual rental rate per square foot at 111 Southchase Boulevard was $0.00 for 2003, $3.29 for 2002, and $3.31 for 2001, 2000, and 1999.



Sprint Building



On July 2, 1999, the Fund XI-XII-REIT Associates acquired the Sprint Building, a three-story
office building including approximately 68,900 rentable square feet on a 7.12-acre tract of land located in Leawood, Johnson County, Kansas.



The entire rentable area of the Sprint Building is currently under a net lease with Sprint Communications, Inc. (Sprint) for an initial term of ten years,
which commenced on May 19, 1997 and expires on May 18, 2007. The monthly base rent payable under the lease is $83,254 through May 18, 2002 and $91,867 for the remainder of the lease term.



On August 19, 2003, Sprint notified Fund XI-XII-REIT Associates of its intention to exercise an early termination option under its lease;
accordingly, Sprint is expected to vacate the building on or before May 18, 2004. Under the terms of the lease, Sprint is required to pay Fund XI-XII-REIT Associates a termination payment equal to $6.53 per square foot, or $450,199, upon vacating
the premises.



The average effective annual rental rate per square foot at the
Sprint Building was $15.45 for 2003, $15.45 for 2002 and 2001, and $15.44 for 2000 and 1999.



Johnson Matthey Building



On
August 17, 1999, Fund XI-XII-REIT Associates acquired the Johnson Matthey Building, an office and warehouse building located in Chester County, Pennsylvania.



The Johnson Matthey Building, an office and warehouse building containing approximately 130,000 square feet, was first constructed in 1973 as a multi-tenant facility and
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 rentable area of the Johnson Matthey Building is currently leased to Johnson
Matthey, which commenced on July 1, 1998 and will expire on June 30, 2007. The annual base rent payable under the Johnson Matthey lease for the remainder of the lease term is as follows: year seven - $874,250, year eight - $897,000, year nine -
$916,500, and year ten - $939,250. Johnson Matthey has the right to extend the lease at the same terms and conditions for one additional three-year period.



Johnson Matthey has a right of first refusal to purchase the Johnson Matthey Building in the event that the Fund XI-XII-REIT Associates desire to sell the building to an
unrelated third party. Fund XI-XII-REIT Associates 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 third-party offer.



The average effective annual rental rate per square foot at the Johnson Matthey Building was
$6.65 for 2003, $6.77 for 2002, and $6.67 for 2001, 2000, and 1999.



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##### Index to Financial Statements



Gartner Building



On September 20, 1999, Fund XI-XII-REIT Associates acquired the Gartner Building, a
two-story office building with approximately 62,400 rentable square feet on a 4.9-acre tract of land located in Fort Myers, Lee County, Florida.



The entire rentable area of the Gartner Building is currently under a net lease agreement with Gartner. The initial term of the Gartner Lease is ten years, commencing on
February 1, 1998 and expiring on January 31, 2008. Gartner has the right to extend the Gartner Lease for two additional five-year periods. The annual base rent payable under the Gartner Lease is $830,656 through January 2003, increased by 2.5%
annually through the remainder of the lease term.



The average effective annual
rental rate per square foot at the Gartner Building was $13.68 for 2003, $13.73 for 2002, and $13.68 for 2001, 2000, and 1999, the first year of ownership.



|ITEM 3. |  | LEGAL PROCEEDINGS.
|------- |  | ------------------



There were no material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during the fourth quarter of 2003.



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



No matters were submitted to a vote of the limited partners during the fourth quarter of 2003.



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 1,302,942 outstanding
Class A Units held by a total of 1,250 limited partners and 350,338 outstanding Class B Units held by a total of 95 limited partners. As of February 15, 2004, the Partnership had 1,387,253 outstanding Class A Units held by a total of 1,244 limited
partners and 266,027 outstanding Class B Units held by a total of 83 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.



Because fiduciaries of retirement plans subject to ERISA are required to determine the value of the assets of such retirement plans on an
annual basis, the General Partners are required under the partnership agreement to report estimated unit values to the limited partners each year in the Partnerships annual Form 10-K. The methodology to be utilized for determining such
estimated unit values under the partnership agreement requires the General Partners to estimate the amount a unit holder would receive if the Partnerships properties were sold at their estimated fair market values as of the end of the
Partnerships fiscal year and the proceeds therefrom (without reduction for selling expenses) were distributed to the limited partners in liquidation of the Partnership. Utilizing this methodology, the General Partners have estimated unit
valuations, based upon their estimates of property values as of December 31, 2003, to be approximately $7.53 per Class A Unit and $11.86 per Class B Unit, based upon market conditions existing in early December 2003. In connection with the estimated
property valuations, the General Partners obtained an opinion from David L. Beal Company, an independent MAI appraiser, to the effect that such estimates of value were deemed reasonable and were prepared in accordance with appropriate



Page 12



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##### Index to Financial Statements



methods for valuing real estate; however,
due to the inordinate expense involved in obtaining appraisals for all of the Partnerships properties, no actual appraisals were obtained. Accordingly, these estimates should not be viewed as an accurate reflection of the values of the limited
partners units, what a limited partner might be able to sell his units for, or the fair market value of the Partnerships properties, nor do they represent the amount of net proceeds limited partners would receive if the
Partnerships properties were sold and the proceeds distributed in a liquidation of the Partnership. The valuations performed by the General Partners are estimates only, and are based on a number of assumptions which may not be accurate or
complete. For example, these estimated valuations assumed, and are applicable only to, limited partners who purchased their units in the Partnerships original offering and have made no conversion elections under the partnership agreement. In
addition, property values are subject to change and could decline in the future. Further, as set forth above, no appraisals have or will be obtained. For these reasons, the estimated unit valuations set forth above should not be used by or relied
upon by investors, other than fiduciaries of retirement plans for limited ERISA reporting purposes, as any indication of the fair market value of their units.



Class A 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 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 Units. Holders of Class A 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 Units, until their capital account balances have been reduced to zero. No distributions have been made to the General Partners
as of December 31, 2003.



As set forth above, Net Cash From Operations are
initially distributed to limited partners holding Class A Units. Net proceeds available for distribution from the sale of the Partnerships properties are initially distributed, first to limited partners holding Class B Units until they receive
distributions equal to prior distributions of Net Cash From Operations previously paid to limited partners holding Class A Units on a per-unit basis, and then equally to limited partners holding Class A Units and limited partners holding Class B
Units on a per-unit basis until they receive a return of their initial capital contributions. See Note 1 to the financial statements included in this report for a more detailed description of the methodology for distributing both Net Cash From
Operations and net sale proceeds from the sale of the Partnerships properties to the limited partners.



Cash available for distribution to the limited partners is distributed on a quarterly basis. Cash distributions made to Class A limited partners during 2002 and 2003, respectively, were as follows:



|                                |  |                        |         |                   |   |                   |  |                 |      |  |   |     
|------------------------------- |  | ---------------------- | ------- | ----------------- | - | ----------------- |  | --------------- | ---- |  | - | ----
|                                |  | Per Class A Unit      
|Distributions for Quarter Ended |  | Total Cash Distributed |         | Investment Income |   | Return of Capital |  | General Partner
|March 31, 2002                  |  | $                      | 318,549 |                   | $ | 0.24              |  | $               | 0.00 |  | $ | 0.00
|June 30, 2002                   |  | $                      | 322,705 |                   | $ | 0.24              |  | $               | 0.00 |  | $ | 0.00
|September 30, 2002              |  | $                      | 325,079 |                   | $ | 0.24              |  | $               | 0.00 |  | $ | 0.00
|December 31, 2002               |  | $                      | 308,611 |                   | $ | 0.22              |  | $               | 0.00 |  | $ | 0.00
|March 31, 2003                  |  | $                      | 276,041 |                   | $ | 0.20              |  | $               | 0.00 |  | $ | 0.00
|June 30, 2003                   |  | $                      | 224,446 |                   | $ | 0.16              |  | $               | 0.00 |  | $ | 0.00
|September 30, 2003              |  | $                      | 276,351 |                   | $ | 0.20              |  | $               | 0.00 |  | $ | 0.00
|December 31, 2003               |  | $                      | 225,429 |                   | $ | 0.16              |  | $               | 0.00 |  | $ | 0.00



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##### Index to Financial Statements



The fourth quarter 2003 distribution was
accrued for accounting purposes in 2003 and paid to limited partners in February 2004. No cash distributions were paid to holders of Class B Units in 2003 or 2002.



|ITEM 6. |  | SELECTED FINANCIAL DATA.
|------- |  | ------------------------



The following sets forth a summary of the selected financial data as of and for the fiscal years ended December 31, 2003, 2002, 2001, 2000, and 1999:



|                                                                         |  |      |            |   |      |   |            |      |  |   |            |   |  |      |            |   |  |   |            |  
|------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | - |  | ---- | ---------- | - |  | - | ---------- | -
|                                                                         |  | 2003 |            |   | 2002 |   |            | 2001 |  |   | 2000       |   |  | 1999 |           
|Total assets                                                             |  | $    | 12,441,848 |   |      | $ | 13,081,560 |      |  | $ | 13,644,230 |   |  | $    | 14,131,924 |   |  | $ | 14,440,800 |  
|Total revenues                                                           |  |      | 559,864    |   |      |   | 839,691    |      |  |   | 960,676    |   |  |      | 975,850    |   |  |   | 766,586    |  
|Net income                                                               |  |      | 445,529    |   |      |   | 746,815    |      |  |   | 870,350    |   |  |      | 895,989    |   |  |   | 630,528    |  
|Net loss allocated to General Partners                                   |  |      | 0          |   |      |   | 0          |      |  |   | 0          |   |  |      | 0          |   |  |   | 0          |  
|Net income allocated to Class A Limited Partners                         |  |      | 999,612    |   |      |   | 1,239,219  |      |  |   | 1,361,828  |   |  |      | 1,381,547  |   |  |   | 1,009,368  |  
|Net loss allocated to Class B Limited Partners                           |  |      | (554,083   | ) |      |   | (492,404   | )    |  |   | (491,478   | ) |  |      | (485,558   | ) |  |   | (378,840   | )
|Net income per weighted average (1) Class A Limited Partner Unit         |  | $    | 0.72       |   |      | $ | 0.91       |      |  | $ | 1.01       |   |  | $    | 1.03       |   |  | $ | 0.77       |  
|Net loss per weighted average (1) Class B Limited Partner Unit           |  | $    | (2.05      | ) |      | $ | (1.68      | )    |  | $ | (1.58      | ) |  | $    | (1.55      | ) |  | $ | (1.12      | )
|Cash distribution per weighted average (1) Class A Limited Partner Unit: |  |      |            |   |      |   |            |      |  |   |            |   |  |      |            |   |  |   |            |  
|Investment income                                                        |  | $    | 0.72       |   |      | $ | 0.94       |      |  | $ | 0.98       |   |  | $    | 0.94       |   |  | $ | 0.71       |  
|Return of capital                                                        |  | $    | 0.00       |   |      | $ | 0.00       |      |  | $ | 0.00       |   |  | $    | 0.00       |   |  | $ | 0.00       |  



|(1) |  | Weighted average units are calculated by averaging units over the period during which they are outstanding and converted to/from Class A or Class B Limited Partner Units,
accordingly.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITION RESULTS OF OPERATIONS.
|------- |  | --------------------------------------------------------------------------------------



The following discussion and analysis should be read in conjunction with the Selected Financial Data presented in Item 6 and our
accompanying financial statements and notes thereto.



(a)    Overview



Currently, management
believes that the Partnership is in the holding phase. Upon investing all capital proceeds and exiting the investing phase, the Partnership owned interests in eleven properties through interests in affiliated joint ventures. As of the date of this
filing, six properties are substantially leased to tenants in the beginning/middle of their respective initial lease terms, one property is leased to a single tenant, Fairchild, whose lease expires on November 30, 2004, two properties, the Sprint
Building and the Alstom Power  Knoxville Building, are leased to single tenants who have given notice that they will exercise early termination options in 2004, one property, 111 Southchase Boulevard, is vacant, and one property, the Cort
Building, was sold in 2003. Management will continue to actively pursue potential re-leasing strategies for the Fairchild Building, the Alstom Power  Knoxville Building, 111 Southchase Boulevard and the Sprint Building during 2004.



Page 14



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##### Index to Financial Statements



As the Partnership evolves through the life
cycle detailed in Item 1, our most significant risks and challenges continue to evolve concurrently. During the positioning for sale phase, we will continue to focus on re-leasing vacant space and space that may become vacant upon the expiration of
our current leases. In doing so, we seek to maximize returns to the limited partners by negotiating long-term leases at market rental rates while attempting to minimize downtime, re-leasing expenditures, ongoing property level costs and portfolio
costs. Later as we embark into the positioning for sale phase and disposition and liquidation phase, our attention will shift to locating suitable acquirers, negotiating purchase-sale contracts that will attempt to maximize the total return to the
limited partners, and minimize contingencies and our post-closing involvement with the acquirer.



During 2003, net income decreased primarily due to the vacancy of 111 Southchase Boulevard beginning in November 2002, and the gradual 30% decline in occupancy of the 360 Interlocken Building over the fifteen months
beginning April 1, 2002. Cash flows increased during 2003 primarily as a result of receiving net proceeds from the sale of the Cort Building, partially offset by a decline in operating distributions received from Fund IX-X-XI-REIT Associates and
Fund XI-XII-REIT Associates due to the decline in occupancy of the 360 Interlocken Building and the vacancy of 111 Southchase Boulevard, respectively.



During 2004, the Partnership anticipates continuing to operate in the holding phase and, accordingly, focus resources on locating suitable replacement tenants for vacant
space as necessary. Substantially all of our operating revenues are generated from the operations of the properties in the Partnerships portfolio. On a quarterly basis, we deduct the expenses related to the recurring operations of the
properties and the portfolio from such revenues and assess the amount of the remaining cash flows that will be required to fund known re-leasing costs and other capital improvements. Any residual operating cash flows are considered available for
distribution to the limited partners and are generally paid quarterly. As further outlined in section (b) below, we anticipate using a portion of future operating cash flows to fund the costs necessary to re-lease 111 Southchase Boulevard, the
Fairchild Building, the Alstom Power-Knoxville Building, and the Sprint Building, as well as to fund parking lot repairs for the 360 Interlocken Building.



Industry Factors



Our results continue to be impacted by a number of factors influencing the real estate industry.



General Economic and Real Estate Market Commentary



The U.S. economy appears to be recovering; however, thus far it has been a jobless recovery, and because of this, real estate office fundamentals may
not improve until employment growth strengthens. The economy has shown signs of growth recently, as companies have recommenced making investments in new employees. Job growth is the most significant demand driver for office markets. The jobless
recovery has resulted in a demand deficit for office space. In general, the real estate office market lags behind the overall economic recovery and, therefore, recovery is not expected until late 2004 or 2005 at the earliest, and then will vary by
market.



Overall, real estate market fundamentals are weak;
however, capital continues to flow into the asset class. This increased capital drives the prices of many properties upward and investor returns downward. There is a significant pricing differential in underwriting parameters between well-leased
assets with credit tenants and those with either existing vacancies or substantial near-term tenant rollover. Properties with long-term leases to strong credit tenants have seen an increase in value.



The office market has significant excess space. Vacancy levels are believed
to be at or near their peak. There is some encouraging news, new construction continues to taper off, coming to a complete halt in



Page 15



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##### Index to Financial Statements



many markets. As a result of
the slow down in new construction and the modest decline in sublease space, net absorption has turned positive, although barely, at year-end. Many industry professionals believe office market fundamentals are bottoming-out; however, a recovery
cannot be expected until job growth and corresponding demand for office space increases.



Wells Real Estate Funds with Current Vacancy or Near-term Rollover Exposure



Real estate funds, such as the Partnership, that contain properties with current vacancies or near-term tenant rollover may face a challenging leasing
environment. The properties within these funds will face lower rents and higher concession packages to the tenants in order to re-lease vacant space.



From a valuation standpoint, it is generally preferable to either renew an existing tenant lease or re-lease the property prior to marketing it for sale.
Generally, buyers will heavily discount their offering price to compensate for the existing or pending vacancies.



(b)    Results of Operations



Gross Revenues



Gross revenues of the Partnership were $559,864, $839,691, and $960,676 for the years ended December 31, 2003, 2002, and 2001, respectively. The 2003 decrease from 2002 and the 2002 decrease from 2001 resulted
primarily from the corresponding changes in equity in income of Joint Ventures described below.



Equity In Income of Joint Ventures



Gross Revenues of Joint Ventures



Gross revenues of the Joint Ventures decreased in 2003, as compared to 2002, primarily as a result of: (i) the vacancy of 111 Southchase Boulevard owned
by Fund XI-XII-REIT Associates beginning in November 2002, (ii) the gradual 30% decline in occupancy of the 360 Interlocken Building owned by Fund IX-X-XI-REIT Associates over the fifteen months beginning April 1, 2002, (iii) the write-off of
unrealizable receivables due from the sole tenant of the Iomega Building, which is also owned by Fund IX-X-XI-REIT Associates, and (iv) the loss recognized and forgone future operating income related to the sale of the Cort Building in September
2003 by Fund X-XI-REIT Associates-Orange County.



Gross
revenues of the Joint Ventures decreased in 2002, as compared to 2001, primarily due to: (i) a decrease in operating expense reimbursement billings to GAIAM, a tenant at the 360 Interlocken Building, based on the terms of a renewed lease affected in
April 2002; under the renewed lease terms, 2002 is the base year, and operating reimbursement billings commenced in 2003, and (ii) a decline in operating income as a result of the vacancy of 111 Southchase Boulevard beginning in November 2002, as
noted above.



Expenses of Joint Ventures



Expenses of the Joint Ventures increased in 2003, as
compared to 2002, primarily due to increases in: (i) property tax expenses for the Ohmeda Building owned by fund IX-X-XI-REIT Associates as a result of adjusting 2002 expenses to reflect actual costs during 2003 (property tax expenses are recorded
based on estimates and adjusted to reflect actual costs as such information becomes available during the current or following accounting period); (ii) third-party property management fees for the 360 Interlocken Building and the Alstom
Power-Knoxville Building; (iii) non-reimbursable HVAC repair costs incurred for the 360 Interlocken Building in 2003; (iv) administrative salaries incurred in connection with the marketing and sale



Page 16



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##### Index to Financial Statements



of the Cort Building; and
(v) operating and maintenance costs for 111 Southchase Boulevard as a result of the vacancy noted above (EYBL CarTex was obligated under a triple-net lease, whereby the tenant was responsible for paying all building and common area maintenance costs
directly), partially offset by the recovery of receivables due from the sole tenant of the Gartner Building for property tax expense reimbursements in 2003.



The expenses of the Joint Ventures increased in 2002, as compared to 2001, primarily due to recording reserves for doubtful accounts receivable due from
tenants at 111 Southchase Boulevard, as the sole tenant vacated in November 2002 and filed for corporate dissolution in December 2002, and the Gartner Building, as reimbursable real estate tax billings were under dispute with the sole tenant at this
property in 2002.



