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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.
20549



FORM 10-K



(Mark One)

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

[Fee Required]



For the fiscal year ended December 31, 2002 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 (Zip Code)                       
|(Address of principal executive offices)                       |  |                                        
|                                                               |  |                                        
|Registrants telephone number,                                 |  | (770) 449-7800                         
|including area code                                            |  |                                        
|Securities registered pursuant to Section 12 (b) of the Act:   |  |                                        
|                                                               |  |                                        
|Title of each class                                            |  | Name of exchange on which registered   
|NONE                                                           |  | NONE                                   



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



CLASS A UNITS

(Title of Class)



CLASS B UNITS

(Title of Class)



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



YES xNO ̈



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

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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 the General Partners. The Partnership was formed on June 20, 1996 for the purpose of
acquiring, developing, owning, operating, improving, leasing, and otherwise 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 a public offering of up to $35,000,000 of limited partnership units pursuant to a Registration Statement
filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations on March 3, 1998 upon receiving and accepting subscriptions for 125,000 units. The offer terminated on December 30, 1998 at which time approximately
1,302,942 and 350,338 units had been sold to 1,250 and 95 Class A and Class B Limited Partners, respectively, for total limited partner capital contributions of $16,532,802. As of December 31, 2002, the Partnership had paid a total of $578,648 in
acquisition and advisory fees and acquisition expenses and $2,066,600 in selling commissions and organization and offering expenses and invested $3,357,436 in Fund IX-X-XI-REIT Associates, $2,398,767 in Fund X-XI Associates, and $8,131,351in
Fund XI-XII-

REIT Associates.



Employees



The Partnership has no direct employees. The employees of Wells Capital, Inc, the general partner of Wells Partners, L.P., and Wells Management Company,
Inc., 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, 2002.



Insurance



Wells Management Company, Inc. carries comprehensive liability and extended coverage with respect to all 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.



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



The Partnership owns interests in all of its real estate assets through joint ventures with other Wells Real Estate Funds. As of December 31, 2002, the
Partnership owned interests in the following 11 properties through the affiliated joint ventures listed below:



|                                   |  |                                                                                                                                                        |  |                                                                                                                                          |  | Occupancy    % |  
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | -
|Joint Venture                      |  | Joint Venture Partners                                                                                                                                 |  | Properties                                                                                                                               |  | 12/31/02       |  
|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. Alstom Power-Knoxville Building A three-story office building   located in
Knoxville, Tennessee                                       |  | 100            | %
|                                   |  |                                                                                                                                                        |  | 2. 360 Interlocken Building A three-story office building   located in Boulder County,   Colorado                                        |  | 75             | %
|                                   |  |                                                                                                                                                        |  | 3. Avaya Building A one-story office building located in Oklahoma City, Oklahoma                                                         |  | 100            | %
|                                   |  |                                                                                                                                                        |  | 4. Iomega Building A single-story warehouse and office building located in Ogden, Weber County, Utah                                     |  | 100            | %
|                                   |  |                                                                                                                                                        |  | 5. Ohmeda Building A two-story office building located in Louisville, Boulder County, Colorado                                           |  | 100            | %
|Fund X-XI AssociatesOrange County |  |     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            | %
|Fund X-XI 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            | %
|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. Eybl Cartex Building A two-story manufacturing and   office building located in   Fountain Inn, South Carolina                        |  | 0              | %
|                                   |  |                                                                                                                                                        |  | 9. Sprint Building A three-story office building   located in Leadwood, Johnson   County, Kansas                                         |  | 100            | %
|                                   |  |                                                                                                                                                        |  | 10. Johnson Matthey Building A one-story office building and   warehouse located in Tredyffin   Township, Chester County,   Pennsylvania |  | 100            | %
|                                   |  |                                                                                                                                                        |  | 11. Gartner Building A two-story office building   located in Ft. Myers, Lee County,
Florida                                             |  | 100            | %



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|* |  | Wells Real Estate Fund X, L.P. (Wells Fund X) and Wells Real Estate Fund XI, L.P. (Wells Fund XI), Georgia public limited partnerships
affiliated with the Partnership through common general partners, entered into a joint venture agreement know as Fund X-XI Associates.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



The Partnership does not have control over the operations of the above joint ventures; however, it does exercise significant influence. Accordingly,
investments in joint ventures are recorded using the equity method of accounting.



As of December 31, 2002, the lease expirations schedule during each of the following ten years for all properties owned by the joint ventures described above, 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 | 
|------------------------ |  | ------------------------- |  | -------------------- |  | -------------------------- | --------- | ----------------------------------------------- | - | ---------------------------------------- |  | ----- | ---------------------------------------- | 
|2003(1)                  |  | 2                         |  | 64,223               |  | $                          | 1,044,916 |                                                 | $ | 215,957                                  |  | 8.4   | %                                        | 
|2004(2)                  |  | 1                         |  | 58,424               |  |                            | 976,181   |                                                 |   | 92,205                                   |  | 7.6   |                                          | 
|2005(3)                  |  | 3                         |  | 133,596              |  |                            | 1,777,331 |                                                 |   | 156,405                                  |  | 17.4  |                                          | 
|2007(4)                  |  | 3                         |  | 283,304              |  |                            | 3,163,126 |                                                 |   | 632,541                                  |  | 36.9  |                                          | 
|2008(5)                  |  | 2                         |  | 119,586              |  |                            | 1,562,574 |                                                 |   | 300,547                                  |  | 15.6  |                                          | 
|2009(6)                  |  | 1                         |  | 108,250              |  |                            | 539,958   |                                                 |   | 47,516                                   |  | 14.1  |                                          | 
|                         |  |                           |  |                      |  |                            |           |                                                 |   |                                          |  |       |                                          | 
|                         |  | 12                        |  | 767,383              |  | $                          | 9,064,086 |                                                 | $ | 1,445,171                                |  | 100.0 | %                                        | 
|                         |  |                           |  |                      |  |                            |           |                                                 |   |                                          |  |       |                                          | 



(1)  Cort Furniture lease ( 52,000 square feet).

(2)  Fairchild lease
(58,424 square feet).

(3)  Ohmeda lease (106,750 square feet).

(4)  Alstom Power-Knoxville lease (84,404 square feet), Sprint lease (68,900 square feet), and the Johnson
Matthey                lease (130,000 square feet).

(5)  Avaya lease (57,186 square feet), and Gartner lease (62,400 square feet).

(6)  Iomega lease (108,250 square feet).



The properties and joint ventures in which the Partnership owns an interest as of December 31, 2002 are further described below:



Fund IX-X-XI-REIT Associates



On June 11, 1998, Wells Real Estate Fund IX L.P. (Wells Fund IX), and Wells Real Estate Fund X, L.P. (Wells Fund X), Georgia public
limited partnerships affiliated with the Partnership through common general partners, entered into a joint venture agreement known as Fund IX-X Associates, which was subsequently amended, restated and renamed as Fund IX-X-XI-REIT Associates in order
to admit the Partnership and Wells OP.



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) 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 Fund X contributed the Iomega Building, a



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single-story warehouse and
office building with 108,250 rentable square feet, to Fund IX-X-XI-REIT Associates, which was recorded as a capital contribution.



As of December 31, 2002, the Partnership, Wells Fund IX, Wells Fund X, and Wells OP held equity interests in Fund IX-X-XI-REIT Associates of approximately
9%, 39%, 49%, and 3%, respectively.



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 containing approximately 84,404 rentable square feet locates on a 5.62 acre tract of real property in Knoxville, Knox County, Tennessee.
Land purchase and construction costs totaling $8,137,994 were funded capital contributions of $4,221,973 from Wells Fund IX and $3,916,021 from Wells Fund X.



Alstom Power, Inc. (Alstom Power), took occupancy of 57,831 rentable square feet in December 1997. The initial term of the
lease term of 9 years and 11 months commenced as Alstom Power took occupancy. 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
during the first five years and $728,750 during the last four years and 11 months of the initial term. The annual base rent for each extended term will be assessed at the then currently prevailing market rental rates. In addition to the base rent,
Alstom Power is required to pay additional rent equal to its share of operating expenses during the lease term.



Commencing December 1, 1999, Alstom Power Environmental exercised its right of first refusal to lease an additional 23,992 square feet of
space, 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 their original lease.



The average effective annual rental per square foot at the Alstom Power-Knoxville Building was $13.67 for 2002, $13.83 for 2001, $14.05 for 2000, $11.82 for 1999, and $9.97 for 1998.



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, for a gross purchase price of $10,325,000, plus acquisition and
additional closing costs of approximately $36,000. Wells Fund IX and Wells Fund X contributed $3,460,192 and $6,900,878 towards the purchase of the Ohmeda Building, respectively.



The entire 106,750 rentable square feet of the Ohmeda Building is currently under a net lease with Ohmeda,
Inc., which was assigned to the Fund IX-X Associates upon acquisition. The Ohmeda Lease currently expires in January 2005, subject to (i) Ohmedas right to effectuate an early termination of the lease under the terms and conditions described
below, and (ii) Ohmedas right to extend the lease for two additional five year periods of time at the then current market rental rates.



The monthly base rental payable under the lease is $83,710 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,



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Ohmeda shall
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 per square foot at the
Ohmeda Building was $9.64 for 2002, $9.62 for 2001, 2000, 1999, and 1998.



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 51,974 rentable square feet located on a 5.1 acre tract of land in Broomfield,
Broomfield County, Colorado for a gross purchase price of $8,275,000, plus acquisition and closing costs of approximately $42,000. This acquisition was funded by capital contributions from Wells Fund IX and Wells Fund X of $6,642,466 and $1,674,271,
respectively.



The second and third floors of the
360 Interlocken Building are currently occupied by two major tenants. On the first floor, 2910 square feet are occupied by one tenant with several suites available for releasing on that floor.



The initial term of the GAIAM lease expired on March 31, 2002
and was renewed and extended through May 31, 2005. In connection therewith, GAIAMs space was increased to include 19,013 square feet on the third floor and 4,923 square feet on the second floor. The annual rent for the remaining term of the
lease is $574,464 per year with a 2% increase each lease year beginning June 1, 2003. The lease for ODS Technologies, L.P. for 12,223 square feet on the second floor, expiring on September 30, 2003, is subject to a renewal option for three years.
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 Company is actively pursuing
prospective tenants to lease the vacant space at the 360 Interlocken Building on the first floor, which encompasses approximately 25% of the premises. Rental revenue reductions associated with the vacant space approximately $400,000 annually.



The average effective annual rental rate per
square foot at the 360 Interlocken Building was $18.49 for 2002, $16.12 for 2001, $16.23 for 2000 and, $15.97 for 1999 and 1998.



Avaya Building



On May 30, 1997, Fund IX-X Associates entered into a purchase and sale agreement with Wells Development Corporation (Wells
Development), an affiliate of the General Partners, for the acquisition and development of the Avaya Building, a one-story office building containing 57,186 net rentable square feet on 5.3 acres of land. On June 24, 1998, Fund IX-X-XI-REIT
Associates purchased this property for $5,504,276, plus acquisition and closing costs of approximately $8,000. The purchase price was funded by capital contributions of $2,482,810 from the Partnership, $657,804 from Wells Fund IX, $950,392 from
Wells Fund X, and $1,421,466 from Wells OP.



Avaya, a worldwide leader in telecommunications technology producing a variety of communication products, occupies the entire Avaya Building. The initial term of the lease is ten years commencing



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January 5,
1998. Avaya has the option to extend the initial term of the lease for two additional five-year periods. The annual base rent payable during the initial term is $508,383 during the first five years and $594,152 during the second five years of the
lease term. The annual base rent for each extended term will be at then currently prevailing market rental rates. In addition to the base rent, Avaya will be required to pay additional rent equal to its share of operating expenses during the lease
term.



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



Iomega Building



On July 1, 1998, Wells Fund X contributed the Iomega Building, a single story warehouse and office building with 108,250 rentable square
feet and located in Ogden, Utah to Fund IX-X-XI-REIT Associates. A capital contribution of $5,050,425 which represents the purchase price of $5,025,000, plus acquisition and closing costs of approximately $25,000, was originally paid by Wells Fund X
on April 1, 1998.



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



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. The Partnership 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 as additional
parking and a loading-dock area, including 400 new parking stalls and new site work for truck maneuver, 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 base rent of $113,700.



The average
effective annual rental per square foot at the Iomega Building was $6.36 for 2002, $6.22 for 2001 and 2000, $5.18 for 1999, and $4.60 for 1998.



Fund X-XI Associates



On July 17, 1998 the Partnership and Wells Fund X entered into a joint venture agreement known as Fund X-XI Associates. The investment objectives of Wells
Fund X are substantially identical to those of the Partnership. As of December 31, 2002, the Partnership and Wells Fund X had contributed $2,398,767 and $3,296,233 respectively, for equity interests in Fund X-XI Associates of approximately 42%, and
58%, respectively.



Fund X-XI AssociatesFremont:



Fairchild Building



On July 15, 1998, Wells OP and Wells
Development Corporation (Wells Development), wholly-owned subsidiary of Wells Management Company, entered into a joint venture agreement, the



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Fremont joint
venture. On July 21, 1998, the Fremont joint venture acquired the Fairchild Building, a 58,424 square-foot manufacturing and office building located in Fremont, California (the Fairchild Building), for a purchase price of $8,900,000,
plus acquisition and closing costs of approximately $60,000.



On October 8, 1998, Fund X-XI Associates purchased Wells Developments interest in the Fremont Joint Venture, thus, creating Fund X-XI Associates  Fremont. As of December 31, 2002, Fund X-XI Associates and Wells OP had
contributed $2,000,000 and $6,983,110 for equity interests in Fund X-XI Associates  Fremont of 22% and 78%, respectively.



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



The average effective annual rental per square foot at the Fairchild Building was $15.46 for 2002, 2001, 2000, 1999, and 1998.



Fund X-XI AssociatesOrange County:



Cort Building



In July 1998, Wells OP and Wells Development entered into a joint venture agreement, the Orange County joint venture, for the purpose of
acquiring the Cort Building for a purchase price of $6,400,000, plus acquisition and closing costs of approximately $150,000.



On September 1, 1998, Fund X-XI Associates purchased Wells Developments interest in the Orange County Joint Venture, thus, creating
Fund X-XI Associates  Orange County. As of December 31, 2002, Fund X-XI Associates and Wells OP had contributed $3,695,000 and $2,871,430 for equity interests in Fund X-XI Associates  Orange County of 56% and 44%, respectively.



The Cort Building is a 52,000-square-foot
warehouse and office building located in Fountain Valley California. The building is leased to one tenant over a 15-year lease term, which commenced on November 1, 1988 and expires on October 31, 2003. The monthly base rent currently payable under
the Cort lease is $69,574 through the remainder of the lease term. The Cort lease is a triple net lease, whereby, Cort is required to reimburse Fund X-XI Associates - Orange County for certain operating expenses, as defined in the lease.



The average effective annual rental per square
foot at the Cort Building was $15.30 for 2002, 2001, 2000, 1999, and 1998.



Fund XI-XII-REIT Associates



On
June 21, 1999, Fund XI-REIT Associates, a joint venture between the Partnership and Wells OP, was amended and restated to admit the Wells Real Estate Fund XII L.P. (Wells Fund XII), a Georgia public limited partnership. Wells Fund XII
and Wells OP are affiliates of the Partnership through common general partners and have investment objectives substantially identical to those of the Partnership. Accordingly, Fund XI-REIT Associates subsequently changed its name to Fund XI-XII-REIT
Associates. Fund XI-REIT Associates had previously acquired and owned the EYBL CarTex Building located in Greenville, South Carolina (further described below). As of December 31, 2002, the Partnership, Wells



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Fund XII, and Wells OP had
contributed $8,131,351, $5,300,000, and $17,585,310 for equity interests in Fund XI-XII-REIT Associates of approximately 26%, 17%, and 57%, respectively.



EYBL CarTex Building



On May 18, 1999, Fund XI-XII-REIT Associates purchased the EYBL CarTex Building, a manufacturing and office building located in Fountain
Inn, unincorporated Greenville County, South Carolina for a purchase price of $5,085,000, plus acquisition and closing costs of approximately $37,000. The purchase cost was funded by capital contributions of $1,530,000 from the partnership and
$3,591,827 from Wells OP.



