##### Index to Financial Statements

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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(Mark one)



| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2005 or



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 0-23719



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WELLS REAL ESTATE FUND X, L.P.

(Exact name of registrant as specified in its
charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Georgia                                                        |  | 58-2250093                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|6200 The Corners Parkway, Norcross, Georgia                    |  | 30092-3365                          
|(Address of principal executive offices)                       |  | (Zip Code)                          
|                                                               | 
|Registrants telephone number including area code              |  | (770) 449-7800                      

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



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     

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



|                 |  |                 
|---------------- |  | ----------------
|CLASS A UNITS    |  | CLASS B UNITS   
|(Title of class) |  | (Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.  Yes ̈No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.  Yes ̈No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ̈No  x



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##### Index to Financial Statements

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-K of Wells Real Estate Fund X, L.P. (the Partnership) other than historical facts may be considered
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, in particular, statements about our plans, strategies, and
prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a
guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as may, will, expect, intend,
anticipate, estimate, believe, continue, or other similar words. Specifically, we consider, among others, statements concerning future operating results and cash flows, our ability to meet future
obligations, and the amount and timing of any future distributions to limited partners to be forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this
report is filed with the Securities and Exchange Commission. We make no representations or warranties (express or implied) about the accuracy of any such forward-looking statements contained in this Form 10-K, and we do not intend to publicly update
or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Any such forward-looking statements are
subject to unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or
impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide dividends to
stockholders, and maintain the value of our real estate properties, may be significantly hindered. Contained in Item 1A are some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to
differ materially from those presented in our forward-looking statements.



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##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.



PART I



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

General

Wells Real Estate Fund X, L.P. (the Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Partners, L.P.
(Wells Partners), a Georgia nonpublic limited partnership, serving as its general partners (collectively, the General Partners). Wells Capital, Inc. (Wells Capital) serves as the corporate general partner of Wells
Partners. Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of Wells Real Estate Funds, Inc. The
Partnership was formed on June 20, 1996 for the purpose of acquiring, developing, owning, operating, improving, leasing, and managing income-producing commercial properties for investment purposes. Upon subscription, limited partners elect to
have their units treated as Class A Units or Class B Units. Limited partners have the right to change their prior elections to have some or all of their units treated as Class A Units or Class B Units one time during each quarterly
accounting period. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations; (b) change the business purpose or investment objectives of the Partnership; and (c) add or
remove a general partner. A majority vote on any of the above-described matters will bind the Partnership without the concurrence of the General Partners. Each limited partnership unit has equal voting rights regardless of class.

On December 31, 1996, the Partnership commenced an offering of up to $35,000,000 of Class A or Class B limited partnership units ($10.00 per unit) pursuant to
a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units on February 4, 1997. The offering was terminated on
December 30, 1997, at which time the Partnership had sold approximately 2,116,099 Class A Units and 596,792 Class B Units representing capital contributions of $27,128,912 from investors who were admitted to the Partnership as limited
partners.

Operating Phases and Objectives

The
Partnership typically operates in the following five life cycle phases and, during which, typically focuses on the following key operating objectives. The duration of each phase is dependent upon various economic, industry, market, and other
internal/external factors. Some overlap naturally exists in the transition from one phase to the next.



| |  |  | Fundraising phase
| | - |  | -----------------

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



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

The period during which the
Partnership invests the capital raised during the fundraising phase, less upfront fees, into the acquisition of real estate assets;



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

The period during which the
Partnership owns and operates its real estate assets during the initial lease terms of the tenants;



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

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



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##### Index to Financial Statements

| |  |  | Disposition-and-liquidation phase
| | - |  | ---------------------------------

The period
during which the Partnership sells its real estate investments, distributes net sale proceeds to the partners, liquidates, and terminates the Partnership.

The Partnership is currently in the holding phase of its life cycle and accordingly will focus resources on managing the Partnerships existing portfolio and locating suitable replacement tenants for vacant space as necessary.

Employees

The Partnership has no direct employees.
The employees of Wells Capital and Wells Management Company, Inc. (Wells Management), an affiliate of the General Partners, perform a full range of real estate services for the Partnership including leasing and property management,
accounting, asset management, and investor relations. See Item 13, Certain Relationships and Related Transactions, for a summary of the fees paid to the General Partners and their affiliates during the year ended December 31,
2005.

Insurance

Wells Management carries
comprehensive liability and extended coverage with respect to the properties we own through our investments in the joint ventures described in Item 2. In the opinion of management, our properties are adequately insured.

Competition

We will experience competition for tenants from owners
and managers of competing projects which may include the General Partners and their affiliates. As a result, in connection with negotiating leases, we may offer rental concessions, reduced charges for tenant improvements, and other inducements, all
of which may have an adverse impact on results of operations. We are also in competition with sellers of similar properties to locate suitable purchasers for its properties.

Economic Dependency

We have engaged Wells Capital and Wells Management to provide certain essential services,
including supervision of the management and leasing of our properties, asset acquisition and disposition services, as well as other administrative responsibilities for us including accounting services, investor communications and relations. These
agreements are terminable by either party upon 60 days written notice. As a result of these relationships, we are dependent upon Wells Capital and Wells Management.

Wells Capital and Wells Management are all owned and controlled by Wells Real Estate Funds, Inc. (WREF). The operations of Wells Capital and Wells Management represent substantially all of the business of
WREF. Accordingly, we focus on the financial condition of WREF when assessing the financial condition of Wells Capital and Wells Management. In the event that WREF was to become unable to meet its obligations as they become due, we might be required
to find alternative service providers.

Future net income generated by WREF will be largely dependent upon the amount of fees earned by Wells Capital and
Wells Management based on, among other things, the level of investor proceeds raised from the sale of common stock for certain WREF-sponsored programs and the volume of future acquisitions and dispositions of real estate assets by WREF-sponsored
programs. As of December 31, 2005, we believe that WREF generates adequate cash flow from operations and has adequate liquidity available in the form of cash on hand and current receivables necessary to meet its current and future obligations
as they become due.

Additionally, we are dependent upon the ability of our current tenants to pay their contractual rent amounts as the rents become due.
The inability of a tenant to pay future rental amounts would have a negative impact on our results of operations. If certain situations prevent our tenants from paying contractual rents, this could result in a material adverse impact on our results
of operations.



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##### Index to Financial Statements

Proxy to Liquidate

Under Section 20.2 of the partnership agreement, limited partners holding 10% or more of the outstanding units have the right, at any time commencing eight years after the termination of the Partnerships offering of units
(December 30, 2005), to provide a written request to the General Partners directing the General Partners to formally proxy the limited partners to determine whether the assets of the Partnership should be liquidated.

Litigation Against Related Parties

During early 2004, a putative
class action complaint was filed against, among others, Leo. F. Wells, III, one of our General Partners, Wells Capital, the corporate general partner of Wells Partners, our other general partner, and Wells Management (Hendry et al. v. Leo F.
Wells, III et al., Superior Court of Gwinnett County, Georgia, Civil Action No. 04-A-2791-2). The Court granted the plaintiffs motion to permit voluntary dismissal of this suit, and the case was subsequently dismissed without
prejudice. In November 2004, the same plaintiffs filed a second putative class action complaint against, among others, Mr. Wells, Wells Capital, and Wells Management (Hendry et al. v. Leo F. Wells, III et al., Superior Court of Gwinnett
County, Georgia Civil Action No. 04A-13051-6). The second action alleges, among other things, that: (i) Mr. Wells and Wells Capital breached their fiduciary duties to the limited partners of Wells Real Estate Fund I (Fund
I), a previously syndicated real estate partnership having common general partners, in connection with certain disclosures and prior actions relating to the distribution of net sale proceeds, (ii) the defendants breached an alleged
contract arising out of a June 2000 consent solicitation to the limited partners of Fund I relating to an alleged waiver of deferred management fees, and (iii) certain misrepresentations and omissions in an April 2002 consent solicitation to
the limited partners of Fund I caused that consent solicitation to be materially misleading. The plaintiffs seek, among other remedies, judgment against Mr. Wells and Wells Capital, jointly and severally, in an amount to be proven at trial;
punitive damages; disgorgement of fees earned by the General Partners; enforcement of the alleged contract relating to the alleged waiver of deferred management fees; and an award to the plaintiffs of their attorneys fees, costs, and expenses.
On January 28, 2005, the defendants filed motions for summary judgment and motions to dismiss the plaintiffs claims. Pursuant to orders entered July 1, 2005, the Court granted the defendants motions to dismiss and for summary
judgment on all counts in the complaint. Thus, this action has now been dismissed, subject to the plaintiffs right to file a notice of appeal within the required time period. On August 3, 2005, the plaintiffs filed a motion requesting the
Court to vacate and re-enter the orders to give the plaintiffs an opportunity to file a motion for reconsideration or notice of appeal. On February 15, 2006, the Court heard argument on the plaintiffs motion to vacate and to re-enter the
judgments previously entered on July 1, 2005. Following the argument, the Court stated orally from the bench that he would grant the motion, so the judgments could be re-entered to allow the plaintiffs thirty days within which to
file a notice of appeal.

Web Site Address

Access to
copies of each of our filings with the Securities and Exchange Commission (the SEC) is available, free of charge, at the http://www.wellsref.com Web site, through a link to the http://www.sec.gov Web site.



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##### Index to Financial Statements

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

Real Estate Risks

Economic and regulatory changes that impact the real estate market generally may cause our operating results to suffer and decrease the value of our real estate
properties.

Our operating results will be subject to risks generally incident to the ownership of real estate, including:



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



| |  |  | changes in supply of or demand for similar or competing properties in an area;
| | - |  | ------------------------------------------------------------------------------



| |  |  | changes in interest rates and availability of permanent mortgage funds, which may render the sale of a property difficult or unattractive;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in tax, real estate, environmental and zoning laws; and
| | - |  | ---------------------------------------------------------------



| |  |  | periods of high interest rates and tight money supply.
| | - |  | ------------------------------------------------------

These and other
reasons may prevent us from being profitable or from realizing growth or maintaining the value of our real estate properties.

General economic
conditions may affect the timing of sale of our properties and the sale price we receive.

We may be unable to sell a property if or when we decide to
do so. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates, and other factors, including supply and demand for real estate investments, all of which are beyond our
control. We cannot predict whether we will be able to sell any property for the price or on terms which are acceptable to us. Further, we cannot predict the length of time which will be needed to find a willing purchaser and to close the sale of a
property.

Adverse economic conditions in the geographic regions in which we own properties may negatively impact your overall returns.

Adverse economic conditions in the geographic regions in which we own our properties could affect the real estate values in this area or the business of our tenants if
any of our tenants rely upon the local economy for their revenues. Therefore, changes in local economic conditions could reduce our income and distributions to limited partners or the amounts we could otherwise receive upon the sale of a property in
a negatively affected region.

Adverse economic conditions affecting the particular industries of the tenants of our properties may negatively impact
your overall returns.

Adverse economic conditions affecting a particular industry of one or more of our tenants, such as the technology industry, could
affect the financial ability of one or more of our tenants to make payments under their leases, which could cause delays in our receipt of rental revenues or a vacancy in one or more of our properties for a period of time. Therefore, changes in
economic conditions of the particular industry of one or more of our tenants could reduce our income and distributions to limited partners and the value of one or more of our properties at the time of sale of such properties.

We are dependent on our tenants for substantially all of our revenue, so our success is materially dependent on the financial stability of our tenants.

Most of our properties are occupied by only a few tenants and, therefore, the success of our investments are materially dependent on the financial
stability of our tenants. Lease payment defaults by tenants could cause us to reduce the amount of distributions to holders of Class A Units. A default of a tenant on its lease payments to us



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##### Index to Financial Statements

would cause us to lose the revenue from the property. In the event of a default, we may experience delays in enforcing our rights as landlord and may incur
substantial costs in protecting our investment and re-letting our property. If a lease is terminated, we cannot assure you that we will be able to lease the property for the rent previously received or sell the property without incurring a loss.

We currently have a vacancy issue with one of our properties which could reduce or eliminate cash distributions to limited partners.

Because of the vacancy issue, we have expended, or anticipate that we will be required to expend in the future, substantial funds for tenant improvements and tenant
refurbishments to the vacated space and other lease-up costs. If these vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash to be distributed to investors holding Class A Units, if any. In
addition, the resale values of these properties are currently diminished because the market value depends principally upon the value of the leases in place at such properties.

Your investment in units are subject to greater risk because we lack a diversified property portfolio.

Because we
own interests in a limited number of properties, your investment in units are subject to a greater risk of loss. There is a greater risk that you will lose money in your investment because our portfolio of properties is not diverse by geographic
location, property type, or industry group of tenants.

Our future financial success depends on only a few tenants.

The revenues generated by these tenants are substantially reliant upon the financial condition of these tenants and, accordingly, any event of bankruptcy, insolvency, or
a general downturn in the business of any of these tenants may result in the failure or delay of such tenants rental payments, which may have a substantial adverse effect on our financial performance.

We depend on tenants for our revenue. Accordingly, lease terminations and/or tenant default could reduce our net income and limit our ability to make distributions to
our stockholders.

The success of our investments materially depends on the financial stability of our tenants. A default or termination by a
significant tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a
mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-letting our property. If significant leases are terminated or
defaulted upon, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. These events could cause us to reduce the amount of distributions to limited partners.

If one or more of our tenants file bankruptcy, we may be precluded from collecting all sums due.