As a result of the aforementioned factors,
equity in income of Joint Ventures was $557,937, $837,509, and $959,631 for the years ended December 31, 2003, 2002, and 2001, respectively.



Expenses of the Partnership



Expenses of the Partnership were $114,335, $92,876, and $90,326 for the years ended December 31, 2003, 2002, and 2001, respectively. The increases in expenses for 2003
from 2002, and for 2002 from 2001, are primarily a result of additional administrative costs incurred in response to new reporting and regulatory requirements. We anticipate additional increases in administrative costs related to implementing and
adhering to such reporting and regulatory requirements on a going-forward basis.



Net Income of the Partnership



As a result of the
aforementioned changes in revenues and expenses, net income of the Partnership was $445,529, $746,815, and $870,350 for the years ended December 31, 2003, 2002, and 2001, respectively.



(c)    Liquidity and Capital Resources



Cash Flows From Operating Activities



Net cash flows from operating activities were $(111,469), $(105,148), and $(128,985) for the years ended December 31, 2003, 2002, and 2001, respectively. The 2003
increase in cash flows used from 2002 resulted primarily from the increase in expenses for the Partnership described in the previous section. The 2002 decrease in cash flows used from 2001 is primarily due to the decrease in repayments to
affiliates, as $50,000 was repaid to Fund IX-X-XI-REIT Associates in 2001, as compared to $15,000 which was repaid to Fund IX-X-XI-REIT Associates in 2002.



Cash Flows From Investing Activities



Net cash flows from investing activities were $2,468,579, $1,473,190, and $1,376,673 for the years ended December 31, 2003, 2002, and 2001, respectively. The 2003
increase from 2002 is largely attributable to the receipt of net sales proceeds from the sale of the Cort Building in September 2003, partially offset by a decline in operating distributions received from Fund IX-X-XI-REIT Associates and Fund
XI-XII-REIT Associates due to the decline in occupancy of the 360 Interlocken Building and the vacancy of 111 Southchase Boulevard, respectively. The net cash provided by investing activities increased slightly in 2002, as compared to 2001, due to a
slight increase in income distributed to the Partnership from the Joint Ventures during the corresponding accounting periods; the Partnership receives distributions from Joint Ventures based on the cash flows generated during the immediately
preceding quarterly accounting period.



Page 17



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##### Index to Financial Statements



Cash Flows From Financing Activities



Net cash flows from financing activities were $(1,085,448),
$(1,294,485), and $(1,307,606) for 2003, 2002, and 2001, respectively. Cash flows used in financing activities are solely comprised of distributions paid to limited partners. The 2003 decrease, as compared to 2002, and the 2002 decrease, as compared
to 2001, are primarily due to the corresponding decline in operating distributions received from Fund IX-X-XI-REIT Associates and Fund XI-XII-REIT Associates as discussed in the preceding section.



Distributions



The Partnership made distributions to the limited partners holding Class A Units of $0.72, $0.94, and $0.98 per unit for the years ended
December 31, 2003, 2002, and 2001, respectively. Such distributions have been made from net cash from operations and distributions received from investments in joint ventures. No distributions have been made to the limited partners holding Class B
Units or to the General Partners. The General Partners anticipate that distributions of net cash from operations to limited partners may decline in the near term as a result of funding the Partnerships pro rata portion of costs anticipated to
be required in connection with the re-leasing of the 360 Interlocken Building, the Alstom Power  Knoxville Building, the Fairchild Building, the Sprint Building and 111 Southchase Boulevard in 2004.



Capital Resources



The Partnership is an investment vehicle formed for the purpose of acquiring, owning and
operating income-producing real properties and has invested all of its funds available for investment. Accordingly, it is unlikely that the Partnership will acquire interests in any additional properties. In the near-term, the General Partners
anticipate that the Partnership will be required to fund its pro rata portion of the costs necessary to (i) re-lease 111 Southchase Boulevard (currently vacant); (ii) re-lease the Sprint Building (early termination option becomes effective May 18,
2004); (iii) re-lease the Fairchild Building (lease expires effective November 30, 2004); (iv) re-lease the Alstom Power  Knoxville Building (early termination option becomes effective December 31, 2004); (v) fund parking lot repairs for the
360 Interlocken Building, and (vi) fund building improvements for the Johnson Matthey Building. In addition, under the terms of the Alstom Power lease, Alstom Power has the right to request the landlord to fund tenant improvements of up to $245,000
through December 2004; Fund IX-X-XI-REIT Associates has not received a request for any such improvements to date.



Sales Proceeds



Rather than distributing the net proceeds from the sale of the Cort Building to the limited partners, such proceeds will be held in reserve as the Partnership continues to evaluate the capital needs of the other
properties in which it holds an interest in consideration of the best interests of the limited partners. Upon completing this evaluation, the General Partners anticipate distributing the net sales proceeds not otherwise reserved to the limited
partners in accordance with the terms of the partnership agreement at a later date in 2004.



(d)    Related-Party Transactions



Management and Leasing Fees



Wells Management, an affiliate of the General Partners, receives compensation for supervising the management of the Partnerships properties owned through joint ventures equal to (a) 2.5% of the gross revenues for management and 2% of
the gross revenues for leasing (aggregate maximum of 4.5%) plus a separate competitive fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee



Page 18



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##### Index to Financial Statements



customarily charged in arms-length
transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 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s share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures was $69,982, $75,321, and $74,478 for the years ended December 31, 2003, 2002, and 2001, respectively.



Administration Reimbursements



Wells Capital 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. During 2002, 2001 and
2001, the Partnership reimbursed $41,802, $43,979, and $40,267, respectively, to Wells Capital and its affiliates for these services. See Note 6 to the financial statements included with this report for a summary of the Partnerships
administrative costs.



Conflicts of Interest



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



(e)    Inflation



The real estate market has not been affected significantly by inflation in the past three
years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases, which would protect the Partnership from the impact of inflation. These provisions include reimbursement billings for operating expense
pass-through charges, real estate tax and insurance reimbursements on a per-square-foot basis, or in some cases, annual reimbursement of operating expenses above a certain per-square-foot allowance. However, due to the long-term nature of the
leases, the leases may not reset frequently enough to cover inflation.



(f)    Application of Critical Accounting Policies



The Partnerships accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including
making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses
during the reporting periods. If managements judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus,
resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of the Partnerships results of operations to those of companies in similar
businesses.



Below is a discussion of the accounting policies that management
considers to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. Additional discussion of accounting policies that management considers to be significant,
including further discussion of the critical accounting policies described below, is presented in Note 1 to the Partnerships financial statements included in this report.



Page 19



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##### Index to Financial Statements



Investment in Real Estate Assets



The Partnerships management is required to make subjective
assessments as to the useful lives of its depreciable assets. The Partnership considers the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. The estimated useful
lives of the Partnerships assets by class are as follows:



|                      |  |                                      
|--------------------- |  | -------------------------------------
|Building              |  | 25 years                             
|Building improvements |  | Remaining useful life of the building
|Land improvements     |  | 20 years                             
|Tenant improvements   |  | Lease term                           



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



Valuation of Real Estate Assets



Management continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which the Partnership has an ownership interest, either directly or through investments in joint
ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by
determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted
future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate
assets held by the Partnership at December 31, 2003.



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



|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|-------- |  | -----------------------------------------------------------



Since the Partnership does not borrow any money or make any foreign investments, it is not subject to risks relating to interest rate or foreign currency exchange rate
fluctuations.



|ITEM 8. |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|------- |  | --------------------------------------------



The financial statements of the Registrant and supplementary data are detailed under Item 15(a) and filed as part of the report on the pages indicated.



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



There were no disagreements with the Partnerships independent public accountants during the years ended December 31, 2003 and 2002.



Page 20



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##### Index to Financial Statements



On May 16, 2002, the General Partners
dismissed Arthur Andersen LLP (Andersen) as the Partnerships independent public accountants effective immediately.



Andersens report on the financial statements of the Partnership for the year ended December 31, 2001 did not contain an adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.



During the year ended December 31, 2001 and through the date of Andersens dismissal, there were no disagreements with Andersen on any matter of accounting principle or practice, financial statement disclosure,
or auditing scope or procedure which, if not resolved to Andersens satisfaction, would have caused Andersen to make reference to the subject matter in connection with its report on the financial statements of the Partnership for such year and
there were no reportable events as set forth in Item 304(a)(1)(v) of Regulation S-K.



On July 3, 2002, the Partnership engaged Ernst & Young, LLP (Ernst & Young) to audit the financial statements of the Partnership, effective immediately. During the fiscal year ended December 31, 2001, and through the date of
appointment of Ernst & Young as the Partnerships independent public accountants, the Partnership did not consult Ernst & Young with respect to the application of accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the financial statements of the Partnership, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.



|ITEM 9A. |  | CONTROLS AND PROCEDURES.
|-------- |  | ------------------------



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



There were no significant changes in the Partnerships
internal control over financial reporting during the Partnerships fourth fiscal quarter that have materially affected or are likely to materially affect the Partnerships internal control over financial reporting.



PART III



|ITEM 10. |  | GENERAL PARTNERS OF THE PARTNERSHIP.
|-------- |  | ------------------------------------



Wells Partners



The sole general partner of Wells Partners is Wells Capital, a Georgia corporation. The executive offices of Wells Capital are located at 6200 The Corners Parkway, Norcross, Georgia 30092. Wells Capital was organized
on April 18, 1984 under the Georgia Business Corporation Code, and is primarily in the business of serving as general partner or as an affiliate to the general partner in affiliated public limited partnerships (Wells Real Estate Funds)
and as the advisor to the Wells Real Estate Investment Trust, Inc. and Wells Real Estate Investment Trust II, Inc. (Wells REITs), each a Maryland corporation which qualifies as a real estate investment trust. In these capacities, Wells
Capital performs certain services for the Wells Real Estate Funds and the Wells REITs, including presenting, structuring, and acquiring real estate investment opportunities, entering into leases and service contracts on acquired properties,
arranging for and completing the disposition of



Page 21



---

##### Index to Financial Statements



properties, and providing other services
such as accounting and administrative functions. Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc., of which Leo F. Wells, III is the sole stockholder.



Leo F. Wells, III



Mr. Wells, who serves as one of our General Partners, is the President, Treasurer, and sole director of Wells Capital, which is the corporate general partner of our other
General Partner. He is also the sole stockholder, President, and sole director of Wells Real Estate Funds, Inc., the parent corporation of Wells Capital, Wells Management, Wells Investment Securities, Inc. (Wells Investment Securities),
and Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which Mr. Wells serves as principal broker. He is also the President, Treasurer, and sole director of:



| |  |  | Wells Management, our property manager;
| | - |  | ---------------------------------------



| |  |  | Wells & Associates, Inc.; and
| | - |  | -----------------------------



| |  |  | Wells Development Corporation, a company he organized in 1997 to develop real properties.
| | - |  | -----------------------------------------------------------------------------------------



Mr. Wells is the President and a director of Wells Real Estate Investment Trust, Inc. and Wells Real Estate Investment Trust II, Inc., which
are both real estate investment trusts formed under Maryland law.



Mr. Wells
was a real estate salesman and property manager from 1970 to 1973 for Roy D. Warren & Company, an Atlanta-based real estate company, and he was associated from 1973 to 1976 with Sax Gaskin Real Estate Company. From 1980 to February 1985 he
served as Vice President of Hill-Johnson, Inc., a Georgia corporation engaged in the construction business. Mr. Wells holds a Bachelor of Business Administration degree in economics from the University of Georgia. Mr. Wells is a member of the
Financial Planning Association (FPA).



On August 26, 2003, Mr. Wells and Wells
Investment Securities entered into a Letter of Acceptance, Waiver and Consent (AWC) with the NASD relating to alleged rule violations. The AWC set forth the NASDs findings that Wells Investment Securities and Mr. Wells had violated conduct
rules relating to the provision of non-cash compensation of more than $100 to associated persons of NASD member firms in connection with their attendance at the annual educational and due diligence conferences sponsored by Wells Investment
Securities in 2001 and 2002. Without admitting or denying the allegations and findings against them, Wells Investment Securities and Mr. Wells consented in the AWC to various findings by the NASD which are summarized in the following paragraph:



In 2001 and 2002, Wells Investment Securities sponsored
conferences attended by registered representatives who sold its real estate investment products. Wells Investment Securities also paid for certain expenses of guests of the registered representatives who attended the conferences. In 2001, Wells
Investment Securities paid the costs of travel to the conference and meals for many of the guests, and paid the costs of playing golf for some of the registered representatives and their guests. Wells Investment Securities later invoiced registered
representatives for the cost of golf and for travel expenses of guests, but was not fully reimbursed for such. In 2002, Wells Investment Securities paid for meals for the guests. Wells Investment Securities also conditioned most of the 2001
conference invitations on attainment by the registered representatives of a predetermined sales goal for Wells Investment Securities products. This conduct violated the prohibitions against payment and receipt of non-cash compensation in connection
with the sales of these products contained in NASDs Conduct Rules 2710, 2810, and 3060. In addition, Wells Investment Securities and Mr. Wells failed to adhere to all of the terms of their written undertaking made in March 2001 not to engage
in the conduct described above, and thereby engaged in conduct that was inconsistent with high standards of commercial honor and just and equitable principles of trade in violation of NASD Conduct Rule 2110.



Page 22



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##### Index to Financial Statements



Wells Investment Securities consented to a
censure and Mr. Wells consented to suspension from acting in a principal capacity with an NASD member firm for one year. Wells Investment Securities and Mr. Wells also agreed to the imposition of a joint and several fine in the amount of $150,000.
Although he is temporarily prohibited from acting in a principal capacity with Wells Investment Securities, Mr. Wells continues to engage in selling efforts and other non-principal activities on behalf of Wells Investment Securities.



Financial Oversight Committee



The Partnership does not have a board of directors or an audit committee. Accordingly, as
the corporate general partner of one of the General Partners of the Partnership, Wells Capital has established a Financial Oversight Committee consisting of Leo F. Wells, III, as the Principal Executive Officer; Douglas P. Williams, as the Principal
Financial Officer; and Randall D. Fretz, as the Chief of Staff, of Wells Capital. The Financial Oversight Committee serves the equivalent function of an audit committee for, among others, the following purposes: appointment, compensation, review and
oversight of the work of our independent public accountant, and establishing and enforcing the code of ethics. However, since the Partnership and General Partners do not have an audit committee and the Financial Oversight Committee is not
independent of the Partnership or the General Partners, the Partnership does not have an audit committee financial expert.



Code of Ethics



The Financial Oversight Committee has adopted a code of ethics applicable to Wells Capitals Principal Executive Officer and Principal Financial Officer, as well as the principal accounting officer, controller or
other employees of Wells Capital performing similar functions on behalf of the Partnership, if any. You may obtain a copy of this code of ethics, without charge, upon request by calling our Investor Services Department at (800) 557-4830 or (770)
243-8282.



|ITEM 11.    COMPENSATION |  | OF GENERAL PARTNERS AND AFFILIATES.
|------------------------ |  | -----------------------------------



The following table summarizes the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 2003 :



|                                      |  |                                                                                 |  |                   |        |    
|------------------------------------- |  | ------------------------------------------------------------------------------- |  | ----------------- | ------ | ---
|Name of Individual or Number in Group |  | Capacities in Which Served/ Form of Compensation                                |  | Cash Compensation |       
|Wells Management                      |  | Property Management and Leasing Fees                                            |  | $                 | 69,245 | (1)
|                                      | 
|Wells Capital                         |  | Administrative services such as accounting and other partnership administration |  | $                 | 17,091 |    
|                                      | 



|(1) |  | These property management and leasing fees are not paid directly by the Partnership, but are paid by the joint venture entities which own properties for which the property
management and leasing services relate and include management and leasing fees. The Partnership does not own any properties directly. Accordingly, these fees are payable to Wells Management. by the Joint Ventures described in Item 1 and represent
the Partnerships ownership interest in amounts attributable to the properties owned directly by these joint ventures for services rendered during 2003. Some of these fees were accrued for accounting purposes in 2003, however, were not paid
until January 2004.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 23



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##### Index to Financial Statements



|ITEM 12.    SECURITY |  | OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
|-------------------- |  | ------------------------------------------------------



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



Set forth below is the security ownership of management as of February 15, 2004.



|               |  |                          |  |                                           |  |                 
|-------------- |  | ------------------------ |  | ----------------------------------------- |  | ----------------
|Title of Class |  | Name of Beneficial Owner |  | Amount and Nature of Beneficial Ownership |  | Percent of Class
|Class A Units  |  | Leo F. Wells, III        |  | 5,109.22 units (IRA)                      |  | Less than 1%    



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



|ITEM 13.    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 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 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 of net cash flow from operations or net sales proceeds for the year ended
December 31, 2003.



Property Management and Leasing Fees



Wells Management, an affiliate of the General Partners, receives compensation for
supervising the management of the Partnerships properties owned through joint ventures equal to the lesser of (a) fees that would be paid to a comparable outside firm or (b) 4.5% of the gross revenues generally paid over the life of the lease
plus a separate competitive fee for the one-time initial lease-up of newly constructed properties generally paid in conjunction with the receipt of the first months rent. In the case of commercial properties which are leased on a long-term
(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 has received a total of $69,245 in property management and leasing fee compensation for services rendered during the year ended December 31, 2003.



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



Page 24



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##### Index to Financial Statements



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 2003, no real estate commissions were paid to the General Partners or their affiliates.



Expense Reimbursement



See Note 6 to the Partnerships financial statements included with this report for a description of the administrative costs and reimbursements made to the General
Partners and their affiliates during the year ended December 31, 2003.



|ITEM 14.    PRINCIPAL |  | ACCOUNTING FEES AND SERVICES.
|--------------------- |  | -----------------------------



Preapproval Policies and Procedures



The Financial Oversight Committee preapproves all auditing and permissible non-auditing services provided by our independent public accountants. The approval may be given
as part of the Financial Oversight Committees approval of the scope of the engagement of our independent public accountants or on an individual basis. The preapproval of certain audit-related services and certain non-auditing services not
exceeding enumerated dollar limits may be delegated to one or more of the Financial Oversight Committees members, but the member to whom such authority is delegated shall report any preapproval decisions to the full Financial Oversight
Committee. Our independent public accountants may not be retained to perform the non-auditing services specified in Section 10A(g) of the Securities Exchange Act of 1934.