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



The entire 169,510 rentable square feet of the EYBL CarTex Building has a ten year lease with EYBL CarTex, Inc., a South Carolina
corporation, beginning on March 1, 1998. EYBL CarTex has the right to extend the Lease for two additional five-year periods. Each extension option must be exercised by giving notice to the landlord at least twelve months prior to the expiration date
of the then current lease term. The annual rent payable is $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 vacated the Eybl CarTex building 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 and, concurrently, actively seeking prospective tenants and marketing the property for releasing. The sole tenant vacated the Eybl CarTex building 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 and, concurrently, actively seeking prospective tenants and marketing the property
for releasing. Rental revenue reductions associated with the vacant space approximate $650,000 annually.



The average effective annual rental per square foot at the EBYL CarTex Building was $3.29 for 2002 and $3.31 for 2001, 2000, and 1999, the
first year of ownership.



Sprint Building



On July 2, 1999, the Fund XI-XII-REIT
Associates acquired the Sprint Building, a three-story office building with approximately 68,900 rentable square feet on a 7.12-acre tract of land located in Leawood, Johnson County, Kansas, for a purchase price of $9,500,000, plus acquisition and
closing costs of approximately $46,200. As of December 31, 2002, the Partnership had contributed $3,000,000, Wells Fund XII had contributed $1,000,000 and Wells OP had contributed $5,546,210 to the purchase of this property.



The entire rentable area of the Sprint Building is currently
under a net lease agreement with Sprint Communications, Inc. (Sprint) dated February 14, 1997. The sellers interest in the lease was assigned to Fund XI-XII-REIT Associates at the closing. The initial term of the lease is ten



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years, which
commenced on May 19, 1997 and expires on May 18, 2007. Sprint has the option to extend the lease for two additional five-year periods of time. 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. The monthly base rent payable for each extended term of the lease will be equal to 95% of the then current market rate which is calculated as a full-service rental rate less anticipated annual operating expenses on a
rentable square foot basis charged for space of comparable location, size, and conditions in comparable office buildings in the suburban south Kansas City, Missouri, and south Johnson County, Kansas areas.



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



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



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



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 for a purchase price of $8,000,000, plus acquisition and closing costs of
approximately $60,000. The purchase of the building was funded by capital contributions of $3,494,727 from the Partnership, $1,500,000 from Wells Fund XII and $3,061,594 from Wells OP.



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. The annual base rent payable under the Johnson Matthey lease for the remainder of the lease term is as follows: year three-$789,750, year four-$809,250, year five-$828,750, year
six-$854,750, year seven-$874,250, year eight-$897,000, year nine-$916,500, and year ten-$939,250. The current lease term expires in June 2007. Johnson Matthey has the right to extend the lease 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 desires 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



9



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refusal, it
must purchase the Johnson Matthey Building on the same terms contained in the third-party offer.



The average effective annual rental per square foot at the Johnson Matthey Building was $6.77 for 2002, and $6.67 for 2001, 2000, and 1999, the first year of ownership.



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 for a purchase price of $8,320,000, plus acquisition and closing costs of
approximately $27,600. The purchase was funded by capital contributions of $106,554 by the Partnership, $2,800,000 by Wells Fund XII and $5,441,064 by Wells OP.



The entire rentable area of the Gartner Building is currently under a net lease agreement with Gartner dated
July 30, 1997 (the Gartner Lease). 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 for the remainder of the Gartner Lease term is $830,656 through January 2003, and will increase by 2.5% through the remainder of the lease term.



In addition, Gartner was afforded two expansion options to construct additional buildings under the Gartner
Lease, neither of which were not exercised and expired on April 15, 2002.



The average effective annual rental per square foot at the Gartner Building was $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 2002.



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 2002.



10



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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 28, 2003, the Partnership had 1,371,606 outstanding Class A Units held by a total of 1,260 Limited Partners and 281,674 outstanding Class B Units held by a total of 79 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, 2002, to be approximately $8.14
per Class A Unit and $11.79 per Class B Unit, based upon market conditions existing in early December 2002. In connection with these estimated 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 reasonable; 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 a number of assumptions which may not be accurate or complete. 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,



11



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until their capital account
balances have been reduced to zero. No distributions have been made to the General Partners as of December 31, 2002.



Cash available for distribution to the Limited Partners is distributed on a annual basis unless Limited Partners elect to have their cash distributed
monthly. Cash distributions made to Class A Limited Partners during 2001 and 2002 were as follows:



|Distribution for Quarter Ended |                        | Per Class A Unit |                   |  |                   |     
|------------------------------ | ---------------------- | ---------------- | ----------------- |  | ----------------- | ----
|                               | Total Cash Distributed |                  | Investment Income |  | Return of Capital |     
|March 31, 2001                 |                        | $                | 326,967           |  | $                 | 0.24
|June 30, 2001                  |                        | $                | 326,752           |  | $                 | 0.24
|September 30, 2001             |                        | $                | 326,936           |  | $                 | 0.25
|December 31, 2001              |                        | $                | 328,150           |  | $                 | 0.25
|March 31, 2002                 |                        | $                | 318,549           |  | $                 | 0.24
|June 30, 2002                  |                        | $                | 322,705           |  | $                 | 0.24
|September 30, 2002             |                        | $                | 325,079           |  | $                 | 0.24
|December 31, 2002              |                        | $                | 308,611           |  | $                 | 0.22



The fourth quarter
distribution was accrued for accounting purposes in 2002 and paid to Limited Partners in February, 2003. No cash distributions were paid to holders of Class B Units in 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, 2002, 2001, 2000, 1999 and 1998:



|                                                                         |  | 2002 |            |   | 2001 |   |            | 2000 |  |   | 1999       |   |  | 1998 |           
|------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | - |  | ---- | ----------
|Total assets                                                             |  | $    | 13,081,560 |   |      | $ | 13,644,230 |      |  | $ | 14,131,924 |   |  | $    | 14,440,800
|Total revenues                                                           |  |      | 839,691    |   |      |   | 960,676    |      |  |   | 975,850    |   |  |      | 766,586   
|Net income                                                               |  |      | 746,815    |   |      |   | 870,350    |      |  |   | 895,989    |   |  |      | 630,528   
|Net loss allocated to General Partners                                   |  |      | 0          |   |      |   | 0          |      |  |   | 0          |   |  |      | 0         
|Net income allocated to Class A Limited Partners                         |  |      | 1,239,219  |   |      |   | 1,361,828  |      |  |   | 1,381,547  |   |  |      | 1,009,368 
|Net loss allocated to Class B Limited Partners                           |  |      | (492,404   | ) |      |   | (491,478   | )    |  |   | (485,558   | ) |  |      | (378,840  
|Net income per weighted average (1) Class A Limited Partner Unit         |  | $    | 0.91       |   |      | $ | 1.01       |      |  | $ | 1.03       |   |  | $    | 0.77      
|Net loss per weighted average (1) Class B Limited Partner Unit           |  |      | (1.68      | ) |      |   | (1.58      | )    |  |   | (1.55      | ) |  |      | (1.12     
|Cash distribution per weighted average (1) Class A Limited Partner Unit: |  |      |            |   |      |   |            |      |  |   |            |   |  |      |           
|Investment income                                                        |  |      | 0.94       |   |      |   | 0.98       |      |  |   | 0.94       |   |  |      | 0.71      
|Return of capital                                                        |  |      | 0.00       |   |      |   | 0.00       |      |  |   | 0.00       |   |  |      | 0.00      



|(1) |  | Weighted average units are calculated by averaging units over the period outstanding during which such units were sold to Limited Partners and/or converted.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



12



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|ITEM 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL AND CONDITIONS RESULTS OF OPERATION
|------- |  | -------------------------------------------------------------------------------------



(a)    Forward-Looking Statements



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



(b)    Results of Operations



Gross Revenues



Gross revenues of the Partnership were $839,691, $960,676, and $975,850 for the years ended December 31, 2002, 2001, and 2000, respectively. The 2002 decrease from 2001, and the 2001 decrease from
2000, resulted primarily from the corresponding changes in equity in income of joint ventures describe below.



Equity In Income of Joint VenturesOperations



Gross Revenues of Joint Ventures



Gross revenues of the joint ventures in
which the Partnership holds an interest decreased in 2002, as compared to 2001, primarily due to a decrease in operating cost reimbursement billings to GAIAM, a tenant at the 360 Interlocken Building, as a result of renewing its lease in April 2002,
and the vacancy of the Eybl CarTex Building beginning in December 2002. Pursuant to the terms of the renewed GAIAM lease, the first lease year will be considered a base year; accordingly, operating reimbursement billings to the GAIAM Group will
begin in 2003. Gross revenues remained relatively stable for 2001, as compared to 2000.



Since the sole tenant of the EYBL CarTex Building vacated the premises, ceased making its rental payments in December 2002 and dissolved as a corporation with the Secretary of State of South Carolina
effective December 31, 2002, and since this building has not yet been re-leased, gross revenues of Fund XI-XII-REIT Associates are anticipated to decrease in 2003 resulting in substantially lower gross revenues allocable to the Partnership with
respect to its interest in the joint venture.



Expenses of Joint Ventures



The expenses of the joint ventures in which the Partnership holds an interest increased in 2002, as compared to 2001, primarily due to (i) increased administrative salaries and (ii) establishing new reserves for doubtful accounts
receivable due from tenants at the Eybl CarTex Building, as the sole tenant vacated in November 2002 and filed for Corporate dissolution in December 2002, and the Gartner Building, as reimburseable real estate tax billings are currently under
dispute with the sole tenant at this property. The 2001 increase in expenses, as compared to 2000, resulted primarily from an increase in administrative salaries. Expenses Total expenses of the Partnership were $92,876 for the year ended 2002, as
compared to $90,326 for 2001 and $79,861 for 2000. Expenses remains relatively stable for 2002, as compared to 2001, as increases inadministrative salaries offset decreases in other general and administrative costs. The 2001 increase in expenses
from 2000 resulted primarily from increases in administrative salaries.



13



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Expenses



Total expenses of the Partnership were
$92,876 for the year ended 2002, as compared to $90,326 for 2001 and $79,861 for 2000. Expenses remains relatively stable for 2002, as compared to 2001, as increases in administrative salaries offset decreases in other general and administrative
costs. The 2001 increase in expenses from 2000 resulted primarily from increases in administrative salaries.



As a result, net income of the Partnership was $746,815, $870,350, and $895,989 for the years ended December 31, 2002, 2001, and 2000,
respectively.



(c)    Liquidity and
Capital Resources



Cash Flows From
Operating Activities



Net cash flows
used in operating activities was $105,148, $128,985, and $72,925 for the years ended December 31, 2002, 2001, and 2000, respectively. The 2002 decrease from 2001 is primarily due to the decrease in the payments to the affiliates, as $50,000 was
repaid to Fund IX-X-XI-REIT Associates in 2001, as compared to $15,000 that was repaid to Fund IX-X-XI-REIT Associates in 2002. 2001 increases, as compared to 2000, resulted primarily from the repayment of $50,000 to Fund IX-X-XI-REIT Associates in
2001, whereas no such repayments were made in 2000.



Cash Flows From Investing Activities



Net cash flows provided by investing activities was $1,473,190, $1,376,673, and $1,333,337 for the years ended December 31, 2002, 2001, and 2000, respectively, which is reflective of the income generated to the Partnership
from its investments in joint ventures during the corresponding accounting periods; the Partnership receives distributions from joint ventures based on the cash generated during each immediately preceding quarterly accounting period.



Cash Flows From Financing Activities



Net cash flows used in financing
activities was $1,294,485, $1,307,606, and $1,205,303 for 2002, 2001, and 2000, respectively. The changes in net cash flows used in financing activities resulted from the changes in cash generated by joint ventures during the corresponding periods.



Distributions



The Partnership made distributions to the limited partners
holding Class A units of $0.94 per unit, $0.98 per unit and $0.94 per unit with respect to the year ended December 31, 2002, 2001 and 2000, 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.



Since the cash flows generated from equity investments in joint ventures are anticipated to decrease in 2003 as a result of the sole
tenant vacating the premises of the EYBL CarTex Building and ceasing to make rental payments, distributions to limited partners holding Class A units are also anticipated to decrease in 2003 until such time as this building is re-leased to one or
more suitable replacement tenants. As a result of this vacancy, cash flows decreased by approximately $100,000 during 2002, of which approximately $26,000 is attributable to the Partnership. Further, in the event that we are unable to lease this
space, we estimate that this property could generate negative cash flows of approximately $(580,000), of which approximately $(150,000) would be attributable to the partnership, for 2003. There can be no assurance when any such suitable replacement
tenant or tenants will be located or at what rental rate this building will be re-leased.



14



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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. Other than those mentioned above, the General Partners are unaware of any specific need requiring capital resources.



(d)    Related-Party Transactions



Management and Leasing Fees



Wells Management Company, Inc., 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 net basis (ten or more years), the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial
leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term.



The Partnership incurred management and leasing fees and lease acquisition costs, at the joint venture level, of $74,031, $74,478, and
$75,700, for the years ended December 31, 2002, 2001, and 2000, respectively.



Administration Reimbursements



Wells Capital, Inc. 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 2000, the partnership reimbursed $43,979, $40,267 and $29,267, respectively, to Wells Capital, Inc. 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 Interests



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 re-set 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



15



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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.



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



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



Valuation of Real Estate Assets



Management continually monitors events and changes in circumstances that could indicate that the carrying
amounts of the real estate assets in which the Partnership has an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the
carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future
operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and
recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Partnership at December 31, 2002 and 2001.



Projections of expected future cash flows requires 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.



16



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|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.



17



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PART II
OTHER INFORMATION



|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 two years ended December 31, 2002.



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



Andersens reports on the financial statements of the Partnership for the year ended December 31, 2001 and 2000 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 years ended December 31, 2001 and 2000 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



(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)



18



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PART III



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



Wells Partners, L.P. The sole General Partner of Wells Partners, L.P. is Wells Capital, Inc., a Georgia corporation (Wells Capital). The
executive offices of Wells Capital, Inc. are located at 6200 The Corners Parkway, Norcross, Georgia 30092.



Leo F. Wells, III



Mr. Wells is a resident of Atlanta, Georgia, is 59 years of age and holds a Bachelor of Business Administration Degree in Economics from the University of Georgia. Mr. Wells is the President, sole Director and sole shareholder of
Wells Real Estate Funds, Inc., which is the parent company of Wells Capital, Wells & Associates, Inc., Wells Management Company, Inc. and Wells Investment Securities, Inc. Mr. Wells is the President and sole Director of Wells Capital, Inc. He is
also the President, sole Director and sole shareholder of Wells Real Estate Investment Funds, Inc., the parent corporation of Wells Capital, Inc. Mr. Wells is also the President of Wells & Associates, Inc., a real estate brokerage and investment
company formed in 1976 and incorporated in 1978, for which he serves as the principal broker. Mr. Wells is also the sole Director and President of Wells Management Company, Inc., a property management company he founded in 1983. In addition, Mr.
Wells is the President and Chairman of the Board of Wells Investment Securities, Inc., Wells & Associates, Inc., and Wells Management Company, Inc., all of which are all affiliates of the General Partners. From 1980 to February 1985, Mr. Wells
served as Vice-President of Hill-Johnson, Inc., a Georgia corporation engaged in the construction business. From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company, and from 1970 to 1973, he was a real estate salesman and property
manager for Roy D. Warren & Company, an Atlanta real estate company.



|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, 2002 :



|Name of Individual or Number in Group |  | Capacities in Which Served Form of Compensation |  | Cash Compensation
|------------------------------------- |  | ----------------------------------------------- |  | -----------------
|Wells Management Company, Inc.        |  | Property Manager-Management and Leasing Fees    |  | $74,031(1)       
|                                      |  |                                                 |  |                  

|(1) |  | These 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, Inc. 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 2002. Some of these fees were accrued for accounting purposes in 2002, however, were not paid until
January 2003.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





19



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



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



Set forth below is the security ownership of management as of
February 28, 2002.



|Title of Class |  | Name and Address of Beneficial Owner |  | Amount and Nature of Beneficial Ownership        |  | Percent of Class
|-------------- |  | ------------------------------------ |  | ------------------------------------------------ |  | ----------------
|Class A Units  |  | Leo F. Wells, III                    |  | 5,109.22 units (IRA, 401(k) and Profit Sharing ) |  | 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 from net cash flow from operations or
net sales proceeds for the year ended December 31, 2002.



Property Management and Leasing Fees



Wells Management Company, Inc., 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.



20



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Wells Management Company, Inc.
has received $74,031 in property management and leasing fee compensation for services rendered during the year ended December 31, 2002.