If one or more of our tenants, or the guarantor of a tenants lease, commences, or has commenced against it, any proceeding under any provision of the federal Bankruptcy Code, as amended, or any other legal or
equitable proceeding under any bankruptcy, insolvency, rehabilitation, receivership, or debtors relief statute or law (bankruptcy proceeding), we may be unable to collect sums due under relevant leases. Any or all of the tenants, or a
guarantor of a tenants lease obligations, could be subject to a bankruptcy proceeding. Such a bankruptcy proceeding may bar our efforts to collect pre-bankruptcy debts from these entities or their properties, unless we are able to obtain an
enabling order from the bankruptcy court. If a lease is rejected by a tenant in bankruptcy, we would only have a general unsecured claim against the tenant, and may not be entitled to any further payments under the lease. A tenants or lease
guarantors bankruptcy proceeding could hinder or delay efforts to collect past due balances under relevant leases, and could ultimately preclude collection of these sums. Such an event



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##### Index to Financial Statements

could cause a decrease or cessation of rental payments which would mean a reduction in our cash flow and the amount available for distribution to limited
partners holding Class A Units. In the event of a bankruptcy proceeding, we cannot assure you that the tenant or its trustee will assume our lease. If a given lease, or guaranty of a lease, is not assumed, our cash flow and the amounts
available for distribution to limited partners holding Class A Units may be adversely affected.

We may not have funding for future tenant
improvements which may reduce your returns and make it difficult to attract one or more new tenants.

When a tenant at one of our properties does not
renew its lease or otherwise vacates its space in one of our buildings, it is likely that in order to attract one or more new tenants, we will be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated
space and other lease-up costs. Substantially all of our net offering proceeds available for investment have been used for investment in Partnership properties, and we do not anticipate that we will maintain permanent working capital reserves. We
also have not identified a funding source to provide funds which may be required in the future for tenant improvements, tenant refurbishments, and other lease-up costs in order to attract new tenants. We cannot assure you that any such source of
funding will be available to us for such purposes in the future. In the event that we are required to use net cash from operations to fund such tenant improvements, tenant refurbishments, and other lease-up costs, cash distributions to limited
partners holding Class A Units will be reduced or eliminated for potentially extended periods of time.

A property that incurs a vacancy could be
difficult to sell or lease.

A property may incur a vacancy either by the continued default of a tenant under its lease or the expiration of one of our
leases. Our properties may be leased to a single tenant and/or may be specifically suited to the particular needs of certain tenants based on the type of business the tenant operates. If a vacancy on any of our properties continues for a long period
of time, we may suffer reduced revenues resulting in less cash to be distributed to investors holding Class A Units. In addition, the resale value of the property could be diminished because the market value of a particular property will depend
principally upon the value of the leases of such property.

Uninsured losses relating to real property or excessively expensive premiums for insurance
coverage could reduce our net income.

Our General Partners will attempt to obtain adequate insurance on all of our properties to cover casualty losses.
However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution, or environmental matters that are uninsurable or not economically insurable, or may be
insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorism acts could sharply increase the premiums we pay for coverage against property and casualty claims. We may not have adequate
coverage for such losses. If any of our properties incur a casualty loss that is not fully insured, the value of our assets will be reduced by such uninsured loss. In addition, other than reserves of net cash from operations we may establish, we
have no source of funding to repair or reconstruct any uninsured damaged property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to limited
partners.

Uncertain market conditions and the broad discretion of our General Partners relating to the future disposition of properties could adversely
affect the return on your investment.

We generally will hold the various real properties in which we invest until such time as the General Partners
determine that the sale or other disposition thereof appears to be advantageous to achieve our investment objectives or until it appears that such objectives will not be met. Our General Partners intend to sell properties acquired for development
after holding such properties for a minimum period of 10 years from the date the



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##### Index to Financial Statements

development is completed, and intend to sell existing income-producing properties within 10 to 12 years after their acquisition, or as soon thereafter as
market conditions permit. This is the period of time it typically takes to realize significant appreciation of the type of property in which we traditionally invest. However, our General Partners may exercise their discretion as to whether and when
to sell a property, and we will have no obligation to sell properties at any particular time, except upon the termination of the Partnership as specified in the partnership agreement, or earlier if a majority of you vote to liquidate the Partnership
in response to a formal proxy to liquidate. We cannot predict with any certainty the various market conditions affecting real estate investments which will exist at any particular time in the future. Due to the uncertainty of market conditions which
may affect the future disposition of our properties, we cannot assure you that we will be able to sell our properties at a profit in the future. Accordingly, the timing of liquidation of the Partnership and the extent to which you will receive cash
distributions and realize potential appreciation on our real estate investments will be dependent upon fluctuating market conditions.

If any
environmentally hazardous material is determined to exist on a property owned by the Partnership, our operating results could be adversely affected.

Under various federal, state and local environmental laws, ordinances, and regulations, a current or previous owner or operator of real property may be liable for the cost of removal or remediation of hazardous or toxic substances on,
under, or in such property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in
which property may be used or businesses may be operated, and these restrictions may require expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain
circumstances, by private parties. In connection with the acquisition and ownership of our properties, we may be potentially liable for such costs. The cost of defending against claims of liability, complying with environmental regulatory
requirements, or remediating any contaminated property could materially adversely affect the business, assets, or results of operations of the Partnership and, consequently, amounts available for distribution to limited partners holding Class A
Units.

The Partnership and/or certain other prior Wells public limited partnerships sponsored by our General Partners have sold real estate properties
for a sale price less than the original purchase price.

Certain of the real estate properties previously purchased by the Partnership and other Wells
public limited partnerships sponsored by the General Partners have not appreciated to the levels anticipated at the time of purchase. Recently some of these properties have been sold by such programs at purchase prices below the prices paid for such
properties. We cannot guarantee that any of our properties will appreciate in value.

General Investment Risks

The Georgia Revised Uniform Limited Partnership Act (GRULPA) does not grant you any specific voting rights and your rights are limited under our partnership agreement.

A vote of a majority in interest of the limited partners is sufficient to take the following significant Partnership actions:



| |  |  | to amend our partnership agreement;
| | - |  | -----------------------------------



| |  |  | to change our business purpose or our investment objectives;
| | - |  | ------------------------------------------------------------



| |  |  | to remove our General Partners; or
| | - |  | ----------------------------------



| |  |  | to authorize a merger or a consolidation of the Partnership.
| | - |  | ------------------------------------------------------------

These are
your only significant voting rights granted under our partnership agreement. In addition, GRULPA does not grant you any specific voting rights. Therefore, your voting rights are severely limited.



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##### Index to Financial Statements

You are bound by the majority vote on matters on which you are entitled to vote.

You may approve any of the above actions by majority vote of the limited partners. Therefore, you are bound by such majority vote even if you do not vote with the
majority on any of these actions.

Under our partnership agreement, we are required to indemnify our General Partners under certain circumstances which
may reduce returns to our limited partners.

Under our partnership agreement and subject to certain limitations, the Partnership is required to
indemnify our General Partners from and against losses, liabilities, and damages relating to or arising out of any action or inaction on behalf of the Partnership done in good faith and in the best interest of the Partnership. If substantial and
expensive litigation should ensue and the Partnership is obligated to indemnify one or both General Partners, we may be forced to use substantial funds to do so, which may reduce the return on your investment.

Payment of fees to our General Partners and their affiliates will reduce cash available for distributions to our limited partners.

Our General Partners and their affiliates perform services for us in connection with the management and leasing of our properties. Our affiliates may receive property
management and leasing fees of 6.0% of gross revenues in connection with the commercial properties we own. In addition, we will reimburse our General Partners and their affiliates for the administrative services necessary to our prudent operation,
which includes actual costs of goods, services, and materials used for or by the Partnership. These fees and reimbursements will reduce the amount of cash available for capital expenditures to our properties or distributions to our limited partners.

The availability and the timing of cash distributions are uncertain.

We cannot assure you that sufficient cash will be available to make distributions to you from either net cash from operations or proceeds from the sale of properties. We bear all expenses incurred in connection with
our operations, which are deducted from cash funds generated by operations prior to computing the amount of net cash from operations to be distributed to our general and limited partners. In addition, our General Partners, in their discretion, may
retain all or any portion of net cash generated from our operations and/or proceeds from the sale of our properties for tenant improvements, tenant refurbishments, and other lease-up costs or for working capital reserves.

Gains and distributions upon sale of our properties are uncertain.

Although gains from the sale of properties typically represent a substantial portion of any profits attributable to real estate investments, we cannot assure you that we will realize any gains on the sale of our properties. In any event,
you should not expect distribution of such proceeds to occur during the early years of our operations. We generally will not sell properties until at least 10 to 12 years after the acquisition of the properties and our General Partners may exercise
their discretion as to whether and when to sell a property; therefore, we have no obligation to sell properties at any particular time. Further, receipt of the full proceeds of such sales may be extended over a substantial period of time following
the sales. In addition, the amount of taxable gain allocated to you with respect to the sale of a Partnership property could exceed the cash proceeds received from such sale. While the net proceeds from the sale of a property will generally be
distributed to investors, the General Partners, in their sole discretion, may not make such distribution if such proceeds are used to:



| |  |  | purchase land underlying any of our properties;
| | - |  | -----------------------------------------------



| |  |  | buy out the interest of any co-venturer or joint venture partner in a property which is jointly owned;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | establish working capital reserves; or
| | - |  | --------------------------------------



| |  |  | make repairs, maintenance, tenant improvements, capital improvements, or other expenditures to any of our existing properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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##### Index to Financial Statements

We are uncertain of our sources for funding of future capital needs.

Substantially all of the gross proceeds of the offering were used to invest in properties and to pay various fees and expenses. In addition, we do not anticipate that we
will maintain any permanent working capital reserves. Accordingly, in the event that we develop a need for additional capital in the future, such as the funding of tenant improvements, tenant refurbishments, or other lease-up costs, we have not
identified any sources for such funding, and we cannot assure you that any sources of funding will be available to us for potential capital needs in the future.

We may need to reserve net cash from operations for future tenant improvements which may reduce your returns.

We may be required to expend
substantial funds for tenant improvements and tenant refurbishments to vacated space and other lease-up costs. Substantially all of our net offering proceeds available for investment will be used for investment in Partnership properties, and we do
not anticipate that we will maintain permanent working capital reserves. We also have no identified funding source to provide funds which may be required in the future for tenant improvements, tenant refurbishments, and other lease-up costs in order
to attract new tenants. We cannot assure you that any such source of funding will be available to us for such purposes in the future. In the event that we are required to use net cash from operations to fund such tenant improvements, tenant
refurbishments, and other lease-up costs, cash distributions to limited partners holding Class A Units will be reduced or eliminated for potentially extended periods of time.

Marketability and Transferability Risks

There is no public trading market for your units.

There is no public market for your units, and we do not anticipate that any public trading market for your units will ever develop. If you attempt to sell your units, you
would likely do so at substantially discounted prices on the secondary market. Further, our partnership agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any
transfer which may cause us to be classified as a publicly traded partnership as defined in Section 7704 of the Internal Revenue Code shall be deemed void and shall not be recognized. Because classification of the Partnership as a
publicly traded partnership may significantly decrease the value of your units, our General Partners intend to use their authority to the maximum extent possible to prohibit transfers of units which could cause us to be classified as a
publicly traded partnership.

Your units have limited transferability and lack liquidity due to restrictions under state regulatory laws and
our partnership agreement.

You are limited in your ability to transfer your units. Our partnership agreement and certain state regulatory agencies have
imposed restrictions relating to the number of units you may transfer. In addition, the suitability standards applied to you upon the purchase of your units may also be applied to persons to whom you wish to transfer your units. Accordingly, you may
find it difficult to sell your units for cash or if you are able to sell your units, you may have to sell your units at a substantial discount. You may not be able to sell your units in the event of an emergency, and your units are not likely to be
accepted as collateral for a loan.

Our estimated unit valuations should not be viewed as an accurate reflection of the value of the limited
partners units.

The estimated unit valuations contained in this annual report on Form 10-K should not be viewed as an accurate reflection of the
value of the limited partners units, what limited partners might be able to sell their units for, or the fair market value of the Partnerships properties, nor do they necessarily 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. There is no established public trading market for the Partnerships limited



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##### Index to Financial Statements

partnership units, and it is not anticipated that a public trading market for the units will ever develop. We did not obtain any third-party appraisals of
our properties in connection with these estimated unit valuations. In addition, property values are subject to change and could decline in the future. The valuations performed by the General Partners are estimates only, and are based on a number of
assumptions which may not be accurate or complete and may or may not be applicable to any specific limited partnership units. Further, these estimated valuations assume, and are applicable only to, limited partners who have made no conversion
elections under the partnership agreement and who purchased their units directly from the Partnership in the Partnerships original public offering of units. It should also be noted that, as properties are sold and the net proceeds from
property sales are distributed to limited partners, the remaining value of the Partnerships portfolio of properties, and resulting value of Partnerships limited partnership units, will naturally decline.

Special Risks Regarding Status of Units

If you hold Class A
Units, you will be allocated more income than cash flow.

Since limited partners holding Class A Units are allocated substantially all of the
Partnerships net income, while substantially all deductions for depreciation and other tax losses are allocated to limited partners holding Class B Units, we expect that those of you who hold Class A Units will be allocated taxable income
in excess of your cash distributions. We cannot assure you that cash flow will be available for distribution in any year.

If you hold Class B Units,
you may not be able to use your passive losses.