Fees Paid to the Independent Public Accountants



As indicated in Item 9 above, we engaged Ernst & Young to be our independent public accountants on July 3, 2002. The aggregate fees
billed to the Partnership for professional accounting services, including the audit of the Partnerships annual financial statements by Ernst & Young for the fiscal years ended December 31, 2003 and 2002, are set forth in the table below.



|                   |  |      |        |      |   |       
|------------------ |  | ---- | ------ | ---- | - | ------
|                   |  | 2003 |        | 2002
|Audit Fees         |  | $    | 20,824 |      | $ | 12,075
|Audit-Related Fees |  |      | 0      |      |   | 0     
|Tax Fees           |  |      | 2,229  |      |   | 118   
|                   |  |      |        |      |   |       
|Total              |  | $    | 23,053 |      | $ | 12,193
|                   |  |      |        |      |   |       



For purposes of the preceding table,
the professional fees are classified as follows:



| |  |  | Audit Fees  These are fees for professional services performed for the audit of our annual financial statements and review of financial statements included in our Form 10-Q
filings, services that are normally provided by independent public accountants in connection with statutory and regulatory filings or engagements, and services that generally independent public accountants reasonably can provide, such as statutory
audits, attest services, consents, and assistance with and review of documents filed with the SEC.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Audit-Related Fees  These are fees for assurance and related services that traditionally are performed by independent public accountants, such as due diligence related to
acquisitions and dispositions, internal control reviews, attestation services that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 25



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##### Index to Financial Statements



| |  |  | Tax Fees  These are fees for all professional services performed by professional staff in our independent public accountants tax division, except those services related
to the audit of our financial statements. These include fees for tax compliance, tax planning, and tax advice. Tax compliance involves preparation of any federal, state or local tax returns. Tax planning and tax advice encompass a diverse range of
services, including assistance with tax audits and appeals, tax advice related to acquisitions and dispositions of assets, and requests for rulings or technical advice from taxing authorities.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | All Other Fees  These are fees for other permissible work performed that do not meet the above-described categories, including assistance with internal audit plans and risk
assessments.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Since May 6, 2003, the effective date of the SEC
Rules requiring audit committees to approve all services provided by independent public accountants, 100% of the services performed by Ernst & Young described above under the captions Audit Fees, Audit-Related Fees,
Tax Fees, and All Other Fees were approved in advance by a member of the Financial Oversight Committee.



|ITEM 15.    EXHIBITS, |  | FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
|--------------------- |  | -------------------------------------------------------



|(a)1. |  | The financial statements are contained on pages F-2 through F-48 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)3. |  | The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|----- |  | -------------------------------------------------------------------------------------------------------------



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



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



|(d) |  | Not applicable.
|--- |  | ---------------



Page 26



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##### Index to Financial Statements



SIGNATURES



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



|               |  |                                                                       
|-------------- |  | ----------------------------------------------------------------------
|               |  | WELLS REAL ESTATE FUND XI, L.P.                                       
|               |  | (Registrant)                                                          
|               | 
|               |  | By: WELLS PARTNERS, L.P.                                              
|               |  | (General Partner)                                                     
|               | 
|               |  | By: WELLS CAPITAL, INC.                                               
|               |  | (Corporate General Partner)                                           
|               | 
|March 19, 2004 |  | /s/    LEO F. WELLS, III                                              
|               |  | Leo F. Wells, III President                                           
|               | 
|March 19, 2004 |  | /s/    DOUGLAS P. WILLIAMS                                            
|               |  | Douglas P. Williams Principal Financial
Officer of Wells Capital, Inc.



Page 27



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##### Index to Financial Statements

EXHIBIT INDEX

TO

2003 FORM 10-K

OF

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)                                                                  
|               | 
|*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)



---

##### Index to Financial Statements

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|*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)                                                                                                                                                     
|       | 
|*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)                                                                                                                                                                                             



---

##### Index to Financial Statements

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                               
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|*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)                                                                          
|       | 
|*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)                                                                       



---

##### Index to Financial Statements

|        |  |                                                                                                                                                                                                                                                                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | 
|*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 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)                                                                                                                             
|        | 
|*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)                                                                                                                                                    
|        | 
|*10(kk) |  | Purchase and Sale Agreement relating to the sale of the Cort Building (Exhibit 10.1 to the Form 10-Q of Wells Real Estate Fund X, L.P. for the
quarter ended September 30, 2003, Commission File No. 0-23719)                                                                                                                                  
|        | 
|31.1    |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                         
|        | 
|31.2    |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                         
|        | 
|32.1    |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                 



---

##### Index to Financial Statements



TABLE OF CONTENTS



|                                                                                      |  |     
|------------------------------------------------------------------------------------- |  | ----
|FINANCIAL STATEMENTS                                                                  |  | Page
|WELLS REAL ESTATE FUND XI, L.P.                                                       |  |     
|Report of Independent Auditors  Ernst & Young LLP                                    |  | F-2 
|Report of Independent Public Accountants  Arthur Andersen LLP                        |  | F-3 
|Balance Sheets as of December 31, 2003 and 2002                                       |  | F-4 
|Statements of Income for the Years Ended December 31, 2003, 2002, and 2001            |  | F-5 
|Statements of Partners Capital for the Years Ended December 31, 2003, 2002, and 2001 |  | F-6 
|Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001        |  | F-7 
|Notes to Financial Statements                                                         |  | F-8 
|                                                                                      | 
|THE FUND IX, FUND X, FUND XI, AND REIT JOINT VENTURE                                  |  |     
|Report of Independent Auditors                                                        |  | F-19
|Balance Sheets as of December 31, 2003 and 2002                                       |  | F-20
|Statements of Income for the Years Ended December 31, 2003, 2002, and 2001            |  | F-21
|Statements of Partners Capital for the Years Ended December 31, 2003, 2002, and 2001 |  | F-22
|Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001        |  | F-23
|Notes to Financial Statements                                                         |  | F-24
|Schedule III  Real Estate and Accumulated Depreciation                               |  | F-28
|                                                                                      | 
|FUND X AND FUND XI ASSOCIATES                                                         |  |     
|Report of Independent Auditors                                                        |  | F-30
|Balance Sheets as of December 31, 2003 and 2002                                       |  | F-31
|Statements of Income for the Years Ended December 31, 2003, 2002, and 2001            |  | F-32
|Statements of Partners Capital for the Years Ended December 31, 2003, 2002, and 2001 |  | F-33
|Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001        |  | F-34
|Notes to Financial Statements                                                         |  | F-35
|                                                                                      | 
|THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE                                         |  |     
|Report of Independent Auditors                                                        |  | F-39
|Balance Sheets as of December 31, 2003 and 2002                                       |  | F-40
|Statements of Income for the Years Ended December 31, 2003, 2002, and 2001            |  | F-41
|Statements of Partners Capital for the Years Ended December 31, 2003, 2002, and 2001 |  | F-42
|Statements of Cash Flows for the Years Ended December 31, 2003, 2002, and 2001        |  | F-43
|Notes to Financial Statements                                                         |  | F-44
|Schedule III  Real Estate and Accumulated Depreciation                               |  | F-47



Page F-1



---

##### Index to Financial Statements



REPORT OF INDEPENDENT AUDITORS



The Partners

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, 2003 and 2002, and the
related statements of income, partners capital, and cash flows for the years then ended. 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. The financial statements of Wells Real Estate Fund XI, L.P. for the year ended December 31, 2001 were audited by other auditors who have ceased operations and whose report dated January 25, 2002 expressed an
unqualified opinion on those financial statements before the restatement adjustments and disclosures described in Note 1.



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 2003 and 2002 financial statements referred to above present fairly, in
all material respects, the financial position of Wells Real Estate Fund XI, L.P. at December 31, 2003 and 2002 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted
in the United States.



As discussed above, the financial statements of Wells
Real Estate Fund XI, L.P. for the year ended December 31, 2001 were audited by other auditors who have ceased operations. As described in Note 1, these financial statements have been restated. We audited the adjustments described in Note 1 that were
applied to restate the 2001 financial statements. Our procedures included (a) agreeing the restatement adjustment amounts to the corresponding accounts maintained in the underlying records of the Partnership, and (b) testing the application of the
adjustments to the previously reported amounts. In our opinion, such adjustments are appropriate and have been properly applied. Additionally, as described in Note 1, these financial statements have been revised to include disclosure of the number
of Class A and Class B weighted average limited partner units outstanding for the year ended December 31, 2001 on the statement of income. Our procedures with respect to this disclosure included recalculating the number of Class A and Class B
weighted average limited partner units outstanding for the year ended December 31, 2001 by dividing the net income amount allocated to Class A limited partners and net loss amount allocated to Class B limited partners, previously reported on the
statement of income in 2001, by the amount of net income per weighted average Class A limited partner unit and net loss per weighted average Class B limited partner unit, previously reported on the statement of income in 2001, respectively. In our
opinion, the disclosure of the number of Class A and Class B weighted average limited partner units outstanding on the statement of income for the year ended December 31, 2001 is appropriate. However, we were not engaged to audit, review, or apply
any procedures to the 2001 financial statements of Wells Real Estate Fund XI, L.P. other than with respect to such restatement adjustments and disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001
financial statements taken as a whole.



/s/    ERNST & YOUNG LLP



Atlanta, Georgia

February 18, 2004



Page F-2



---

##### Index to Financial Statements



(The following is a copy of the audit
report previously issued by Arthur Andersen LLP in connection with the financial statements of Wells Real Estate Fund XI, L.P. for the fiscal year ended December 31, 2001 included in the 2001 Form 10-K filing. This audit report has not been reissued
by Arthur Andersen in connection with the filing of this form 10-K for the fiscal year ended December 31, 2003.)



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, 2001 and 2000 and the related statements of income, partners capital, and cash flows for each of the three years in the period ended
December 31, 2001. 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, 2001 and 2000 and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.



ARTHUR ANDERSEN LLP



Atlanta, Georgia

January 25, 2002



Page F-3



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



BALANCE SHEETS

DECEMBER 31, 2003 AND 2002



ASSETS



|                                                                                                                  |  |      |            |      |   |           
|----------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                                                  |  | 2003 |            | 2002
|                                                                                                                  |  |      |            |      |   |           
|                                                                                                                  |  |     
|INVESTMENT IN JOINT VENTURES                                                                                      |  | $    | 10,826,635 |      | $ | 12,706,842
|CASH AND CASH EQUIVALENTS                                                                                         |  |      | 1,362,761  |      |   | 91,099    
|DUE FROM JOINT VENTURES                                                                                           |  |      | 252,452    |      |   | 282,887   
|ACCOUNTS RECEIVABLE                                                                                               |  |      | 0          |      |   | 732       
|                                                                                                                  |  |      |            |      |   |           
|Total assets                                                                                                      |  | $    | 12,441,848 |      | $ | 13,081,560
|                                                                                                                  |  |      |            |      |   |           
|                                                                                                                 
|LIABILITIES AND PARTNERS CAPITAL                                                                                
|                                                                                                                  |  |     
|LIABILITIES:                                                                                                      |  |      |            |      |   |           
|Partnership distributions payable                                                                                 |  | $    | 225,429    |      | $ | 308,610   
|Accounts payable                                                                                                  |  |      | 207        |      |   | 0         
|                                                                                                                  |  |      |            |      |   |           
|Total liabilities                                                                                                 |  |      | 225,636    |      |   | 308,610   
|                                                                                                                  |  |      |            |      |   |           
|PARTNERS CAPITAL:                                                                                                |  |      |            |      |   |           
|Limited partners:                                                                                                 |  |      |            |      |   |           
|Class A1,387,253 units and 1,371,606 units issued and outstanding as of December 31, 2003 and 2002, respectively |  |      | 12,119,023 |      |   | 12,091,903
|Class B266,027 units and 281,674 units issued and outstanding as of December 31, 2003 and 2002, respectively     |  |      | 97,189     |      |   | 681,047   
|General partners                                                                                                  |  |      | 0          |      |   | 0         
|                                                                                                                  |  |      |            |      |   |           
|Total partners capital                                                                                           |  |      | 12,216,212 |      |   | 12,772,950
|                                                                                                                  |  |      |            |      |   |           
|Total liabilities and partners capital                                                                           |  | $    | 12,441,848 |      | $ | 13,081,560
|                                                                                                                  |  |      |            |      |   |           



See accompanying notes.



Page F-4



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



STATEMENTS OF INCOME

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|-------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                               |  | 2003 |           |   | 2002 |   |           | 2001 | 
|REVENUES:                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Equity in income of Joint Ventures                             |  | $    | 557,937   |   |      | $ | 837,509   |      |  | $ | 959,631   |  
|Interest income                                                |  |      | 1,927     |   |      |   | 1,105     |      |  |   | 1,045     |  
|Other income                                                   |  |      | 0         |   |      |   | 1,077     |      |  |   | 0         |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|                                                               |  |      | 559,864   |   |      |   | 839,691   |      |  |   | 960,676   |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|EXPENSES:                                                      |  |      |           |   |      |   |           |      |  |   |           |  
|Partnership administration                                     |  |      | 81,958    |   |      |   | 70,515    |      |  |   | 61,341    |  
|Legal and accounting                                           |  |      | 20,860    |   |      |   | 15,668    |      |  |   | 16,193    |  
|Computer costs                                                 |  |      | 9,835     |   |      |   | 6,693     |      |  |   | 12,792    |  
|Other general and administrative                               |  |      | 1,682     |   |      |   | 0         |      |  |   | 0         |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|                                                               |  |      | 114,335   |   |      |   | 92,876    |      |  |   | 90,326    |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|NET INCOME                                                     |  | $    | 445,529   |   |      | $ | 746,815   |      |  | $ | 870,350   |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS               |  | $    | 999,612   |   |      | $ | 1,239,219 |      |  | $ | 1,361,828 |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS                 |  | $    | (554,083  | ) |      | $ | (492,404  | )    |  | $ | (491,478  | )
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT   |  | $    | 0.72      |   |      | $ | 0.91      |      |  | $ | 1.01      |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT     |  | $    | (2.05     | ) |      | $ | (1.68     | )    |  | $ | (1.58     | )
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT |  | $    | 0.72      |   |      | $ | 0.94      |      |  | $ | 0.98      |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|WEIGHTED AVERAGE LIMITED PARTNER UNITS OUTSTANDING:            |  |      |           |   |      |   |           |      |  |   |           |  
|                                                               |  |      |          
|CLASS A                                                        |  |      | 1,382,605 |   |      |   | 1,357,326 |      |  |   | 1,342,356 |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  
|CLASS B                                                        |  |      | 270,676   |   |      |   | 293,187   |      |  |   | 310,924   |  
|                                                               |  |      |           |   |      |   |           |      |  |   |           |  



See accompanying notes.



Page F-5



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                           |  |                  |  |        |                  |   |                         |         |   |        |   |           |   |  |   |   |  |   |            |  
|-------------------------- |  | ---------------- |  | ------ | ---------------- | - | ----------------------- | ------- | - | ------ | - | --------- | - |  | - | - |  | - | ---------- | -
|                           |  | Limited Partners |  |        | General Partners |   | Total Partners Capital |        
|                           |  | Class A          |  |        | Class B          |   |                         |        
|                           |  | Units            |  | Amount |                  |   | Units                   |         |   | Amount |   |           |  
|BALANCE, December 31, 2000 |  | 1,341,356        |  | $      | 11,993,987       |   |                         | 311,924 |   |        | $ | 1,745,547 |   |  | $ | 0 |  | $ | 13,739,534 |  
|                           |  |                  |  |        |                  |  
|Net income (loss)          |  | 0                |  |        | 1,361,828        |   |                         | 0       |   |        |   | (491,478  | ) |  |   | 0 |  |   | 870,350    |  
|Partnership distributions  |  | 0                |  |        | (1,308,805       | ) |                         | 0       |   |        |   | 0         |   |  |   | 0 |  |   | (1,308,805 | )
|Class B conversions        |  | 4,900            |  |        | 23,807           |   |                         | (4,900  | ) |        |   | (23,807   | ) |  |   | 0 |  |   | 0          |  
|                           |  |                  |  |        |                  |   |                         |         |   |        |   |           |   |  |   |   |  |   |            |  
|BALANCE, December 31, 2001 |  | 1,346,256        |  |        | 12,070,817       |   |                         | 307,024 |   |        |   | 1,230,262 |   |  |   | 0 |  |   | 13,301,079 |  
|                           |  |                  |  |        |                  |  
|Net income (loss)          |  | 0                |  |        | 1,239,219        |   |                         | 0       |   |        |   | (492,404  | ) |  |   | 0 |  |   | 746,815    |  
|Partnership distributions  |  | 0                |  |        | (1,274,944       | ) |                         | 0       |   |        |   | 0         |   |  |   | 0 |  |   | (1,274,944 | )
|Class B conversions        |  | 25,350           |  |        | 56,811           |   |                         | (25,350 | ) |        |   | (56,811   | ) |  |   | 0 |  |   | 0          |  
|                           |  |                  |  |        |                  |   |                         |         |   |        |   |           |   |  |   |   |  |   |            |  
|BALANCE, December 31, 2002 |  | 1,371,606        |  |        | 12,091,903       |   |                         | 281,674 |   |        |   | 681,047   |   |  |   | 0 |  |   | 12,772,950 |  
|                           |  |                  |  |        |                  |  
|Net income (loss)          |  | 0                |  |        | 999,612          |   |                         | 0       |   |        |   | (554,083  | ) |  |   | 0 |  |   | 445,529    |  
|Partnership distributions  |  | 0                |  |        | (1,002,267       | ) |                         | 0       |   |        |   | 0         |   |  |   | 0 |  |   | (1,002,267 | )
|Class B conversions        |  | 15,647           |  |        | 29,775           |   |                         | (15,647 | ) |        |   | (29,775   | ) |  |   | 0 |  |   | 0          |  
|                           |  |                  |  |        |                  |   |                         |         |   |        |   |           |   |  |   |   |  |   |            |  
|BALANCE, December 31, 2003 |  | 1,387,253        |  | $      | 12,119,023       |   |                         | 266,027 |   |        | $ | 97,189    |   |  | $ | 0 |  | $ | 12,216,212 |  
|                           |  |                  |  |        |                  |   |                         |         |   |        |   |           |   |  |   |   |  |   |            |  



See accompanying notes.



Page F-6



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|----------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                              |  | 2003 |            |   | 2002 |   |            | 2001 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                    |  | $    | 445,529    |   |      | $ | 746,815    |      |  | $ | 870,350    |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Adjustments to reconcile net income to net cash used in operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Equity in income of Joint Ventures                                            |  |      | (557,937   | ) |      |   | (837,509   | )    |  |   | (959,631   | )
|Changes in assets and liabilities:                                            |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts receivable                                                           |  |      | 732        |   |      |   | 546        |      |  |   | 10,734     |  
|Accounts payable                                                              |  |      | 207        |   |      |   | 0          |      |  |   | (438       | )
|Due to affiliates                                                             |  |      | 0          |   |      |   | (15,000    | )    |  |   | (50,000    | )
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Total adjustments                                                             |  |      | (556,998   | ) |      |   | (851,963   | )    |  |   | (999,335   | )
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in operating activities                                         |  |      | (111,469   | ) |      |   | (105,148   | )    |  |   | (128,985   | )
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Investment in Joint Ventures                                                  |  |      | (7,278     | ) |      |   | 0          |      |  |   | 0          |  
|Distributions received from Joint Ventures                                    |  |      | 2,475,857  |   |      |   | 1,473,190  |      |  |   | 1,376,673  |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by investing activities                                     |  |      | 2,468,579  |   |      |   | 1,473,190  |      |  |   | 1,376,673  |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Distributions to partners from accumulated earnings                           |  |      | (1,085,448 | ) |      |   | (1,294,485 | )    |  |   | (1,307,606 | )
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          |  |      | 1,271,662  |   |      |   | 73,557     |      |  |   | (59,918    | )
|CASH AND CASH EQUIVALENTS, beginning of year                                  |  |      | 91,099     |   |      |   | 17,542     |      |  |   | 77,460     |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|CASH AND CASH EQUIVALENTS, end of year                                        |  | $    | 1,362,761  |   |      | $ | 91,099     |      |  | $ | 17,542     |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                               |  |      |            |   |      |   |            |      |  |   |            |  
|Due from joint ventures                                                       |  | $    | 252,452    |   |      | $ | 282,887    |      |  | $ | 348,632    |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  
|Partnership distributions payable                                             |  | $    | 225,429    |   |      | $ | 308,610    |      |  | $ | 328,151    |  
|                                                                              |  |      |            |   |      |   |            |      |  |   |            |  



See accompanying notes.