Real Estate Commissions



In connection with the sale of Partnership properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (A)
50% of the commissions customarily charged by other brokers in arms-length transactions involving comparable properties in the same geographic area or (B) 3% of the gross sales price of the property, and provided that payments of such
commissions will be made only after Limited Partners have received prior distributions totaling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. During 2002, 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, 2002.



|ITEM 14. |  | CONTROLS AND PROCEDURES
|-------- |  | -----------------------



Within the 90 days prior to the date of this report, the Partnership carried out an evaluation, under the supervision and with the participation of
management of Wells Capital, Inc., the corporate General Partner 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 pursuant to Rule 13a  14 under the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Partnerships disclosure controls
and procedures were effective.



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



|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-71 of this Annual Report on Form 10-K, and the list of
the financial statements contained herein is set forth on page F-1, which is hereby incorporated by reference.
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(a)2. |  | The Exhibits filed in response to Item 601 of Regulation S-K are listed on the
Exhibit Index attached hereto.                                                                                                                      
|     
|(b)   |  | No reports on Form 8-K were filed with the Commission during the fourth quarter of
2002.                                                                                                                                           
|     
|(c)   |  | The exhibits filed in response to Item 601 of Regulation S-K are listed on the
Exhibit Index attached hereto.                                                                                                                      
|     
|(d)   |  | Not applicable.                                                                                                                                                                                                                    







21



---



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)
| |  |  |  | --------------------------------------------
|
| |  |  |  |                                             
| |  |  |  |                                             

| |  |  |  | 
| |  |  |  | 
|
| |  |  |  | 
| |  |  |  | 



|               |  |  |  |    
|-------------- |  |  |  | ---
|              
|March 31, 2003 |  |  |  | By:
|               |  |  |  |    



|               |  |  |  |    
|-------------- |  |  |  | ---
|              
|March 31, 2003 |  |  |  | By:
|               |  |  |  |    









22



---



CERTIFICATIONS



I, Leo F. Wells, III,
certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the Partnership;
|-- |  | -------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared,
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the board of
directors of the corporate general partner of the General Partner:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                      |  |  |  |    
|--------------------- |  |  |  | ---
|                     
|Dated: March 31, 2003 |  |  |  | By:
|                      |  |  |  |    







23



---

CERTIFICATIONS



I, Douglas P. Williams, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the Partnership;
|-- |  | -------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared,
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the board of
directors of the corporate general partner of the General Partners:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                      |  |  |  |    
|--------------------- |  |  |  | ---
|                     
|Dated: March 31, 2003 |  |  |  | By:
|                      |  |  |  |    









24



---



SUPPLEMENTAL
INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT

TO SECTION 15(d) OF THE ACT BY REGISTRANTS THAT HAVE NOT BEEN

REGISTERED PURSUANT TO SECTION 12 OF THE ACT.



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



25



---



EXHIBIT
INDEX

TO

2002 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)
toForm 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)





26



---



|*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)                                                                                                                                                                                             



27



---



|*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)                                                                       



28



---



|*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)                                                                                                                                                    
|       
|99.1    |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                                                                                                                                                             
|       
|99.2    |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                                                                                                                                                             



29



---



INDEX TO
FINANCIAL STATEMENTS



|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, 2002 and 2001                                      |  | F-4 
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-5 
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-6 
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-7 
|Notes to Financial Statements                                                        |  | F-8 
|                                                                                    
|THE FUND IX, FUND X, FUND XI, AND REIT JOINT VENTURE                                 |  |     
|Report of Independent Auditors                                                       |  | F-41
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-42
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-43
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-44
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-45
|Notes to Financial Statements                                                        |  | F-46
|Schedule III  Real Estate and Accumulated Depreciation                              |  | F-50
|                                                                                    
|FUND X AND FUND XI ASSOCIATES                                                        |  |     
|Report of Independent Auditors                                                       |  | F-52
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-53
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-54
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-55
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-56
|Notes to Financial Statements                                                        |  | F-57
|                                                                                    
|THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE                                        |  |     
|Report of Independent Auditors                                                       |  | F-61
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-62
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-63
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-64
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-65
|Notes to Financial Statements                                                        |  | F-66
|Schedule III  Real Estate and Accumulated Depreciation                              |  | F-71



F-1



---

REPORT OF INDEPENDENT AUDITORS



The Partners

Wells Real Estate Fund XI, L.P.



We have audited the accompanying balance sheet of Wells Real Estate Fund XI, L.P. (a Georgia public limited partnership) as of December 31, 2002 and the related statements of income, partners capital, and cash flows for the
year 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 audit. The financial statements of Wells Real Estate Fund
XI, L.P. as of December 31, 2001, and for the years ended December 31, 2001 and 2000 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 audit 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 audit provides a reasonable basis for our opinion.



In our opinion, the 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, 2002 and the results of its operations and its cash flows for the year 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. as of December 31, 2001 and for the years
ended December 31, 2001 and 2000 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
and 2000 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 recorded 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 years ended December 31, 2001 and 2000 on the statements 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 years ended December 31, 2001 and 2000 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 statements
of income in 2001 and 2000, 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 statements of income in 2001 and 2000, respectively.
In our opinion, the disclosure of the number of Class A and Class B weighted average limited partner units outstanding on the statements of income for the years ended December 31, 2001 and 2000 is appropriate. However, we were not engaged to audit,
review, or apply any procedures to the 2001 and 2000 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 and 2000 financial statements taken as a whole.



/s/    Ernst & Young LLP



Atlanta, Georgia

January 24, 2003





F-2



---



(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 previous years 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, 2002.)

|
|





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



F-3



---



WELLS REAL
ESTATE FUND XI, L.P.

(a Georgia Public Limited Partnership)



BALANCE SHEETS



DECEMBER 31, 2002 AND 2001



ASSETS



|                             |  | 2002 |            | 2001
|---------------------------- |  | ---- | ---------- | ----
|INVESTMENT IN JOINT VENTURES |  | $    | 12,706,842 |     
|                            
|DUE FROM JOINT VENTURES      |  |      | 282,887    |     
|                            
|CASH AND CASH EQUIVALENTS    |  |      | 91,099     |     
|                            
|ACCOUNTS RECEIVABLE          |  |      | 732        |     
|                             |  |      |            |     
|Total assets                 |  | $    | 13,081,560 |     
|                             |  |      |            |     



LIABILITIES AND PARTNERS CAPITAL



|LIABILITIES:                                                                                                    |  |   |            |  |   |           
|--------------------------------------------------------------------------------------------------------------- |  | - | ---------- |  | - | ----------
|Partnership distributions payable                                                                               |  | $ | 308,610    |  | $ | 328,151   
|Due to affiliate                                                                                                |  |   | 0          |  |   | 15,000    
|                                                                                                                |  |   |            |  |   |           
|Total liabilities                                                                                               |  |   | 308,610    |  |   | 343,151   
|                                                                                                                |  |   |            |  |   |           
|COMMITMENTS AND CONTINGENCIES                                                                                   |  |   |            |  |   |           
|                                                                                                               
|PARTNERS CAPITAL:                                                                                              |  |   |            |  |   |           
|Limited partners:                                                                                               |  |   |            |  |   |           
|Class A1,371,606 units and 1,346,256 units issuedand outstanding as of
December 31, 2002 and 2001,respectively |  |   | 12,091,903 |  |   | 12,070,817
|Class B281,674 units and 307,024 units issued andoutstanding as of December
31, 2002 and 2001,respectively     |  |   | 681,047    |  |   | 1,230,262 
|                                                                                                                |  |   |            |  |   |           
|Total partners capital                                                                                         |  |   | 12,772,950 |  |   | 13,301,079
|                                                                                                                |  |   |            |  |   |           
|Total liabilities and partners capital                                                                         |  | $ | 13,081,560 |  | $ | 13,644,230
|                                                                                                                |  |   |            |  |   |           



See accompanying
notes.





F-4



---



WELLS REAL
ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF INCOME



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000



|                                                               |  | 2002 |           |   | 2001 |   |           | 2000 | 
|-------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- | 
|REVENUES:                                                      |  |      |           |   |      |   |           |      | 
|Equity in income of Joint Ventures                             |  | $    | 837,509   |   |      | $ | 959,631   |      | 
|Interest income                                                |  |      | 1,105     |   |      |   | 1,045     |      | 
|Other income                                                   |  |      | 1,077     |   |      |   | 0         |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                               |  |      | 839,691   |   |      |   | 960,676   |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|EXPENSES:                                                      |  |      |           |   |      |   |           |      | 
|Partnership administration                                     |  |      | 70,515    |   |      |   | 61,341    |      | 
|Legal and accounting                                           |  |      | 15,668    |   |      |   | 16,193    |      | 
|Other general and administrative                               |  |      | 6,693     |   |      |   | 12,792    |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                               |  |      | 92,876    |   |      |   | 90,326    |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|NET INCOME                                                     |  | $    | 746,815   |   |      | $ | 870,350   |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|NET INCOME ALLOCATED TO CLASS A LIMITED PARTNERS               |  | $    | 1,239,219 |   |      | $ | 1,361,828 |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS                 |  | $    | (492,404  | ) |      | $ | (491,478  | )    | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|NET INCOME PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT   |  | $    | 0.91      |   |      | $ | 1.01      |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|NET LOSS PER WEIGHTED AVERAGE CLASS B LIMITED PARTNER UNIT     |  | $    | (1.68     | ) |      | $ | (1.58     | )    | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|DISTRIBUTION PER WEIGHTED AVERAGE CLASS A LIMITED PARTNER UNIT |  | $    | 0.94      |   |      | $ | 0.98      |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|WEIGHTED AVERAGE LIMITED PARTNER UNITS OUTSTANDING:            |  |      |           |   |      |   |           |      | 
|                                                              
|CLASS A                                                        |  |      | 1,357,326 |   |      |   | 1,342,356 |      | 
|                                                               |  |      |           |   |      |   |           |      | 
|                                                              
|CLASS B                                                        |  |      | 293,187   |   |      |   | 310,924   |      | 
|                                                               |  |      |           |   |      |   |           |      | 



See accompanying
notes.





F-5



---



WELLS REAL
ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF PARTNERS CAPITAL



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000



|                           |  | Limited Partners |  |        | General Partner |   | Total Partners Capital |        
|-------------------------- |  | ---------------- |  | ------ | --------------- | - | ----------------------- | -------
|                           |  | Class A          |  |        | Class B         |   |                         |        
|                           |  | Units            |  | Amount |                 |   | Units                   |        
|                           |  |                  |  |        |                 |   |                         |        
|BALANCE, December 31, 1999 |  | 1,336,906        |  | $      | 11,804,940      |   |                         | 316,374
|                          
|Net income (loss)          |  | 0                |  |        | 1,381,547       |   |                         | 0      
|Partnership distributions  |  | 0                |  |        | (1,256,518      | ) |                         | 0      
|Class B conversions        |  | 4,450            |  |        | 64,018          |   |                         | (4,450 
|                           |  |                  |  |        |                 |   |                         |        
|BALANCE, December 31, 2000 |  | 1,341,356        |  |        | 11,993,987      |   |                         | 311,924
|                          
|Net income (loss)          |  | 0                |  |        | 1,361,828       |   |                         | 0      
|Partnership distributions  |  | 0                |  |        | (1,308,805      | ) |                         | 0      
|Class B conversions        |  | 4,900            |  |        | 23,807          |   |                         | (4,900 
|                           |  |                  |  |        |                 |   |                         |        
|BALANCE, December 31, 2001 |  | 1,346,256        |  |        | 12,070,817      |   |                         | 307,024
|                          
|Net income (loss)          |  | 0                |  |        | 1,239,219       |   |                         | 0      
|Partnership distributions  |  | 0                |  |        | (1,274,944      | ) |                         | 0      
|Class B conversions        |  | 25,350           |  |        | 56,811          |   |                         | (25,350
|                           |  |                  |  |        |                 |   |                         |        
|BALANCE, December 31, 2002 |  | 1,371,606        |  | $      | 12,091,903      |   |                         | 281,674
|                           |  |                  |  |        |                 |   |                         |        



See accompanying
notes.





F-6



---



WELLS REAL
ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF CASH FLOWS



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000



|                                                                              |  | 2002 |            |   | 2001 |   |            | 2000 | 
|----------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |  |      |            |   |      |   |            |      | 
|Net income                                                                    |  | $    | 746,815    |   |      | $ | 870,350    |      | 
|                                                                              |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash used in operating
activities: |  |      |            |   |      |   |            |      | 
|Equity in income of Joint Ventures                                            |  |      | (837,509   | ) |      |   | (959,631   | )    | 
|Changes in assets and liabilities:                                            |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                           |  |      | 546        |   |      |   | 10,734     |      | 
|Accounts payable                                                              |  |      | 0          |   |      |   | (438       | )    | 
|Due to affiliates                                                             |  |      | (15,000    | ) |      |   | (50,000    | )    | 
|                                                                              |  |      |            |   |      |   |            |      | 
|Total adjustments                                                             |  |      | (851,963   | ) |      |   | (999,335   | )    | 
|                                                                              |  |      |            |   |      |   |            |      | 
|Net cash used in operating activities                                         |  |      | (105,148   | ) |      |   | (128,985   | )    | 
|                                                                              |  |      |            |   |      |   |            |      | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |      |            |   |      |   |            |      | 
|Distributions received from Joint Ventures                                    |  |      | 1,473,190  |   |      |   | 1,376,673  |      | 
|                                                                              |  |      |            |   |      |   |            |      | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |  |      |            |   |      |   |            |      | 
|Distributions to partners from accumulated earnings                           |  |      | (1,294,485 | ) |      |   | (1,307,606 | )    | 
|                                                                              |  |      |            |   |      |   |            |      | 
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          |  |      | 73,557     |   |      |   | (59,918    | )    | 
|                                                                             
|CASH AND CASH EQUIVALENTS, beginning of year                                  |  |      | 17,542     |   |      |   | 77,460     |      | 
|                                                                              |  |      |            |   |      |   |            |      | 
|CASH AND CASH EQUIVALENTS, end of year                                        |  | $    | 91,099     |   |      | $ | 17,542     |      | 
|                                                                              |  |      |            |   |      |   |            |      | 
|                                                                             
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                               |  |      |            |   |      |   |            |      | 
|Joint Venture distributions receivable                                        |  | $    | 282,887    |   |      | $ | 348,632    |      | 
|                                                                              |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                             |  | $    | 308,610    |   |      | $ | 328,151    |      | 
|                                                                              |  |      |            |   |      |   |            |      | 



See accompanying
notes.





F-7



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS





1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Organization and Business



Wells Real Estate Fund XI, L.P. (the Partnership) is a public limited partnership organized on June 20, 1996 under the laws of
the state of Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia nonpublic limited partnership. Upon subscription for units, each limited partner must elect whether to have his or her
units treated as Class A units or Class B units. Thereafter, 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, (c) elect or remove a general partner, (d)
dissolve the Partnership, and (e) approve a sale of all or substantially all of the Partnerships assets, subject to certain limitations. A majority vote on any of the described matters will bind the Partnership without concurrence of the
general partners. Each limited partnership unit has equal voting rights, regardless of class. The Partnership commenced operations as of March 3, 1998.



The Partnership was formed to acquire and operate commercial real estate properties, including properties which are either to be
developed, are currently under development or construction, are newly constructed, or have operating histories.



The Partnership owns interests in all of its real estate assets through joint ventures with other Wells entities (the Joint
Ventures). As of December 31, 2002, the Partnership owned interests in the following 11 properties through the affiliated Joint Ventures listed below:



|Joint Venture                |  | Joint Venture Partners                                                                                                                           |  | Properties                                                                                          
|---------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------
|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. Alstom Power-Knoxville Building A three-story office building located in Knoxville,
Tennessee    
|                             |  |                                                                                                                                                  |  | 2. 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
|                            
|                             |  |                                                                                                                                                  |  | 5. Ohmeda Building A two-story office building located in Louisville, Boulder County, Colorado      





F-8



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





|Joint Venture                                |  | Joint Venture Partners                                                                                          |  | Properties                                                                                                                        
|-------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------
|Fund IX-X-XI-REIT Associates  Orange County |  |    Wells Real Estate Fund X, L.P.    Wells Real Estate Fund XI, L.P.                                          |  | 6. Cort Building A one-story office and warehouse building located in Fountain
Valley, California                                 
|                                            
|Fund X-XI Associates  Fremont               |  |    Wells Real Estate Fund X, L.P.    Wells Real Estate Fund XI, L.P.                                          |  | 7. Fairchild Building A two-story warehouse and office building located in
Fremont, California                                    
|                                            
|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. Eybl Cartex Building A two-story manufacturing and office building located in
Fountain Inn, South Carolina                     
|                                            
|                                             |  |                                                                                                                 |  | 9. 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. serving as its general
partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



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 to date. Any remaining cash available for distribution is split



F-9



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





90% to the
limited partners holding Class A units and 10% to the general partners. No 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 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/her net capital contributions, as defined
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



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



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/her 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



F-10



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





made, if
applicable: (a) allocations made pursuant to the qualified income offset provisions of the partnership agreement, (b) allocations to partners having negative capital accounts until all negative capital accounts have been restored to zero, and (c)
allocations to limited partners holding Class B units in amounts equal to the deductions for depreciation and amortization previously allocated to them with respect to the specific partnership property sold, but not in excess of the amount of gain
on sale recognized by the Partnership with respect to the sale of such property.