Those of you holding Class B Units will be allocated a disproportionately larger share of our
deductions for depreciation and other tax losses. Such losses will be treated as passive losses, which may only be used to offset passive income and may not be used to offset active or portfolio income. Accordingly, you may
receive no current benefit from your share of tax losses unless you are currently being allocated passive income from other sources.

In addition, the
American Jobs Creation Act of 2004 (the Act) added Section 470 to the Internal Revenue Code, which provides for certain limitations on the utilization of losses allocable to leased property owned by a partnership having both taxable
and tax-exempt partners, such as the Partnership. In March 2005, the Internal Revenue Service issued IRS Notice 2005-29 announcing that the IRS would not be applying Section 470 to disallow losses for tax year 2004 based solely on the fact that
a partnership had both taxable and tax-exempt partners. In December 2005, the IRS issued IRS Notice 2006-2 extending the period for transitional relief through the 2005 tax year; however, it is important to note that IRS Notices 2005-29 and 2006-2
provide relief for partnerships only for tax years 2004 and 2005. The IRS has indicated that it is continuing to study the application of Section 470 to partnerships, such as the Partnership, but unless further legislation is enacted which
addresses this issue or some other form of relief from the provisions of Section 470 of the Act is granted, beginning in tax year 2006 and thereafter, passive losses allocable to limited partners holding Class B Units may be used only to offset
passive income generated from the same property or within the same fund.

The desired effect of holding Class A Units or Class B Units may be
reduced depending on how many investors hold each type of unit.

You will be entitled to different rights and priorities as to distributions of cash
flow from operations and net sale proceeds and as to the allocation of depreciation and other tax losses depending upon whether you are holding Class A Units or Class B Units. However, the effect of any advantage associated with holding
Class A Units or Class B Units may be significantly reduced or eliminated, depending upon the ratio of Class A Units to Class B Units during any given period. We will not attempt to restrict the ratio of Class A Units to Class B
Units, and we will not attempt to establish or maintain any particular ratio.



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##### Index to Financial Statements

Management Risks

You must rely on our General Partners for management of our business.

Our General Partners make all decisions with respect to the
management of the Partnership. Limited partners have no right or power to take part in the management of the Partnership, except through the exercise of limited voting rights. Therefore, you must rely almost entirely on our General Partners for
management of the Partnership and the operation of its business. Our General Partners may be removed only under certain conditions set forth in our partnership agreement. If our General Partners are removed, they will receive payment equal to the
fair market value of their interests in the Partnership as agreed upon by our General Partners and the Partnership or by arbitration if they are unable to agree.

Leo F. Wells, III has a primary role in determining what is in the best interests of the Partnership and its limited partners.

Leo F.
Wells, III is one of our General Partners and is the president, treasurer, and sole director of Wells Capital, our other General Partner. Therefore, one person has a primary role in determining what is in the best interests of the Partnership and
its limited partners. Although Mr. Wells relies on the input of the officers and other employees of Wells Capital, he ultimately has the authority to make decisions affecting our Partnership operations. Therefore, Mr. Wells alone will
determine the propriety of his own actions, which could result in a conflict of interest when he is faced with any significant decision relating to our Partnership affairs.

Our loss of or inability to obtain key personnel could delay or hinder implementation of our investment strategies, which could limit our ability to make distributions.

Our success depends to a significant degree upon the contributions of Leo F. Wells, III, Douglas P. Williams, and Randall D. Fretz, each of whom would be difficult to
replace. We do not have employment agreements with Messrs. Wells, Williams, or Fretz, and we cannot guarantee that such persons will remain affiliated with us. If any of Wells Capitals key personnel were to cease their affiliation with the
Partnership, we may be unable to find suitable replacement personnel, and our operating results could suffer. We do not intend to maintain key person life insurance on any person. We believe that our future success depends, in large part, upon the
ability of our General Partners to hire and retain highly skilled managerial, operational, and marketing personnel. If we lose or are unable to obtain the services of highly skilled personnel or do not establish or maintain appropriate strategic
relationships, our ability to implement our investment strategies could be delayed or hindered, and the value of your investment may decline.

Our
operating performance could suffer if Wells Capital incurs significant losses, including those losses that may result from being the general partner of other entities.

We are dependent on Wells Capital to conduct our operations; thus, adverse changes in the financial condition of Wells Capital or our relationship with Wells Capital could hinder its ability to successfully manage our
operations and our portfolio of investments. As a general partner in many Wells-sponsored programs, Wells Capital may have contingent liabilities for the obligations of such programs. Enforcement of such obligations against Wells Capital could
result in a substantial reduction of its net worth. If such liabilities affected the level of services that Wells Capital could provide, our operations and financial performance could suffer.

Our General Partners have a limited net worth consisting of illiquid assets which may affect their ability to fulfill their financial obligations to the Partnership.

The net worth of our General Partners consists primarily of interests in real estate, retirement plans, partnerships, and closely-held businesses and,
in the case of Wells Capital, receivables from affiliated corporations and partnerships. Accordingly, the net worth of our General Partners is illiquid and not readily marketable. This illiquidity may be relevant to you in evaluating the ability of
our General Partners to fulfill their financial obligations to the Partnership. In addition, our General Partners have significant commitments to the other Wells-sponsored programs.



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##### Index to Financial Statements

Increases in our administrative operating expenses, including increased expenses associated with operating as a public
company in the current regulatory environment, could limit our ability to make distributions.

Over the last few years, our administrative operating
expenses have increased, and the regulatory environment has resulted in increases in our expenses related to operating as a public company. In addition, as we evolve through our partnership life cycle, and sell various properties in our portfolio,
our administrative operating expenses become a larger percentage in relationship to our operating cash flow and the value of our properties. Further, we bear all expenses incurred in connection with our operations, which are deducted from cash funds
generated by operations prior to computing the amount of net cash from operations to be distributed to our limited partners. Therefore, as a result of the increased administrative operating expenses and increased percentage of such expenses, we
cannot assure you that sufficient cash will be available to make future distributions to you from either net cash from our operations or proceeds from the sale of our properties.

Conflicts of Interest Risks

Our General Partners will face conflicts of interest relating to time management
which could result in lower returns on our investments.

Because our General Partners and their affiliates have interests in other real estate programs
and also engage in other business activities, they could have conflicts of interest in allocating their time between our business and these other activities, which could affect operations of the Partnership. You should note that our partnership
agreement does not specify any minimum amount of time or level of attention that our General Partners are required to devote to the Partnership.

Our
General Partners will face conflicts of interest relating to the sale and leasing of properties.

We may be selling properties at the same time as other
Wells programs are buying and selling properties. We may have acquired or be selling properties in geographic areas where other Wells programs own properties or are trying to sell properties, which could lower your return on your investment.

Investments in joint ventures with affiliates will result in additional risks involving our relationship with the co-venturer.

We have entered into joint ventures with affiliates. Such investments may involve risks not otherwise present with an investment in real estate, including, for example:



| |  |  | the possibility that our co-venturer, co-tenant, or partner in an investment might become bankrupt;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | that such co-venturer, co-tenant, or partner may at any time have economic or business interests or goals which are or which become inconsistent with our business interests or
goals; or
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | that such co-venturer, co-tenant, or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Actions by such a co-venturer, co-tenant, or partner might result in subjecting the property to liabilities in excess of those contemplated
and may have the effect of reducing your returns.

Our General Partners will face various conflicts of interest relating to joint ventures with
affiliates.

Since our General Partners and their affiliates control both the Partnership and other affiliates, transactions between the parties with
respect to joint ventures between such parties do not have the benefit of arms length negotiation of the type normally conducted between unrelated co-venturers. Under these joint venture arrangements, neither co-venturer has the power to
control the venture, and an impasse could be reached regarding matters pertaining to the joint venture, which might have a negative influence on the joint venture and decrease potential returns to you. In the event that a co-venturer has a right of
first refusal to buy out the other



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##### Index to Financial Statements

co-venturer, it may be unable to finance such buy-out at that time. It may also be difficult for us to sell our interest in any such joint venture or
partnership or as a co-tenant in property. In addition, to the extent that our co-venturer, partner, or co-tenant is an affiliate of our General Partners, certain conflicts of interest will exist.

Federal Income Tax Risks

The Internal Revenue Service (IRS) may
challenge our characterization of material tax aspects of your investment in the Partnership.

An investment in units involves certain material income
tax risks, the character and extent of which are, to some extent, a function of whether you hold Class A Units or Class B Units. We will not seek any rulings from the IRS regarding any of the tax issues related to your units.

Investors may realize taxable income without cash distributions.

As
a limited partner in the Partnership, you are required to report your allocable share of the Partnerships taxable income on your personal income tax return regardless of whether or not you have received any cash distributions from the
Partnership. For example, if you hold Class A Units, you will be allocated substantially all of our net income, defined in the partnership agreement to mean generally net income for federal income tax purposes, including any income exempt from
tax, but excluding all deductions for depreciation and amortization and gain or loss from the sale of Partnership properties, even if such income is in excess of any distributions of cash from our operations. If you hold Class A Units, you will
likely be allocated taxable income in excess of any distributions to you, and the amount of cash received by you could be less than the income tax attributable to the net income allocated to you.

We could potentially be characterized as a publicly traded partnership resulting in unfavorable tax results.

If the IRS were to classify the Partnership as a publicly traded partnership, we could be taxable as a corporation, and distributions made to you could be
treated as portfolio income to you rather than passive income. We cannot assure you that we will not, at some time in the future, be treated as a publicly traded partnership due to the following factors:



| |  |  | the complex nature of the IRS rules governing our potential exemption from classification as a publicly traded partnership;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | the lack of interpretive guidance with respect to such rules; and
| | - |  | -----------------------------------------------------------------



| |  |  | the fact that any determination in this regard will necessarily be based upon events which have not yet occurred.
| | - |  | -----------------------------------------------------------------------------------------------------------------

The deductibility of losses will be subject to limitations.

Section 469 of the Internal Revenue Code limits the allowance of deductions for losses attributable to passive activities, which are generally defined as activities in which the taxpayer does not materially participate. Any
tax losses allocated to investors holding Class B Units will be characterized as passive losses, and accordingly, the deductibility of such losses will be subject to these limitations.

In addition, the American Jobs Creation Act of 2004 (the Act) added Section 470 to the Internal Revenue Code, which provides for certain limitations on the utilization of losses allocable to leased
property owned by a partnership having both taxable and tax-exempt partners, such as the Partnership. In March 2005, the Internal Revenue Service issued IRS Notice 2005-29 announcing that the IRS would not be applying Section 470 to disallow
losses for tax year 2004 based solely on the fact that a partnership had both taxable and tax-exempt partners. In December 2005, the IRS issued IRS Notice 2006-2 extending the period for transitional relief through the 2005 tax year; however, it is
important to note that IRS Notices 2005-29 and 2006-2 provide relief



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##### Index to Financial Statements

for partnerships only for tax years 2004 and 2005. The IRS has indicated that it is continuing to study the application of Section 470 to partnerships,
such as the Partnership, but unless further legislation is enacted which addresses this issue or some other form of relief from the provisions of Section 470 of the Act is granted, beginning in tax year 2006 and thereafter, passive losses
allocable to limited partners holding Class B Units may be used only to offset passive income generated from the same property or within the same fund.

The IRS may challenge our allocations of profit and loss.

While it is more likely than not Partnership items of income, gain, loss,
deduction, and credit will be allocated among our General Partners and our limited partners substantially in accordance with the allocation provisions of the partnership agreement, we cannot assure you that the IRS will not successfully challenge
the allocations in the partnership agreement and reallocate items of income, gain, loss, deduction, and credit in a manner which reduces the anticipated tax benefits to investors holding Class B Units or increases the income allocated to investors
holding Class A Units.

We may be audited and additional tax, interest, and penalties may be imposed upon you.

Our federal income tax returns may be audited by the IRS. Any audit of the Partnership could result in an audit of your tax return causing adjustments of items unrelated
to your investment in the Partnership, in addition to adjustments to various Partnership items. In the event of any such adjustments, you might incur accountants or attorneys fees, court costs, and other expenses contesting deficiencies
asserted by the IRS. You also may be liable for interest on any underpayment and certain penalties from the date your tax was originally due. The tax treatment of all Partnership items will generally be determined at the partnership level in a
single proceeding rather than in separate proceedings with each partner, and our General Partners are primarily responsible for contesting federal income tax adjustments proposed by the IRS. In this connection, our General Partners may extend the
statute of limitations as to all partners and, in certain circumstances, may bind the partners to a settlement with the IRS. Further, our General Partners may cause us to elect to be treated as an electing large partnership. If they do,
we could take advantage of simplified flow-through reporting of Partnership items. Adjustments to Partnership items would continue to be determined at the partnership level, however, and any such adjustments would be accounted for in the year they
take effect, rather than in the year to which such adjustments relate. Accordingly, if you make an election to change the status of your units between the years in which a tax benefit is claimed and an adjustment is made, you may suffer a
disproportionate adverse impact with respect to any such adjustment. Further, our General Partners will have the discretion in such circumstances either to pass along any such adjustments to the partners or to bear such adjustments at the
partnership level, thereby potentially adversely impacting the holders of a particular class of units disproportionately to holders of the other class of units.

State and local taxes and a requirement to withhold state taxes may apply.