Page F-7



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2003, 2002, AND 2001



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



Organization and Business



Wells Real Estate Fund XI, L.P. (the Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Partners, L.P. (Wells
Partners), a Georgia nonpublic limited partnership, serving as its general partners (the General Partners). The Partnership was formed on June 20, 1996 for the purpose of acquiring, developing, owning, operating, improving,
leasing, and managing income producing commercial properties for investment purposes. Upon subscription, limited partners elect to have their units treat their units as Class A Units or Class B Units. The limited partners 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 annual 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; and (c) add or remove a general partner. A majority vote on any of the above-described matters will bind the Partnership without the concurrence of the
General Partners. Each limited partnership unit has equal voting rights, regardless of class.



On December 31, 1997, the Partnership commenced an offering of up to $35,000,000 of Class A or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the
Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units on March 3, 1998. The offering was terminated on December 30, 1998, at which time the Partnership had sold approximately
1,302,942 Class A Units and 350,338 Class B Units representing capital contributions of $16,532,802 from investors who were admitted to the Partnership as limited partners.



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



|                                                                                    |  |                                                                                                                                               |  |            |  |                                                                                                                                                                                            
|----------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                   
|                                                                                    |  |                                                                                                                                              
|Joint Venture                                                                       |  | Joint Venture Partners                                                                                                                        |  | Properties
|                                                                                   
|The Fund IX, Fund X, Fund XI and REIT Joint Venture(Fund IX-X-XI-REIT Associates) |  |   Wells Real Estate Fund IX, L.P.   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P.   Wells Operating Partnership, L.P.* |  | 1.    2.   |  | Alstom Power  Knoxville Building A three-story
office building located in Knoxville, Tennessee  360 Interlocken
Building A three-story office building located in Boulder County, Colorado
|                                                                                    |  |                                                                                                                                               | 
|                                                                                    |  |                                                                                                                                               |  | 3.         |  | Avaya Building A one-story office building located in Oklahoma City, Oklahoma                                                                                                              
|                                                                                    |  |                                                                                                                                               | 
|                                                                                    |  |                                                                                                                                               |  | 4.         |  | Iomega Building A single-story warehouse and office building located in Ogden, Weber County, Utah                                                                                          



Page F-8



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



|                                                                              |  |                                                                                                              |  |           |  |                                                                                                                                                                                                                                                         
|----------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                              |  |                                                                                                              | 
|                                                                              |  |                                                                                                              |  | 5.        |  | Ohmeda Building A two-story office building located in Louisville, Boulder County,
Colorado                                                                                                                                                             
|                                                                             
|Wells/Orange County Associates (Fund X-XI-REIT Associates  Orange County)  |  |   Fund X and Fund XI Associates**   Wells Operating Partnership, L.P.*                                     |  | 6.        |  | Cort Building*** A one-story office and warehouse
building located in Fountain Valley, California                                                                                                                                                       
|                                                                             
|Wells/Fremont Associates (Fund X-XI-REIT Associates  Fremont)              |  |   Fund X and Fund XI Associates**   Wells Operating Partnership, L.P.*                                     |  | 7.        |  | Fairchild Building A two-story warehouse and office
building located in Fremont, California                                                                                                                                                             
|                                                                             
|The Wells Fund XI-Fund XII-REIT Joint Venture (Fund XI-XII-REIT Associates) |  |   Wells Real Estate Fund XI, L.P.   Wells Real Estate Fund XII, L.P.   Wells Operating Partnership, L.P.* |  | 8.     9. |  | 111 Southchase Boulevard (formerly known as the EYBL CarTex Building) A two-story manufacturing and office building located in Fountain Inn, South Carolina  Sprint Building A three-story
office building located in Leadwood, Johnson County, Kansas
|                                                                              |  |                                                                                                              |  | 10.       |  | Johnson Matthey Building A one-story office building and warehouse located in Tredyffin Township, Chester County, Pennsylvania                                                                                                                          
|                                                                              |  |                                                                                                              | 
|                                                                              |  |                                                                                                              |  | 11.       |  | Gartner Building A two-story office building located in Ft. Myers, Lee County,
Florida                                                                                                                                                                  
|                                                                             

|* |  | Wells Operating Partnership, L.P. (Wells OP) is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells REIT) serving as its
general partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|** |  | Fund X and Fund XI Associates (Fund X-XI Associates) is a joint venture between Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



|*** |  | This property was sold in September 2003.
|--- |  | -----------------------------------------



Use of Estimates



The preparation of the Partnerships financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Page F-9



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



Investment in Joint Ventures



The Partnership does not have control over the operations of the Joint Ventures; however, it
does exercise significant influence. Accordingly, the Partnerships investments in the Joint Ventures are recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for
contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements, all income and distributions are allocated to joint venture partners in accordance with their respective
ownership interests. Distributions of net cash from operations are distributed to the joint venture partners on a quarterly basis.



Cash and Cash Equivalents



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.



Income Taxes



The Partnership is not subject to federal or state income taxes; 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 with respect to the current fiscal year. Any remaining cash available for
distribution is split 90% to the limited partners holding Class A Units and 10% to the General Partners. No operating cash 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 on a per unit basis
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | To limited partners on a per-unit basis until each limited partner has received an amount equal to his preferential limited partner return (defined as the sum of a 10% per annum
cumulative, noncompounded return on net capital contributions for all periods during which the units were treated as Class A Units, and a 15% per annum cumulative, noncompounded return on net capital contributions for all periods during which the
units were treated as Class B Units)
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-10



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



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



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



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



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.



Recent Accounting Pronouncements



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



Page F-11



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



Restatement Adjustments and Disclosures



Prior to fiscal 2002, the Joint Ventures had historically reported property operating costs
net of reimbursements from tenants as an expense in their statements of income. These costs include property taxes, property insurance, utilities, repairs and maintenance, management fees, and other expenses related to the ownership and operation of
the properties that are required to be reimbursed by the properties tenants in accordance with the terms of their leases. In response to FASB Emerging Issues Task Force consensus reached in November 2001, the Joint Ventures now present these
reimbursements as revenue and the gross property operating costs as expenses. Since this presentation does not impact the amount of reimbursements received or property operating costs incurred and requires equal adjustments to revenues and expenses,
the adoption of this guidance has no impact on the financial position, net income, or cash flows of the Partnership or the Joint Ventures.



The condensed financial information for the Joint Ventures presented in Note 3 has been restated to reflect the effects of this revised presentation.



Furthermore, the statement of income of the Partnership for the year ended December 31, 2001
has been revised to include disclosure of Class A and Class B weighted-average limited partner units outstanding for the year ended December 31, 2001.



|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



Due from Joint Ventures at December 31, 2003 and 2002 represents the Partnerships share of cash to be distributed from its joint venture investments for the fourth
quarter of 2003 and 2002 as follows:



|                             |  |      |         |      |   |        
|---------------------------- |  | ---- | ------- | ---- | - | -------
|                             |  | 2003 |         | 2002
|Fund IX-X-XI-REIT Associates |  | $    | 82,183  |      | $ | 50,252 
|Fund X-XI Associates         |  |      | 18,469  |      |   | 66,397 
|Fund XI-XII-REIT Associates  |  |      | 151,800 |      |   | 166,238
|                             |  |      |         |      |   |        
|                             |  | $    | 252,452 |      | $ | 282,887
|                             |  |      |         |      |   |        



The Partnership entered into a
property management and leasing 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
Joint Ventures pay Wells Management management and leasing fees equal to (a) 2.5% of the gross revenues for management and 2% of the gross revenues for leasing (aggregate maximum of 4.5%) plus a separate competitive fee for the one-time initial
lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) 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s share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures was
$69,982, $75,321, and $74,478 for the years ended December 31, 2003, 2002, and 2001, respectively.



Wells Capital, Inc. (Wells Capital), general partner of Wells Partners, 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 estimates of the amount of



Page F-12



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



time dedicated to each fund by individual administrative personnel. In the opinion of
management, this allocation is a reasonable estimation of such expenses. During 2003, 2002, and 2001, the Partnership reimbursed $41,802, $43,979, and $40,267, respectively, to Wells Capital and its affiliates for these services.



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.



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



The Partnerships investment and percentage ownership in the Joint Ventures at December 31, 2003 and 2002 are summarized as follows:



|                             |  |        |            |         |      |   |        |   |            |  |    |  
|---------------------------- |  | ------ | ---------- | ------- | ---- | - | ------ | - | ---------- |  | -- | -
|                             |  | 2003   |            |         | 2002 |  
|                             |  | Amount |            | Percent |      |   | Amount |   | Percent    | 
|Fund IX-X-XI-REIT Associates |  | $      | 2,827,636  |         | 9    | % |        | $ | 2,966,822  |  | 9  | %
|Fund X-XI Associates         |  |        | 753,622    |         | 42   | % |        |   | 2,203,420  |  | 42 | %
|Fund XI-XII-REIT Associates  |  |        | 7,245,377  |         | 26   | % |        |   | 7,536,600  |  | 26 | %
|                             |  |        |            |         |      |   |        |   |            |  |    |  
|                             |  | $      | 10,826,635 |         |      |   |        | $ | 12,706,842 |  |    |  
|                             |  |        |            |         |      |   |        |   |            |  |    |  



The following is a roll-forward of the
Partnerships investment in the Joint Ventures for the years ended December 31, 2003 and 2002:



|                                                |  |      |            |   |      |   |            |  
|----------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                |  | 2003 |            |   | 2002 |  
|Investment in Joint Ventures, beginning of year |  | $    | 12,706,842 |   |      | $ | 13,276,778 |  
|Equity in income of Joint Ventures              |  |      | 557,937    |   |      |   | 837,509    |  
|Contributions to Joint Ventures                 |  |      | 7,278      |   |      |   | 0          |  
|Distributions from Joint Ventures               |  |      | (2,445,422 | ) |      |   | (1,407,445 | )
|                                                |  |      |            |   |      |   |            |  
|Investment in Joint Ventures, end of year       |  | $    | 10,826,635 |   |      | $ | 12,706,842 |  
|                                                |  |      |            |   |      |   |            |  



Fund IX-X-XI-REIT Associates



On March 20, 1997, the Partnership entered into a joint venture agreement
with Wells Real Estate Fund X, L.P. (Fund X) to form Fund IX and Fund X Associates (Fund IX-X Associates) for the purpose of acquiring, developing, operating, and selling real properties. On March 20, 1997, Fund IX
contributed a 5.62-acre tract of real property in Knoxville, Tennessee, and improvements thereon, known as the Alstom Power-Knoxville Building, to Fund IX-X Associates on which an 84,404 square foot, three-story office building was constructed and
commenced operations at the end of 1997. On February 13, 1998, Fund IX-X Associates purchased a two-story office building, known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, Fund IX-X Associates purchased a three-story office
building, known as the 360 Interlocken Building, in Broomfield, Colorado. On June 11, 1998, Fund IX-X Associates was amended and restated as Fund IX-X-XI-REIT upon admitting the Partnership and Wells OP. On June 24, 1998, Fund IX-X-XI-REIT purchased
a one-story office building, known as the Avaya Building, in Oklahoma City, Oklahoma. On April 1, 1998, Fund X purchased a one-story office and warehouse building known as the Iomega Building, in Ogden, Utah. On July 1, 1998, Fund X contributed the
Iomega Building to Fund IX-X-XI-REIT Associates.



Page F-13



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



Fund X-XI Associates



Fund X-XI Associates was formed on July 15, 1998 for the purposes of acquiring, developing, operating, and selling real properties. During
the periods presented, Fund X-XI Associates owned interests in the Cort Building and the Fairchild Building through its interests in Fund X-XI-REIT Associates  Orange County and Fund X-XI-REIT Associates  Fremont, respectively, as
further described below.



Fund X-XI-REIT AssociatesOrange County



On July 27, 1998, Wells OP entered into a joint venture agreement with
Wells Development Corporation referred to as Wells/Orange County Associates, which acquired a 52,000-square foot warehouse and office building located in Fountain Valley, California and known as the Cort Building shortly thereafter. On July 30,
1998, Fund X-XI-REIT Associates acquired Wells Development Corporations interest in Wells/Orange County Associates, at which time this joint venture became known as Fund X-XI-REIT Associates  Orange County. On September 11, 2003, Fund
X-XI-REIT Associates  Orange County sold the Cort Building to an unrelated third party for a gross sales price of $5,770,000. As a result of this sale, net proceeds of approximately $1,305,000 and loss of approximately $90,000 were allocated
to the Partnership.



Fund X-XI-REIT Associates  Fremont



On July 15, 1998, Wells OP entered into a joint venture agreement with
Wells Development Corporation referred to as Wells/Fremont Associates, which acquired a 58,424-square-foot two-story manufacturing and office building located in Fremont, California and known as the Fairchild Building shortly thereafter. On October
8, 1998, Fund X-XI Associates acquired Wells Development Corporations interest in Wells/Fremont Associates, at which time this joint venture became known as Fund X-XI-REIT Associates  Fremont.



Fund XI-XII-REIT Associates



On May 1, 1999, Fund XI-XII-REIT Associates was formed for the purposes of acquiring,
developing, operating, and selling real properties. On May 18, 1999, XI-XII-REIT Associates purchased a 169,510-square-foot, two-story manufacturing and office building known as 111 Southchase Boulevard located in Fountain Inn, South Carolina. On
June 21, 1999, Fund XI-XII-REIT Associates purchased a 68,900-square-foot, three-story office building known as the Sprint Building located in Leawood, Kansas. On August 17, 1999, Fund XI-XII-REIT Associates purchased a 130,000-square-foot office
and warehouse building known as the Johnson Matthey Building located in Chester County Pennsylvania. On September 20, 1999, Fund XI-XII-REIT Associates purchased a 62,400-square-foot, two-story office building known as the Gartner Building located
in Fort Myers, Florida.



Condensed financial information for the Joint Ventures
as of December 31, 2003 and 2002, and for the years ended December 31, 2003, 2002, and 2001 follows:



|                             |  |                           |            |                               |   |                           |  |      |           |      |   |           |  |   |            |  |   |           
|---------------------------- |  | ------------------------- | ---------- | ----------------------------- | - | ------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------- |  | - | ----------
|                             |  | Total Assets December 31, |            | Total LiabilitiesDecember 31, |   | Total Equity December 31,
|                             |  | 2003                      |            | 2002                          |   | 2003                      |  | 2002 |           | 2003 |   | 2002     
|Fund IX-X-XI-REIT Associates |  | $                         | 33,880,423 |                               | $ | 34,999,773                |  | $    | 1,705,982 |      | $ | 1,241,600 |  | $ | 32,174,441 |  | $ | 33,758,173
|Fund X-XI Associates         |  |                           | 1,838,644  |                               |   | 5,405,922                 |  |      | 44,010    |      |   | 158,157   |  |   | 1,794,634  |  |   | 5,247,765 
|Fund XI-XII-REIT Associates  |  |                           | 28,664,755 |                               |   | 29,616,484                |  |      | 955,434   |      |   | 793,422   |  |   | 27,709,321 |  |   | 28,823,062
|                             |  |                           |            |                               |   |                           |  |      |           |      |   |           |  |   |            |  |   |           
|                             |  | $                         | 64,383,822 |                               | $ | 70,022,179                |  | $    | 2,705,426 |      | $ | 2,193,179 |  | $ | 61,678,396 |  | $ | 67,829,000
|                             |  |                           |            |                               |   |                           |  |      |           |      |   |           |  |   |            |  |   |           