Investment in Joint Ventures



Basis of Presentation



The Partnership does not have control over the operations of the Joint Ventures; however, it does exercise significant influence. Accordingly, the Partnerships 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, as further described below.



Allocation of Income and Distributions



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 is distributed to the Joint Venture partners on a quarterly
basis.



Real Estate Assets



The Joint Ventures 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 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.



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 Ventures to date.



Revenue Recognition



The Joint Ventures leases typically include renewal options, escalation provisions and provisions
requiring tenants to reimburse the Joint Ventures for a pro rata share of operating costs incurred. All of the Joint Ventures 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.



F-11



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Rental Income



The
future minimum rental income due Fund IX, X, XI, and REIT Joint Venture under noncancelable operating leases at December 31, 2002 is as follows:



|Year ended December 31: |  |             
|----------------------- |  | ------------
|2003                    |  | $  4,193,500
|2004                    |  | 4,119,454   
|2005                    |  | 2,727,513   
|2006                    |  | 2,351,958   
|2007                    |  | 2,192,200   
|Thereafter              |  | 771,839     
|                        |  |             
|                        |  | $16,352,464 
|                        |  |             



Four
tenants contributed 24%, 23%, 12%, and 12% of rental income for the year ended December 31, 2002. In addition, four tenants will contribute 35%, 21%, 19%, and 13% of future minimum rental income.



The future minimum rental income due Wells/Orange County
Associates under noncancelable operating leases at December 31, 2002 is as follows:



|Year ended December 31: |  |         
|----------------------- |  | --------
|2003                    |  | $695,740
|2004                    |  | 0       
|2005                    |  | 0       
|2006                    |  | 0       
|2007                    |  | 0       
|Thereafter              |  | 0       
|                        |  |         
|                        |  | $695,740
|                        |  |         



One
tenant contributed 100% of rental income for the year ended December 31, 2002 and will contribute 100% of future minimum rental income.



The future minimum rental income due Wells/Fremont Associates under noncancelable operating leases at December 31, 2002 is as follows:



|Year ended December 31: |  |            
|----------------------- |  | -----------
|2003                    |  | $   950,118
|2004                    |  | 894,832    
|2005                    |  | 0          
|2006                    |  | 0          
|2007                    |  | 0          
|Thereafter              |  | 0          
|                        |  |            
|                        |  | $1,844,950 
|                        |  |            



One
tenant contributed 100% of rental income for the year ended December 31, 2002 and will contribute 100% of future minimum rental income.



F-12



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





The
future minimum rental income due from Fund XI, XII, and REIT Joint Venture under noncancelable operating leases at December 31, 2002 is as follows:



|Year ended December 31: |  |             
|----------------------- |  | ------------
|2003                    |  | $  2,816,603
|2004                    |  | 2,858,971   
|2005                    |  | 2,901,870   
|2006                    |  | 2,945,313   
|2007                    |  | 1,828,348   
|Thereafter              |  | 78,319      
|                        |  |             
|                        |  | $13,429,424 
|                        |  |             



Four
tenants contributed approximately 32%, 25%, 25%, and 16% of rental income for the year ended December 31, 2002. In addition, three tenants will contribute approximately 36%, 34%, and 30% of future minimum rental income.



Prepaid Expenses and Other Assets



Prepaid expenses and other assets of the Joint Ventures is
comprised primarily of deferred leasing costs and refundable security deposits. Deferred leasing costs reflect costs incurred to procure operating leases, which are capitalized and amortized on a straight-line basis over the terms of the related
leases. Refundable security deposits represent cash deposits received from tenants, the offset to which is included in accounts payable and refundable security deposits in the corresponding balance sheets. Pursuant to the respective leases, the
Joint Ventures 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.



Restatement Adjustments and Disclosures



The Joint Ventures have 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 its Joint Ventures.



The joint venture statements of income presented in Note 3 have been restated to reflect the effects of this
revised presentation.



Furthermore, the
statements of income of the Partnership for the years ended December 31, 2001 and 2000 have been revised to include disclosure of Class A and Class B weighted average limited partner units outstanding for the years ended December 31, 2001 and 2000.



F-13



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





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.



Reclassifications



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



2.    RELATED-PARTY TRANSACTIONS



Due from Joint Ventures at December 31, 2002 and 2001 represents the Partnerships share of cash to be distributed from its joint
venture investments for the fourth quarter of 2002 and 2001 as follows:



|                                       |  | 2002      |  | 2001     
|-------------------------------------- |  | --------- |  | ---------
|Fund IX, X, XI, and REIT Joint Venture |  | $  50,252 |  | $  85,927
|Fund X and XI Associates               |  | 66,397    |  | 64,634   
|Fund XI, XII, and REIT Joint Venture   |  | 166,238   |  | 198,071  
|                                       |  |           |  |          
|                                       |  | $282,887  |  | $348,632 
|                                       |  |           |  |          



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



The Joint Ventures incurred management and leasing fees and lease acquisition costs of $74,031, $74,478, and $75,700, for the years ended December 31, 2002, 2001, and 2000, respectively.



Wells Capital, Inc. (the Company), 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
time spent on each fund by individual administrative personnel. In the opinion of management, such allocation is a reasonable estimation of such expenses. During 2002, 2001 and 2000, the partnership reimbursed $43,979, $40,267 and $29,267 to Wells
Capital, Inc. 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.



F-14



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001, AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





3.    INVESTMENT IN JOINT VENTURES



The Partnerships investment and percentage ownership in the Joint Ventures at December 31, 2002 and 2001 are summarized as follows:



|                                       |  | 2002   |            |         | 2001 |  
|-------------------------------------- |  | ------ | ---------- | ------- | ---- | -
|                                       |  | Amount |            | Percent |      |  
|Fund IX, X, XI, and REIT Joint Venture |  | $      | 2,966,822  |         | 9    | %
|Fund X and XI Associates               |  |        | 2,203,420  |         | 42   |  
|Fund XI, XII, and REIT Joint Venture   |  |        | 7,536,600  |         | 26   |  
|                                       |  |        |            |         |      |  
|                                       |  | $      | 12,706,842 |         |      |  
|                                       |  |        |            |         |      |  



The
following is a roll forward of the Partnerships investment in the Joint Ventures for the years ended December 31, 2002 and 2001:



|                                                |  | 2002 |            |   | 2001 |  
|----------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Investment in Joint Ventures, beginning of year |  | $    | 13,276,778 |   |      | $
|Equity in income of Joint Ventures              |  |      | 837,509    |   |      |  
|Distributions from Joint Ventures               |  |      | (1,407,445 | ) |      |  
|                                                |  |      |            |   |      |  
|Investment in Joint Ventures, end of year       |  | $    | 12,706,842 |   |      | $
|                                                |  |      |            |   |      |  



Fund
IX, X, XI, and REIT Joint Venture



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



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



During 1999, the Partnership and Wells Fund IX made additional capital contributions to the Fund IX, X, XI, and REIT Joint Venture; during 2000, Wells Fund IX and Wells Fund X made additional capital
contributions to the Fund IX, X, XI, and REIT Joint Venture. Ownership interests were recomputed accordingly.



F-15



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Following
is selected financial information for the Fund IX, X, XI, and REIT Joint Venture:



IX, X, XI, and REIT Joint Venture

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



Assets



|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 6,698,020  |     
|Building and improvements, less accumulated depreciation of $7,045,381 in 2002 and
$5,619,744 in 2001 |  |      | 26,063,758 |     
|                                                                                                      |  |      |            |     
|Total real estate assets, net                                                                         |  |      | 32,761,778 |     
|Cash and cash equivalents                                                                             |  |      | 1,337,964  |     
|Accounts receivable                                                                                   |  |      | 482,756    |     
|Prepaid expenses and other assets, net                                                                |  |      | 417,275    |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 34,999,773 |     
|                                                                                                      |  |      |            |     



Liabilities and Partners Capital



|Liabilities:                             |  |   |            |  |   |           
|---------------------------------------- |  | - | ---------- |  | - | ----------
|Accounts payable and accrued liabilities |  | $ | 670,668    |  | $ | 734,481   
|Partnership distributions payable        |  |   | 570,932    |  |   | 966,912   
|                                         |  |   |            |  |   |           
|Total liabilities                        |  |   | 1,241,600  |  |   | 1,701,393 
|                                         |  |   |            |  |   |           
|Partners capital:                       |  |   |            |  |   |           
|Wells Real Estate Fund IX                |  |   | 13,176,010 |  |   | 13,598,505
|Wells Real Estate Fund X                 |  |   | 16,369,765 |  |   | 16,803,586
|Wells Real Estate Fund XI                |  |   | 2,966,822  |  |   | 3,073,671 
|Wells Operating Partnership, L.P.        |  |   | 1,245,576  |  |   | 1,290,360 
|                                         |  |   |            |  |   |           
|Total partners capital                  |  |   | 33,758,173 |  |   | 34,766,122
|                                         |  |   |            |  |   |           
|Total liabilities and partners capital  |  | $ | 34,999,773 |  | $ | 36,467,515
|                                         |  |   |            |  |   |           





F-16



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Fund IX,
X, XI, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Income

for the Years Ended
December 31, 2002, 2001, and 2000



|                                                          |  | 2002 |           | 2001 |   |           | 2000 | 
|--------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | ---- | 
|Revenues:                                                 |  |      |           |      |   |           |      | 
|Rental income                                             |  | $    | 4,308,536 |      | $ | 4,174,379 |      | 
|Reimbursement income (1)                                  |  |      | 1,048,910 |      |   | 1,574,176 | (1)  | 
|Other income                                              |  |      | 113,895   |      |   | 113,701   |      | 
|Interest income                                           |  |      | 14,596    |      |   | 50,002    |      | 
|                                                          |  |      |           |      |   |           |      | 
|                                                          |  |      | 5,485,937 |      |   | 5,912,258 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Expenses:                                                 |  |      |           |      |   |           |      | 
|Depreciation                                              |  |      | 1,425,637 |      |   | 1,416,242 |      | 
|Management and leasing fees                               |  |      | 341,860   |      |   | 357,761   |      | 
|Operating costs                                           |  |      | 1,282,075 |      |   | 1,335,448 |      | 
|Property administration expense                           |  |      | 104,354   |      |   | 91,747    |      | 
|Legal and accounting                                      |  |      | 29,045    |      |   | 26,223    |      | 
|                                                          |  |      |           |      |   |           |      | 
|                                                          |  |      | 3,182,971 |      |   | 3,227,421 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income                                                |  | $    | 2,302,966 |      | $ | 2,684,837 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Real Estate Fund IX         |  | $    | 899,993   |      | $ | 1,050,156 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Real Estate Fund X          |  | $    | 1,114,219 |      | $ | 1,297,665 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Real Estate Fund XI         |  | $    | 203,375   |      | $ | 237,367   |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 85,379    |      | $ | 99,649    |      | 
|                                                          |  |      |           |      |   |           |      | 



|(1) |  | Amounts have been restated to reflect tenant reimbursements of $1,574,176 in 2001 and $1,536,929 in 2000 as revenue and gross property operating costs as expenses as
disclosed in the Restatement Adjustments and Disclosures section of Note 1.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-17



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Fund IX,
X, XI, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Partners Capital

for the
Years Ended December 31, 2002, 2001, and 2000



|                           |  | Wells Real Estate Fund IX |            |   | Wells Real Estate Fund X |   |            | Wells Real Estate Fund XI |  |   | Wells Operating Partnership, L.P. |   |  | Total Partners Capital |          
|-------------------------- |  | ------------------------- | ---------- | - | ------------------------ | - | ---------- | ------------------------- |  | - | --------------------------------- | - |  | ----------------------- | ---------
|Balance, December 31, 1999 |  | $                         | 14,552,716 |   |                          | $ | 18,000,869 |                           |  | $ | 3,308,403                         |   |  | $                       | 1,388,884
|                          
|Net income                 |  |                           | 1,045,094  |   |                          |   | 1,288,629  |                           |  |   | 236,243                           |   |  |                         | 99,177   
|Partnership contributions  |  |                           | 84,032     |   |                          |   | 84,317     |                           |  |   | 0                                 |   |  |                         | 0        
|Partnership distributions  |  |                           | (1,564,039 | ) |                          |   | (1,928,538 | )                         |  |   | (353,553                          | ) |  |                         | (148,425 
|                           |  |                           |            |   |                          |   |            |                           |  |   |                                   |   |  |                         |          
|Balance, December 31, 2000 |  |                           | 14,117,803 |   |                          |   | 17,445,277 |                           |  |   | 3,191,093                         |   |  |                         | 1,339,636
|                          
|Net income                 |  |                           | 1,050,156  |   |                          |   | 1,297,665  |                           |  |   | 237,367                           |   |  |                         | 99,649   
|Partnership distributions  |  |                           | (1,569,454 | ) |                          |   | (1,939,356 | )                         |  |   | (354,789                          | ) |  |                         | (148,925 
|                           |  |                           |            |   |                          |   |            |                           |  |   |                                   |   |  |                         |          
|Balance, December 31, 2001 |  |                           | 13,598,505 |   |                          |   | 16,803,586 |                           |  |   | 3,073,671                         |   |  |                         | 1,290,360
|                          
|Net income                 |  |                           | 899,993    |   |                          |   | 1,114,219  |                           |  |   | 203,375                           |   |  |                         | 85,379   
|Partnership contributions  |  |                           | 50,503     |   |                          |   | 151,933    |                           |  |   | 0                                 |   |  |                         | 0        
|Partnership distributions  |  |                           | (1,372,991 | ) |                          |   | (1,699,973 | )                         |  |   | (310,224                          | ) |  |                         | (130,163 
|                           |  |                           |            |   |                          |   |            |                           |  |   |                                   |   |  |                         |          
|Balance, December 31, 2002 |  | $                         | 13,176,010 |   |                          | $ | 16,369,765 |                           |  | $ | 2,966,822                         |   |  | $                       | 1,245,576
|                           |  |                           |            |   |                          |   |            |                           |  |   |                                   |   |  |                         |          





F-18



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Fund IX,
X, XI, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended
December 31, 2002, 2001, and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 2,302,966  |   |      | $ | 2,684,837  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 1,425,637  |   |      |   | 1,416,242  |      | 
|Amortization of deferred leasing costs                                            |  |      | 62,928     |   |      |   | 65,673     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                               |  |      | 113,294    |   |      |   | (173,807   | )    | 
|Prepaid expenses and other assets                                                 |  |      | 5,959      |   |      |   | (1,056     | )    | 
|Accounts payable and accrued liabilities                                          |  |      | (63,813    | ) |      |   | 57,090     |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 1,544,005  |   |      |   | 1,364,142  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 3,846,971  |   |      |   | 4,048,979  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Expenditures for deferred lease acquisition costs                                 |  |      | (47,160    | ) |      |   | (16,343    | )    | 
|Investment in real estate                                                         |  |      | (310,869   | ) |      |   | 0          |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (358,029   | ) |      |   | (16,343    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions received from partners                                              |  |      | 202,436    |   |      |   | 0          |      | 
|Distributions to joint venture partners                                           |  |      | (3,909,331 | ) |      |   | (3,976,763 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (3,706,895 | ) |      |   | (3,976,763 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (217,953   | ) |      |   | 55,873     |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 1,555,917  |   |      |   | 1,500,044  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 1,337,964  |   |      | $ | 1,555,917  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|                                                                                 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |            |      | 
|Deferred project costs contributed to joint venture                               |  | $    | 14,363     |   |      | $ | 0          |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 570,932    |   |      | $ | 966,912    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



Fund
X and XI Associates



The joint venture, Fund
X and XI Associates, was formed on July 17, 1998 to acquire, develop, operate, and sell real properties. On July 15, 1998, 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.