The state in which you reside may impose an income tax upon your
share of our taxable income. Further, states in which we own properties may impose income taxes upon your share of our taxable income allocable to any Partnership property located in that state or other taxes on limited partnerships owning
properties in their states. Many states have implemented or are implementing programs to require partnerships to withhold and pay state income taxes owed by nonresident partners relating to income-producing properties located in their states, and we
may be required to withhold state taxes from cash distributions otherwise payable to you. In the event we are required to withhold state taxes from your cash distributions, or pay other state taxes, the amount of the net cash from operations
otherwise payable to you would be reduced. In addition, such collection and filing requirements at the state level may result in increases in our administrative expenses which would have the effect of reducing cash available for distribution to you.
You are urged to consult with your own tax advisors with respect to the impact of applicable state and local taxes and state tax withholding requirements or other potential state taxes relating to an investment in our units.



Page 15



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##### Index to Financial Statements

Legislative or regulatory action could adversely affect investors.

In recent years, numerous legislative, judicial, and administrative changes have been made in the provisions of the federal income tax laws applicable to investments
similar to an investment in our units. Additional changes to the tax laws are likely to continue to occur in the future, and we cannot assure you that any such changes will not adversely affect the taxation of a limited partner. Any such changes
could have an adverse effect on an investment in our units or on the market value or the resale potential of our properties. You are urged to consult with your own tax advisor with respect to the impact of recent legislation on your investment in
units and the status of legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our units.

Retirement Plan and Qualified Plan Risks

There are special considerations that apply to pension or profit-sharing trusts or IRAs
investing in units.

If you are investing the assets of a pension, profit-sharing, Section 401(k), Keogh, or other qualified retirement plan or the
assets of an Individual Retirement Account (IRA) in units, you should satisfy yourself that:



| |  |  | your investment is consistent with your fiduciary obligations under ERISA and the Internal Revenue Code;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | your investment is made in accordance with the documents and instruments governing your plan or IRA, including your plans investment policy;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | your investment will not impair the liquidity of the plan or IRA;
| | - |  | -----------------------------------------------------------------



| |  |  | your investment will not produce unrelated business taxable income for the plan or IRA;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | you will be able to value the assets of the plan annually in accordance with ERISA requirements; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | your investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------

We may dissolve the Partnership if our assets are deemed to be plan assets or if we engage in prohibited transactions.

If our assets were deemed to be assets of qualified plans investing as limited partners, i.e., plan assets, our General Partners would be considered to be fiduciaries of
such plans and certain contemplated transactions between our General Partners or their affiliates, and the Partnership may then be deemed to be prohibited transactions subject to excise taxation under Section 4975 of the Internal
Revenue Code. Additionally, if our assets were deemed to be plan assets, the standards of prudence and other provisions of ERISA applicable to plan fiduciaries would apply to the General Partners with respect to our investments. We have not sought a
ruling from the U.S. Department of Labor regarding the potential classification of our assets as plan assets.

In this regard, U.S. Department of Labor
Regulations defining plan assets for purposes of ERISA contain exemptions which, if satisfied, would preclude assets of a limited partnership such as ours from being treated as plan assets. We cannot assure you that our partnership agreement has
been structured so that the exemptions in such Regulations would apply to us, although our General Partners intend that an investment by a qualified plan in units will not be deemed an investment in the assets of the Partnership. We can make no
representations or warranties of any kind regarding the consequences of an investment in our units by qualified plans in this regard. Plan fiduciaries are urged to consult with and rely upon their own advisors with respect to this and other ERISA
issues which, if decided adversely to the Partnership, could result in qualified plan investors being deemed to have engaged in prohibited transactions, which would cause the imposition of excise taxes and co-fiduciary liability under
Section 405 of ERISA in the event actions taken by us are deemed to be nonprudent investments or prohibited transactions.



Page 16



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##### Index to Financial Statements

In the event our assets are deemed to constitute plan assets or certain transactions undertaken by us are deemed to
constitute prohibited transactions under ERISA or the Internal Revenue Code, and no exemption for such transactions is obtainable by us, the General Partners have the right, but not the obligation, upon notice to all limited partners,
but without the consent of any limited partner, to:



| |  |  | compel a termination and dissolution of the Partnership; or
| | - |  | -----------------------------------------------------------



| |  |  | restructure our activities to the extent necessary to comply with any exemption in the U.S. Department of Labor Regulations or any prohibited transaction exemption granted by the
Department of Labor or any condition which the Department of Labor might impose as a condition to granting a prohibited transaction exemption.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Adverse tax consequences may result because of minimum distribution requirements.

If you intend to purchase units through your IRA, or if
you are a trustee of an IRA or other fiduciary of a retirement plan considering an investment in units, you must consider the limited liquidity of an investment in our units as it relates to applicable minimum distribution requirements under the
Internal Revenue Code. If units are held and our properties have not yet been sold at such time as mandatory distributions are required to begin to an IRA beneficiary or qualified plan participant, Sections 408(a)(6) and 401(a)(9) of the Internal
Revenue Code will likely require that a distribution-in-kind of the units be made to the IRA beneficiary or qualified plan participant. Any such distribution-in-kind of units must be included in the taxable income of the IRA beneficiary or qualified
plan participant for the year in which the units are received at the fair market value of the units and taxes attributable thereto must be paid without any corresponding cash distributions from us with which to pay such income tax liability.

Unrelated business taxable income (UBTI) may be generated with respect to tax-exempt investors.

We do not intend or anticipate that the tax-exempt investors in the Partnership will be allocated income deemed to be derived from an unrelated trade or business, which
is generally referred to as UBTI. Notwithstanding this, the General Partners do have limited authority to borrow funds deemed necessary:



| |  |  | to finance improvements necessary to protect capital previously invested in a property;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | to protect the value of our investment in a property; or
| | - |  | --------------------------------------------------------



| |  |  | to make one of our properties more attractive for sale or lease.
| | - |  | ----------------------------------------------------------------

Our
General Partners have represented that they will not cause the Partnership to incur indebtedness unless they obtain an opinion from legal counsel or an opinion from our tax accountants that the proposed indebtedness more likely than not will not
cause the income allocable to tax-exempt investors to be characterized as UBTI. Any such opinion will have no binding effect on the IRS or any court, however, and some risk remains that we may generate UBTI for our tax-exempt investors in the event
that it becomes necessary for us to borrow funds.

Further, in the event we were deemed to be a dealer in real property, defined as one who
holds real estate primarily for sale to customers in the ordinary course of business, the gain realized on the sale of our properties which is allocable to tax-exempt investors would be characterized as UBTI.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

There were no unresolved SEC staff
comments as of December 31, 2005.



Page 17



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##### Index to Financial Statements

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

Overview

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



|                                                                                      |  |                                                                                                                                                 |  |                                                                                                                                  |  |                                         |   |  |      |   |  |      |   |  |      |   |  |      |  
|------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                                                                                      |  |                                                                                                                                                 |  |                                                                                                                                  |  | Approximate Leased % as of December 31, |  
|Joint Venture                                                                         |  | Joint Venture Partners                                                                                                                          |  | Properties                                                                                                                       |  | 2005                                    |   |  | 2004 |   |  | 2003 |   |  | 2002 |   |  | 2001 |  
|The Fund IX, Fund X, Fund XI, and REIT Joint Venture (Fund IX-X-XI-REIT Associates) |  |   Wells Real Estate Fund IX, L.P.   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P.   Wells Operating Partnership, L.P.(1) |  | 1. Alstom Power  Knoxville Building(2) A three-story office building located in Knoxville, Tennessee                            |  |                                        |   |  | 100  | % |  | 100  | % |  | 100  | % |  | 100  | %
|                                                                                      |  |                                                                                                                                                 |  | 2. 360 Interlocken Building A three-story office building located in Broomfield, Colorado                                        |  | 97                                      | % |  | 93   | % |  | 70   | % |  | 75   | % |  | 100  | %
|                                                                                      |  |                                                                                                                                                 |  |                                                                                                                                  |  |                                         |  
|                                                                                      |  |                                                                                                                                                 |  | 3. Avaya Building A one-story office building located in Oklahoma City, Oklahoma                                                 |  | 100                                     | % |  | 100  | % |  | 100  | % |  | 100  | % |  | 100  | %
|                                                                                      |  |                                                                                                                                                 |  |                                                                                                                                  |  |                                         |  
|                                                                                      |  |                                                                                                                                                 |  | 4. Iomega Building A single-story warehouse and office building located in Ogden, Utah                                           |  | 100                                     | % |  | 100  | % |  | 100  | % |  | 100  | % |  | 100  | %
|                                                                                      |  |                                                                                                                                                 |  |                                                                                                                                  |  |                                         |  
|                                                                                      |  |                                                                                                                                                 |  | 5. 1315 West Century Drive (formerly known as the Ohmeda Building) A two-story office building located in Louisville, Colorado |  | 0                                       | % |  | 100  | % |  | 100  | % |  | 100  | % |  | 100  | %
|Fund X and Fund XI Associates (Fund X-XI Associates)                                |  |   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P.                                                                            |  | This joint venture owns interests only in other joint ventures and does not own interests in any properties directly.            | 
|Wells/Orange County Associates                                                        |  |   Fund X-XI Associates   Wells Operating Partnership, L.P.(1)                                                                                 |  | 6.Cort Building(3) A one-story office and warehouse building located in Fountain Valley, California                              |  |                                        |   |  |     |   |  |     |   |  | 100  | % |  | 100  | %
|Wells/Fremont Associates                                                              |  |   Fund X-XI Associates   Wells Operating Partnership, L.P.(1)                                                                                 |  | 7.47320 Kato Road A two-story warehouse and office building located in Fremont, California                                       |  | 100                                     | % |  | 100  | % |  | 100  | % |  | 100  | % |  | 100  | %



| | (1) | Wells Operating Partnership, L.P. (Wells OP) is a Delaware limited partnership
with Wells Real Estate Investment Trust, Inc. (Wells REIT) serving as its General Partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | This property was sold in March 2005.
| | --- | -------------------------------------



| | (3) | This property was sold in September 2003.
| | --- | -----------------------------------------

Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P. are affiliated with the Partnership through common general partners. Each of the properties described
above was acquired on an all-cash basis.



Page 18



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##### Index to Financial Statements

Lease Expirations

As
of December 31, 2005, the lease expirations scheduled during the following ten years for all properties in which the Partnership held an interest through the Joint Ventures, assuming no exercise of renewal options or termination rights, are
summarized below:



|                         |  |                        |  |                      |  |                                               |  |                                                                         |  |                                      |  |                                                                   
|------------------------ |  | ---------------------- |  | -------------------- |  | --------------------------------------------- |  | ----------------------------------------------------------------------- |  | ------------------------------------ |  | ------------------------------------------------------------------
|Year of Lease Expiration |  | NumberofLeasesExpiring |  | Square Feet Expiring |  | AnnualizedGross BaseRent in Year ofExpiration |  | Partnership Share of Annualized Gross Base Rent in Year ofExpiration(1) |  | Percentageof TotalSquareFeetExpiring |  | Percentage of Total Annualized Gross Base Rent inYear ofExpiration
|2008(2)                  |  | 2                      |  | 93,345               |  | $1,273,618                                    |  | 617,577                                                                 |  | 34.0%                                |  | 46.0%                                                             
|2009(3)                  |  | 2                      |  | 166,674              |  | 1,179,809                                     |  | 403,133                                                                 |  | 60.7                                 |  | 42.7                                                              
|2010(4)                  |  | 2                      |  | 5,211                |  | 107,976                                       |  | 52,358                                                                  |  | 1.9                                  |  | 3.9                                                               
|2011(5)                  |  | 1                      |  | 4,832                |  | 106,304                                       |  | 51,547                                                                  |  | 1.8                                  |  | 3.8                                                               
|2012(6)                  |  | 1                      |  | 4,364                |  | 96,008                                        |  | 46,554                                                                  |  | 1.6                                  |  | 3.5                                                               
|2013(7)                  |  | 1                      |  | 0                    |  | 2,400                                         |  | 1,164                                                                   |  | 0.0                                  |  | 0.1                                                               
|                         |  |                        |  |                      |  |                                               |  |                                                                         |  |                                      |  |                                                                   
|                         |  | 9                      |  | 274,426              |  | $2,766,115                                    |  | $1,172,333                                                              |  | 100.0%                               |  | 100.0%                                                            
|                         |  |                        |  |                      |  |                                               |  |                                                                         |  |                                      |  |                                                                   



| | (1) | The Partnerships share of annualized gross base rent in year of expiration is
calculated based on the Partnerships ownership percentage in the Joint Venture that owns the leased property.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Avaya lease (approximately 57,200 square feet) and GAIAM lease at 360 Interlocken Building
(approximately 36,200 square feet).
| | --- | ------------------------------------------------------------------------------------------------------------------------------



| | (3) | Iomega lease (approximately 108,300 square feet) and TCI International, Inc. lease at
47320 Kato Road (approximately 58,400 square feet).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Casey Family Programs lease at the 360 Interlocken Building (approximately 2,900 square
feet) and Ayres Associates, Inc. lease at the 360 Interlocken Building (approximately 2,300 square feet).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Culver Financial lease at the 360 Interlocken Building (approximately 4,800 square feet).
| | --- | -----------------------------------------------------------------------------------------



| | (6) | Lighthouse Financial lease at the 360 Interlocken Building (approximately 4,400 square
feet).
| | --- | ---------------------------------------------------------------------------------------------



| | (7) | Expiration of TCG Colorado ground lease at the 360 Interlocken Building.
| | --- | ------------------------------------------------------------------------

Property Descriptions

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

Fund IX-X-XI-REIT
Associates

In March 1997, the Partnership and Wells Real Estate Fund IX, L.P. entered into a joint venture known as Fund IX and Fund X
Associates (Fund IX-X Associates), which was subsequently renamed as Fund IX-X-XI-REIT Associates upon the admission of Wells Real Estate Fund XI, L.P. and Wells OP as joint venture partners, on June 11, 1998.