Page F-14



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



|                             |  |                                                 |           |      |                                             |           |  |   |           |     |      |   |           |  |   |           |  |   |          
|---------------------------- |  | ----------------------------------------------- | --------- | ---- | ------------------------------------------- | --------- |  | - | --------- | --- | ---- | - | --------- |  | - | --------- |  | - | ---------
|                             |  | Total Revenues For The Years Ended December 31, |           |      | Net Income For The Years Ended December 31,
|                             |  | 2003                                            |           | 2002 |                                             | 2001      |  |   | 2003      |     | 2002 |   | 2001     
|Fund IX-X-XI-REIT Associates |  | $                                               | 5,212,392 |      | $                                           | 5,485,937 |  | $ | 5,912,258 | (i) |      | $ | 1,922,495 |  | $ | 2,302,966 |  | $ | 2,684,837
|Fund X-XI Associates         |  |                                                 | 131,707   |      |                                             | 431,094   |  |   | 434,257   |     |      |   | 127,635   |  |   | 431,094   |  |   | 434,257  
|Fund XI-XII-REIT Associates  |  |                                                 | 3,028,301 |      |                                             | 3,455,291 |  |   | 3,485,133 | (i) |      |   | 1,282,644 |  |   | 1,732,936 |  |   | 2,064,911
|                             |  |                                                 |           |      |                                             |           |  |   |           |     |      |   |           |  |   |           |  |   |          
|                             |  | $                                               | 8,372,400 |      | $                                           | 9,372,322 |  | $ | 9,831,648 |     |      | $ | 3,332,774 |  | $ | 4,466,996 |  | $ | 5,184,005
|                             |  |                                                 |           |      |                                             |           |  |   |           |     |      |   |           |  |   |           |  |   |          



|(i) |  | Amounts have been restated to reflect tenant reimbursements and other income of $1,574,262 for Fund IX-X-XI REIT Associates and $114,066 for Fund XI-XII-REIT Associates as
revenues for the twelve months ended December 31, 2001, which were previously recorded as a reduction of expenses. This change in presentation has no impact on the financial position, net income, or cash flows of the Joint Ventures or the
Partnership (see Note 1).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following information
summarizes the financial position of the joint ventures in which the Partnership held an interest through its interest in Fund X-XI Associates as of December 31, 2003 and 2002 and for the years ended December 31, 2003, 2002 and 2001:



|                                          |  |                           |           |                               |   |                           |  |   |         |   |      |   |         |  |   |           |  |   |           
|----------------------------------------- |  | ------------------------- | --------- | ----------------------------- | - | ------------------------- |  | - | ------- | - | ---- | - | ------- |  | - | --------- |  | - | ----------
|                                          |  | Total Assets December 31, |           | Total LiabilitiesDecember 31, |   | Total Equity December 31,
|                                          |  | 2003                      |           | 2002                          |   | 2003                      |  |   | 2002    |   | 2003 |   | 2002   
|Fund X-XI-REIT Associates  Orange County |  | $                         | 40,082    |                               | $ | 6,244,843                 |  | $ | (9,031  | ) |      | $ | 195,800 |  | $ | 49,113    |  | $ | 6,049,043 
|Fund X-XI-REIT Associates  Fremont       |  |                           | 8,075,929 |                               |   | 8,408,380                 |  |   | 221,543 |   |      |   | 228,157 |  |   | 7,854,386 |  |   | 8,180,223 
|                                          |  |                           |           |                               |   |                           |  |   |         |   |      |   |         |  |   |           |  |   |           
|                                          |  | $                         | 8,116,011 |                               | $ | 14,653,223                |  | $ | 212,512 |   |      | $ | 423,957 |  | $ | 7,903,499 |  | $ | 14,229,266
|                                          |  |                           |           |                               |   |                           |  |   |         |   |      |   |         |  |   |           |  |   |           



|                                        |  |                                                 |           |      |                                                                    |           |                                                                      |   |                                                  |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          
|--------------------------------------- |  | ----------------------------------------------- | --------- | ---- | ------------------------------------------------------------------ | --------- | -------------------------------------------------------------------- | - | ------------------------------------------------ | --- |  | ---- | ------- | ---- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------ | ---- | - | ------- |  | - | ------- |  | - | ------- |  | - | --------- |  | - | ---------
|                                        |  | Total Revenues For The Years Ended December 31, |           |      | Income From Continuing Operations For The Years Ended December 31, |           | Income From Discontinued Operations For The Years Ended December 31, |   | Net Income (ii) For The Years Ended December 31,
|                                        |  | 2003                                            |           | 2002 |                                                                    | 2001      |                                                                      |   | 2003                                             |     |  | 2002 |         | 2001 |  | 2003 |         | 2002 |   | 2001    |  | 2003 |        | 2002 |   | 2001   
|Fund X-XI-REIT Associates-Orange County |  | $                                               | 558,401   |      | $                                                                  | 846,030   |                                                                      | $ | 813,299                                          | (i) |  | $    | (7,866  | )    |  | $    | 0       |      | $ | 0       |  | $    | 22,433 |      | $ | 542,398 |  | $ | 546,171 |  | $ | 14,567  |  | $ | 542,398   |  | $ | 546,171  
|Fund X-XI-REIT Associates-Fremont       |  |                                                 | 902,639   |      |                                                                    | 905,615   |                                                                      |   | 907,673                                          |     |  |      | 548,993 |      |  |      | 558,082 |      |   | 562,891 |  |      | 0      |      |   | 0       |  |   | 0       |  |   | 548,993 |  |   | 558,082   |  |   | 562,891  
|                                        |  |                                                 |           |      |                                                                    |           |                                                                      |   |                                                  |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          
|                                        |  | $                                               | 1,461,040 |      | $                                                                  | 1,751,645 |                                                                      | $ | 1,720,972                                        |     |  | $    | 541,127 |      |  | $    | 558,082 |      | $ | 562,891 |  | $    | 22,433 |      | $ | 542,398 |  | $ | 546,171 |  | $ | 563,560 |  | $ | 1,100,480 |  | $ | 1,109,062
|                                        |  |                                                 |           |      |                                                                    |           |                                                                      |   |                                                  |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          



|(i) |  | Amounts have been restated to reflect tenant reimbursements of$15,362for Fund X-XI-REIT Associates  Orange County as revenues for the twelve months ended
December 31, 2001, which was previously recorded as a reduction of expenses. This change in presentation has no impact on the financial position, net income, or cash flows of the Joint Ventures or the Partnership (see Note 1).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) |  | The Partnerships share of income earned from its investment in Fund X-XI Associates is recorded by Fund X-XI-REIT Associates  Orange County and Fund X-XI-REIT
Associates  Fremont as equity in income of joint ventures, which is classified as revenue.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-15



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



|4. |  | INCOME TAX BASIS NET INCOME AND PARTNERS CAPITAL
|-- |  | -------------------------------------------------



A reconciliation of the Partnerships financial statement net income to net income presented in accordance with the Federal Income Tax basis of accounting is as
follows for the years ended December 31, 2003, 2002, and 2001:



|                                                                                                       |  |      |         |   |      |   |         |  |   |           |  
|------------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- |  | - | --------- | -
|                                                                                                       |  | 2003 |         |   | 2002 |   | 2001    | 
|Financial statement net income                                                                         |  | $    | 445,529 |   |      | $ | 746,815 |  | $ | 870,350   |  
|Increase (decrease) in net income resulting from:                                                      |  |      |         |   |      |   |         |  |   |           |  
|Meals and Entertainment                                                                                |  |      | 0       |   |      |   | 163     |  |   | 0         |  
|Depreciation expense for financial reporting purposes in excess of amounts for income tax purposes     |  |      | 168,492 |   |      |   | 185,647 |  |   | 230,508   |  
|Bad debt expense for financial reporting purposes in excess of amounts for income tax purposes         |  |      | (20,090 | ) |      |   | 20,090  |  |   | 0         |  
|Expenses deducted for financial reporting purposes, capitalized for income tax purposes                |  |      | 0       |   |      |   | 293     |  |   | 364       |  
|Rental income accrued for financial reporting purposes in excess of amounts for income tax purposes    |  |      | 41,679  |   |      |   | 12,414  |  |   | (62,828   | )
|Gain on sale of property for financial reporting purposes in excess of amounts for income tax purposes |  |      | (72,817 | ) |      |   | 0       |  |   | 0         |  
|                                                                                                       |  |      |         |   |      |   |         |  |   |           |  
|Income tax basis net income                                                                            |  | $    | 562,793 |   |      | $ | 965,422 |  | $ | 1,038,394 |  
|                                                                                                       |  |      |         |   |      |   |         |  |   |           |  



A reconciliation of the partners
capital balances, as presented in the accompanying financial statements, to partners capital balances, as presented in accordance with the Federal Income Tax basis of accounting, is as follows for the years ended December 31, 2003, 2002, and
2001:



|                                                                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                                                                         |  | 2003 |            |   | 2002 |   |            | 2001 | 
|Financial statements partners capital                                                                                                   |  | $    | 12,216,212 |   |      | $ | 12,772,950 |      |  | $ | 13,301,079 |  
|Increase (decrease) in partners capital resulting from:                                                                                 |  |      |            |   |      |   |            |      |  |   |            |  
|Meals and Entertainment                                                                                                                  |  |      | 163        |   |      |   | 163        |      |  |   | 0          |  
|Bad debt expense for financial reporting purposes in excess of amounts for income tax purposes                                           |  |      | 0          |   |      |   | 20,090     |      |  |   | 0          |  
|Depreciation expense for financial reporting purposes in excess of amounts for income tax purposes                                       |  |      | 905,315    |   |      |   | 736,823    |      |  |   | 551,176    |  
|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                          |  |      | (173,964   | ) |      |   | (215,643   | )    |  |   | (228,057   | )
|Accumulated expenses deducted for financial reporting purposes, capitalized for income tax purposes                                      |  |      | 1,981      |   |      |   | 1,981      |      |  |   | 1,688      |  
|Gain on sale of property for financial reporting purposes in excess of amounts for income tax purposes                                   |  |      | (72,817    | ) |      |   | 0          |      |  |   | 0          |  
|Partnerships distributions payable                                                                                                      |  |      | 225,429    |   |      |   | 308,611    |      |  |   | 328,150    |  
|                                                                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  
|Income tax basis partners capital                                                                                                       |  | $    | 15,137,708 |   |      | $ | 15,660,364 |      |  | $ | 15,989,425 |  
|                                                                                                                                         |  |      |            |   |      |   |            |      |  |   |            |  



Page F-16



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



|5. |  | QUARTERLY RESULTS (UNAUDITED)
|-- |  | -----------------------------



Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2002 and 2003:



|                                                                           |  |                     |          |   |         |   |          |              |  |   |             |      |  |   |          |  
|-------------------------------------------------------------------------- |  | ------------------- | -------- | - | ------- | - | -------- | ------------ |  | - | ----------- | ---- |  | - | -------- | -
|                                                                           |  | 2003 Quarters Ended |         
|                                                                           |  | March 31            |          |   | June 30 |   |          | September 30 |  |   | December 31 |     
|Revenues (b)                                                               |  | $                   | 186,309  |   |         | $ | 156,290  |              |  | $ | 87,371      |      |  | $ | 129,895  |  
|Net income (b)                                                             |  |                     | 164,322  |   |         |   | 118,246  |              |  |   | 66,271      |      |  |   | 96,689   |  
|Net income allocated to Class A limited partners                           |  |                     | 286,776  |   |         |   | 236,966  |              |  |   | 267,371     | (a)  |  |   | 208,499  |  
|Net loss allocated to Class B limited partners (b)                         |  |                     | (122,454 | ) |         |   | (118,720 | )            |  |   | (201,100    | )(a) |  |   | (111,810 | )
|Net income per weighted-average Class A limited partner unit outstanding   |  | $                   | 0.21     |   |         | $ | 0.17     |              |  | $ | 0.19        |      |  | $ | 0.15     |  
|Net loss per weighted-average Class B limited partner unit outstanding     |  | $                   | (0.45    | ) |         | $ | (0.44    | )            |  | $ | (0.74       | )    |  | $ | (0.42    | )
|Distribution per weighted-average Class A limited partner unit outstanding |  | $                   | 0.20     |   |         | $ | 0.16     |              |  | $ | 0.20        |      |  | $ | 0.16     |  



|(a) |  | These amounts have been restated to reflect the impact of a reclassification of $(89,563) from net income allocated to Class A limited partners to net loss allocated to Class B
limited partners related to the loss recognized on the sale of the Cort Building attributable to the Partnership in the third quarter of 2003. This reclassification has no impact on net income.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | The totals of the four quarterly amounts do not equal the totals for the year. This difference results from rounding differences between quarters.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                           |  |                     |          |   |         |   |          |              |  |   |             |   |  |   |          |  
|-------------------------------------------------------------------------- |  | ------------------- | -------- | - | ------- | - | -------- | ------------ |  | - | ----------- | - |  | - | -------- | -
|                                                                           |  | 2002 Quarters Ended |         
|                                                                           |  | March 31            |          |   | June 30 |   |          | September 30 |  |   | December 31 |  
|Revenues                                                                   |  | $                   | 223,156  |   |         | $ | 243,725  |              |  | $ | 224,079     |   |  | $ | 148,731  |  
|Net income                                                                 |  |                     | 199,559  |   |         |   | 218,906  |              |  |   | 206,319     |   |  |   | 122,031  |  
|Net income allocated to Class A limited partners                           |  |                     | 322,278  |   |         |   | 351,250  |              |  |   | 267,371     |   |  |   | 245,352  |  
|Net loss allocated to Class B limited partners                             |  |                     | (122,719 | ) |         |   | (132,344 | )            |  |   | (201,100    | ) |  |   | (123,321 | )
|Net income per weighted-average Class A limited partner unit outstanding   |  | $                   | 0.24     |   |         | $ | 0.26     |              |  | $ | 0.23        |   |  | $ | 0.18     |  
|Net loss per weighted-average Class B limited partner unit outstanding     |  | $                   | (0.39    | ) |         | $ | (0.45    | )            |  | $ | (0.40       | ) |  | $ | (0.44    | )
|Distribution per weighted-average Class A limited partner unit outstanding |  | $                   | 0.24     |   |         | $ | 0.24     |              |  | $ | 0.24        |   |  | $ | 0.22     |  



Page F-17



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited
Partnership)



|6. |  | PARTNERSHIP ADMINISTRATION AND LEGAL AND ACCOUNTING COSTS
|-- |  | ---------------------------------------------------------



Partnership administration and legal and accounting costs for the years ended December 31, 2003 and 2002 are comprised of the following items:



|                                                                |  |      |         |      |   |       
|--------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------
|                                                                |  | 2003 |         | 2002
|Salary reimbursements                                           |  | $    | 41,802  |      | $ | 43,979
|Independent accounting fees                                     |  |      | 16,609  |      |   | 13,659
|Taxes and licensing fees                                        |  |      | 13,741  |      |   | 5,493 
|Printing expenses                                               |  |      | 12,430  |      |   | 7,519 
|Postage and delivery expenses                                   |  |      | 6,943   |      |   | 4,895 
|Other professional fees                                         |  |      | 5,302   |      |   | 8,276 
|Legal fees                                                      |  |      | 4,252   |      |   | 2,009 
|Bank service charges                                            |  |      | 1,739   |      |   | 0     
|Life insurance                                                  |  |      | 0       |      |   | 319   
|Other office expenses                                           |  |      | 0       |      |   | 34    
|                                                                |  |      |         |      |   |       
|Total partnership administration and legal and accounting costs |  | $    | 102,818 |      | $ | 86,183
|                                                                |  |      |         |      |   |       



Page F-18



---

##### Index to Financial Statements



REPORT OF INDEPENDENT AUDITORS



The Partners

The Fund IX, Fund X, Fund XI and REIT Joint Venture:



We have audited the accompanying balance sheets of The Fund IX, Fund X, Fund XI and REIT Joint Venture, a Georgia joint venture, as of December 31, 2003 and 2002, and the
related statements of income, partners capital, and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial
statements and schedule are the responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.



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



In our opinion, the
financial statements referred to above present fairly, in all material respects, the financial position of The Fund IX, Fund X, Fund XI and REIT Joint Venture at December 31, 2003 and 2002, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



/s/    ERNST & YOUNG LLP



Atlanta, Georgia

February 18, 2004



Page F-19



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



BALANCE SHEETS

DECEMBER 31, 2003 AND 2002



|                                                                                                                                  |  |      |            |      |   |           
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|ASSETS                                                                                                                           
|                                                                                                                                  |  | 2003 |            | 2002
|Real estate assets, at cost:                                                                                                      |  |      |            |      |   |           
|Land                                                                                                                              |  | $    | 6,698,020  |      | $ | 6,698,020 
|Building and improvements, less accumulated depreciation of $8,484,278 and $7,045,381 at December 31, 2003 and 2002,
respectively |  |      | 24,760,732 |      |   | 26,063,758
|                                                                                                                                  |  |      |            |      |   |           
|Total real estate assets, net                                                                                                     |  |      | 31,458,752 |      |   | 32,761,778
|Cash and cash equivalents                                                                                                         |  |      | 1,510,487  |      |   | 1,337,964 
|Accounts receivable                                                                                                               |  |      | 571,599    |      |   | 482,756   
|Other assets, net                                                                                                                 |  |      | 339,585    |      |   | 417,275   
|                                                                                                                                  |  |      |            |      |   |           
|Total assets                                                                                                                      |  | $    | 33,880,423 |      | $ | 34,999,773
|                                                                                                                                  |  |      |            |      |   |           
|                                                                                                                                 
|LIABILITIES AND PARTNERS CAPITAL                                                                                                
|Liabilities:                                                                                                                      |  |      |            |      |   |           
|Partnership distributions payable                                                                                                 |  | $    | 935,112    |      | $ | 570,932   
|Accounts payable and refundable security deposits                                                                                 |  |      | 626,543    |      |   | 670,668   
|Deferred rent                                                                                                                     |  |      | 144,327    |      |   | 0         
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities                                                                                                                 |  |      | 1,705,982  |      |   | 1,241,600 
|                                                                                                                                  |  |      |            |      |   |           
|Partners capital:                                                                                                                |  |      |            |      |   |           
|Wells Real Estate Fund IX, L.P.                                                                                                   |  |      | 12,557,869 |      |   | 13,176,010
|Wells Real Estate Fund X, L.P.                                                                                                    |  |      | 15,601,793 |      |   | 16,369,765
|Wells Real Estate Fund XI, L.P.                                                                                                   |  |      | 2,827,634  |      |   | 2,966,822 
|Wells Operating Partnership, L.P.                                                                                                 |  |      | 1,187,145  |      |   | 1,245,576 
|                                                                                                                                  |  |      |            |      |   |           
|Total partners capital                                                                                                           |  |      | 32,174,441 |      |   | 33,758,173
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities and partners capital                                                                                           |  | $    | 33,880,423 |      | $ | 34,999,773
|                                                                                                                                  |  |      |            |      |   |           



See accompanying notes.



Page F-20



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF INCOME

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                                                          |  |      |           |      |   |           |  |   |          
|--------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                          |  | 2003 |           | 2002 |   | 2001     
|REVENUES:                                                 |  |      |           |      |   |           |  |   |          
|Rental income                                             |  | $    | 4,052,299 |      | $ | 4,308,536 |  | $ | 4,174,379
|Reimbursement income                                      |  |      | 1,038,513 |      |   | 1,048,910 |  |   | 1,574,176
|Other income                                              |  |      | 114,601   |      |   | 113,895   |  |   | 113,701  
|Interest income                                           |  |      | 6,979     |      |   | 14,596    |  |   | 50,002   
|                                                          |  |      |           |      |   |           |  |   |          
|                                                          |  |      | 5,212,392 |      |   | 5,485,937 |  |   | 5,912,258
|                                                          |  |      |           |      |   |           |  |   |          
|EXPENSES:                                                 |  |      |           |      |   |           |  |   |          
|Depreciation                                              |  |      | 1,438,897 |      |   | 1,425,637 |  |   | 1,416,242
|Operating costs                                           |  |      | 1,304,654 |      |   | 1,282,075 |  |   | 1,335,448
|Management and leasing fees                               |  |      | 370,457   |      |   | 341,860   |  |   | 357,761  
|Joint Venture administration                              |  |      | 125,283   |      |   | 104,354   |  |   | 91,747   
|Legal and accounting                                      |  |      | 50,606    |      |   | 29,045    |  |   | 26,223   
|                                                          |  |      |           |      |   |           |  |   |          
|                                                          |  |      | 3,289,897 |      |   | 3,182,971 |  |   | 3,227,421
|                                                          |  |      |           |      |   |           |  |   |          
|Net income                                                |  | $    | 1,922,495 |      | $ | 2,302,966 |  | $ | 2,684,837
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Real Estate Fund IX, L.P.   |  | $    | 750,361   |      | $ | 899,993   |  | $ | 1,050,156
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Real Estate Fund X, L.P.    |  | $    | 932,243   |      | $ | 1,114,219 |  | $ | 1,297,665
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Real Estate Fund XI, L.P.   |  | $    | 168,960   |      | $ | 203,375   |  | $ | 237,367  
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 70,931    |      | $ | 85,379    |  | $ | 99,649   
|                                                          |  |      |           |      |   |           |  |   |          



See accompanying notes.