F-19



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





On October
8, 1998, Fund X and XI Associates acquired Wells Development Corporations interest in Wells/Fremont Associates which resulted in Fund X and XI Associates becoming a joint venture partner with 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, Fund X and XI Associates acquired Wells Development Corporations interest in Wells/Orange County Associates which resulted in Fund X and XI Associates becoming a joint venture partner with Wells OP in the ownership
of the Cort Building.



F-20



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Following
is selected financial information for Fund X and XI Associates:



Fund X and XI Associates

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



Assets



|                             |  | 2002 |           | 2001
|---------------------------- |  | ---- | --------- | ----
|Investment in joint ventures |  | $    | 5,247,765 |     
|Due from affiliates          |  |      | 158,157   |     
|                             |  |      |           |     
|Total assets                 |  | $    | 5,405,922 |     
|                             |  |      |           |     



Liabilities and Partners Capital



|Liabilities:                            |  |   |           |  |   |          
|--------------------------------------- |  | - | --------- |  | - | ---------
|Partnership distributions payable       |  | $ | 158,157   |  | $ | 155,826  
|                                        |  |   |           |  |   |          
|Partners capital:                      |  |   |           |  |   |          
|Wells Real Estate Fund X                |  |   | 3,044,345 |  |   | 3,157,698
|Wells Real Estate Fund XI               |  |   | 2,203,420 |  |   | 2,285,461
|                                        |  |   |           |  |   |          
|Total partners capital                 |  |   | 5,247,765 |  |   | 5,443,159
|                                        |  |   |           |  |   |          
|Total liabilities and partners capital |  | $ | 5,405,922 |  | $ | 5,598,985
|                                        |  |   |           |  |   |          





F-21



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Fund X
and XI Associates

(A Georgia Joint Venture)

Statements of Income

for the Years Ended
December 31, 2002, 2001 and 2000



|                                                  |  | 2002 |         | 2001 |   | 2000   
|------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|Equity in income of joint ventures                |  | $    | 431,094 |      | $ | 434,257
|Expenses                                          |  |      | 0       |      |   | 0      
|                                                  |  |      |         |      |   |        
|Net income                                        |  | $    | 431,094 |      | $ | 434,257
|                                                  |  |      |         |      |   |        
|Net income allocated to Wells Real Estate Fund X  |  | $    | 250,088 |      | $ | 251,923
|                                                  |  |      |         |      |   |        
|Net income allocated to Wells Real Estate Fund XI |  | $    | 181,006 |      | $ | 182,334
|                                                  |  |      |         |      |   |        



Fund X
and XI Associates

(A Georgia Joint Venture)

Statements of Partners Capital

for the
Years Ended December 31, 2002, 2001, and 2000



|                           |  | Wells Real Estate Fund X |           |   | Wells Real Estate Fund XI |   |           | Total Partners Capital | 
|-------------------------- |  | ------------------------ | --------- | - | ------------------------- | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $                        | 3,341,081 |   |                           | $ | 2,419,534 |                         | 
|Net income                 |  |                          | 259,034   |   |                           |   | 188,159   |                         | 
|Partnership distributions  |  |                          | (340,435  | ) |                           |   | (248,420  | )                       | 
|                           |  |                          |           |   |                           |   |           |                         | 
|Balance, December 31, 2000 |  |                          | 3,259,680 |   |                           |   | 2,359,273 |                         | 
|Net income                 |  |                          | 251,923   |   |                           |   | 182,334   |                         | 
|Partnership distributions  |  |                          | (353,905  | ) |                           |   | (256,146  | )                       | 
|                           |  |                          |           |   |                           |   |           |                         | 
|Balance, December 31, 2001 |  |                          | 3,157,698 |   |                           |   | 2,285,461 |                         | 
|Net income                 |  |                          | 250,088   |   |                           |   | 181,006   |                         | 
|Partnership distributions  |  |                          | (363,441  | ) |                           |   | (263,047  | )                       | 
|                           |  |                          |           |   |                           |   |           |                         | 
|Balance, December 31, 2002 |  | $                        | 3,044,345 |   |                           | $ | 2,203,420 |                         | 
|                           |  |                          |           |   |                           |   |           |                         | 





F-22



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Fund X
and XI Associates

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended
December 31, 2002, 2001, and 2000



|                                                                                  |  | 2002 |          |   | 2001 |   |          | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- | 
|Cash flows from operating activities:                                             |  |      |          |   |      |   |          |      | 
|Net income                                                                        |  | $    | 431,094  |   |      | $ | 434,257  |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |          |   |      |   |          |      | 
|Equity in income of joint ventures                                                |  |      | (431,094 | ) |      |   | (434,257 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net cash provided by operating activities                                         |  |      | 0        |   |      |   | 0        |      | 
|Cash flows from investing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions received from joint ventures                                        |  |      | 624,157  |   |      |   | 603,443  |      | 
|Cash flows from financing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions to joint venture partners                                           |  |      | (624,157 | ) |      |   | (603,443 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net increase in cash and cash equivalents                                         |  |      | 0        |   |      |   | 0        |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 0        |   |      |   | 0        |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 0        |   |      | $ | 0        |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Supplemental disclosure of noncash activities:                                    |  |      |          |   |      |   |          |      | 
|Partnership distributions payable                                                 |  | $    | 158,157  |   |      | $ | 155,826  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 



Fund X
and XI Associates investment and percentage ownership in joint ventures at December 31, 2002 and 2001 are summarized as follows:



|                               |  | 2002   |           |         | 2001 |  
|------------------------------ |  | ------ | --------- | ------- | ---- | -
|                               |  | Amount |           | Percent |      |  
|Wells/Orange County Associates |  | $      | 3,407,554 |         | 56   | %
|Wells/Fremont Associates       |  |        | 1,840,211 |         | 22   |  
|                               |  |        |           |         |      |  
|                               |  | $      | 5,247,765 |         |      |  
|                               |  |        |           |         |      |  





F-23



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





The
following is a roll forward of Fund X and XI Associates investment in joint ventures for the years ended December 31, 2002 and 2001:



|                                               |  | 2002 |           |   | 2001 |  
|---------------------------------------------- |  | ---- | --------- | - | ---- | -
|Investment in joint venture, beginning or year |  | $    | 5,443,159 |   |      | $
|Equity in income of joint venture              |  |      | 431,094   |   |      |  
|Distributions from joint venture               |  |      | (626,488  | ) |      |  
|                                               |  |      |           |   |      |  
|Investment in joint venture, end of year       |  | $    | 5,247,765 |   |      | $
|                                               |  |      |           |   |      |  







F-24



---



WELLS
REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Orange County
Associates



Following is selected financial information for
Wells/Orange County Associates:



Wells/Orange
County Associates

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



Assets



|                                                                                 |  | 2002 |           | 2001
|-------------------------------------------------------------------------------- |  | ---- | --------- | ----
|Real estate assets, at cost:                                                     |  |      |           |     
|Land                                                                             |  | $    | 2,187,501 |     
|Building, less accumulated depreciation of $838,345 in 2002 and $651,780 in
2001 |  |      | 3,825,770 |     
|                                                                                 |  |      |           |     
|Total real estate assets                                                         |  |      | 6,013,271 |     
|Cash and cash equivalents                                                        |  |      | 138,212   |     
|Accounts receivable                                                              |  |      | 80,671    |     
|Prepaid expenses and other assets                                                |  |      | 12,689    |     
|                                                                                 |  |      |           |     
|Total assets                                                                     |  | $    | 6,244,843 |     
|                                                                                 |  |      |           |     



Liabilities and Partners Capital



|Liabilities:                            |  |   |           |  |   |          
|--------------------------------------- |  | - | --------- |  | - | ---------
|Accounts payable                        |  | $ | 1,597     |  | $ | 11,792   
|Partnership distributions payable       |  |   | 194,203   |  |   | 192,042  
|                                        |  |   |           |  |   |          
|Total liabilities                       |  |   | 195,800   |  |   | 203,834  
|                                        |  |   |           |  |   |          
|Partners capital:                      |  |   |           |  |   |          
|Wells Operating Partnership, L.P.       |  |   | 2,641,489 |  |   | 2,740,000
|Fund X and XI Associates                |  |   | 3,407,554 |  |   | 3,534,638
|                                        |  |   |           |  |   |          
|Total partners capital                 |  |   | 6,049,043 |  |   | 6,274,638
|                                        |  |   |           |  |   |          
|Total liabilities and partners capital |  | $ | 6,244,843 |  | $ | 6,478,472
|                                        |  |   |           |  |   |          





F-25



---



WELLS
REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Orange County Associates

(A Georgia Joint Venture)

Statements of Income

for the Years Ended December 31, 2002, 2001, and 2000



|                                                          |  | 2002 |         | 2001 |   |         | 2000 | 
|--------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | ---- | 
|Revenues:                                                 |  |      |         |      |   |         |      | 
|Rental income                                             |  | $    | 795,857 |      | $ | 795,528 |      | 
|Reimbursement income (1)                                  |  |      | 48,325  |      |   | 15,362  | (1)  | 
|Interest income                                           |  |      | 1,848   |      |   | 2,409   |      | 
|                                                          |  |      |         |      |   |         |      | 
|                                                          |  |      | 846,030 |      |   | 813,299 |      | 
|                                                          |  |      |         |      |   |         |      | 
|Expenses:                                                 |  |      |         |      |   |         |      | 
|Depreciation                                              |  |      | 186,565 |      |   | 186,564 |      | 
|Management and leasing fees                               |  |      | 33,396  |      |   | 33,547  |      | 
|Operating costs (1)                                       |  |      | 48,248  |      |   | 23,046  | (1)  | 
|Partnership administration                                |  |      | 25,168  |      |   | 14,171  |      | 
|Legal and accounting                                      |  |      | 10,255  |      |   | 9,800   |      | 
|                                                          |  |      |         |      |   |         |      | 
|                                                          |  |      | 303,632 |      |   | 267,128 |      | 
|                                                          |  |      |         |      |   |         |      | 
|Net income                                                |  | $    | 542,398 |      | $ | 546,171 |      | 
|                                                          |  |      |         |      |   |         |      | 
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 236,850 |      | $ | 238,542 |      | 
|                                                          |  |      |         |      |   |         |      | 
|Net income allocated to Fund X and XI Associates          |  | $    | 305,548 |      | $ | 307,629 |      | 
|                                                          |  |      |         |      |   |         |      | 

|(1) |  | Amounts have been restated to reflect tenant reimbursements of $15,362 in 2001 and $26,817 in 2000 as revenue and gross property operating costs as expenses as
disclosed in the Restatement Adjustments and Disclosures section of Note 1.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-26



---



WELLS
REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Orange County Associates

(A Georgia Joint Venture)

Statements of Partners Capital

for the Years Ended December 31, 2002, 2001, and 2000



|                           |  | Wells Operating Partnership, L.P. |           |   | Fund X and XI Associates |   |           | Total Partners Capital | 
|-------------------------- |  | --------------------------------- | --------- | - | ------------------------ | - | --------- | ----------------------- | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 1999 |  | $                                 | 2,893,112 |   |                          | $ | 3,732,262 |                         | 
|                          
|Net income                 |  |                                   | 248,449   |   |                          |   | 320,512   |                         | 
|Partnership distributions  |  |                                   | (313,954  | ) |                          |   | (405,016  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2000 |  |                                   | 2,827,607 |   |                          |   | 3,647,758 |                         | 
|                          
|Net income                 |  |                                   | 238,542   |   |                          |   | 307,629   |                         | 
|Partnership distributions  |  |                                   | (326,149  | ) |                          |   | (420,749  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2001 |  |                                   | 2,740,000 |   |                          |   | 3,534,638 |                         | 
|                          
|Net income                 |  |                                   | 236,850   |   |                          |   | 305,548   |                         | 
|Partnership distributions  |  |                                   | (335,361  | ) |                          |   | (432,632  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2002 |  | $                                 | 2,641,489 |   |                          | $ | 3,407,554 |                         | 
|                           |  |                                   |           |   |                          |   |           |                         | 





F-27



---



WELLS
REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Orange County Associates

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended December 31, 2002, 2001, and 2000



|                                                                                  |  | 2002 |          |   | 2001 |   |          | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- | 
|Cash flows from operating activities:                                             |  |      |          |   |      |   |          |      | 
|Net income                                                                        |  | $    | 542,398  |   |      | $ | 546,171  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |          |   |      |   |          |      | 
|Depreciation                                                                      |  |      | 186,565  |   |      |   | 186,564  |      | 
|Changes in assets and liabilities:                                                |  |      |          |   |      |   |          |      | 
|Accounts receivable                                                               |  |      | 132      |   |      |   | 18,351   |      | 
|Accounts payable                                                                  |  |      | (10,195  | ) |      |   | 10,792   |      | 
|Prepaid expenses and other assets                                                 |  |      | (3,263   | ) |      |   | (9,426   | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Total adjustments                                                                 |  |      | 173,239  |   |      |   | 206,281  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net cash provided by operating activities                                         |  |      | 715,637  |   |      |   | 752,452  |      | 
|Cash flows from financing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions to partners                                                         |  |      | (765,832 | ) |      |   | (683,083 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (50,195  | ) |      |   | 69,369   |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 188,407  |   |      |   | 119,038  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 138,212  |   |      | $ | 188,407  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Supplemental disclosure of noncash activities:                                    |  |      |          |   |      |   |          |      | 
|Partnership distributions payable                                                 |  | $    | 194,203  |   |      | $ | 192,042  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 





F-28



---



WELLS
REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Fremont
Associates



Following is selected financial information for
Wells/Fremont Associates:



Wells/Fremont
Associates

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



Assets



|                                                                                   |  | 2002 |           | 2001
|---------------------------------------------------------------------------------- |  | ---- | --------- | ----
|Real estate assets, at cost:                                                       |  |      |           |     
|Land                                                                               |  | $    | 2,219,251 |     
|Building, less accumulated depreciation of $1,284,826 in 2002 and $999,301 in
2001 |  |      | 5,853,332 |     
|                                                                                   |  |      |           |     
|Total real estate assets                                                           |  |      | 8,072,583 |     
|Cash and cash equivalents                                                          |  |      | 220,989   |     
|Accounts receivable                                                                |  |      | 114,807   |     
|                                                                                   |  |      |           |     
|Total assets                                                                       |  | $    | 8,408,379 |     
|                                                                                   |  |      |           |     



Liabilities and Partners Capital



|Liabilities:                            |  |   |           |  |   |          
|--------------------------------------- |  | - | --------- |  | - | ---------
|Accounts payable                        |  | $ | 11,415    |  | $ | 9,926    
|Partnership distributions payable       |  |   | 216,741   |  |   | 201,854  
|                                        |  |   |           |  |   |          
|Total liabilities                       |  |   | 228,156   |  |   | 211,780  
|                                        |  |   |           |  |   |          
|Partners capital:                      |  |   |           |  |   |          
|Wells Operating Partnership, L.P.       |  |   | 6,340,012 |  |   | 6,575,358
|Fund X and XI Associates                |  |   | 1,840,211 |  |   | 1,908,521
|                                        |  |   |           |  |   |          
|Total partners capital                 |  |   | 8,180,223 |  |   | 8,483,879
|                                        |  |   |           |  |   |          
|Total liabilities and partners capital |  | $ | 8,408,379 |  | $ | 8,695,659
|                                        |  |   |           |  |   |          





F-29



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)







Wells/Fremont Associates

(A Georgia Joint
Venture)

Statements of Income

for the Years Ended December 31, 2002, 2001, and 2000



|                                                          |  | 2002 |         | 2001 |   | 2000   
|--------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|Revenues:                                                 |  |      |         |      |   |        
|Rental income                                             |  | $    | 903,451 |      | $ | 902,945
|Interest income                                           |  |      | 2,164   |      |   | 2,713  
|Other income                                              |  |      | 0       |      |   | 2,015  
|                                                          |  |      |         |      |   |        
|                                                          |  |      | 905,615 |      |   | 907,673
|                                                          |  |      |         |      |   |        
|Expenses:                                                 |  |      |         |      |   |        
|Depreciation                                              |  |      | 285,525 |      |   | 285,528
|Management and leasing fees                               |  |      | 36,036  |      |   | 36,267 
|Operating costs                                           |  |      | 19,762  |      |   | 16,585 
|Legal and accounting                                      |  |      | 6,210   |      |   | 6,400  
|                                                          |  |      |         |      |   |        
|                                                          |  |      | 347,533 |      |   | 344,780
|                                                          |  |      |         |      |   |        
|Net income                                                |  | $    | 558,082 |      | $ | 562,893
|                                                          |  |      |         |      |   |        
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 432,536 |      | $ | 436,265
|                                                          |  |      |         |      |   |        
|Net income allocated to Fund X and XI Associates          |  | $    | 125,546 |      | $ | 126,628
|                                                          |  |      |         |      |   |        