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) 1315 West Century Drive; and (iii) the 360 Interlocken Building. On June 24, 1998, Fund IX-X-XI-REIT Associates purchased the Avaya Building, a one-story office building. On July 1, 1998, the
Partnership transferred and contributed the Iomega Building, a single-story warehouse and office building including approximately 108,000 rentable square feet, to Fund IX-X-XI-REIT Associates, as a capital contribution.



Page 19



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##### Index to Financial Statements

As of December 31, 2005, the Partnership, Wells Real Estate Fund IX, L.P., Wells Real Estate Fund XI, L.P., and
Wells OP held equity interests of approximately 48%, 39%, 9%, and 4%, respectively, in the following properties based on their respective cumulative capital contributions to Fund IX-X-XI-REIT Associates:

Alstom Power  Knoxville Building

In
March 1997, Fund IX-X Associates began construction of the Alstom Power  Knoxville Building, a three-story office building comprised of approximately 84,000 rentable square feet located on a 5.62-acre tract of real property in Knoxville,
Tennessee.

The entire rentable area of the Alstom Power  Knoxville Building was leased to Alstom Power, Inc., which commenced in December 1998 and
was set to expire on October 31, 2014.

On March 15, 2005, the Fund IX-X-XI-REIT Associates sold the Alstom Power  Knoxville Building to an
unrelated third party for a gross sale price of $12,000,000. As a result of the sale of the Alstom Power  Knoxville Building, the Partnership received net sale proceeds of approximately $5,647,000 and was allocated a gain of approximately
$2,440,000.

360 Interlocken Building

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

One major tenant, GAIAM, Inc. (GAIAM), currently occupies approximately 36,000 square feet (or 70% of the building). In 2004, GAIAM signed a
three-year lease extension through May 31, 2008. Beginning June 1, 2004, the annual base rent for the GAIAM lease is approximately $588,000 per year through May 31, 2006. Beginning on June 1, 2006, the annual base rent increases
to approximately $615,000 through May 31, 2007. Beginning on June 1, 2007, annual base rent increases to approximately $651,000 through the term of the lease.

An additional 27% of the building is leased to four tenants: Culver Financial (4,832 square feet, expiring February 2011); Lighthouse Financial, LLC (4,364 square feet, expiring July 2012); Casey Family Programs
(2,910 square feet, expiring May 2010); and Ayres Associates, Inc. (2,301 square feet, expiring August 2010). Currently, Wells Management is actively pursuing prospective tenants to lease the remaining vacant space at the 360 Interlocken
Building, which encompasses approximately 3% of the premises.

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 a base year as defined in their respective leases.

Avaya Building

On June 24, 1998, Fund IX-X-XI-REIT Associates acquired the Avaya Building from Wells Development Corporation, an affiliate of
the General Partners. The Avaya Building is a one-story office building containing approximately 57,000 net rentable square feet on 5.3 acres of land.

Avaya, Inc. (Avaya) occupies the entire Avaya Building under the initial lease term of ten years, which commenced January 5, 1998 and expires January 31, 2008. The annual base rent payable is approximately $623,000 for
the remainder of the lease term. In addition to base rent, Avaya is required to reimburse the landlord for certain insurance expenses. Avaya has the option to extend the initial term for two additional five-year periods. The annual base rent payable
for each extended term will be assessed at the respective currently prevailing market rental rates.



Page 20



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##### Index to Financial Statements

Iomega Building

On July 1, 1998, the Partnership transferred and contributed the Iomega Building, a single-story warehouse and office building including approximately 108,000 rentable square feet located in Ogden, Utah, to Fund
IX-X-XI-REIT Associates. The building is 100% occupied by Iomega Corporation. On March 22, 1999, Fund IX-X-XI-REIT Associates purchased a four-acre tract of vacant land adjacent to the Iomega Building. Wells Real Estate Fund IX, L.P.
funded this acquisition and related land improvement costs and, accordingly, was credited as a capital contribution to Fund IX-X-XI-REIT Associates. This site was developed into an additional parking and loading-dock area, including 400 new parking
stalls, and was completed in July 1999.

Iomega Corporation has extended its lease term through April 30, 2009 and, in connection therewith, will
pay annual base rent of approximately $589,000, plus an additional annual base rent of approximately $114,000 related to the parking lot area. The lease is an economic triple-net lease, whereby the terms require the tenant to pay or to reimburse the
landlord for all operating expenses.

1315 West Century Drive

On February 13, 1998, Fund IX-X Associates acquired 1315 West Century Drive, a two-story office building with approximately 107,000 rentable square feet located on a
15-acre tract of land located in Louisville, Colorado.

The entire rentable area of 1315 West Century Drive was under a lease with Ohmeda, Inc.
(Ohmeda) through April 30, 2005. After fulfilling the terms of the lease, Ohmeda vacated the building, and it currently remains unoccupied. We are aggressively pursuing leasing opportunities for this asset.

Fund X-XI Associates

On July 15, 1998, Fund X-XI
Associates was formed for the purpose of acquiring, developing, owning, operating and selling real properties. As of December 31, 2005, the Partnership and Wells Real Estate Fund XI, L.P. owned equity interests of approximately 58% and 42%,
respectively, in Fund X-XI Associates based on their respective cumulative capital contributions thereto.

Wells/Orange County Associates

On July 27, 1998, Wells OP entered into a joint venture agreement with Wells Development Corporation, referred to as Wells/Orange County
Associates, which developed a 52,000-square-foot warehouse and office building, the Cort Building, located in Fountain Valley, California. On July 30, 1998, Fund X-XI Associates acquired Wells Development Corporations interest in
Wells/Orange County Associates

Cort Building

On September 11, 2003, Wells/Orange County Associates sold the Cort Building to an unrelated third party for a gross sales price of $5,770,000. As a result of the sale, the Partnership received net sale proceeds
of approximately $1,818,000 and was allocated a loss of approximately $124,000

Wells/Fremont Associates

In July 1998, Wells OP entered into a joint venture agreement with Wells Development Corporation, referred to as Wells/Fremont Associates, which developed an
approximately 58,000-square-foot, two-story manufacturing and office building, 47320 Kato Road, located in Fremont, California. On October 8, 1998, Fund X-XI Associates acquired Wells Development Corporations interest in
Wells/Fremont Associates.



Page 21



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##### Index to Financial Statements

47320 Kato Road

The 47320 Kato Road building is 100% leased to one tenant, TCI International, Inc. (TCI), under a five-year lease term, which commenced on December 1, 2004 and expires on November 30, 2009. Under
the lease, annual base rent of approximately $435,000 is payable through November 30, 2006. Beginning December 1, 2006, base rent will increase by approximately $14,000 annually through the end of the lease term.



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

From time to time, we are party to legal
proceedings which arise in the ordinary course of our business. We are not currently involved in any litigation for which the outcome would, in the judgment of the General Partners based on information currently available, have a materially adverse
impact on the results of operations or financial condition of the Partnership, nor is management aware of any such litigation threatened against us. In addition, no legal proceeds were terminated during the fourth quarter of 2005.



|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 2005.



Page 22



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##### Index to Financial Statements

PART II



|ITEM 5. | MARKET FOR PARTNERSHIPS UNITS AND RELATED SECURITY HOLDER MATTERS.
|------- | -------------------------------------------------------------------

Summary

As of February 28, 2006, 2,422,642 Class A Units and 290,249 Class B Units held by a total of 1,623 and 146 limited
partners, respectively, were outstanding. Capital contributions are equal to $10.00 per each limited partnership unit. A public trading market has not been established for the Partnerships limited partnership units, nor is such a market
anticipated to develop in the future. The partnership agreement provides the General Partners with the right to prohibit transfers of units at their discretion.

Unit Valuation

Because fiduciaries of retirement plans subject to the Employee Retirement Income Security Act (ERISA) and the
Individual Retirement Account (IRA) custodians are required to determine and report the value of the assets held in their respective plans or accounts 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 report on 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 assuming that 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 any reduction for selling expenses) plus the amount of net sale proceeds held by the Partnership at year-end from previous property sales, if any, were distributed to the limited partners in liquidation. The estimated unit valuations are
intended to be an estimate of the distributions that would be made to limited partners who purchased their units directly from the Partnership in the Partnerships original public offering of units, and who have made no conversion elections
under the partnership agreement.

Utilizing the foregoing methodology and based upon market conditions existing in early December 2005, the General
Partners have estimated the Partnerships unit valuations, based upon their estimates of property values as of December 31, 2005, to be approximately $5.18 per Class A Unit and $4.75 per Class B Unit, based upon market conditions
existing in early December 2005. These estimates should not be viewed as an accurate reflection of the value of the limited partners units, what limited partners might be able to sell their units for, or the fair market value of the
Partnerships properties, nor do they necessarily 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. There is no
established public trading market for the Partnerships limited partnership units, and it is not anticipated that a public trading market for the units will ever develop. In addition, property values are subject to change and could decline in
the future. While, as required by the partnership agreement, the General Partners have obtained an opinion from The David L. Beal Company, an independent appraiser certified by the Member Appraisal Institute, to the effect that such estimates of
value were deemed reasonable and were prepared in accordance with appropriate methods for valuing real estate, no actual appraisals were obtained due to the inordinate expense which would be involved in obtaining appraisals for all of the
Partnerships properties.

The valuations performed by the General Partners are estimates only, and are based on a number of assumptions which may not
be accurate or complete and may or may not be applicable to any specific limited partnership units. For example, as a result of the availability of conversion elections under the partnership agreement and the resulting complexities involved relating
to the distribution methodology under the partnership agreement, each limited partnership unit of the Partnership potentially has its own unique characteristics as to distributions and value. These estimated valuations assume, and are applicable
only to, limited partners who have made no conversion elections under the partnership agreement and who purchased their units directly from the Partnership in the Partnerships original public offering of units. Further, as set forth above, no
third-party appraisals have or will be obtained. For these reasons, the estimated unit valuations set forth above should not be used by or relied



Page 23



---

##### Index to Financial Statements

upon by investors, other than fiduciaries of retirement plans and IRA custodians for limited ERISA and IRA reporting purposes, as any indication of the fair
market value of their units. In addition, it should be noted that ERISA plan fiduciaries and IRA custodians may use estimated unit valuations obtained from other sources, such as prices paid for the Partnerships units in secondary market
trades, and that such estimated unit valuations may well be lower than those estimated by the General Partners using the methodology required by the partnership agreement.

It should also be noted that once the Partnership begins the process of selling certain of its properties and that, as properties are sold and the net proceeds from property sales are distributed to limited partners,
the remaining value of the Partnerships portfolio of properties, and resulting value of Partnerships limited partnership units, will naturally decline. In considering the foregoing estimated unit valuations, it should be noted that the
Partnership has previously distributed net sale proceeds in the amount of $1.17 per Class A Unit and $7.12 per Class B Unit to its limited partners. These amounts are intended to represent the per-unit distributions received by limited partners
who purchased their units directly from the Partnership in the Partnerships original public offering of units, and who have made no conversion elections under the partnership agreement. Limited partners who have made one or more conversion
elections would have received a different level of per-unit distribution.

Operating Distributions

Operating cash available for distribution to the limited partners is generally distributed on a quarterly basis. Under the partnership agreement, distributions from net
cash from operations are allocated first to the limited partners holding Class A Units (and limited partners holding Class B Units that have elected a conversion right that allows them to share in the distribution rights of limited partners
holding Class A Units) until they have received 10% of their adjusted capital contributions. Cash available for distribution is then distributed to the General Partners until they have received an amount equal to 10% of cash distributions
previously distributed to the limited partners. Any remaining cash available for distribution is split between the limited partners holding Class A Units and the General Partners on a basis of 90% and 10%, respectively. No operating
distributions will be made to the limited partners holding Class B Units.

Operating cash distributions made to limited partners holding Class A Units
during 2004 and 2005 are summarized below:



|                                          |  |                                 |         |                                  |   |                                   |  |                |      |  |   |     
|----------------------------------------- |  | ------------------------------- | ------- | -------------------------------- | - | --------------------------------- |  | -------------- | ---- |  | - | ----
|Operating Distributions for Quarter Ended |  | Total OperatingCash Distributed |         | Per Class AUnit InvestmentIncome |   | Per Class A UnitReturn of Capital |  | GeneralPartner
|March 31, 2004                            |  | $                               | 402,277 |                                  | $ | 0.00                              |  | $              | 0.17 |  | $ | 0.00
|June 30, 2004                             |  | $                               | 268,365 |                                  | $ | 0.00                              |  | $              | 0.11 |  | $ | 0.00
|September 30, 2004                        |  | $                               | 0       |                                  | $ | 0.00                              |  | $              | 0.00 |  | $ | 0.00
|December 31, 2004                         |  | $                               | 119,182 |                                  | $ | 0.00                              |  | $              | 0.05 |  | $ | 0.00
|March 31, 2005                            |  | $                               | 266,361 |                                  | $ | 0.00                              |  | $              | 0.11 |  | $ | 0.00
|June 30, 2005                             |  | $                               | 148,509 |                                  | $ | 0.00                              |  | $              | 0.06 |  | $ | 0.00
|September 30, 2005                        |  | $                               | 0       |                                  | $ | 0.00                              |  | $              | 0.00 |  | $ | 0.00
|December 31, 2005                         |  | $                               | 161,375 |                                  | $ | 0.00                              |  | $              | 0.07 |  | $ | 0.00

Fourth quarter 2005 operating distribution were accrued for accounting purposes in 2005 and paid to limited
partners holding Class A Units in February 2006. No operating cash distributions were paid to holders of Class B Units or the General Partners in 2005 or 2004.