Page F-21



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |            |  
|-------------------------- |  | ------------------------------ | ---------- | - | ----------------------------- | - | ---------- | ------------------------------ |  | - | -------------------------------- | - |  | ----------------------- | --------- | - |  | - | ---------- | -
|                           |  | Wells RealEstate Fund IX, L.P. |            |   | Wells RealEstate Fund X, L.P. |   |            | Wells RealEstate Fund XI, L.P. |  |   | Wells OperatingPartnership, L.P. |   |  | Total Partners Capital |          
|BALANCE, December 31, 2000 |  | $                              | 14,117,803 |   |                               | $ | 17,445,277 |                                |  | $ | 3,191,093                        |   |  | $                       | 1,339,636 |   |  | $ | 36,093,809 |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 1,050,156  |   |                               |   | 1,297,665  |                                |  |   | 237,367                          |   |  |                         | 99,649    |   |  |   | 2,684,837  |  
|Partnership distributions  |  |                                | (1,569,454 | ) |                               |   | (1,939,356 | )                              |  |   | (354,789                         | ) |  |                         | (148,925  | ) |  |   | (4,012,524 | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |            |  
|BALANCE, December 31, 2001 |  |                                | 13,598,505 |   |                               |   | 16,803,586 |                                |  |   | 3,073,671                        |   |  |                         | 1,290,360 |   |  |   | 34,766,122 |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 899,993    |   |                               |   | 1,114,219  |                                |  |   | 203,375                          |   |  |                         | 85,379    |   |  |   | 2,302,966  |  
|Partnership contributions  |  |                                | 50,503     |   |                               |   | 151,933    |                                |  |   | 0                                |   |  |                         | 0         |   |  |   | 202,436    |  
|Partnership distributions  |  |                                | (1,372,991 | ) |                               |   | (1,699,973 | )                              |  |   | (310,224                         | ) |  |                         | (130,163  | ) |  |   | (3,513,351 | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |            |  
|BALANCE, December 31, 2002 |  |                                | 13,176,010 |   |                               |   | 16,369,765 |                                |  |   | 2,966,822                        |   |  |                         | 1,245,576 |   |  |   | 33,758,173 |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 750,361    |   |                               |   | 932,243    |                                |  |   | 168,960                          |   |  |                         | 70,931    |   |  |   | 1,922,495  |  
|Partnership contributions  |  |                                | 32,320     |   |                               |   | 40,154     |                                |  |   | 7,278                            |   |  |                         | 3,055     |   |  |   | 82,807     |  
|Partnership distributions  |  |                                | (1,400,822 | ) |                               |   | (1,740,369 | )                              |  |   | (315,426                         | ) |  |                         | (132,417  | ) |  |   | (3,589,034 | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |            |  
|BALANCE, December 31, 2003 |  | $                              | 12,557,869 |   |                               | $ | 15,601,793 |                                |  | $ | 2,827,634                        |   |  | $                       | 1,187,145 |   |  | $ | 32,174,441 |  
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |            |  



See accompanying notes.



Page F-22



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001



|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | 2003 |            |   | 2002 |   |            | 2001 | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $    | 1,922,495  |   |      | $ | 2,302,966  |      |  | $ | 2,684,837  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                                      |  |      | 1,438,897  |   |      |   | 1,425,637  |      |  |   | 1,416,242  |  
|Amortization of deferred leasing costs                                            |  |      | 74,625     |   |      |   | 62,928     |      |  |   | 65,673     |  
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts receivable                                                               |  |      | (88,843    | ) |      |   | 113,294    |      |  |   | (173,807   | )
|Other assets, net                                                                 |  |      | 3,065      |   |      |   | 5,959      |      |  |   | (1,056     | )
|Deferred rent                                                                     |  |      | 144,327    |   |      |   | 0          |      |  |   | 0          |  
|Accounts payable and refundable security deposits                                 |  |      | (44,125    | ) |      |   | (63,813    | )    |  |   | 57,090     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Total adjustments                                                                 |  |      | 1,527,946  |   |      |   | 1,544,005  |      |  |   | 1,364,142  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |      | 3,450,441  |   |      |   | 3,846,971  |      |  |   | 4,048,979  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Payment of deferred lease acquisition costs                                       |  |      | 0          |   |      |   | (47,160    | )    |  |   | (16,343    | )
|Investment in real estate assets                                                  |  |      | (135,871   | ) |      |   | (310,869   | )    |  |   | 0          |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                             |  |      | (135,871   | ) |      |   | (358,029   | )    |  |   | (16,343    | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Contributions received from partners                                              |  |      | 82,807     |   |      |   | 202,436    |      |  |   | 0          |  
|Distributions to joint venture partners                                           |  |      | (3,224,854 | ) |      |   | (3,909,331 | )    |  |   | (3,976,763 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                             |  |      | (3,142,047 | ) |      |   | (3,706,895 | )    |  |   | (3,976,763 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |      | 172,523    |   |      |   | (217,953   | )    |  |   | 55,873     |  
|Cash and cash equivalents, beginning of year                                      |  |      | 1,337,964  |   |      |   | 1,555,917  |      |  |   | 1,500,044  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents, end of year                                            |  | $    | 1,510,487  |   |      | $ | 1,337,964  |      |  | $ | 1,555,917  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Deferred project costs contributed to the Joint Venture                           |  | $    | 0          |   |      | $ | 14,363     |      |  | $ | 0          |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Partnership distributions payable                                                 |  | $    | 935,112    |   |      | $ | 570,932    |      |  | $ | 966,912    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Write-off of fully amortized deferred leasing costs                               |  | $    | 827        |   |      | $ | 0          |      |  | $ | 13,787     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  



See accompanying notes.



Page F-23



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003, 2002, AND 2001



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



Organization and Business



On March 20, 1997, Wells Real Estate Fund IX, L.P. (Wells Fund IX) entered into a joint venture agreement with Wells Real Estate Fund X, L.P. (Wells
Fund X) to form Fund IX and Fund X Associates (Fund IX-X Associates) for the purpose of acquiring, developing, operating, and selling 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-Knoxville Building, to Fund IX-X Associates on which an 84,404 square foot, three-story office building was constructed and commenced operations at the end of 1997. On
February 13, 1998, Fund IX-X Associates purchased a two-story office building, known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, Fund IX-X Associates purchased a three-story office building, known as the 360 Interlocken
Building, in Broomfield, Colorado. On June 11, 1998, Fund IX-X Associates was amended and restated as The Fund IX, Fund X, Fund XI and REIT Joint Venture (the Joint Venture) upon admitting Wells Real Estate Fund XI, L.P. (Wells
Fund XI) and Wells Operating Partnership, L.P. (Wells OP). On June 24, 1998, the Joint Venture purchased a one-story office building, known as the Avaya Building, in Oklahoma City, Oklahoma. On April 1, 1998, Wells Fund X purchased
a one-story office and warehouse building known as the Iomega Building, in Ogden, Utah. On July 1, 1998, Wells Fund X contributed the Iomega Building to the Joint Venture.



Use of Estimates



The preparation of the Joint Ventures financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Revenue Recognition



The Joint Ventures leases typically include renewal options, escalation provisions and provisions requiring tenants to reimburse the Joint Venture for a pro-rata
share of operating costs incurred. All of the Joint Ventures leases are classified as operating leases, and the related rental income, including scheduled rental rate increases (other than scheduled increases based on the Consumer Price Index)
is recognized on a straight-line basis over the terms of the respective leases. Rental revenues collected in advance are recorded as deferred rent in the accompanying balance sheets.



Allocation of Income and Distributions



Pursuant to the terms of the joint venture agreement, all income and distributions are allocated to Wells Fund IX, Wells Fund X, Wells Fund XI and Wells OP in accordance
with their respective ownership interests of approximately 39%, 48%, 9%, and 4%, respectively. Net cash from operations is distributed to the joint venture partners on a quarterly basis.



Real Estate Assets



Real estate assets are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related
assets. All repairs and maintenance expenditures are



Page F-24



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



expensed as incurred. Depreciation for
buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real estate asset.



Effective January 1, 2002, the Joint Venture adopted the Statement of Financial Accounting Standards No. 144 Accounting for the
Impairment or Disposal of Long Lived Assets(SFAS 144), which supersedes Statement of Financial Accounting Standards No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (SFAS 121) and Accounting Principles Board No. 30 Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual or Infrequently Occurring Events or
Transactions, with regard to impairment assessment and discontinued operations, respectively. Under this accounting standard, management continually monitors events and changes in circumstances that could indicate that carrying amounts of
real estate assets may not be recoverable. When indicators of potential impairment are present, management assesses the recoverability of the assets by determining whether the carrying value of the real estate assets will be recovered through the
undiscounted future cash flows expected from the use and eventual disposition of the asset. In the event the expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and
recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Joint Venture to date.



Cash and Cash Equivalents



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



Accounts Receivable



Accounts receivable are comprised of tenant receivables and straight-line rent receivables. Management assesses the collectibility of accounts receivable on an ongoing basis and provides for allowances as such
balances, or portions thereof, become uncollectible. No such allowances have been recorded as of December 31, 2003 or 2002.



Other Assets, net



Other assets, net, as of December 31, 2003 and 2002 is comprised of the following items:



|                             |  |      |         |      |   |        
|---------------------------- |  | ---- | ------- | ---- | - | -------
|                             |  | 2003 |         | 2002
|Deferred leasing costs, net  |  | $    | 241,893 |      | $ | 316,517
|Refundable security deposits |  |      | 97,692  |      |   | 100,758
|                             |  |      |         |      |   |        
|Total                        |  | $    | 339,585 |      | $ | 417,275
|                             |  |      |         |      |   |        



Deferred leasing costs, net, reflect
costs incurred to procure operating leases, which are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred leasing costs, net, include amortization of $331,697 and $257,899 as of December 31, 2003 and
2002, respectively. Refundable security deposits represent cash deposits received from tenants, the offset to which is included in accounts payable and refundable security deposits in the accompanying balance sheets. Pursuant to the respective
leases, the Joint Venture may apply such balances towards unpaid receivable balances or property damages, where applicable, or will refund such balances to the tenants upon the expiration of the lease term.



Page F-25



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



Income Taxes



The Joint Venture is not subject to federal or state income taxes; therefore, none have been
provided for in the accompanying financial statements. The partners of Wells Fund IX, Wells Fund X, Wells Fund XI and Wells OP are required to include their respective share of profits and losses from the Joint Venture in their individual income tax
returns.



|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



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



Wells Fund XI also entered into property management and leasing agreements with Wells Management. In consideration for supervising the management and leasing of the Joint
Ventures properties, the Joint Venture will pay Wells Management management and leasing fees equal to (a) 2.5% of the gross revenues for management and 2% of the gross revenues for leasing plus a separate competitive fee for the one-time
initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties (aggregate maximum of
6%) or (b) 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.



Wells OP entered into an asset/property management agreement with Wells Management. In consideration for supervising the assets, management and leasing of the Joint
Ventures properties, the Joint Venture will pay Wells Management property management, leasing and asset management fees equal to the lesser of (a) 4.5% of the gross revenues generally paid over the life of the lease or (b) 0.6% of Net Asset
Value calculated on an annual basis.



As the Joint Venture is owned by funds
with separate management agreements (and fee structures), management and leasing fees incurred by the Joint Venture are determined by calculating a blended fee percentage according to each funds ownership interest in the Joint Venture.



The Joint Venture incurred management and leasing fees of $269,718, $280,571,
and $306,700 for the years ended December 31, 2003, 2002, and 2001, respectively, which are payable to Wells Management.



Wells Capital, Inc., an affiliate of the General Partners, and its affiliates perform certain administrative services for the Partnership, such as accounting, property
management, and other partnership administration, and incur the related expenses. Such expenses are allocated among these entities based on time spent on each entity by individual personnel. During 2003, 2002, and 2001, the Joint Venture reimbursed
$106,652, $86,630, $73,571, respectively, to Wells Capital, Inc. and its affiliates for these services.



Page F-26



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



The general partners of Wells Fund IX,
Wells Fund X, Wells Fund XI and Wells OP are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may
be in competition with the Joint Venture for tenants in similar geographic markets.



|3. |  | RENTAL INCOME
|-- |  | -------------



The future minimum rental income due to the Joint Venture under noncancelable operating leases at December 31, 2003 follows:



|                        |  |   |          
|----------------------- |  | - | ---------
|Year ended December 31: |  |   |          
|2004                    |  | $ | 4,399,521
|2005                    |  |   | 1,680,578
|2006                    |  |   | 1,212,124
|2007                    |  |   | 1,212,124
|2008                    |  |   | 641,265  
|Thereafter              |  |   | 196,456  
|                        |  |   |          
|                        |  | $ | 9,342,068
|                        |  |   |          



Five tenants contributed 28%, 24%,
20%, 14%, and 14% of rental income for the year ended December 31, 2003. In addition, five tenants will contribute 34%, 27%, 13%, 13%, and 13% of future minimum rental income.



The Joint Venture has received notice that Alstom Power, the sole tenant of the Alstom Power-Knoxville Building, will terminate its lease
and vacate the premises effective December 31, 2004. Accordingly, no such future rental income has been included above for Alstom Power following December 2004.



Page F-27



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2003



|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                      |       |               |  |                                          |            |  |    |  |   |            |  |   |           |  |      |  |          |  |               
|------------------------------------- |  | ------------ |  | -------------------------- | --------- | ----------------------------------------- | ---- | -------------------------------------------------- | -------------------------- | ------------------------ | ------------------------ | -------------------- | ----- | ------------- |  | ---------------------------------------- | ---------- |  | -- |  | - | ---------- |  | - | --------- |  | ---- |  | -------- |  | --------------
|Description                           |  | Encumbrances |  | Initial Cost               |           | Costs CapitalizedSubsequent ToAcquisition |      | Gross Amount at Which Carried at December 31, 2003 |                            | Accumulated Depreciation |                          | Date of Construction |       | Date Acquired |  | Life on whichDepreciation isComputed (f)
|                                      |  | Land         |  | Buildings and Improvements |           |                                           | Land |                                                    | Buildings and Improvements |                          | Construction in Progress |                      | Total |               |  |                                          |           
|ALSTOM POWER  KNOXVILLE BUILDING (a) |  | None         |  | $                          | 582,897   |                                           | $    | 744,164                                            |                            | $                        | 6,744,547                |                      | $     | 607,930       |  | $                                        | 7,463,678  |  | $0 |  | $ | 8,071,608  |  | $ | 2,656,128 |  | 1998 |  | 12/10/96 |  | 20 to 25 years
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                     
|AVAYA BUILDING (b)                    |  | None         |  |                            | 1,002,723 |                                           |      | 4,386,374                                          |                            |                          | 242,241                  |                      |       | 1,051,138     |  |                                          | 4,580,200  |  | 0  |  |   | 5,631,338  |  |   | 1,022,912 |  | 1998 |  | 6/24/98  |  | 20 to 25 years
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                     
|360 INTERLOCKEN BUILDING (c)          |  | None         |  |                            | 1,570,000 |                                           |      | 6,733,500                                          |                            |                          | 884,006                  |                      |       | 1,650,070     |  |                                          | 7,537,436  |  | 0  |  |   | 9,187,506  |  |   | 1,691,715 |  | 1996 |  | 3/20/98  |  | 20 to 25 years
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                     
|IOMEGA BUILDING (d)                   |  | None         |  |                            | 597,000   |                                           |      | 4,674,624                                          |                            |                          | 876,458                  |                      |       | 641,988       |  |                                          | 5,506,094  |  | 0  |  |   | 6,148,082  |  |   | 1,182,891 |  | 1998 |  | 7/01/98  |  | 20 to 25 years
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                     
|OHMEDA BUILDING (e)                   |  | None         |  |                            | 2,613,600 |                                           |      | 7,762,481                                          |                            |                          | 528,415                  |                      |       | 2,746,894     |  |                                          | 8,157,602  |  | 0  |  |   | 10,904,496 |  |   | 1,930,632 |  | 1998 |  | 2/13/98  |  | 20 to 25 years
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                      |       |               |  |                                          |            |  |    |  |   |            |  |   |           |  |      |  |          |  |               
|Total                                 |  |              |  | $                          | 6,366,220 |                                           | $    | 24,301,143                                         |                            | $                        | 9,275,667                |                      | $     | 6,698,020     |  | $                                        | 33,245,010 |  | $0 |  | $ | 39,943,030 |  | $ | 8,484,278 |  |      |  |          |  |               
|                                      |  |              |  |                            |           |                                           |      |                                                    |                            |                          |                          |                      |       |               |  |                                          |            |  |    |  |   |            |  |   |           |  |      |  |          |  |               



|(a) |  | The Alstom Power - Knoxville Building is a three-story office building located in Knoxville, Tennessee.
|--- |  | -------------------------------------------------------------------------------------------------------

|(b) |  | The Avaya Building is a one-story office building located in Oklahoma City, Oklahoma.
|--- |  | -------------------------------------------------------------------------------------

|(c) |  | The 360 Interlocken Building is a three-story office building located in Broomfield, Colorado.
|--- |  | ----------------------------------------------------------------------------------------------

|(d) |  | The Iomega Building is a single-story warehouse and office building located in Ogden, Weber County, Utah.
|--- |  | ---------------------------------------------------------------------------------------------------------

|(e) |  | The Ohmeda Building is a two-story office building located in Louisville, Boulder County, Colorado.
|--- |  | ---------------------------------------------------------------------------------------------------

|(f) |  | Depreciation lives used for buildings are 25 years. Depreciation lives used for land improvements are 20 years.
|--- |  | ---------------------------------------------------------------------------------------------------------------



Page F-28



---

##### Index to Financial Statements

THE FUND IX, FUND X, FUND XI AND REIT JOINT VENTURE

(A Georgia Joint
Venture)



SCHEDULE III 
REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2003



|                             |  |      |            |                          |   |          
|---------------------------- |  | ---- | ---------- | ------------------------ | - | ---------
|                             |  | Cost |            | Accumulated Depreciation
|BALANCE AT DECEMBER 31, 2000 |  | $    | 39,496,290 |                          | $ | 4,203,502
|                             |  |     
|2001 additions               |  |      | 0          |                          |   | 1,416,242
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2001 |  |      | 39,496,290 |                          |   | 5,619,744
|                             |  |     
|2002 additions               |  |      | 310,869    |                          |   | 1,425,637
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2002 |  |      | 39,807,159 |                          |   | 7,045,381
|                             |  |     
|2003 additions               |  |      | 135,871    |                          |   | 1,438,897
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2003 |  | $    | 39,943,030 |                          | $ | 8,484,278
|                             |  |      |            |                          |   |          



Page F-29



---

##### Index to Financial Statements



REPORT OF INDEPENDENT AUDITORS



The Partners

Fund X and Fund XI Associates:



We have audited the accompanying balance sheets of Fund X and Fund XI Associates, a Georgia joint venture, as of December 31, 2003 and 2002, and the related statements of
income, partners capital, and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Joint Venture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 Fund X and Fund XI Associates at December
31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.