F-30



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





Wells/Fremont Associates

(A Georgia Joint Venture)

Statements of Partners Capital

for the Years Ended December 31, 2002, 2001, and 2000



|                           |  | Wells Operating Partnership, L.P. |           |   | Fund X and XI Associates |   |           | Total Partners Capital | 
|-------------------------- |  | --------------------------------- | --------- | - | ------------------------ | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $                                 | 6,988,210 |   |                          | $ | 2,028,353 |                         | 
|                          
|Net income                 |  |                                   | 436,452   |   |                          |   | 126,681   |                         | 
|Partnership distributions  |  |                                   | (633,375  | ) |                          |   | (183,839  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2000 |  |                                   | 6,791,287 |   |                          |   | 1,971,195 |                         | 
|                          
|Net income                 |  |                                   | 436,265   |   |                          |   | 126,628   |                         | 
|Partnership distributions  |  |                                   | (652,194  | ) |                          |   | (189,302  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2001 |  |                                   | 6,575,358 |   |                          |   | 1,908,521 |                         | 
|                          
|Net income                 |  |                                   | 432,536   |   |                          |   | 125,546   |                         | 
|Partnership distributions  |  |                                   | (667,882  | ) |                          |   | (193,856  | )                       | 
|                           |  |                                   |           |   |                          |   |           |                         | 
|Balance, December 31, 2002 |  | $                                 | 6,340,012 |   |                          | $ | 1,840,211 |                         | 





F-31



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



Wells/Fremont Associates

(A Georgia Joint Venture)

Statements of Cash
Flows

for the Years Ended December 31, 2002, 2001, and 2000



|                                                                                  |  | 2002 |          |   | 2001 |   |          | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- | 
|Cash flows from operating activities:                                             |  |      |          |   |      |   |          |      | 
|Net income                                                                        |  | $    | 558,082  |   |      | $ | 562,893  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |          |   |      |   |          |      | 
|Depreciation                                                                      |  |      | 285,525  |   |      |   | 285,528  |      | 
|Changes in assets and liabilities:                                                |  |      |          |   |      |   |          |      | 
|Accounts receivable                                                               |  |      | 18,994   |   |      |   | (7,368   | )    | 
|Accounts payable                                                                  |  |      | 1,489    |   |      |   | (676     | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Total adjustments                                                                 |  |      | 306,008  |   |      |   | 277,484  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net cash provided by operating activities                                         |  |      | 864,090  |   |      |   | 840,377  |      | 
|Cash flows from financing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions to partners                                                         |  |      | (846,851 | ) |      |   | (729,191 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net increase (decrease) in cash and cash equivalents                              |  |      | 17,239   |   |      |   | 111,186  |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 203,750  |   |      |   | 92,564   |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 220,989  |   |      | $ | 203,750  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Supplemental disclosure of noncash activities:                                    |  |      |          |   |      |   |          |      | 
|Partnership distributions payable                                                 |  | $    | 216,741  |   |      | $ | 201,854  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 



Fund XI, XII, and
REIT Joint Venture



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



F-32



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



Following is selected financial information for the Fund XI, XII, and REIT Joint Venture:



Fund XI, XII, and REIT Joint Venture

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



Assets

|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 5,048,797  |     
|Building and improvements, less accumulated depreciation of $3,784,766 in 2002 and
$2,692,116 in 2001 |  |      | 23,533,686 |     
|                                                                                                      |  |      |            |     
|Total real estate assets                                                                              |  |      | 28,582,483 |     
|Cash and cash equivalents                                                                             |  |      | 594,294    |     
|Accounts receivable, net                                                                              |  |      | 439,707    |     
|Prepaid assets and other expenses                                                                     |  |      | 0          |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 29,616,484 |     
|                                                                                                      |  |      |            |     



Liabilities and Partners Capital

|Liabilities:                            |  |   |            |  |   |           
|--------------------------------------- |  | - | ---------- |  | - | ----------
|Accounts payable                        |  | $ | 157,666    |  | $ | 114,612   
|Partnership distributions payable       |  |   | 635,756    |  |   | 757,500   
|                                        |  |   |            |  |   |           
|Total liabilities                       |  |   | 793,422    |  |   | 872,112   
|                                        |  |   |            |  |   |           
|Partners capital:                      |  |   |            |  |   |           
|Wells Real Estate Fund XI               |  |   | 7,536,600  |  |   | 7,917,646 
|Wells Real Estate Fund XII              |  |   | 4,925,669  |  |   | 5,174,703 
|Wells Operating Partnership, L.P.       |  |   | 16,360,793 |  |   | 17,187,985
|                                        |  |   |            |  |   |           
|Total partners capital                 |  |   | 28,823,062 |  |   | 30,280,334
|                                        |  |   |            |  |   |           
|Total liabilities and partners capital |  | $ | 29,616,484 |  | $ | 31,152,446
|                                        |  |   |            |  |   |           





F-33



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



Fund XI, XII, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Income

for the Years Ended December 31, 2002, 2001, and 2000



|                                                          |  | 2002 |           | 2001 |   |           | 2000 | 
|--------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | ---- | 
|Revenues:                                                 |  |      |           |      |   |           |      | 
|Rental income                                             |  | $    | 3,359,469 |      | $ | 3,346,227 |      | 
|Reimbursement income (1)                                  |  |      | 63,432    |      |   | 114,066   | (1)  | 
|Interest income                                           |  |      | 8,001     |      |   | 24,480    |      | 
|Other income                                              |  |      | 24,389    |      |   | 360       |      | 
|                                                          |  |      |           |      |   |           |      | 
|                                                          |  |      | 3,455,291 |      |   | 3,485,133 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Expenses:                                                 |  |      |           |      |   |           |      | 
|Depreciation                                              |  |      | 1,092,650 |      |   | 1,092,853 |      | 
|Management and leasing fees                               |  |      | 164,576   |      |   | 156,987   |      | 
|Operating costs                                           |  |      | 133,638   |      |   | 86,617    |      | 
|Property administration                                   |  |      | 83,190    |      |   | 65,765    |      | 
|Legal and accounting                                      |  |      | 19,142    |      |   | 18,000    |      | 
|Bad debt expense                                          |  |      | 229,159   |      |   | 0         |      | 
|                                                          |  |      |           |      |   |           |      | 
|                                                          |  |      | 1,722,355 |      |   | 1,420,222 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income                                                |  | $    | 1,732,936 |      | $ | 2,064,911 |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Real Estate Fund XI         |  | $    | 453,128   |      | $ | 539,930   |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Real Estate Fund XII        |  | $    | 296,142   |      | $ | 352,878   |      | 
|                                                          |  |      |           |      |   |           |      | 
|Net income allocated to Wells Operating Partnership, L.P. |  | $    | 983,666   |      | $ | 1,172,103 |      | 
|                                                          |  |      |           |      |   |           |      | 



|(1) |  | Amounts have been restated to reflect tenant reimbursements of $114,066 in 2001 and $57,956 in 2000 as revenue and gross property operating costs as expenses as
disclosed in the Restatement Adjustments and Disclosures section of Note 1.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-34



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



Fund XI, XII, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Partners Capital

for the Years Ended December 31, 2002, 2001, and 2000



|                           |  | Wells Real Estate Fund XI |           |   | Wells Real Estate Fund XII |   |           | Wells Operating Partnership, L.P. |  |   | Total Partners Capital |  
|-------------------------- |  | ------------------------- | --------- | - | -------------------------- | - | --------- | --------------------------------- |  | - | ----------------------- | -
|Balance, December 31, 1999 |  | $                         | 8,365,852 |   |                            | $ | 5,467,634 |                                   |  | $ | 18,160,970              |  
|                          
|Net income                 |  |                           | 543,497   |   |                            |   | 355,211   |                                   |  |   | 1,179,848               |  
|Partnership distributions  |  |                           | (761,088  | ) |                            |   | (497,421  | )                                 |  |   | (1,652,203              | )
|                           |  |                           |           |   |                            |   |           |                                   |  |   |                         |  
|Balance, December 31, 2000 |  |                           | 8,148,261 |   |                            |   | 5,325,424 |                                   |  |   | 17,688,615              |  
|                          
|Net income                 |  |                           | 539,930   |   |                            |   | 352,878   |                                   |  |   | 1,172,103               |  
|Partnership distributions  |  |                           | (770,545  | ) |                            |   | (503,599  | )                                 |  |   | (1,672,733              | )
|                           |  |                           |           |   |                            |   |           |                                   |  |   |                         |  
|Balance, December 31, 2001 |  |                           | 7,917,646 |   |                            |   | 5,174,703 |                                   |  |   | 17,187,985              |  
|                          
|Net income                 |  |                           | 453,128   |   |                            |   | 296,142   |                                   |  |   | 983,666                 |  
|Partnership distributions  |  |                           | (834,174  | ) |                            |   | (545,176  | )                                 |  |   | (1,810,858              | )
|                           |  |                           |           |   |                            |   |           |                                   |  |   |                         |  
|Balance, December 31, 2002 |  | $                         | 7,536,600 |   |                            | $ | 4,925,669 |                                   |  | $ | 16,360,793              |  
|                           |  |                           |           |   |                            |   |           |                                   |  |   |                         |  





F-35



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



Fund XI, XII, and REIT Joint Venture

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended December 31, 2002, 2001, and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 1,732,936  |   |      | $ | 2,064,911  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 1,092,650  |   |      |   | 1,092,853  |      | 
|Amortization of deferred leasing costs                                            |  |      | 13,787     |   |      |   | 13,787     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable, net                                                          |  |      | 235,315    |   |      |   | (280,708   | )    | 
|Prepaid expenses and other assets                                                 |  |      | 26,486     |   |      |   | 0          |      | 
|Accounts payable                                                                  |  |      | 43,054     |   |      |   | 432        |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 1,411,292  |   |      |   | 826,364    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 3,144,228  |   |      |   | 2,891,275  |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investment in deferred lease acquisition costs                                    |  |      | (13,787    | ) |      |   | (13,787    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Distributions to joint venture partners                                           |  |      | (3,311,952 | ) |      |   | (2,642,772 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net increase (decrease) in cash and cash equivalents                              |  |      | (181,511   | ) |      |   | 234,716    |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 775,805    |   |      |   | 541,089    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 594,294    |   |      | $ | 775,805    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Supplemental disclosure of noncash activities:                                    |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 635,756    |   |      | $ | 757,500    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 





F-36



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)



|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, 2002, 2001 and 2000:



|                                                                                                    |  | 2002 |         | 2001 |   |           | 2000 | 
|--------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | --------- | ---- | 
|Financial statement net income                                                                      |  | $    | 746,815 |      | $ | 870,350   |      | 
|Increase (decrease) in net income resulting from:                                                   |  |      |         |      |   |           |      | 
|Meals and Entertainment                                                                             |  |      | 163     |      |   | 0         |      | 
|Depreciation expense for financial reporting purposes in excess of amounts for income
tax purposes  |  |      | 185,647 |      |   | 230,508   |      | 
|Bad debt expense for financial reporting purposes in excess of amounts for income tax
purposes      |  |      | 20,090  |      |   | 0         |      | 
|Expenses deducted for financial reporting purposes, capitalized for income tax
purposes             |  |      | 293     |      |   | 364       |      | 
|Rental income accrued for financial reporting purposes in excess of amounts for income
tax purposes |  |      | 12,414  |      |   | (62,828   | )    | 
|                                                                                                    |  |      |         |      |   |           |      | 
|Income tax basis net income                                                                         |  | $    | 965,422 |      | $ | 1,038,394 |      | 
|                                                                                                    |  |      |         |      |   |           |      | 



F-37



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





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, 2002, 2001 and 2000:



|                                                                                                                                         |  | 2002 |            |   | 2001 |   |            | 2000 | 
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Financial statements partners capital                                                                                                   |  | $    | 12,772,950 |   |      | $ | 13,301,079 |      | 
|Increase (decrease) in partners capital resulting from:                                                                                 |  |      |            |   |      |   |            |      | 
|Meals and Entertainment                                                                                                                  |  |      | 163        |   |      |   | 0          |      | 
|Bad debt expense for financial reporting purposes in excess of amounts for income tax
purposes                                           |  |      | 20,090     |   |      |   | 0          |      | 
|Depreciation expense for financial reporting purposes in excess of amounts for income
tax purposes                                       |  |      | 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  |      | 
|Accumulated rental income accrued for financial reporting purposes in excess of amounts
for income tax purposes                          |  |      | (215,643   | ) |      |   | (228,057   | )    | 
|Accumulated expenses deducted for financial reporting purposes, capitalized for income
tax purposes                                      |  |      | 1,981      |   |      |   | 1,688      |      | 
|Partnerships distributions payable                                                                                                      |  |      | 308,611    |   |      |   | 328,150    |      | 
|                                                                                                                                         |  |      |            |   |      |   |            |      | 
|Income tax basis partners capital                                                                                                       |  | $    | 15,660,364 |   |      | $ | 15,989,425 |      | 
|                                                                                                                                         |  |      |            |   |      |   |            |      | 





F-38



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





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



Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2002 and 2001:



|                                                                           |  | 2002 Quarters Ended |         
|-------------------------------------------------------------------------- |  | ------------------- | --------
|                                                                           |  | March 31            |         
|Revenues                                                                   |  | $                   | 223,156 
|Net income                                                                 |  |                     | 199,559 
|Net income allocated to Class A limited partners                           |  |                     | 322,278 
|Net loss allocated to Class B limited partners                             |  |                     | (122,719
|Net income per weighted average Class A limited partner unit outstanding   |  | $                   | 0.24    
|Net loss per weighted average Class B limited partner unit outstanding     |  |                     | (0.39   
|Distribution per weighted average Class A limited partner unit
outstanding |  |                     | 0.24    



F-39



---

WELLS REAL ESTATE FUND XI, L.P.

(A Georgia Public Limited Partnership)



DECEMBER 31, 2002, 2001 AND 2000



NOTES TO FINANCIAL STATEMENTS(Continued)





|                                                                           |  | 2001 Quarters Ended |         
|-------------------------------------------------------------------------- |  | ------------------- | --------
|                                                                           |  | March 31            |         
|Revenues                                                                   |  | $                   | 237,855 
|Net income                                                                 |  |                     | 216,980 
|Net income allocated to Class A limited partners                           |  |                     | 339,634 
|Net loss allocated to Class B limited partners                             |  |                     | (122,654
|Net income per weighted average Class A limited partner unit outstanding   |  | $                   | 0.25    
|Net loss per weighted average Class B limited partner unit outstanding
(a) |  |                     | (0.39   
|Distribution per weighted average Class A limited partner unit
outstanding |  |                     | 0.24    



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



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



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



|                                                                |  | 2002
|--------------------------------------------------------------- |  | ----
|Salary reimbursements                                           |  | $   
|Printing expenses                                               |  |     
|Other professional fees                                         |  |     
|Legal fees                                                      |  |     
|Independent accounting fees                                     |  |     
|Postage and delivery expenses                                   |  |     
|Taxes and licensing fees                                        |  |     
|Life insurance                                                  |  |     
|Other office expenses                                           |  |     
|Filing fees                                                     |  |     
|                                                                |  |     
|Total partnership administration and legal and accounting costs |  | $   
|                                                                |  |     



F-40



---

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, 2002 and 2001, and the related statements of income,
partners capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audit 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, 2002 and 2001, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2002, 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

March 18, 2003



F-41



---

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

(A Georgia Joint Venture)



Balance Sheets



December 31, 2002 and 2001



Assets

|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 6,698,020  |     
|Building and improvements, less accumulated depreciation of $7,045,381 in 2002 and
$5,619,744 in 2001 |  |      | 26,063,758 |     
|                                                                                                      |  |      |            |     
|Total real estate assets, net                                                                         |  |      | 32,761,778 |     
|Cash and cash equivalents                                                                             |  |      | 1,337,964  |     
|Accounts receivable                                                                                   |  |      | 482,756    |     
|Other assets, net                                                                                     |  |      | 417,275    |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 34,999,773 |     
|                                                                                                      |  |      |            |     



Liabilities and Partners Capital

|Liabilities:                                      |  |   |            |  |   |           
|------------------------------------------------- |  | - | ---------- |  | - | ----------
|Accounts payable and refundable security deposits |  | $ | 670,668    |  | $ | 734,481   
|Partnership distributions payable                 |  |   | 570,932    |  |   | 966,912   
|                                                  |  |   |            |  |   |           
|Total liabilities                                 |  |   | 1,241,600  |  |   | 1,701,393 
|                                                  |  |   |            |  |   |           
|Partners capital:                                |  |   |            |  |   |           
|Wells Fund IX                                     |  |   | 13,176,010 |  |   | 13,598,505
|Wells Fund X                                      |  |   | 16,369,765 |  |   | 16,803,586
|Wells Fund XI                                     |  |   | 2,966,822  |  |   | 3,073,671 
|Wells OP                                          |  |   | 1,245,576  |  |   | 1,290,360 
|                                                  |  |   |            |  |   |           
|Total partners capital                           |  |   | 33,758,173 |  |   | 34,766,122
|                                                  |  |   |            |  |   |           
|Total liabilities and partners capital           |  | $ | 34,999,773 |  | $ | 36,467,515
|                                                  |  |   |            |  |   |           



See accompanying
notes.