Page 24



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##### Index to Financial Statements

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

A summary of the selected financial data
as of and for the fiscal years ended December 31, 2005, 2004, 2003, 2002, and 2001 for the Partnership is provided below. The comparability of net income for the periods presented below is impacted by the sale of properties described in
Item 2.



|                                                                                |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- |  | ---- | ---------- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                                                |  | 2005 |            | 2004 |   | 2003       |  | 2002 |            |  | 2001 |           
|Total assets                                                                    |  | $    | 15,221,110 |      | $ | 17,728,465 |  | $    | 18,931,114 |  | $    | 19,938,960 |   |  | $ | 20,738,735 |  
|Equity in income of Joint Ventures                                              |  | $    | 3,032,297  |      | $ | 1,073,828  |  | $    | 1,006,287  |  | $    | 1,364,307  |   |  | $ | 1,549,588  |  
|Net income                                                                      |  | $    | 2,875,111  |      | $ | 907,857    |  | $    | 856,732    |  | $    | 1,240,352  |   |  | $ | 1,449,849  |  
|Net income (loss) allocated to Limited Partners:                                |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|Class A                                                                         |  | $    | 1,168,059  |      | $ | 357,097    |  | $    | 856,732    |  | $    | 1,977,552  |   |  | $ | 2,264,351  |  
|Class B                                                                         |  | $    | 1,707,052  |      | $ | 550,760    |  | $    | 0          |  | $    | (737,200   | ) |  | $ | (814,502   | )
|Net income (loss) per weighted-average Limited Partner Unit:                    |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|Class A                                                                         |  | $    | 0.48       |      | $ | 0.15       |  | $    | 0.36       |  | $    | 0.85       |   |  | $ | 0.99       |  
|Class B                                                                         |  | $    | 5.84       |      | $ | 1.72       |  | $    | 0.00       |  | $    | (1.90      | ) |  | $ | (1.88      | )
|Operating cash distributions per weighted-average Class A Limited Partner Unit: |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|Investment income                                                               |  | $    | 0.00       |      | $ | 0.00       |  | $    | 0.06       |  | $    | 0.66       |   |  | $ | 0.61       |  
|Return of capital                                                               |  | $    | 0.24       |      | $ | 0.33       |  | $    | 0.70       |  | $    | 0.19       |   |  | $ | 0.37       |  
|Operating cash distributions per weighted-average Class B Limited Partner Unit: |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|Investment income                                                               |  | $    | 0.00       |      | $ | 0.00       |  | $    | 0.00       |  | $    | 0.00       |   |  | $ | 0.00       |  
|Return of capital                                                               |  | $    | 0.00       |      | $ | 0.00       |  | $    | 0.00       |  | $    | 0.00       |   |  | $ | 0.00       |  
|Distribution of net sale proceeds per weighted-average Limited Partner Unit:    |  |      |            |      |   |            |  |      |            |  |      |            |   |  |   |            |  
|Class A                                                                         |  | $    | 1.40       |      | $ | 0.20       |  | $    | 0.00       |  | $    | 0.00       |   |  | $ | 0.00       |  
|Class B                                                                         |  | $    | 5.01       |      | $ | 1.78       |  | $    | 0.00       |  | $    | 0.00       |   |  | $ | 0.00       |  



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

The following discussion and analysis should be read in conjunction with the Selected Financial Data presented in Item 6 and our accompanying financial statements and notes thereto. See also Cautionary Note
Regarding Forward-Looking Statements preceding Part I of this report and Risk Factors in Item 1A of this report.

Overview

Portfolio Overview

We are currently in the holding
phase of our life cycle. We now own interests in five assets, following the sale of the Alstom Power  Knoxville Building in March 2005. At this time, our focus involves increasing the overall occupancy level within the portfolio and
concentrating on re-leasing and marketing efforts that we believe will deliver the best operating performance for our limited partners.

During the first
quarter of 2005, we sold the Alstom Power  Knoxville Building for a gross sale price of $12,000,000, which was in excess of the original purchase price for this asset. In addition, we distributed net proceeds to limited partners for
approximately $4,850,000 from the sales of the Cort Building and the Alstom Power  Knoxville Building in November 2005. We have returned, or announced plans to return, total net sale proceeds of approximately $5,885,000 to the limited partners
from original gross capital contributions of approximately $27,129,000.

Total occupancy of our portfolio has declined to 68%, as we are facing some
near-term leasing issues that may negatively impact our future operating performance. The 1315 West Century Drive property is now vacant and



Page 25



---

##### Index to Financial Statements

we have a small amount of vacant space to lease at the 360 Interlocken Building. While these leasing challenges may impact our performance in the near-term,
we are working aggressively with potential tenants in these markets to minimize the negative financial impact.

The fourth quarter 2005 operating
distributions to limited partners increased from the previous quarter as a result of funding capital improvements at the 360 Interlocken Building in the third quarter of 2005. However, we anticipate that future operating distributions may be
reserved or remain low in order to provide funding for anticipated re-leasing costs for 1315 West Century Drive and the small amount of vacant space at the 360 Interlocken Building. Once the details surrounding the extent of the capital requirements
become known, the General Partners will evaluate if distributions of the remaining net sale proceeds from the Alstom Power  Knoxville Building sale would be appropriate.

Property Summary

As we continue to operate in the holding phase, we will continue to focus on re-leasing vacant
space and space that may become vacant upon the expiration of our current leases. In doing so, we will seek to maximize returns to the limited partners by negotiating long-term leases at market rental rates while attempting to minimize down time,
re-leasing expenditures, ongoing property level costs, and portfolio costs. As we move into the positioning-for-sale and disposition-and-liquidation phases, our attention will shift to locating suitable buyers and negotiating purchase-sale contracts
that will attempt to maximize the total return to the limited partners and minimize contingencies and our post-closing involvement with the buyer.

Information relating to the properties owned, or previously owned, by the Joint Ventures is provided below:



| |  |  | The Cort Building was sold on September 11, 2003.
| | - |  | -------------------------------------------------



| |  |  | The Alstom Power  Knoxville Building sold on March 15, 2005.
| | - |  | -------------------------------------------------------------



| |  |  | The 360 Interlocken Building is located in the Broomfield submarket of Denver, Colorado. The majority of this building is leased to GAIAM, Inc. through May 2008, now that we have
successfully extended its lease for three years. We signed a new lease in the second quarter that increased the building occupancy to 97%. We also continue to pursue tenants for the remaining vacancy at this property.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Avaya Building in Oklahoma City, Oklahoma, is 100% leased through January 2008.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | The Iomega Building, located in Ogden, Utah, outside Salt Lake City, is 100% leased through April 2009.
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | The 1315 West Century Drive property is located in Louisville, Colorado, adjacent to the Broomfield submarket. The lease for this property expired in April 2005, and this property
is currently vacant. We are aggressively pursuing leasing opportunities for this asset.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The 47320 Kato Road building, located in Fremont, California, in the Silicon Valley area, is 100% leased through November 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------

Industry Factors

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

General Economic Conditions and Real Estate Market
Commentary

The General Partners review a number of economic forecasts and market commentaries in order to evaluate general economic
conditions and formulate a view of the current environments effect on the real estate markets in which we operate.

The U.S. economy
experienced a moderate rate of growth at the end of 2005. Actual gross domestic product (GDP) grew at an annual rate of 1.1% for the fourth quarter of 2005, which declined from an annual



Page 26



---

##### Index to Financial Statements

growth rate of 4.1% for the third quarter of 2005. The decline in the rate of economic growth for the fourth quarter of 2005 is primarily attributable to
corresponding declines in consumer and federal government spending and net exports. Annual GDP growth is projected to remain in the range of 3% during 2006. The economy is anticipated to grow at a slower pace during 2006 due to rising energy prices
and growing trade deficits. However, the rate of job growth relative to the labor force is expected to continue to improve in 2006, partially due to a shrinking labor force.

The U.S. office real estate market has shown some improvement over the past two years. The continued improvement of the overall economy is having a
positive impact on office real estate fundamentals in certain markets. Office employment has grown moderately over the last year, and the pace is anticipated to accelerate in future years. The source of the future growth is projected to come
predominately from the service sector. The U.S. office vacancy rate declined from approximately 14.1% for the third quarter of 2005 to approximately 13.6% for the fourth quarter of 2005. Positive absorption and low levels of new construction are
projected to lead to a further reduction in vacancy in 2006. Increased tenant demand and steady absorption is expected to continue to contribute to positive rental rate growth in certain markets. Many markets are expected to move from the recovery
cycle to the expansion cycle during 2006. The strength of office real estate market fundamentals will vary by location, as market conditions and real estate fundamentals differ based on geographical region, metropolitan area, and submarket.

The real estate capital transactions market remains relatively healthy and exceedingly liquid. The national transaction volume has grown at
an average annual rate of over 50% during the past two years. Capitalization rates (Cap rates), or required first-year returns on real estate investments, remain low and we believe are likely to remain flat through 2006. The spread
between average cap rates and 10-year U.S. Treasuries remained relatively stable in 2005. We believe that, absent a significant movement in interest rates or a significant decrease in capital flows into the real estate market, cap rates will remain
at or near their current levels.

Impact of Economic Conditions to the Partnership

While some of the market conditions noted above may indicate an expected increase in rental rates, the extent to which we may benefit from this
growth is dependent upon the contractual rental rates currently provided in existing leases at the properties in which we own an interest. Specifically, in instances where leases were executed at a time when the market
demanded higher rental rates as compared to today, new leasing activities could actually result in a decrease in future rental rates.

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

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

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

Liquidity and Capital Resources

Overview

Our operating strategy entails funding expenditures related to the recurring operations of the Joint Ventures properties and the portfolio with operating cash flows, including current and prior period operating distributions received
from the Joint Ventures, and assessing the amount of remaining cash flows that will be required to fund known future re-leasing costs and other capital improvements. Any residual operating cash flows are generally considered available for
distribution to the Class A limited partners and, unless reserved, are generally paid



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##### Index to Financial Statements

quarterly. As a result, the ongoing monitoring of our cash position is critical to ensuring that adequate liquidity and capital resources are available.
Economic downturns in one or more of our core markets could adversely impact the ability of our tenants to honor lease payments and our ability to re-lease space on favorable terms as leases expire or space otherwise becomes vacant. In the event of
either situation, cash flows and, consequently, our ability to provide funding for capital needs could be adversely affected.

Short-Term Liquidity

During the year ended December 31, 2005, we generated net operating cash flows, including distributions received from the Joint Ventures, of
approximately $707,000, as compared to approximately $1,185,000 for the year ended December 31, 2004 and $1,743,000 for the year ended December 31, 2003. The 2005 and 2004 declines are primarily attributable to corresponding declines in
operating distributions received from the Joint Ventures, as further described below. Operating distributions from the Joint Ventures are generally representative of rental revenues and tenant reimbursements, less property operating expenses,
management fees, general administrative expenses, and capital expenditures.

Operating distributions from the Joint Ventures declined during 2005 and 2004,
as compared to the prior year, primarily as a result of (i) a reduction in cash flows from the aforementioned sales of the Alstom Power  Knoxville Building and the Cort Building, (ii) absorbing rent abatements for 47320 Kato Road in
2005 and the Alstom Power  Knoxville Building and the 360 Interlocken Building in 2004, and (iii) the expiration of the lease of the sole tenant of 1315 West Century Drive in April 2005. Future operating distributions are expected to
remain low or be reserved in order to fund the Partnerships pro-rata share of anticipated re-leasing costs for 1315 West Century Drive and the 360 Interlocken Building.

During 2005, we also received net proceeds from the sale of the Alstom Power  Knoxville Building of approximately $5.6 million, and distributed net sale proceeds to limited partners of approximately $4.9
million.

We believe that the cash on hand and distributions due from the Joint Ventures are sufficient to cover our working capital needs, including
liabilities of approximately $207,000, as of December 31, 2005. During 2006, our General Partners anticipate that we will fund our proportionate share of capital expenditures noted above.

Long-Term Liquidity

We expect that our future sources of capital
will be primarily derived from operating cash flows generated from the Joint Ventures, and net proceeds generated from the selective and strategic sale of properties. Our future long-term liquidity requirements will include, but not be limited to,
funding tenant improvements, renovations, expansions and other significant capital improvements necessary for properties owned through the Joint Ventures. We expect to continue to use substantially all future net cash flows from operations to
provide funding for such requirements. Future cash flows from operating activities will be primarily affected by distributions received from the Joint Ventures, which are dependent upon net operating income generated by the Joint Ventures
properties, less reserves for known capital expenditures.

Capital Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning, and operating income-producing real properties, or investing in joint ventures formed for the same purpose, and has invested all of
the partners original capital contributions. Thus, it is unlikely that we will acquire interests in any additional properties or joint ventures. Historically, our investment strategy has generally involved acquiring properties that are
pre-leased to creditworthy tenants on an all-cash basis through joint ventures with affiliated Partnerships.

The Joint Ventures fund capital expenditures
primarily related to building improvements for the purpose of maintaining the quality of their properties, and tenant improvements for the purpose of readying their properties



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##### Index to Financial Statements

for re-leasing. As leases expire, we will work with the Joint Ventures to attempt to re-lease space to an existing tenant or market the space to prospective
new tenants. Generally, tenant improvements funded in connection with lease renewals require less capital than those funded in connection with new leases. However, external conditions, such as the supply of and demand for comparable space available
within a given market, drive capital costs as well as rental rates. The Partnership and respective Joint Venture partners will fund any capital or other expenditures not provided for by the operations of the Joint Ventures, on a pro-rata basis.