/s/    ERNST &
YOUNG LLP



Atlanta, Georgia

February 18, 2004



Page F-30



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



BALANCE SHEET

DECEMBER 31, 2003 AND 2002



ASSETS

|                                        |  |      |           |      |   |          
|--------------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                        |  | 2003 |           | 2002
|Investment in joint ventures            |  | $    | 1,794,633 |      | $ | 5,247,765
|Due from affiliates                     |  |      | 44,011    |      |   | 158,157  
|                                        |  |      |           |      |   |          
|Total assets                            |  | $    | 1,838,644 |      | $ | 5,405,922
|                                        |  |      |           |      |   |          
|LIABILITIES AND PARTNERS
CAPITAL      
|Liabilities:                            |  |      |           |      |   |          
|Partnership distributions payable       |  | $    | 44,010    |      | $ | 158,157  
|                                        |  |      |           |      |   |          
|Partners capital:                      |  |      |           |      |   |          
|Wells Real Estate Fund X, L.P.          |  |      | 1,041,012 |      |   | 3,044,345
|Wells Real Estate Fund XI, L.P.         |  |      | 753,622   |      |   | 2,203,420
|                                        |  |      |           |      |   |          
|Total partners capital                 |  |      | 1,794,634 |      |   | 5,247,765
|                                        |  |      |           |      |   |          
|Total liabilities and partners capital |  | $    | 1,838,644 |      | $ | 5,405,922
|                                        |  |      |           |      |   |          



See accompanying notes.



Page F-31



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



STATEMENT OF INCOME

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, and 2001



|                                                        |  |      |         |   |      |   |         |  |   |        
|------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | - | -------
|                                                        |  | 2003 |         |   | 2002 |   | 2001   
|Equity in income of joint ventures                      |  | $    | 131,707 |   |      | $ | 431,094 |  | $ | 434,257
|Expenses                                                |  |      | (4,072  | ) |      |   | 0       |  |   | 0      
|                                                        |  |      |         |   |      |   |         |  |   |        
|Net income                                              |  | $    | 127,635 |   |      | $ | 431,094 |  | $ | 434,257
|                                                        |  |      |         |   |      |   |         |  |   |        
|Net income allocated to Wells Real Estate Fund X, L.P.  |  | $    | 74,044  |   |      | $ | 250,088 |  | $ | 251,923
|                                                        |  |      |         |   |      |   |         |  |   |        
|Net income allocated to Wells Real Estate Fund XI, L.P. |  | $    | 53,591  |   |      | $ | 181,006 |  | $ | 182,334
|                                                        |  |      |         |   |      |   |         |  |   |        



See accompanying notes.



Page F-32



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



STATEMENT OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002 and 2001



|                           |  |                               |            |   |                                |   |            |                         |  |   |            |  
|-------------------------- |  | ----------------------------- | ---------- | - | ------------------------------ | - | ---------- | ----------------------- |  | - | ---------- | -
|                           |  | Wells RealEstate Fund X, L.P. |            |   | Wells RealEstate Fund XI, L.P. |   |            | Total Partners Capital | 
|BALANCE, December 31, 2000 |  | $                             | 3,259,680  |   |                                | $ | 2,359,273  |                         |  | $ | 5,618,953  |  
|Net income                 |  |                               | 251,923    |   |                                |   | 182,334    |                         |  |   | 434,257    |  
|Partnership distributions  |  |                               | (353,905   | ) |                                |   | (256,146   | )                       |  |   | (610,051   | )
|                           |  |                               |            |   |                                |   |            |                         |  |   |            |  
|BALANCE, December 31, 2001 |  |                               | 3,157,698  |   |                                |   | 2,285,461  |                         |  |   | 5,443,159  |  
|Net income                 |  |                               | 250,088    |   |                                |   | 181,006    |                         |  |   | 431,094    |  
|Partnership distributions  |  |                               | (363,441   | ) |                                |   | (263,047   | )                       |  |   | (626,488   | )
|                           |  |                               |            |   |                                |   |            |                         |  |   |            |  
|BALANCE, December 31, 2002 |  |                               | 3,044,345  |   |                                |   | 2,203,420  |                         |  |   | 5,247,765  |  
|Net income                 |  |                               | 74,044     |   |                                |   | 53,591     |                         |  |   | 127,635    |  
|Partnership distributions  |  |                               | (2,077,377 | ) |                                |   | (1,503,389 | )                       |  |   | (3,580,766 | )
|                           |  |                               |            |   |                                |   |            |                         |  |   |            |  
|BALANCE, December 31, 2003 |  | $                             | 1,041,012  |   |                                | $ | 753,622    |                         |  | $ | 1,794,634  |  
|                           |  |                               |            |   |                                |   |            |                         |  |   |            |  



See accompanying notes.



Page F-33



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



STATEMENT OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, and 2001



|                                                                                  |  |      |            |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                                                  |  | 2003 |            |   | 2002 |   |          | 2001 | 
|Cash flows from continuing operating activities:                                  |  |      |            |   |      |   |          |      |  |   |          |  
|Net income                                                                        |  | $    | 127,635    |   |      | $ | 431,094  |      |  | $ | 434,257  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |          |      |  |   |          |  
|Equity in income of joint ventures                                                |  |      | (131,707   | ) |      |   | (431,094 | )    |  |   | (434,257 | )
|                                                                                  |  |      |            |   |      |   |          |      |  |   |          |  
|Net cash used in operating activities                                             |  |      | (4,072     | ) |      |   | 0        |      |  |   | 0        |  
|                                                                                  |  |      |           
|Cash flows from investing activities:                                             |  |      |            |   |      |   |          |      |  |   |          |  
|Distributions received from joint ventures                                        |  |      | 3,698,985  |   |      |   | 624,157  |      |  |   | 603,443  |  
|Cash flows from financing activities:                                             |  |      |            |   |      |   |          |      |  |   |          |  
|Distributions to joint venture partners                                           |  |      | (3,694,913 | ) |      |   | (624,157 | )    |  |   | (603,443 | )
|                                                                                  |  |      |            |   |      |   |          |      |  |   |          |  
|Net change 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 NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |          |      |  |   |          |  
|Partnership distributions payable                                                 |  | $    | 44,010     |   |      | $ | 158,157  |      |  | $ | 155,826  |  
|                                                                                  |  |      |            |   |      |   |          |      |  |   |          |  
|Due from affiliates                                                               |  | $    | 44,011     |   |      | $ | 158,157  |      |  | $ | 155,826  |  
|                                                                                  |  |      |            |   |      |   |          |      |  |   |          |  



See accompanying notes.



Page F-34



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2003, 2002, AND 2001



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



Organization and Business



On July 15, 1998, Wells Real Estate Fund X, L.P. (Wells Fund X) and Wells Real Estate Fund XI, L.P. (Wells Fund XI), entered into a joint venture
agreement to create Fund X and Fund XI Associates (the Joint Venture). The general partners of Wells Fund X and Wells Fund XI are Leo F. Wells, III and Wells Partners, L.P., a private Georgia limited partnership. The Joint Venture was
formed for the purpose of acquiring, developing, owning, operating, and selling real properties.



On July 15, 1998, the Wells Operating Partnership, L.P. (Wells OP) 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 two-story manufacturing and office building located in Fremont, California, known as the Fairchild Building. On October 8, 1998, the Joint Venture acquired Wells Development Corporations
interest in Wells/Fremont Associates, which resulted in the Joint Venture becoming a joint venture partner with Wells OP in the ownership of the Fairchild Building.



On July 27, 1998, Wells OP 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. During 1998, the Joint Venture acquired Wells Development
Corporations interest in Wells/Orange County Associates, which resulted in the Joint Venture becoming a joint venture partner with Wells OP in the ownership of the Cort Building.



On September 11, 2003, Wells/Orange County Associates sold the Cort Building to an unrelated third party for a gross selling price of
$5,770,000. As a result of the sale, net proceeds of approximately $3,108,000 and a loss of approximately $213,000 were allocated to the Joint Venture.



Investment in Joint Ventures



The Joint Venture does not have control over the operations of its investments in the Joint Ventures; however, it does exercise significant influence. Accordingly,
investments in the Joint Ventures are recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions and net income (loss) attributable to the Joint
Venture. Pursuant to the terms of the joint venture agreements, all income and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations are distributed
to the joint venture partners on a quarterly basis.



Use of Estimates



The preparation of the Joint Ventures financial statements in
conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from
those estimates.



Page F-35



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



Allocation of Income and
Distributions



Pursuant to the terms of the joint venture agreement, all
income and distributions are allocated to Wells Fund X and Wells Fund XI in accordance with their respective ownership interests of approximately 58% and 42%, respectively. Net cash from operations is distributed to the joint venture partners on a
quarterly basis.



Cash and Cash Equivalents



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



Income Taxes



The Joint Venture is not subject to federal or state income taxes; therefore, none have been
provided for in the accompanying financial statements. The partners of Wells Fund X and Wells Fund XI are required to include their respective share of profits and losses from the Joint Venture in their individual income tax returns.



|2. |  | INVESTMENT IN JOINT VENTURES
|-- |  | ----------------------------



The Partnerships investment and percentage ownership in joint ventures at December 31, 2003 and 2002 is summarized as follows:



|                               |  |        |           |         |      |   |        |   |           |  |    |  
|------------------------------ |  | ------ | --------- | ------- | ---- | - | ------ | - | --------- |  | -- | -
|                               |  | 2003   |           |         | 2002 |  
|                               |  | Amount |           | Percent |      |   | Amount |   | Percent   | 
|Wells/Orange County Associates |  | $      | 27,722    |         | 23   | % |        | $ | 3,407,554 |  | 23 | %
|Wells/Fremont Associates       |  |        | 1,766,911 |         | 56   | % |        |   | 1,840,211 |  | 56 | %
|                               |  |        |           |         |      |   |        |   |           |  |    |  
|                               |  | $      | 1,794,633 |         |      |   |        | $ | 5,247,765 |  |    |  
|                               |  |        |           |         |      |   |        |   |           |  |    |  



The following is a roll forward of the
Partnerships investment in joint ventures for the years ended December 31, 2003 and 2002:



|                                                |  |      |            |   |      |   |           |  
|----------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                                |  | 2003 |            |   | 2002 |  
|Investment in joint ventures, beginning of year |  | $    | 5,247,765  |   |      | $ | 5,443,159 |  
|Equity in income of joint ventures              |  |      | 131,707    |   |      |   | 431,094   |  
|Distributions from joint ventures               |  |      | (3,584,839 | ) |      |   | (626,488  | )
|                                                |  |      |            |   |      |   |           |  
|Investment in joint ventures, end of year       |  | $    | 1,794,633  |   |      | $ | 5,247,765 |  
|                                                |  |      |            |   |      |   |           |  



Page F-36



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



The following information summarizes the
financial position and operations of the joint ventures in which the Joint Venture held an interest as of December 31, 2003 and 2002, respectively:



|                               |  |                          |           |                               |   |                          |  |   |         |   |      |   |         |  |   |           |  |   |           
|------------------------------ |  | ------------------------ | --------- | ----------------------------- | - | ------------------------ |  | - | ------- | - | ---- | - | ------- |  | - | --------- |  | - | ----------
|                               |  | Total AssetsDecember 31, |           | Total LiabilitiesDecember 31, |   | Total EquityDecember 31,
|                               |  | 2003                     |           | 2002                          |   | 2003                     |  |   | 2002    |   | 2003 |   | 2002   
|Wells/Fremont Associates       |  | $                        | 8,075,929 |                               | $ | 8,408,379                |  | $ | 221,543 |   |      | $ | 228,156 |  | $ | 7,854,386 |  | $ | 8,180,223 
|Wells/Orange County Associates |  |                          | 40,082    |                               |   | 6,244,843                |  |   | (9,031  | ) |      |   | 195,800 |  |   | 49,113    |  |   | 6,049,043 
|                               |  |                          |           |                               |   |                          |  |   |         |   |      |   |         |  |   |           |  |   |           
|                               |  | $                        | 8,116,011 |                               | $ | 14,653,222               |  | $ | 212,512 |   |      | $ | 423,956 |  | $ | 7,903,499 |  | $ | 14,229,266
|                               |  |                          |           |                               |   |                          |  |   |         |   |      |   |         |  |   |           |  |   |           



|                                |  |                                               |           |      |                                                                         |           |                                                                    |   |                                           |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          
|------------------------------- |  | --------------------------------------------- | --------- | ---- | ----------------------------------------------------------------------- | --------- | ------------------------------------------------------------------ | - | ----------------------------------------- | --- |  | ---- | ------- | ---- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------ | ---- | - | ------- |  | - | ------- |  | - | ------- |  | - | --------- |  | - | ---------
|                                |  | Total RevenuesFor The Years EndedDecember 31, |           |      | Income (Loss) From Continuing OperationsFor The Years EndedDecember 31, |           | Income From Discontinued OperationsFor The Years EndedDecember 31, |   | Net IncomeFor The Years EndedDecember 31,
|                                |  | 2003                                          |           | 2002 |                                                                         | 2001      |                                                                    |   | 2003                                      |     |  | 2002 |         | 2001 |  | 2003 |         | 2002 |   | 2001    |  | 2003 |        | 2002 |   | 2001   
|Wells/ Fremont Associates       |  | $                                             | 902,639   |      | $                                                                       | 905,615   |                                                                    | $ | 907,673                                   |     |  | $    | 548,993 |      |  | $    | 558,082 |      | $ | 562,893 |  | $    | 0      |      | $ | 0       |  | $ | 0       |  | $ | 548,993 |  | $ | 558,082   |  | $ | 562,893  
|Wells/ Orange County Associates |  |                                               | 558,401   |      |                                                                         | 846,030   |                                                                    |   | 813,299                                   | (i) |  |      | (7,866  | )    |  |      | 0       |      |   | 0       |  |      | 22,433 |      |   | 542,398 |  |   | 546,171 |  |   | 14,567  |  |   | 542,398   |  |   | 546,171  
|                                |  |                                               |           |      |                                                                         |           |                                                                    |   |                                           |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          
|                                |  | $                                             | 1,461,040 |      | $                                                                       | 1,751,645 |                                                                    | $ | 1,720,972                                 |     |  | $    | 541,127 |      |  | $    | 558,082 |      | $ | 562,893 |  | $    | 22,433 |      | $ | 542,398 |  | $ | 546,171 |  | $ | 563,560 |  | $ | 1,100,480 |  | $ | 1,109,064
|                                |  |                                               |           |      |                                                                         |           |                                                                    |   |                                           |     |  |      |         |      |  |      |         |      |   |         |  |      |        |      |   |         |  |   |         |  |   |         |  |   |           |  |   |          



Amounts have been restated to
reflect tenant reimbursements of $15,362 for Wells/Orange County Associates as revenues for the twelve months ended December 31, 2001, which was previously recorded as a reduction of expenses. This change in presentation has no impact on the
financial position, net income, or cash flows of the Joint Venture.



|3. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



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



Wells Fund XI entered into a
property management and leasing agreement with Wells Management. In consideration for supervising the management and leasing of the Joint Ventures properties, the Joint Venture will pay Wells Management management and leasing fees equal to (a)
2.5% of the gross revenues for management and 2% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate competitive fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee
customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) 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.



As the Joint Venture is owned by funds with
separate management agreements (and fee structures), management and leasing fees incurred by the Joint Venture are determined by calculating a blended fee percentage according



Page F-37



---

##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint
Venture)



to each funds ownership interest
in the Joint Venture. The Joint Venture indirectly incurred management and leasing fees through its equity in income of joint ventures of $21,051, $26,920, and $27,057 for the years ended December 31, 2003, 2002, and 2001, respectively, which are
payable to Wells Management.



Wells Capital, Inc., an affiliate of the general
partners, and its affiliates perform certain administrative services for the Partnership, such as accounting, property management, and other partnership administration, and incur the related expenses. Such expenses are allocated among these entities
based on time spent on each entity by individual personnel and are recognized by Wells/Fremont Associates and Wells/Orange County Associates. During 2003, 2002, and 2001, the Joint Venture indirectly reimbursed through its equity in income of joint
ventures $19,549, $17,411, and $10,364, respectively, to Wells Capital, Inc. and its affiliates for these services.



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



Page F-38



---

##### Index to Financial Statements



REPORT OF INDEPENDENT AUDITORS



The Partners

The Wells Fund XI-Fund XII-REIT Joint Venture:



We have audited the accompanying balance sheets of The Wells Fund XI-Fund XII-REIT Joint Venture, a Georgia joint venture, as of December 31, 2003 and 2002, and the
related statements of income, partners capital, and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial
statements and schedule are the responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.



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



In our opinion, the
financial statements referred to above present fairly, in all material respects, the financial position of The Wells Fund XI-Fund XII-REIT Joint Venture at December 31, 2003 and 2002, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



/s/    ERNST & YOUNG LLP



Atlanta, Georgia

February 18, 2004



Page F-39



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



BALANCE SHEETS

DECEMBER 31, 2003 and 2002



ASSETS



|                                                                                                                                  |  |      |            |      |   |           
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                                                                  |  | 2003 |            | 2002
|Real estate assets, at cost:                                                                                                      |  |      |            |      |   |           
|Land                                                                                                                              |  | $    | 5,048,797  |      | $ | 5,048,797 
|Building and improvements, less accumulated depreciation of $4,880,004 and $3,784,766 at December 31, 2003 and 2002,
respectively |  |      | 22,453,447 |      |   | 23,533,686
|                                                                                                                                  |  |      |            |      |   |           
|Total real estate assets                                                                                                          |  |      | 27,502,244 |      |   | 28,582,483
|Cash and cash equivalents                                                                                                         |  |      | 641,912    |      |   | 594,294   
|Accounts receivable, net                                                                                                          |  |      | 520,599    |      |   | 439,707   
|                                                                                                                                  |  |      |            |      |   |           
|Total assets                                                                                                                      |  | $    | 28,664,755 |      | $ | 29,616,484
|                                                                                                                                  |  |      |            |      |   |           
|                                                                                                                                 
|LIABILITIES AND PARTNERS CAPITAL                                                                                                
|Liabilities:                                                                                                                      |  |      |            |      |   |           
|Partnership distributions payable                                                                                                 |  | $    | 580,540    |      | $ | 635,756   
|Deferred rent                                                                                                                     |  |      | 244,599    |      |   | 0         
|Accounts payable and refundable security deposits                                                                                 |  |      | 130,295    |      |   | 157,666   
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities                                                                                                                 |  |      | 955,434    |      |   | 793,422   
|                                                                                                                                  |  |      |            |      |   |           
|Partners capital:                                                                                                                |  |      |            |      |   |           
|Wells Real Estate Fund XI, L.P.                                                                                                   |  |      | 7,245,379  |      |   | 7,536,600 
|Wells Real Estate Fund XII, L.P.                                                                                                  |  |      | 4,735,342  |      |   | 4,925,669 
|Wells Operating Partnership, L.P.                                                                                                 |  |      | 15,728,600 |      |   | 16,360,793
|                                                                                                                                  |  |      |            |      |   |           
|Total partners capital                                                                                                           |  |      | 27,709,321 |      |   | 28,823,062
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities and partners capital                                                                                           |  | $    | 28,664,755 |      | $ | 29,616,484
|                                                                                                                                  |  |      |            |      |   |           



See accompanying notes.