F-42



---

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

(A Georgia Joint Venture)



Statements of Income



For the Years Ended December 31, 2002, 2001 and 2000



|                                      |  | 2002 |           | 2001 |   | 2000     
|------------------------------------- |  | ---- | --------- | ---- | - | ---------
|Revenues:                             |  |      |           |      |   |          
|Rental income                         |  | $    | 4,308,536 |      | $ | 4,174,379
|Reimbursement income                  |  |      | 1,048,910 |      |   | 1,574,176
|Other income                          |  |      | 113,895   |      |   | 113,701  
|Interest income                       |  |      | 14,596    |      |   | 50,002   
|                                      |  |      |           |      |   |          
|                                      |  |      | 5,485,937 |      |   | 5,912,258
|                                      |  |      |           |      |   |          
|Expenses:                             |  |      |           |      |   |          
|Depreciation                          |  |      | 1,425,637 |      |   | 1,416,242
|Management and leasing fees           |  |      | 341,860   |      |   | 357,761  
|Operating costs                       |  |      | 1,282,075 |      |   | 1,335,448
|Joint Venture administration          |  |      | 104,354   |      |   | 91,747   
|Legal and accounting                  |  |      | 29,045    |      |   | 26,223   
|                                      |  |      |           |      |   |          
|                                      |  |      | 3,182,971 |      |   | 3,227,421
|                                      |  |      |           |      |   |          
|Net income                            |  | $    | 2,302,966 |      | $ | 2,684,837
|                                      |  |      |           |      |   |          
|Net income allocated to Wells Fund IX |  | $    | 899,993   |      | $ | 1,050,156
|                                      |  |      |           |      |   |          
|Net income allocated to Wells Fund X  |  | $    | 1,114,219 |      | $ | 1,297,665
|                                      |  |      |           |      |   |          
|Net income allocated to Wells Fund XI |  | $    | 203,375   |      | $ | 237,367  
|                                      |  |      |           |      |   |          
|Net income allocated to Wells OP      |  | $    | 85,379    |      | $ | 99,649   
|                                      |  |      |           |      |   |          



See accompanying
notes.



F-43



---

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, 2002, 2001 and 2000



|                           |  | Wells Fund IX |            |   | Wells Fund X |   |            | Wells Fund XI |  |   | Wells OP  |   |  | Total Partners Capital |          
|-------------------------- |  | ------------- | ---------- | - | ------------ | - | ---------- | ------------- |  | - | --------- | - |  | ----------------------- | ---------
|Balance, December 31, 1999 |  | $             | 14,552,716 |   |              | $ | 18,000,869 |               |  | $ | 3,308,403 |   |  | $                       | 1,388,884
|                          
|Net income                 |  |               | 1,045,094  |   |              |   | 1,288,629  |               |  |   | 236,243   |   |  |                         | 99,177   
|Partnership contributions  |  |               | 84,032     |   |              |   | 84,317     |               |  |   | 0         |   |  |                         | 0        
|Partnership distributions  |  |               | (1,564,039 | ) |              |   | (1,928,538 | )             |  |   | (353,553  | ) |  |                         | (148,425 
|                           |  |               |            |   |              |   |            |               |  |   |           |   |  |                         |          
|Balance, December 31, 2000 |  |               | 14,117,803 |   |              |   | 17,445,277 |               |  |   | 3,191,093 |   |  |                         | 1,339,636
|                          
|Net income                 |  |               | 1,050,156  |   |              |   | 1,297,665  |               |  |   | 237,367   |   |  |                         | 99,649   
|Partnership distributions  |  |               | (1,569,454 | ) |              |   | (1,939,356 | )             |  |   | (354,789  | ) |  |                         | (148,925 
|                           |  |               |            |   |              |   |            |               |  |   |           |   |  |                         |          
|Balance, December 31, 2001 |  |               | 13,598,505 |   |              |   | 16,803,586 |               |  |   | 3,073,671 |   |  |                         | 1,290,360
|                          
|Net income                 |  |               | 899,993    |   |              |   | 1,114,219  |               |  |   | 203,375   |   |  |                         | 85,379   
|Partnership contributions  |  |               | 50,503     |   |              |   | 151,933    |               |  |   | 0         |   |  |                         | 0        
|Partnership distributions  |  |               | (1,372,991 | ) |              |   | (1,699,973 | )             |  |   | (310,224  | ) |  |                         | (130,163 
|                           |  |               |            |   |              |   |            |               |  |   |           |   |  |                         |          
|Balance, December 31, 2002 |  | $             | 13,176,010 |   |              | $ | 16,369,765 |               |  | $ | 2,966,822 |   |  | $                       | 1,245,576
|                           |  |               |            |   |              |   |            |               |  |   |           |   |  |                         |          



See accompanying
notes.



F-44



---

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, 2002, 2001 and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 2,302,966  |   |      | $ | 2,684,837  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 1,425,637  |   |      |   | 1,416,242  |      | 
|Amortization of deferred leasing costs                                            |  |      | 62,928     |   |      |   | 65,673     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                               |  |      | 113,294    |   |      |   | (173,807   | )    | 
|Prepaid expenses and other assets                                                 |  |      | 5,959      |   |      |   | (1,056     | )    | 
|Accounts payable and accrued liabilities                                          |  |      | (63,813    | ) |      |   | 57,090     |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 1,544,005  |   |      |   | 1,364,142  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 3,846,971  |   |      |   | 4,048,979  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Expenditures for deferred lease acquisition costs                                 |  |      | (47,160    | ) |      |   | (16,343    | )    | 
|Investment in real estate                                                         |  |      | (310,869   | ) |      |   | 0          |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (358,029   | ) |      |   | (16,343    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions received from partners                                              |  |      | 202,436    |   |      |   | 0          |      | 
|Distributions to joint venture partners                                           |  |      | (3,909,331 | ) |      |   | (3,976,763 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (3,706,895 | ) |      |   | (3,976,763 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (217,953   | ) |      |   | 55,873     |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 1,555,917  |   |      |   | 1,500,044  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 1,337,964  |   |      | $ | 1,555,917  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |            |      | 
|Deferred project costs contributed to joint venture                               |  | $    | 14,363     |   |      | $ | 0          |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 570,932    |   |      | $ | 966,912    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Write-off of fully amortized deferred leasing costs                               |  | $    | 0          |   |      | $ | 13,787     |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



See accompanying
notes.





F-45



---

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

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2002, 2001, AND 2000



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



Organization and Business



On March 20, 1997, the Wells Fund IX entered into a joint venture agreement with Wells Fund X known as Fund IX and X Associates for the
purposes of acquiring, developing and operating real properties. Concurrent with the formation of Fund IX and X Associates, Wells Fund IX contributed a 5.62-acre tract of real property in Knoxville, Tennessee, and improvements thereon, known as the
Alstom Power Property to Fund IX and X Associates. Following this contribution, the Alstom Power Building, an 84,404-square foot, three-story office building, was constructed. On February 13, 1998, the Fund IX and X Associates purchased a two-story
office building, known as the Ohmeda Building, in Louisville, Colorado. On March 20, 1998, the Fund IX and X Associates purchased a three-story office building, known as the 360 Interlocken Building, in Broomfield, Colorado.



On June 11, 1998, Fund IX and X Associates was amended and
restated to admit Wells Real Estate Fund XI, L.P. (Wells Fund XI) and Wells Operating Partnership, L.P. (Wells OP) and, accordingly, renamed as The Fund IX, Fund X, Fund XI and REIT Joint Venture (the Joint
Venture). On June 24, 1998, the Joint Venture purchased an 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.



F-46



---

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

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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. 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 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.



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.



Other Assets, net



Other assets, net, as of December 31, 2002 and 2001 is
comprised of the following items:



|                             |  | 2002 |         | 2001
|---------------------------- |  | ---- | ------- | ----
|Deferred leasing costs, net  |  | $    | 316,517 |     
|Refundable security deposits |  |      | 100,758 |     
|                             |  |      |         |     
|Total                        |  | $    | 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 $257,899 and $188,587 as
of December 31, 2000 and 2001, 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.



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.



F-47



---

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

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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, 2002 or 2001.



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



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 $341,860, $357,761 and $362,774 for the years ended December 31, 2002, 2001 and
2000, respectively.



Wells Capital, Inc., an
affiliate of Wells Partners, L.P., and its affiliates perform certain administrative services for the various Wells Real Estate Funds and joint ventures, such as accounting and other general administration, and incur the related expenses. Such
expenses are allocated among these entities based on time spent on each entity by individual personnel. During 2002, 2001 and 2000, the



F-48



---

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

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)



Joint Venture reimbursed $104,354, $91,747, $57,924, respectively, to Wells Capital,
Inc. and its affiliates for these services.



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 the Joint Venture under noncancelable operating leases at December 31, 2002 is as follows:



|Year ended December 31: |  |   |           
|----------------------- |  | - | ----------
|2003                    |  | $ | 4,193,500 
|2004                    |  |   | 4,119,454 
|2005                    |  |   | 2,727,513 
|2006                    |  |   | 2,351,958 
|2007                    |  |   | 2,192,200 
|Thereafter              |  |   | 771,839   
|                        |  |   |           
|                        |  | $ | 16,352,464
|                        |  |   |           



Four
tenants contributed 24%, 23%, 12%, and 12% of rental income for the year ended December 31, 2002. In addition, four tenants will contribute 35%, 21%, 19%, and 13% of future minimum rental income.



F-49



---



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

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2002



|                                      |  |              |  | Initial Cost |           |                            |   | Gross Amount at Which Carried at December 31, 2002 |  |      |           |                            |   |                          |  |      
|------------------------------------- |  | ------------ |  | ------------ | --------- | -------------------------- | - | -------------------------------------------------- |  | ---- | --------- | -------------------------- | - | ------------------------ |  | -----
|Description                           |  | Encumbrances |  | Land         |           | Buildings and Improvements |   | Costs Capitalized Subsequent To Acquisition        |  | Land |           | Buildings and Improvements |   | Construction in Progress |  | Total
|ALSTOM POWER  KNOXVILLE PROPERTY (a) |  | None         |  | $            | 582,897   |                            | $ | 744,164                                            |  | $    | 6,744,547 |                            | $ | 607,930                  |  | $    
|AVAYA (b)                             |  | None         |  |              | 1,002,723 |                            |   | 4,386,374                                          |  |      | 242,241   |                            |   | 1,051,138                |  |      
|360 INTERLOCKEN (c)                   |  | None         |  |              | 1,570,000 |                            |   | 6,733,500                                          |  |      | 748,134   |                            |   | 1,650,070                |  |      
|IOMEGA PROPERTY (d)                   |  | None         |  |              | 597,000   |                            |   | 4,674,624                                          |  |      | 876,459   |                            |   | 641,988                  |  |      
|OHMEDA PROPERTY(e)                    |  | None         |  |              | 2,613,600 |                            |   | 7,762,481                                          |  |      | 528,415   |                            |   | 2,746,894                |  |      
|                                      |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |      
|Total                                 |  |              |  | $            | 6,366,220 |                            | $ | 24,301,143                                         |  | $    | 9,139,796 |                            | $ | 6,698,020                |  | $    
|                                      |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |      



|(a) |  | The Alstom Power  Knoxville Property is a 5.6-acre tract of real property under construction in Knoxville, Tennessee.
|--- |  | ----------------------------------------------------------------------------------------------------------------------

|(b) |  | The Avaya property consists of a one-story office building located in Oklahoma City, Oklahoma.
|--- |  | ----------------------------------------------------------------------------------------------

|(c) |  | The 360 Interlocken property consists of a three-story multi-tenant office building located in Broomfield, Colorado.
|--- |  | --------------------------------------------------------------------------------------------------------------------

|(d) |  | The Iomega Property consists of a one-story warehouse and office building located in Ogden, Utah.
|--- |  | -------------------------------------------------------------------------------------------------

|(e) |  | The Ohmeda Property consists of a two-story office building located in Louisville, Colorado.
|--- |  | --------------------------------------------------------------------------------------------

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





F-50



---



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

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2002



|                             |  | Cost |            | Accumulated Depreciation
|---------------------------- |  | ---- | ---------- | ------------------------
|BALANCE AT DECEMBER 31, 1999 |  | $    | 39,443,604 |                         
|                            
|2000 additions               |  |      | 52,686     |                         
|2000 deletions               |  |      | 0          |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2000 |  |      | 39,496,290 |                         
|                            
|2001 additions               |  |      | 0          |                         
|2001 deletions               |  |      | 0          |                         
|BALANCE AT DECEMBER 31, 2001 |  |      | 39,496,290 |                         
|                             |  |      |            |                         
|                            
|2002 additions               |  |      | 310,869    |                         
|2002 deletions               |  |      | 0          |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2002 |  | $    | 39,807,159 |                         
|                             |  |      |            |                         



F-51



---

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, 2002 and 2001, and the related statements of income, partners capital, and cash flows for each of the
three years in the period ended December 31, 2002. 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, 2002 and 2001, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.



/s/ Ernst & Young LLP


Atlanta, Georgia

March 18, 2003



F-52



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



BALANCE SHEETS

DECEMBER 31, 2002 AND 2001





Assets



|                             |  | 2002 |           | 2001
|---------------------------- |  | ---- | --------- | ----
|Investment in joint ventures |  | $    | 5,247,765 |     
|Due from affiliates          |  |      | 158,157   |     
|                             |  |      |           |     
|Total assets                 |  | $    | 5,405,922 |     
|                             |  |      |           |     



Liabilities and Partners Capital



|                                        |  |   |           | 
|--------------------------------------- |  | - | --------- | 
|Liabilities:                            |  |   |           | 
|Partnership distributions payable       |  | $ | 158,157   | 
|                                        |  |   |           | 
|Partners capital:                      |  |   |           | 
|Wells Fund X                            |  |   | 3,044,345 | 
|Wells Fund XI                           |  |   | 2,203,420 | 
|                                        |  |   |           | 
|Total partners capital                 |  |   | 5,247,765 | 
|                                        |  |   |           | 
|Total liabilities and partners capital |  | $ | 5,405,922 | 
|                                        |  |   |           | 



See accompanying
notes.



F-53



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000







|                                      |  | 2002 |         | 2001 |   | 2000   
|------------------------------------- |  | ---- | ------- | ---- | - | -------
|Equity in income of joint ventures    |  | $    | 431,094 |      | $ | 434,257
|Expenses                              |  |      | 0       |      |   | 0      
|                                      |  |      |         |      |   |        
|Net income                            |  | $    | 431,094 |      | $ | 434,257
|                                      |  |      |         |      |   |        
|Net income allocated to Wells Fund X  |  | $    | 250,088 |      | $ | 251,923
|                                      |  |      |         |      |   |        
|Net income allocated to Wells Fund XI |  | $    | 181,006 |      | $ | 182,334
|                                      |  |      |         |      |   |        



See accompanying
notes.