Operating cash flows, if available, are generally distributed from the Joint Ventures to the Partnership following each calendar quarter-end. Our cash
management policy typically includes first utilizing current period operating cash flow until depleted, at which point operating reserves are utilized to fund capital and other required expenditures. In the event that current and prior period
accumulated operating cash flows are insufficient to fund such costs, net property sale proceeds reserves would then be utilized.

As of December 31,
2005, we have received, used, distributed, and held net proceeds allocated to the Partnership from the sale of properties as presented below:



|                                                |  |              |            |                                       |      |         |                                           |   |                     |  |                                                             |   |                                                    |   |  |   |           |  |   |          
|----------------------------------------------- |  | ------------ | ---------- | ------------------------------------- | ---- | ------- | ----------------------------------------- | - | ------------------- |  | ----------------------------------------------------------- | - | -------------------------------------------------- | - |  | - | --------- |  | - | ---------
|Property                                        |  | Net Proceeds |            | Partnerships Approximate Ownership % |      |         | Net
Proceeds Allocated to the Partnership |   | Use of Net Proceeds |  | Net
Proceeds Distributed toPartners as of December 31, 2005 |   | Undistributed Net Proceeds as of December 31, 2005
|                                                |  |              |            | Amount                                |      | Purpose |                                           |  
|Cort Building(sold in 2003)                     |  | $            | 5,563,403  |                                       | 32.7 | %       |                                           | $ | 1,818,114           |  | $                                                           | 0 |                                                    |  |  | $ | 1,818,114 |  | $ | 0        
|Alstom Power  Knoxville Building(sold in 2005) |  |              | 11,646,089 |                                       | 48.5 | %       |                                           |   | 5,647,340           |  |                                                             | 0 |                                                    |  |  |   | 4,066,886 |  |   | 1,580,454
|                                                |  |              |            |                                       |      |         |                                           |   |                     |  |                                                             |   |                                                    |   |  |   |           |  |   |          
|                                                |  |              |            |                                       |      |         |                                           | $ | 7,465,454           |  | $                                                           | 0 |                                                    |   |  | $ | 5,885,000 |  | $ | 1,580,454
|                                                |  |              |            |                                       |      |         |                                           |   |                     |  |                                                             |   |                                                    |   |  |   |           |  |   |          

Upon evaluating the capital needs of the properties in which we currently hold an interest, our General Partners
determined that substantially all of the undistributed net sale proceeds above will be required to fund the Partnerships pro-rata share of the anticipated costs in connection with capital improvements and re-leasing activities at 1315 West
Century Drive and the 360 Interlocken Building.

Results of Operations

Comparison of the year ended December 31, 2005 vs. the year ended December 31, 2004

Equity in Income of Joint Ventures

Equity in income of Joint Ventures was $3,032,297 and $1,073,828 for the years ended
December 31, 2005 and 2004, respectively. The 2005 increase is primarily attributable to (i) a gain recognized on the sale of the Alstom Power  Knoxville Building in the first quarter of 2005, and (ii) a reduction in
depreciation expense due to changing the estimated weighted-average composite useful life for all buildings owned through the Joint Venture from 25 years to 40 years effective July 1, 2004. We expect future equity in income of Joint Ventures to
decrease as a result of (i) a reduction in operating income due to the sale of the Alstom Power  Knoxville Building, and (ii) the vacancy at 1315 West Century Drive.

Expenses

Total expenses were $293,146 and
$184,794 for the years ended December 31, 2005 and 2004, respectively. The 2005 increase is primarily attributable to increases in administrative salaries, accounting fees, legal fees, postage and delivery expense, and printing costs, all of
which have occurred in association with increased reporting and regulatory requirements, as well as an increase in Tennessee partnership taxes as a result of the gain recognized on the sale of the Alstom Power  Knoxville Building. We estimate
Tennessee partnership franchise and excise taxes based on an estimate of the apportionment of income allocable to the Partnership from properties in Tennessee relative to income allocable to the Partnership from all properties as if earned ratably
during the calendar year. Thus, due to the sale of the Alstom Power  Knoxville Building, we anticipate future expenses to decrease.



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##### Index to Financial Statements

Interest and Other Income

Interest and other income was $135,960 and $18,823 for the years ended December 31, 2005 and 2004, respectively. The 2005 increase is primarily a result of (i) an increase in the average amount of net sale
proceeds held during 2005 as a result of the sale of the Alstom Power  Knoxville Building and (ii) an increase in the daily interest yield. Future levels of interest income will be largely dependent upon the timing of future dispositions
and net sale proceeds distributions to the investors.

Comparison of the year ended December 31, 2004 vs. the year ended December 31, 2003

Equity in Income of Joint Ventures

Equity in income of Joint Ventures was $1,073,828 and $1,006,287 for the years ended December 31, 2004 and 2003, respectively. The increase is primarily attributable to (i) the loss recognized on the sale of
the Cort Building in September 2003, and (ii) a reduction in depreciation expense due to changing the estimated weighted-average composite useful life for all buildings owned through the Joint Venture from 25 years to 40 years effective
July 1, 2004.

Expenses

Total expenses were $184,794 and $151,060 for the years ended December 31, 2004 and 2003, respectively. The increases are primarily attributable to increases in administrative salaries, accounting fees, legal fees, postage and delivery
expense, and printing costs, all of which have occurred in association with increased reporting and regulatory requirements.

Interest and Other Income

Interest and other income was $18,823 and $1,505 for the years ended December 31, 2004 and 2003, respectively. The
increase is a result of an increase in the average amount of net sale proceeds held during 2004 as a result of the September 2003 sale of the Cort Building.

Inflation

We are exposed to inflation risk as income from long-term leases is the primary source of our cash flows from operations. There
are provisions in the majority of our tenant leases that would protect us from the impact of inflation. These provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax and insurance
reimbursements on a per square-foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square-foot allowance. However, due to the long-term nature of our leases, the leases may not readjust their reimbursement
rates frequently enough to cover inflation.

Application of Critical Accounting Policies

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



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##### Index to Financial Statements

Below is a discussion of the accounting policies used by the partnership and the Joint Ventures, which are considered to
be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.

Investment
in Real Estate Assets

We will be required to make subjective assessments as to the useful lives of its depreciable assets. We will consider the period
of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. We expect that the estimated useful lives of the Joint Ventures assets by class will be as follows:



|                      |  |                                       
|--------------------- |  | --------------------------------------
|Buildings             |  | 40 years                              
|Building improvements |  | 5-25 years                            
|Land improvements     |  | 20 years                              
|Tenant improvements   |  | Shorter of lease term or economic life

Effective July 1, 2004, the Joint Ventures extended the weighted-average composite useful life for all
building assets from 25 years to 40 years. We believe that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry practice. In the event that the Joint Ventures utilize
inappropriate useful lives or methods of depreciation, our net income would be misstated. The change resulted in an increase to net income of approximately $136,000 for the year ended December 31, 2004.

Valuation of Real Estate Assets

We continually monitor events and
changes in circumstances that could indicate that the carrying amounts of the real estate assets in which we have an ownership interest, either directly or through investments in the 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, as defined by Statement of Financial Accounting Standard No. 144, and recognizes an impairment loss. Estimated fair values are calculated based on the following information, dependent
upon availability, in order of preference: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value. We have determined
that there has been no impairment in the carrying value of any of the real estate assets held as of December 31, 2005.

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

Related-Party Transactions and
Agreements

We have entered into agreements with Wells Capital and its affiliates, whereby we pay certain fees or reimbursements to Wells Capital and
Wells Management, or their affiliates, for property management and leasing services and reimbursement of operating costs. See Item 13, Certain Relationships and Related Transactions for a description of these fees and reimbursements
and amounts incurred and Risk Factors  Conflicts of Interest in Item 1A of this report.



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##### Index to Financial Statements

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

Since we do not borrow any money, make any foreign investments, or invest in any market risk-sensitive instruments, we are not subject to risks relating to interest rates, foreign current exchange rate fluctuations,
or the other market risks contemplated by Item 305 of Regulation S-K.



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

Our financial
statements 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 our independent registered public accountants during the years ended December 31, 2005 or 2004.



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

We carried out an evaluation, under the
supervision and with the participation of management of Wells Capital, the corporate general partner of one of our General Partners, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as of the end of the period. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer
concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed
by us in such reports is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no significant changes in our internal control over financial reporting during the quarter ended December 31, 2005 that have materially affected, or are
likely to materially affect, our internal control over financial reporting.



|ITEM 9B.    OTHER | INFORMATION.
|----------------- | ------------

For the quarter ended December 31, 2005, all
items required to be disclosed under Form 8-K were reported under Form 8-K.



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##### Index to Financial Statements

PART III



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

Wells Partners

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

Leo F.
Wells, III

Mr. Wells, 62, who serves as one of our General Partners, is the president, treasurer, and sole director of Wells Capital, which is our
corporate General Partner. He is also the sole stockholder, president, and sole director of Wells Real Estate Funds, Inc., the parent corporation of Wells Capital, Wells Management, Wells Investment Securities, Inc. (WIS), and
Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which Mr. Wells serves as principal broker. He is also the president, treasurer, and sole director of:



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



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



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

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

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

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

In 2001 and 2002, WIS sponsored conferences attended by registered representatives who sold its real
estate investment products. WIS also paid for certain expenses of guests of the registered representatives who attended the conferences. In 2001, WIS paid the costs of travel to the conference and meals for many of the guests, and paid the costs of
playing golf for some of the registered representatives and their guests. WIS later invoiced registered representatives for the cost of golf and for travel expenses of guests, but was not



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##### Index to Financial Statements

fully reimbursed for such. In 2002, WIS paid for meals for the guests. WIS also conditioned most of the 2001 conference invitations on attainment by the
registered representatives of a predetermined sales goal for WIS products. This conduct violated the prohibitions against payment and receipt of noncash compensation in connection with the sales of these products contained in NASDs Conduct
Rules 2710, 2810, and 3060. In addition, WIS and Mr. Wells failed to adhere to all of the terms of their written undertaking made in March 2001 not to engage in the conduct described above, and thereby engaged in conduct that was inconsistent
with high standards of commercial honor and just and equitable principles of trade in violation of NASD Conduct Rule 2110.

WIS consented to a censure and
Mr. Wells consented to suspension from acting in a principal capacity with an NASD member firm for one year. WIS and Mr. Wells also agreed to the imposition of a joint and several fine in the amount of $150,000. Mr. Wells
one-year suspension from acting in a principal capacity ended on October 6, 2004. Mr. Wells continues to engage in selling efforts and other nonprincipal activities on behalf of WIS.

In November 2004, a putative class action complaint, the Hendry Action, was filed against, among others, Wells Capital, Mr. Wells, and Wells Management. See Part I,
Item 1 for additional information regarding the Hendry Action.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the officers and directors of the general partner of our General Partner, and persons who own 10% or
more of any class of equity interests in the Partnership, to report their beneficial ownership of equity interests in the Partnership to the SEC. Their initial reports are required to be filed using the SECs Form 3, and they are required
to report subsequent purchases, sales, and other changes using the SECs Form 4, which must be filed within two business days of most transactions. Officers, directors, and partners owning more than 10% of any class of equity interests in
the Partnership are required by SEC regulations to furnish us with copies of all of reports they file pursuant to Section 16(a).

Based solely on our
review of copies of these reports furnished to us by the officers and directors of the general partner of our General Partner, we believe that the officers and directors of the general partner of our General Partner listed below did not timely file
initial Form 3 reports pursuant to Section 16(a) filing requirements (there are no individuals who own 10% of any class of equity interests in the Partnership). In addition, Leo F. Wells, III and Angeline J. Wells inadvertently failed to
report prior issuances of units on such Form 3 reports when those reports were filed with the SEC. All such issuances were subsequently reported on amended Form 3 reports.



|                         |  |        |  |                     |  |                          |  |                                
|------------------------ |  | ------ |  | ------------------- |  | ------------------------ |  | -------------------------------
|Name                     |  | Report |  | No. of Late Reports |  | No. of Late Transactions |  | Date Form Filed                
|Robert E. Bowers         |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Thomas F. Brittelle      |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Linda L. Carson          |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Stephen G. Franklin, Sr. |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Randy Fretz              |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Angeline J. Wells        |  | Form 3 |  | 2                   |  | 1                        |  | June 2, 2005 and March 17, 2006
|Leo F. Wells, III        |  | Form 3 |  | 2                   |  | 2                        |  | June 2, 2005 and March 17, 2006
|Douglas P. Williams      |  | Form 3 |  | 1                   |  | 0                        |  | June 2, 2005                   
|Donald A. Miller         |  | Form 3 |  | 1                   |  | 0                        |  | July 8, 2005                   

Financial Oversight Committee

The Partnership does not have a board of directors or an audit committee. Accordingly, as the corporate general partner of one of the General Partners of the Partnership, Wells Capital has established a Financial
Oversight Committee consisting of Leo F. Wells, III, as the Principal Executive Officer; Douglas P. Williams, as the Principal Financial Officer; and Randall D. Fretz, as the Senior Vice President of Wells Capital. The Financial Oversight



Page 34



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##### Index to Financial Statements

Committee serves the equivalent function of an audit committee for, among others, the following purposes: appointment, compensation, review and oversight of
the work of our independent registered public accountants, and establishing and enforcing the code of ethics. However, since neither the Partnership nor its corporate General Partner has an audit committee and the Financial Oversight Committee is
not independent of the Partnership or the General Partners, we do not have an audit committee financial expert.