Page F-40



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF INCOME

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, and 2001



|                                                          |  |      |           |      |   |           |  |   |          
|--------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                          |  | 2003 |           | 2002 |   | 2001     
|Revenues:                                                 |  |      |           |      |   |           |  |   |          
|Rental income                                             |  | $    | 2,783,101 |      | $ | 3,359,469 |  | $ | 3,346,227
|Other income                                              |  |      | 96,002    |      |   | 24,389    |  |   | 360      
|Reimbursement                                             |  |      | 89,188    |      |   | 63,432    |  |   | 114,066  
|Recovery of bad debt                                      |  |      | 57,410    |      |   |           |  |   |          
|Interest income                                           |  |      | 2,600     |      |   | 8,001     |  |   | 24,480   
|                                                          |  |      |           |      |   |           |  |   |          
|                                                          |  |      | 3,028,301 |      |   | 3,455,291 |  |   | 3,485,133
|                                                          |  |      |           |      |   |           |  |   |          
|Expenses:                                                 |  |      |           |      |   |           |  |   |          
|Depreciation                                              |  |      | 1,095,238 |      |   | 1,092,650 |  |   | 1,092,853
|Operating costs                                           |  |      | 336,920   |      |   | 133,638   |  |   | 86,617   
|Management and leasing fees                               |  |      | 151,060   |      |   | 164,576   |  |   | 156,987  
|Joint Venture administration                              |  |      | 114,278   |      |   | 83,190    |  |   | 65,765   
|Legal and accounting                                      |  |      | 48,161    |      |   | 19,142    |  |   | 18,000   
|Bad debt expense                                          |  |      | 0         |      |   | 229,159   |  |   | 0        
|                                                          |  |      |           |      |   |           |  |   |          
|                                                          |  |      | 1,745,657 |      |   | 1,722,355 |  |   | 1,420,222
|                                                          |  |      |           |      |   |           |  |   |          
|Net income                                                |  | $    | 1,282,644 |      | $ | 1,732,936 |  | $ | 2,064,911
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Real Estate Fund XI, L.P.   |  | $    | 335,386   |      | $ | 453,128   |  | $ | 539,930  
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Real Estate Fund XII, L.P.  |  | $    | 219,191   |      | $ | 296,142   |  | $ | 352,878  
|                                                          |  |      |           |      |   |           |  |   |          
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 728,067   |      | $ | 983,666   |  | $ | 1,172,103
|                                                          |  |      |           |      |   |           |  |   |          



See accompanying notes.



Page F-41



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, and 2001



|                           |  |                                 |           |   |                                  |   |           |                                   |  |   |                         |   |  |   |            |  
|-------------------------- |  | ------------------------------- | --------- | - | -------------------------------- | - | --------- | --------------------------------- |  | - | ----------------------- | - |  | - | ---------- | -
|                           |  | Wells Real Estate Fund XI, L.P. |           |   | Wells Real Estate Fund XII, L.P. |   |           | Wells Operating Partnership, L.P. |  |   | Total Partners Capital |  
|BALANCE, December 31, 2000 |  | $                               | 8,148,261 |   |                                  | $ | 5,325,424 |                                   |  | $ | 17,688,615              |   |  | $ | 31,162,300 |  
|                           |  |                                 |           |  
|Net income                 |  |                                 | 539,930   |   |                                  |   | 352,878   |                                   |  |   | 1,172,103               |   |  |   | 2,064,911  |  
|Partnership distributions  |  |                                 | (770,545  | ) |                                  |   | (503,599  | )                                 |  |   | (1,672,733              | ) |  |   | (2,946,877 | )
|                           |  |                                 |           |   |                                  |   |           |                                   |  |   |                         |   |  |   |            |  
|BALANCE, December 31, 2001 |  |                                 | 7,917,646 |   |                                  |   | 5,174,703 |                                   |  |   | 17,187,985              |   |  |   | 30,280,334 |  
|                           |  |                                 |           |  
|Net income                 |  |                                 | 453,128   |   |                                  |   | 296,142   |                                   |  |   | 983,666                 |   |  |   | 1,732,936  |  
|Partnership distributions  |  |                                 | (834,174  | ) |                                  |   | (545,176  | )                                 |  |   | (1,810,858              | ) |  |   | (3,190,208 | )
|                           |  |                                 |           |   |                                  |   |           |                                   |  |   |                         |   |  |   |            |  
|BALANCE, December 31, 2002 |  |                                 | 7,536,600 |   |                                  |   | 4,925,669 |                                   |  |   | 16,360,793              |   |  |   | 28,823,062 |  
|                           |  |                                 |           |  
|Net income                 |  |                                 | 335,386   |   |                                  |   | 219,191   |                                   |  |   | 728,067                 |   |  |   | 1,282,644  |  
|Partnership distributions  |  |                                 | (626,607  | ) |                                  |   | (409,518  | )                                 |  |   | (1,360,260              | ) |  |   | (2,396,385 | )
|                           |  |                                 |           |   |                                  |   |           |                                   |  |   |                         |   |  |   |            |  
|BALANCE, December 31, 2003 |  | $                               | 7,245,379 |   |                                  | $ | 4,735,342 |                                   |  | $ | 15,728,600              |   |  | $ | 27,709,321 |  
|                           |  |                                 |           |   |                                  |   |           |                                   |  |   |                         |   |  |   |            |  



See accompanying notes.



Page F-42



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, and 2001



|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | 2003 |            |   | 2002 |   |            | 2001 | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $    | 1,282,644  |   |      | $ | 1,732,936  |      |  | $ | 2,064,911  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Depreciation                                                                      |  |      | 1,095,238  |   |      |   | 1,092,650  |      |  |   | 1,092,853  |  
|Amortization of deferred leasing costs                                            |  |      | 0          |   |      |   | 13,787     |      |  |   | 13,787     |  
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      |  |   |            |  
|Accounts receivable, net                                                          |  |      | (80,892    | ) |      |   | 235,315    |      |  |   | (280,708   | )
|Deferred rent                                                                     |  |      | 244,599    |   |      |   | 0          |      |  |   | 0          |  
|Other assets                                                                      |  |      | 0          |   |      |   | 26,486     |      |  |   | 0          |  
|Accounts payable and refundable security deposits                                 |  |      | (27,371    | ) |      |   | 43,054     |      |  |   | 432        |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Total adjustments                                                                 |  |      | 1,231,574  |   |      |   | 1,411,292  |      |  |   | 826,364    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |      | 2,514,218  |   |      |   | 3,144,228  |      |  |   | 2,891,275  |  
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Investment in real estate assets                                                  |  |      | (14,999    | ) |      |   | 0          |      |  |   | 0          |  
|Investment in deferred lease acquisition costs                                    |  |      | 0          |   |      |   | (13,787    | )    |  |   | (13,787    | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in investing activities                                             |  |      | (14,999    | ) |      |   | (13,787    | )    |  |   | (13,787    | )
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Distributions to joint venture partners                                           |  |      | (2,451,601 | ) |      |   | (3,311,952 | )    |  |   | (2,642,772 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |      | 47,618     |   |      |   | (181,511   | )    |  |   | 234,716    |  
|Cash and cash equivalents, beginning of year                                      |  |      | 594,294    |   |      |   | 775,805    |      |  |   | 541,089    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Cash and cash equivalents, end of year                                            |  | $    | 641,912    |   |      | $ | 594,294    |      |  | $ | 775,805    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |            |      |  |   |            |  
|Partnership distributions payable                                                 |  | $    | 580,540    |   |      | $ | 635,756    |      |  | $ | 757,500    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Write-off of fully amortized deferred leasing costs                               |  | $    | 0          |   |      | $ | 13,787     |      |  | $ | 13,787     |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  



See accompanying notes.



Page F-43



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2003, 2002, and 2001



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



Organization and Business



On May 1, 1999, Wells Real Estate Fund XI, L.P. (Wells Fund XI), Wells Real Estate Fund XII, L.P (Wells Fund XII) and Wells Operating Partnership,
L.P. (Wells OP) entered into a joint venture known as The Wells Fund XI-Fund XII-REIT Joint Venture (the Joint Venture). The general partners of Wells Fund XI and Wells Fund XII are Leo F. Wells, III and Wells Partners, L.P.,
a private Georgia limited partnership. Wells OP is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells REIT) serving as its general partner. Wells REIT is a Maryland corporation that qualifies as a real
estate investment trust.



On May 18, 1999, the Joint Venture purchased a
169,510-square foot, two-story manufacturing and office building, known as 111 Southchase Boulevard (formerly known as the EYBL CarTex Building), located 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, located 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,
located 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, located in Fort Myers, Florida.



Use of Estimates



The preparation of the Joint Ventures financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Revenue Recognition



The Joint Ventures leases typically include renewal options, escalation provisions and provisions requiring tenants to reimburse the
Joint Venture for a pro rata share of operating costs incurred. All of the Joint Ventures leases are classified as operating leases, and the related rental income, including scheduled rental rate increases (other than scheduled increases based
on the Consumer Price Index) is recognized on a straight-line basis over the terms of the respective leases. Rental revenues collected in advance are recorded as deferred rent on the accompanying balance sheets.



Allocation of Income and Distributions



Pursuant to the terms of the joint venture agreement, all income and distributions are
allocated to Wells Fund XI, Wells Fund XII and Wells OP in accordance with their respective ownership interests of approximately 26%, 17% and 57%, respectively. Net cash from operations is distributed to the joint venture partners on a quarterly
basis.



Real Estate Assets



Real estate assets are stated at cost less accumulated depreciation. Major improvements and
betterments are capitalized when they extend the useful lives of the related assets. All repairs and maintenance expenditures



Page F-44



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



are expensed as incurred. Depreciation
for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real estate asset.



Effective January 1, 2002, the Joint Venture adopted the Statement of Financial Accounting Standards No. 144 Accounting for
the Impairment or Disposal of Long Lived Assets(SFAS 144), which supersedes Statement of Financial Accounting Standards No. 121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of (SFAS 121) and Accounting Principles Board No. 30 Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual or Infrequently Occurring
Events or Transactions, with regard to impairment assessment and discontinued operations, respectively. Under this accounting standard, management continually monitors events and changes in circumstances that could indicate that carrying
amounts of real estate assets may not be recoverable. When indicators of potential impairment are present, management assesses the recoverability of the assets by determining whether the carrying value of the real estate assets will be recovered
through the undiscounted future cash flows expected from the use and eventual disposition of the asset. In the event the expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair
value and recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Joint Venture to date.



Cash and Cash Equivalents



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



Accounts Receivable, Net



Accounts receivable, net, are comprised of tenant receivables and straight-line rent receivables. Management assesses the collectibility of accounts receivables on an
ongoing basis and provides for allowances as such balances, or portions thereof, become uncollectible. Allowances of $0 and $229,159 have been recorded as of December 31, 2003 and 2002, respectively.



Income Taxes



The Joint Venture is not subject to federal or state income taxes; therefore, none have been provided for in the accompanying financial
statements. The partners of Wells Fund XI, Wells Fund XII and Wells OP are required to include their respective share of profits and losses from the Joint Venture in their individual income tax returns.



|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



Wells Fund XI and Wells Fund XII entered into a property management and leasing agreement with Wells Management, Inc. (Wells Management), an affiliate of the
general partners. In consideration for supervising the management and leasing of the Joint Ventures properties, the Joint Venture will pay Wells Management management and leasing fees equal to (a) 2.5% of the gross revenues for management and
2% of the gross revenues for leasing plus a separate competitive fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering
similar services in the same geographic area for similar properties (aggregate maximum of 6%) or (b) 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



Page F-45



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



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 OP entered into an asset/property management agreement with Wells Management. In consideration for supervising the assets, management and leasing of the Joint
Ventures properties, the Joint Venture will pay Wells Management property management, leasing and asset management fees equal to the lesser of (a) 4.5% of the gross revenues generally paid over the life of the lease or (b) 0.6% of Net Asset
Value calculated on an annual basis. The Joint Venture incurred management and leasing fees of $143,259, $150,788, and $143,200 for the years ended December 31, 2003, 2002, and 2001, respectively, which are payable to Wells Management.



Wells Capital, Inc., an affiliate of the General Partners, and its affiliates perform
certain administrative services for the Partnership, such as accounting, property management, and other partnership administration, and incur the related expenses. Such expenses are allocated among these entities based on time spent on each entity
by individual personnel. During 2003, 2002, and 2001, the Joint Venture reimbursed $95,508, $67,300, and $52,854, respectively, to Wells Capital, Inc. and its affiliates for these services.



The general partners of Wells Fund XI, Wells Fund XII and Wells OP are also general partners
of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may be in competition with the Joint Venture for tenants in similar
geographic markets.



|3. |  | RENTAL INCOME
|-- |  | -------------



The future minimum rental income due to the Joint Venture under noncancelable operating leases at December 31, 2003 follows:



|                        |  |   |          
|----------------------- |  | - | ---------
|Year ended December 31: |  |   |          
|2004                    |  | $ | 2,215,904
|2005                    |  |   | 1,799,470
|2006                    |  |   | 1,842,913
|2007                    |  |   | 1,407,539
|2008                    |  |   | 78,319   
|Thereafter              |  |   | 0        
|                        |  |   |          
|                        |  | $ | 7,344,145
|                        |  |   |          



Three tenants contributed
approximately 39%, 31%, and 30% of rental income for the year ended December 31, 2003. In addition, two tenants will contribute approximately 50% and 43% of future minimum rental income.



The Joint Venture has received notice that Sprint, the sole tenant of the Sprint Building,
will terminate its lease and vacate the premises effective May 18, 2004. Accordingly, no such future minimum rental income is included above for Sprint following May 2004. Sprint contributed approximately $1,100,000 of rental income in 2003.



Page F-46



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2003



|                                                                            |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |       |            |                          |   |                      |  |               |            |                                            |   |           |  |      |  |          |  |               
|--------------------------------------------------------------------------- |  | ------------ |  | ------------ | --------- | -------------------------- | - | -------------------------------------------------- |  | ---- | --------- | -------------------------- | - | ------------------------ |  | ----- | ---------- | ------------------------ | - | -------------------- |  | ------------- | ---------- | ------------------------------------------ | - | --------- |  | ---- |  | -------- |  | --------------
|                                                                            |  |              |  | Initial Cost |           |                            |   | Gross Amount at Which Carried at December 31, 2003 |  |      |           |                            |   |                          |  |      
|Description                                                                 |  | Encumbrances |  | Land         |           | Buildings and Improvements |   | Costs Capitalized Subsequent To Acquisition        |  | Land |           | Buildings and Improvements |   | Construction in Progress |  | Total |            | Accumulated Depreciation |   | Date of Construction |  | Date Acquired |            | Life on which Depreciation is Computed (e)
|111 SOUTHCHASE BOULEVARD (FORMERLY KNOWN AS THE EYBL CARTEX BUILDING) (a) |  | None         |  | $            | 330,000   |                            | $ | 4,791,828                                          |  | $    | 228,411   |                            | $ | 343,750                  |  | $     | 5,006,489  |                          | $ | 0                    |  | $             | 5,350,239  |                                            | $ | 934,148   |  | 1998 |  | 05/18/99 |  | 20 to 25 years
|SPRINTBUILDING (b)                                                          |  | None         |  |              | 1,696,000 |                            |   | 7,850,726                                          |  |      | 397,783   |                            |   | 1,766,667                |  |       | 8,177,842  |                          |   | 0                    |  |               | 9,944,509  |                                            |   | 1,472,012 |  | 1998 |  | 07/02/99 |  | 20 to 25 years
|JOHNSON MATTHEY BUILDING (c)                                                |  | None         |  |              | 1,925,000 |                            |   | 6,131,392                                          |  |      | 335,685   |                            |   | 2,005,209                |  |       | 6,386,868  |                          |   | 0                    |  |               | 8,392,077  |                                            |   | 1,128,387 |  | 1973 |  | 08/17/99 |  | 20 to 25 years
|GARTNER BUILDING (d)                                                        |  | None         |  |              | 895,844   |                            |   | 7,451,760                                          |  |      | 347,819   |                            |   | 933,171                  |  |       | 7,762,252  |                          |   | 0                    |  |               | 8,695,423  |                                            |   | 1,345,457 |  | 1998 |  | 09/20/99 |  | 20 to 25 years
|                                                                            |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |       |            |                          |   |                      |  |               |            |                                            |   |           |  |      |  |          |  |               
|Total                                                                       |  |              |  | $            | 4,846,844 |                            | $ | 26,225,706                                         |  | $    | 1,309,698 |                            | $ | 5,048,797                |  | $     | 27,333,451 |                          | $ | 0                    |  | $             | 32,382,248 |                                            | $ | 4,880,004 |  |      |  |          |  |               
|                                                                            |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |       |            |                          |   |                      |  |               |            |                                            |   |           |  |      |  |          |  |               



|(a) |  | 111 Southchase Boulevard is a two-story manufacturing and office building located in Fountain Inn, South Carolina.
|--- |  | ------------------------------------------------------------------------------------------------------------------

|(b) |  | Sprint Building is a three-story office building located in Leawood, Johnson County, Kansas.
|--- |  | --------------------------------------------------------------------------------------------

|(c) |  | Johnson Matthey Building is a one-story office building and warehouse located in Tredyffin Township, Chester County, Pennsylvania.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------

|(d) |  | Gartner Building is a two-story office building located in Ft. Myers, Lee County, Florida.
|--- |  | ------------------------------------------------------------------------------------------

|(e) |  | Depreciation lives used for buildings are 25 years. Depreciation lives used for land improvements are 20 years.
|--- |  | ---------------------------------------------------------------------------------------------------------------



Page F-47



---

##### Index to Financial Statements

THE WELLS FUND XI - FUND XII - REIT JOINT VENTURE

(A Georgia Joint
Venture)



SCHEDULE III 
REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2003



|                             |  |      |            |                          |   |          
|---------------------------- |  | ---- | ---------- | ------------------------ | - | ---------
|                             |  | Cost |            | Accumulated Depreciation
|BALANCE AT DECEMBER 31, 2000 |  | $    | 32,367,249 |                          | $ | 1,599,263
|                             |  |     
|2001 additions               |  |      | 0          |                          |   | 1,092,853
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2001 |  |      | 32,367,249 |                          |   | 2,692,116
|                             |  |     
|2002 additions               |  |      | 0          |                          |   | 1,092,650
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2002 |  |      | 32,367,249 |                          |   | 3,784,766
|                             |  |     
|2003 additions               |  |      | 14,999     |                          |   | 1,095,238
|                             |  |      |            |                          |   |          
|BALANCE AT DECEMBER 31, 2003 |  | $    | 32,382,248 |                          | $ | 4,880,004
|                             |  |      |            |                          |   |          





Page F-48