F-54



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000







|                           |  | WellsFund X |           |   | WellsFund XI |   |           | Total Partners Capital | 
|-------------------------- |  | ----------- | --------- | - | ------------ | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $           | 3,341,081 |   |              | $ | 2,419,534 |                         | 
|Net income                 |  |             | 259,034   |   |              |   | 188,159   |                         | 
|Partnership distributions  |  |             | (340,435  | ) |              |   | (248,420  | )                       | 
|                           |  |             |           |   |              |   |           |                         | 
|Balance, December 31, 2000 |  |             | 3,259,680 |   |              |   | 2,359,273 |                         | 
|Net income                 |  |             | 251,923   |   |              |   | 182,334   |                         | 
|Partnership distributions  |  |             | (353,905  | ) |              |   | (256,146  | )                       | 
|                           |  |             |           |   |              |   |           |                         | 
|Balance, December 31, 2001 |  |             | 3,157,698 |   |              |   | 2,285,461 |                         | 
|Net income                 |  |             | 250,088   |   |              |   | 181,006   |                         | 
|Partnership distributions  |  |             | (363,441  | ) |              |   | (263,047  | )                       | 
|                           |  |             |           |   |              |   |           |                         | 
|Balance, December 31, 2002 |  | $           | 3,044,345 |   |              | $ | 2,203,420 |                         | 
|                           |  |             |           |   |              |   |           |                         | 



See accompanying
notes.



F-55



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000







|                                                                                  |  | 2002 |          |   | 2001 |   |          | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- | 
|Cash flows from operating activities:                                             |  |      |          |   |      |   |          |      | 
|Net income                                                                        |  | $    | 431,094  |   |      | $ | 434,257  |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |          |   |      |   |          |      | 
|Equity in income of joint ventures                                                |  |      | (431,094 | ) |      |   | (434,257 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net cash provided by operating activities                                         |  |      | 0        |   |      |   | 0        |      | 
|Cash flows from investing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions received from joint ventures                                        |  |      | 624,157  |   |      |   | 603,443  |      | 
|Cash flows from financing activities:                                             |  |      |          |   |      |   |          |      | 
|Distributions to joint venture partners                                           |  |      | (624,157 | ) |      |   | (603,443 | )    | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Net change in cash and cash equivalents                                           |  |      | 0        |   |      |   | 0        |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 0        |   |      |   | 0        |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 0        |   |      | $ | 0        |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |          |   |      |   |          |      | 
|Partnership distributions payable                                                 |  | $    | 158,157  |   |      | $ | 155,826  |      | 
|                                                                                  |  |      |          |   |      |   |          |      | 



See accompanying
notes.





F-56



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS





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



Organization and Business



In 1995, 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 on July 15, 1998 to acquire, develop, operate, and sell 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 the Wells OP in the ownership of the Fairchild
Building.



On July 27, 1998, the 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 the
Wells OP in the ownership of the Cort Building.



Basis of Presentation



The Joint Venture does not control the operations of Wells/Freemont Associates or Wells/Orange County Associates. Accordingly, investments in these 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, as further described in Note 3.



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.



F-57



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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.



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. 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 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.



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.



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.



F-58



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





|2. |  | 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 the lesser of (a) fees that would be paid to a comparable outside firm or (b) 4.5% of the gross revenues
generally paid over the life of the lease plus a separate competitive fee for the one-time initial lease-up of newly constructed properties generally paid in conjunction with the receipt of the first months rent. In the case of commercial
properties which are leased on a long-term net basis (ten or more years), the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of
3% of the gross revenues on each lease payable over the first five full years of the original lease term.



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.



Wells Capital, Inc., an affiliate of Wells Partners, L.P, and its affiliates perform certain administrative services for the various Wells
Real Estate Funds and joint ventures, such as accounting and other general 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.



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.



F-59



---

FUND X AND FUND XI ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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



The following information summarizes the financial position of Wells/Freemont Associates and Wells/Orange County Associates as of December
31, 2002 and 2001, and the results of operations for the years ended December 31, 2002, 2001 and 2000:



|                               |  | Total Assets |            | Total Liabilities |   | Total Equity |  | Joint Ventures Investment
|------------------------------ |  | ------------ | ---------- | ----------------- | - | ------------ |  | --------------------------
|                               |  | 2002         |            | 2001              |   | 2002         |  | 2001                      
|Wells/Fremont Associates       |  | $            | 8,408,379  |                   | $ | 8,695,659    |  | $                         
|Wells/Orange County Associates |  |              | 6,244,843  |                   |   | 6,478,472    |  |                           
|                               |  |              |            |                   |   |              |  |                           
|                               |  | $            | 14,653,222 |                   | $ | 15,174,131   |  | $                         
|                               |  |              |            |                   |   |              |  |                           



|                               |  | Total Revenues |           | Net Income |   | Joint Ventures Share of Net Income
|------------------------------ |  | -------------- | --------- | ---------- | - | -----------------------------------
|                               |  | 2002           |           | 2001       |   | 2000                               
|Wells/Fremont Associates       |  | $              | 905,615   |            | $ | 907,673                            
|Wells/Orange County Associates |  |                | 846,030   |            |   | 813,299                            
|                               |  |                |           |            |   |                                    
|                               |  | $              | 1,751,645 |            | $ | 1,720,972                          
|                               |  |                |           |            |   |                                    



F-60



---



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, 2002 and
2001, and the related statements of income, partners capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audit 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, 2002 and 2001, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2002, 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

March 18, 2003



F-61



---



The Wells
Fund XI-Fund XII-REIT Joint Venture

(A Georgia Joint Venture)



Balance Sheets

December 31, 2002 and 2001





|Assets                                                                                               
|-----------------------------------------------------------------------------------------------------
|                                                                                                     
|Real estate assets, at cost:                                                                         
|Land                                                                                                 
|Building and improvements, less accumulated depreciation of $3,784,766 in 2002 and
$2,692,116 in 2001
|                                                                                                     
|Total real estate assets                                                                             
|Cash and cash equivalents                                                                            
|Accounts receivable, net                                                                             
|Other assets                                                                                         
|                                                                                                     
|Total assets                                                                                         
|                                                                                                     
|                                                                                                     
|Liabilities and Partners Capital                                                                    
|Liabilities:                                                                                         
|Accounts payable and refundable security deposits                                                    
|Partnership distributions payable                                                                    
|                                                                                                     
|Total liabilities                                                                                    
|                                                                                                     
|Partners capital:                                                                                   
|Wells Fund XI                                                                                        
|Wells Fund XII                                                                                       
|Wells OP                                                                                             
|                                                                                                     
|Total partners capital                                                                              
|                                                                                                     
|Total liabilities and partners capital                                                              
|                                                                                                     



See accompanying
notes



F-62



---



The Wells
Fund XI-Fund XII-REIT Joint Venture

(A Georgia Joint Venture)



Statements of Income

For the Years Ended December 31, 2002, 2001 and 2000





|                                       |  | 2002 |           | 2001 |   | 2000     
|-------------------------------------- |  | ---- | --------- | ---- | - | ---------
|Revenues:                              |  |      |           |      |   |          
|Rental income                          |  | $    | 3,359,469 |      | $ | 3,346,227
|Reimbursement                          |  |      | 63,432    |      |   | 114,066  
|Interest income                        |  |      | 8,001     |      |   | 24,480   
|Other income                           |  |      | 24,389    |      |   | 360      
|                                       |  |      |           |      |   |          
|                                       |  |      | 3,455,291 |      |   | 3,485,133
|                                       |  |      |           |      |   |          
|Expenses:                              |  |      |           |      |   |          
|Depreciation                           |  |      | 1,092,650 |      |   | 1,092,853
|Management and leasing fees            |  |      | 164,576   |      |   | 156,987  
|Operating costs                        |  |      | 133,638   |      |   | 86,617   
|Joint Venture administration           |  |      | 83,190    |      |   | 65,765   
|Legal and accounting                   |  |      | 19,142    |      |   | 18,000   
|Bad debt expense                       |  |      | 229,159   |      |   | 0        
|                                       |  |      |           |      |   |          
|                                       |  |      | 1,722,355 |      |   | 1,420,222
|                                       |  |      |           |      |   |          
|Net income                             |  | $    | 1,732,936 |      | $ | 2,064,911
|                                       |  |      |           |      |   |          
|Net income allocated to Wells Fund XI  |  | $    | 453,128   |      | $ | 539,930  
|                                       |  |      |           |      |   |          
|Net income allocated to Wells Fund XII |  | $    | 296,142   |      | $ | 352,878  
|                                       |  |      |           |      |   |          
|Net income allocated to Wells OP       |  | $    | 983,666   |      | $ | 1,172,103
|                                       |  |      |           |      |   |          



See accompanying
notes.



F-63



---



The Wells
Fund XI-Fund XII-REIT Joint Venture

(A Georgia Joint Venture)



Statements of Partners Capital

For the Years Ended December 31, 2002, 2001 and 2000





|                           |  | Wells Fund XI |           |   | Wells Fund XII |   |           | Wells OP |  |   | Total Partners Capital |  
|-------------------------- |  | ------------- | --------- | - | -------------- | - | --------- | -------- |  | - | ----------------------- | -
|Balance, December 31, 1999 |  | $             | 8,365,852 |   |                | $ | 5,467,634 |          |  | $ | 18,160,970              |  
|Net income                 |  |               | 543,497   |   |                |   | 355,211   |          |  |   | 1,179,848               |  
|Partnership distributions  |  |               | (761,088  | ) |                |   | (497,421  | )        |  |   | (1,652,203              | )
|                           |  |               |           |   |                |   |           |          |  |   |                         |  
|Balance, December 31, 2000 |  |               | 8,148,261 |   |                |   | 5,325,424 |          |  |   | 17,688,615              |  
|Net income                 |  |               | 539,930   |   |                |   | 352,878   |          |  |   | 1,172,103               |  
|Partnership distributions  |  |               | (770,545  | ) |                |   | (503,599  | )        |  |   | (1,672,733              | )
|                           |  |               |           |   |                |   |           |          |  |   |                         |  
|Balance, December 31, 2001 |  |               | 7,917,646 |   |                |   | 5,174,703 |          |  |   | 17,187,985              |  
|Net income                 |  |               | 453,128   |   |                |   | 296,142   |          |  |   | 983,666                 |  
|Partnership distributions  |  |               | (834,174  | ) |                |   | (545,176  | )        |  |   | (1,810,858              | )
|                           |  |               |           |   |                |   |           |          |  |   |                         |  
|Balance, December 31, 2002 |  | $             | 7,536,600 |   |                | $ | 4,925,669 |          |  | $ | 16,360,793              |  
|                           |  |               |           |   |                |   |           |          |  |   |                         |  



See accompanying
notes.



F-64



---



The Wells
Fund XI-Fund XII-REIT Joint Venture

(A Georgia Joint Venture)



Statements of Cash Flows

For the Years Ended December 31, 2002, 2001 and 2000





|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 1,732,936  |   |      | $ | 2,064,911  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 1,092,650  |   |      |   | 1,092,853  |      | 
|Amortization of deferred leasing costs                                            |  |      | 13,787     |   |      |   | 13,787     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable, net                                                          |  |      | 235,315    |   |      |   | (280,708   | )    | 
|Other assets                                                                      |  |      | 26,486     |   |      |   | 0          |      | 
|Accounts payable and refundable security deposits                                 |  |      | 43,054     |   |      |   | 432        |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 1,411,292  |   |      |   | 826,364    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 3,144,228  |   |      |   | 2,891,275  |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investment in deferred lease acquisition costs                                    |  |      | (13,787    | ) |      |   | (13,787    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Distributions to joint venture partners                                           |  |      | (3,311,952 | ) |      |   | (2,642,772 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (181,511   | ) |      |   | 234,716    |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 775,805    |   |      |   | 541,089    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 594,294    |   |      | $ | 775,805    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                                   |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 635,756    |   |      | $ | 757,500    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Write-off of fully amortized deferred leasing costs                               |  | $    | 13,787     |   |      | $ | 13,787     |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



See accompanying
notes.



F-65



---



THE WELLS
FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS

December 31, 2002, 2001, and 2000



|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 (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 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.



F-66



---

THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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. 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 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.



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.



Other Assets



Other assets are comprised of refundable security deposits,
which 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.



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 $229,159 and $0 have been
recorded as of December 31, 2002 and 2001, respectively.



F-67



---

THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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



The Joint Venture incurred management and leasing fees of
$164,576, $156,987 and $157,236 for the years ended December 31, 2002, 2001 and 2000, respectively.



Wells Capital, Inc., an affiliate of Wells Partners, L.P., and its affiliates perform certain administrative services for the various
Wells Real Estate Funds and joint ventures, such as accounting and other general administration, and incur the related expenses. Such expenses are allocated among these entities based on time spent on each entity by individual personnel. During
2002, 2001 and 2000, the Joint Venture reimbursed $83,190, $65,765 and $36,707, 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.



F-68



---

THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS(Continued)





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



The future minimum rental income due from the Joint Venture under noncancelable operating leases at December 31, 2002 is as follows:



| |  | Year ended December 31: |  |  
| |  | ----------------------- |  | -
| |  | 2003                    |  | $
| |  | 2004                    |  |  
| |  | 2005                    |  |  
| |  | 2006                    |  |  
| |  | 2007                    |  |  
| |  | Thereafter              |  |  
| |  |                         |  |  
| |  |                         |  | $
| |  |                         |  |  



Four
tenants contributed approximately 32%, 25%, 25%, and 16% of rental income for the year ended December 31, 2002. In addition, three tenants will contribute approximately 36%, 34%, and 30% of future minimum rental income.



F-69



---

THE WELLS FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION



DECEMBER 31, 2002



|                         |  | Encumbrances |      | Initial Cost |                            | Costs Capitalized Subsequent To Acquisition |   | Gross Amount at Which Carried at December 31, 2002 |  | Accumulated Depreciation   |           | Date of Construction     |   | Date Acquired |  | Life on which Depreciation is Computed (e)
|------------------------ |  | ------------ | ---- | ------------ | -------------------------- | ------------------------------------------- | - | -------------------------------------------------- |  | -------------------------- | --------- | ------------------------ | - | ------------- |  | ------------------------------------------
|Description              |  |              | Land |              | Buildings and Improvements |                                             |   | Land                                               |  | Buildings and Improvements |           | Construction in Progress |   | Total         |  |                                           
|EYBL CARTEX PROPERTY (a) |  | None         |      | $            | 330,000                    |                                             | $ | 4,791,828                                          |  | $                          | 213,411   |                          | $ | 343,750       |  | $                                         
|SPRINT BUILDING (b)      |  | None         |      |              | 1,696,000                  |                                             |   | 7,850,726                                          |  |                            | 397,783   |                          |   | 1,766,667     |  |                                           
|JOHNSON MATTHEY (c)      |  | None         |      |              | 1,925,000                  |                                             |   | 6,131,392                                          |  |                            | 335,685   |                          |   | 2,005,209     |  |                                           
|GARTNER PROPERTY (d)     |  | None         |      |              | 895,844                    |                                             |   | 7,451,760                                          |  |                            | 347,820   |                          |   | 933,171       |  |                                           
|                         |  |              |      |              |                            |                                             |   |                                                    |  |                            |           |                          |   |               |  |                                           
|Total                    |  |              |      | $            | 4,846,844                  |                                             | $ | 26,225,706                                         |  | $                          | 1,294,699 |                          | $ | 5,048,797     |  | $                                         
|                         |  |              |      |              |                            |                                             |   |                                                    |  |                            |           |                          |   |               |  |                                           



|(a) |  | The EYBL CarTex Property consists of a one-story manufacturing and office building located in Fountain Inn, South Carolina.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------

|(b) |  | The Sprint Building consists of a three-story office building located in Leawood, Kansas.
|--- |  | -----------------------------------------------------------------------------------------

|(c) |  | The Johnson Matthey Property consists of one-story research and development office and warehouse building located in Chester County, Pennsylvania.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

|(d) |  | The Gartner Property consists of a two-story office building located in Ft. Myers, Florida.
|--- |  | -------------------------------------------------------------------------------------------

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





F-70



---



THE WELLS
FUND XI-FUND XII-REIT JOINT VENTURE

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2002



|                             |  | Cost |            | Accumulated Depreciation
|---------------------------- |  | ---- | ---------- | ------------------------
|BALANCE AT DECEMBER 31, 1999 |  | $    | 32,367,249 |                         
|                            
|2000 additions               |  |      | 0          |                         
|2000 deletions               |  |      | 0          |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2000 |  |      | 32,367,249 |                         
|                            
|2001 additions               |  |      | 0          |                         
|2001 deletions               |  |      | 0          |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2001 |  |      | 32,367,249 |                         
|                            
|2002 additions               |  |      | 0          |                         
|2002 deletions               |  |      | 0          |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2002 |  | $    | 32,367,249 |                         
|                             |  |      |            |                         



F-71