Code of Ethics

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



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

As of
December 31, 2005, the Partnership has not made payments directly to the General Partners. See Item 13, Certain Relationships and Related Transactions, for a description of the fees incurred by the Partnership payable to
affiliates of the General Partners during the year ended December 31, 2005.



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

(a)    No limited partner owns beneficially more than 5% of any class of the outstanding units of the Partnership.

(b)    Set forth below is the security ownership of management as of February 28, 2006.



|                          |  |                          |  |                                           |  |                 
|------------------------- |  | ------------------------ |  | ----------------------------------------- |  | ----------------
|Title of Class            |  | Name of Beneficial Owner |  | Amount and Nature of Beneficial Ownership |  | Percent of Class
|Limited Partnership Units |  | Leo F. Wells, III        |  | 110.036 Units(1)                          |  | Less than 1%    



| | (1) | Leo F. Wells, III owns 110.036 Class A Units through an Individual Retirement
Account.
| | --- | --------------------------------------------------------------------------------------

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



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
|-------- | -----------------------------------------------

The compensation
and fees we pay to our General Partners and their affiliates in connection with our operations are as follows:

Interest in Partnership Cash Flow and
Net Sales Proceeds

The General Partners are entitled to 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 are also entitled to receive a subordinated participation
in net sales proceeds and net financing proceeds equal to 20% of residual proceeds available for distribution after limited partners holding Class A Units have received a return of their adjusted capital contributions plus a 10% cumulative
return on their adjusted capital contributions and limited partners holding Class B Units have received a return of their adjusted capital contributions plus a 15% cumulative return on their adjusted capital contributions; provided, however, that in
no event shall the General Partners receive in the aggregate in excess of 15% of net sales proceeds and net financing proceeds remaining after payments to limited partners from such proceeds of amounts equal to the sum of their adjusted capital
contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners did not receive any distributions of net cash from operations or net sales proceeds for the year ended December 31, 2005.



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##### Index to Financial Statements

Management and Leasing Fees

Wells Management, an affiliate of the General Partners, receives compensation for asset management and the management and leasing of our properties owned through Joint Ventures equal to (a) of the gross revenues collected monthly, 3%
for management services and 3% for leasing services, 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. Management and leasing fees are paid by the Joint Ventures and, accordingly, included in equity in income of joint ventures in the accompanying statement of operations. The
Partnerships share of management and leasing fees and lease acquisition cost incurred through the Joint Ventures were $64,051, $117,505, and $142,944 for the years ended December 31, 2005, 2004, and 2003, respectively.

Real Estate Commissions

In connection with the sale of our
properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (a) 50% of the commissions customarily charged by other brokers in arms-length transactions involving comparable properties in the
same geographic area or (b) 3% of the gross sales price of the property, and provided that payments of such commissions will be made only after limited partners have received prior distributions totaling 100% of their capital contributions plus
a 6% cumulative return on their adjusted capital contributions. No real estate commissions were paid to the General Partners or affiliates for the years ended December 31, 2005, 2004, or 2003.

Administration Reimbursements

Wells Capital, the corporate general
partner of Wells Partners, one of our general partners, and Wells Management perform certain administrative services for the Partnership, relating to accounting and other partnership administration, and incurs the related expenses. Such expenses are
allocated among other entities affiliated with the General Partners based on estimates of the amount of time dedicated to each fund by individual administrative personnel. In the opinion of the General Partners, this allocation is a reasonable
estimation of such expenses. We reimbursed Wells Capital and Wells Management for administrative expenses of $81,934, $84,837, and $49,558 for the years ended December 31, 2005, 2004, and 2003, respectively, which are included in partnership
administration expenses in the accompanying statements of operations.



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

Preapproval Policies
and Procedures

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



Page 36



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##### Index to Financial Statements

Fees Paid to the Independent Registered Public Accountants

During the year ended December 31, 2005, Ernst & Young LLP (Ernst & Young) served as our independent registered public accountants and
provided certain tax and other services. Ernst & Young has served as our independent registered public accountants since July 3, 2002. All such fees are recognized in the period to which the services relate. A portion of such fees are
allocated to the joint ventures in which the Partnership invests. The aggregate fees billed to the Partnership for professional accounting services by Ernst & Young, including the audit of the Partnerships annual financial statements,
for the fiscal years ended December 31, 2005 and 2004, are set forth in the table below.



|                   |  |      |        |      |   |       
|------------------ |  | ---- | ------ | ---- | - | ------
|                   |  | 2005 |        | 2004
|Audit Fees         |  | $    | 39,591 |      | $ | 26,496
|Audit-Related Fees |  |      | 0      |      |   | 0     
|Tax Fees           |  |      | 21,370 |      |   | 13,173
|Other Fees         |  |      | 0      |      |   | 0     
|                   |  |      |        |      |   |       
|Total              |  | $    | 60,961 |      | $ | 39,669
|                   |  |      |        |      |   |       

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



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



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



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



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

During the fiscal years ended December 31, 2005 and 2004, 100% of the services performed by Ernst & Young
described above under the captions Audit Fees, Audit-Related Fees, Tax Fees, and Other Fees were approved in advance by a member of the Financial Oversight Committee.



Page 37



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##### Index to Financial Statements

PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|-------- | -------------------------------------------



|(a) | 1.  The financial statements are contained on pages F-2 through F-38 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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|(c) | See (a) 1 above.
|--- | ----------------



Page 38



---

##### Index to Financial Statements

SIGNATURES

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



|               |  |  |  |                                                                                                    |  |                                                 |  | 
|-------------- |  |  |  | -------------------------------------------------------------------------------------------------- |  | ----------------------------------------------- |  | 
|               |  |  |  | WELLS REAL ESTATE FUND X, L.P. (Registrant)                                                       
|               |  |  | 
|               |  |  |  | By:                                                                                                |  | WELLS PARTNERS, L.P. (General Partner)         
|               |  |  | 
|               |  |  |  | By:                                                                                                |  | WELLS CAPITAL, INC. (Corporate General Partner)
|               |  | 
|March 28, 2006 |  |  |  | /S/    LEO F. WELLS,
III                                                                          
|               |  |  |  | Leo F. Wells, III President, Principal
Executive Officer, and Sole Director of Wells Capital, Inc.
|               |  | 
|March 28, 2006 |  |  |  | /S/    DOUGLAS P.
WILLIAMS                                                                        
|               |  |  |  | Douglas P. Williams Principal Financial
Officer of Wells Capital, Inc.                            



Page 39



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##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.



TABLE OF CONTENTS



|                                                                                                              |  |     
|------------------------------------------------------------------------------------------------------------- |  | ----
|FINANCIAL STATEMENTS                                                                                          |  | Page
|                                                                                                              | 
|WELLS REAL ESTATE FUND X, L.P.                                                                                |  |     
|Report of Independent Registered Public Accounting Firm                                                       |  | F-2 
|Balance Sheets as of December 31, 2005 and 2004                                                               |  | F-3 
|Statements of Operations for the Years Ended December 31, 2005, 2004, and 2003                                |  | F-4 
|Statements of Partners Capital for the Years Ended December 31, 2005, 2004, and 2003                         |  | F-5 
|Statements of Cash Flows for the Years Ended December 31, 2005, 2004, and 2003                                |  | F-6 
|Notes to Financial Statements                                                                                 |  | F-7 
|                                                                                                              | 
|THE FUND IX, FUND X, FUND XI, AND REIT JOINT VENTURE                                                          |  |     
|Report of Independent Registered Public Accounting Firm                                                       |  | F-18
|Balance Sheets as of December 31, 2005 and 2004                                                               |  | F-19
|Statements of Operations for the Years Ended December 31, 2005, 2004, and 2003                                |  | F-20
|Statements of Partners Capital for the Years Ended December 31, 2005, 2004, and 2003                         |  | F-21
|Statements of Cash Flows for the Years Ended December 31, 2005, 2004, and 2003                                |  | F-22
|Notes to Financial Statements                                                                                 |  | F-23
|Schedule III  Real Estate and Accumulated Depreciation                                                       |  | F-28
|                                                                                                              | 
|FUND X AND FUND XI ASSOCIATES                                                                                 |  |     
|Report of Independent Registered Public Accounting Firm                                                       |  | F-30
|Balance Sheets as of December 31, 2005 (unaudited) and 2004 (unaudited)                                       |  | F-31
|Statements of Operations for the Years Ended December 31, 2005 (unaudited), 2004 (unaudited), and 2003        |  | F-32
|Statements of Partners Capital for the Years Ended December 31, 2005 (unaudited), 2004 (unaudited), and 2003 |  | F-33
|Statements of Cash Flows for the Years Ended December 31, 2005 (unaudited), 2004 (unaudited), and 2003        |  | F-34
|Notes to Financial Statements                                                                                 |  | F-35



Page F-1



---

##### Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The General Partners of

Wells Real Estate Fund X, L.P.

We have
audited the accompanying balance sheets of Wells Real Estate Fund X, L.P. (the Partnership) as of December 31, 2005 and 2004, and the related statements of operations, partners capital, and cash flows for each of the three
years in the period ended December 31, 2005. 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 the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Partnerships internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnerships
internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and 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 X, L.P. at December 31, 2005 and 2004, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

/S/    ERNST & YOUNG LLP

Atlanta, Georgia

March 2, 2006



Page F-2



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.

BALANCE SHEETS

DECEMBER 31, 2005 AND 2004



|                                                                                                                    |  |      |            |      |   |           
|------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|ASSETS                                                                                                             
|                                                                                                                    |  | 2005 |            | 2004
|Investment in joint ventures                                                                                        |  | $    | 13,267,855 |      | $ | 16,477,756
|Cash and cash equivalents                                                                                           |  |      | 1,828,183  |      |   | 857,860   
|Due from joint ventures                                                                                             |  |      | 125,072    |      |   | 392,849   
|                                                                                                                    |  |      |            |      |   |           
|Total assets                                                                                                        |  | $    | 15,221,110 |      | $ | 17,728,465
|                                                                                                                    |  |      |            |      |   |           
|LIABILITIES AND PARTNERS
CAPITAL                                                                                  
|Liabilities:                                                                                                        |  |      |            |      |   |           
|Accounts payable and accrued expenses                                                                               |  | $    | 37,036     |      | $ | 39,068    
|Due to affiliates                                                                                                   |  |      | 8,132      |      |   | 4,514     
|Partnership distributions payable                                                                                   |  |      | 161,376    |      |   | 119,182   
|                                                                                                                    |  |      |            |      |   |           
|Total liabilities                                                                                                   |  |      | 206,544    |      |   | 162,764   
|                                                                                                                    |  |     
|Commitments and contingencies                                                                                       |  |      | 0          |      |   | 0         
|                                                                                                                    |  |     
|Partners Capital:                                                                                                  |  |      |            |      |   |           
|Limited partners:                                                                                                   |  |      |            |      |   |           
|Class A  2,422,642 units and 2,407,142 units issued and outstanding as of December 31, 2005 and 2004,
respectively |  |      | 14,815,005 |      |   | 17,565,701
|Class B  290,249 units and 305,749 units issued and outstanding as of December 31, 2005 and 2004, respectively     |  |      | 199,561    |      |   | 0         
|                                                                                                                    |  |      |            |      |   |           
|Total partners capital                                                                                             |  |      | 15,014,566 |      |   | 17,565,701
|                                                                                                                    |  |      |            |      |   |           
|Total liabilities and partners capital                                                                             |  | $    | 15,221,110 |      | $ | 17,728,465
|                                                                                                                    |  |      |            |      |   |           

See accompanying notes.



Page F-3



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                                             |  |      |           |      |   |           |  |   |          
|------------------------------------------------------------ |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                                             |  | 2005 |           | 2004 |   | 2003     
|EQUITY IN INCOME OF JOINT VENTURES                           |  | $    | 3,032,297 |      | $ | 1,073,828 |  | $ | 1,006,287
|                                                             |  |      |          
|EXPENSES:                                                    |  |      |           |      |   |           |  |   |          
|Partnership administration                                   |  |      | 222,763   |      |   | 143,786   |  |   | 132,294  
|Legal and accounting                                         |  |      | 70,383    |      |   | 41,008    |  |   | 18,766   
|                                                             |  |      |           |      |   |           |  |   |          
|Total expenses                                               |  |      | 293,146   |      |   | 184,794   |  |   | 151,060  
|                                                             |  |      |          
|INTEREST AND OTHER INCOME                                    |  |      | 135,960   |      |   | 18,823    |  |   | 1,505    
|                                                             |  |      |           |      |   |           |  |   |          
|NET INCOME                                                   |  | $    | 2,875,111 |      | $ | 907,857   |  | $ | 856,732  
|                                                             |  |      |           |      |   |           |  |   |          
|NET INCOME (LOSS) ALLOCATED TO LIMITED PARTNERS:             |  |      |           |      |   |           |  |   |          
|CLASS A                                                      |  | $    | 1,168,059 |      | $ | 357,097   |  | $ | 856,732  
|                                                             |  |      |           |      |   |           |  |   |          
|CLASS B                                                      |  | $    | 1,707,052 |      | $ | 550,760   |  | $ | 0        
|                                                             |  |      |           |      |   |           |  |   |          
|NET INCOME (LOSS) PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT: |  |      |           |      |   |           |  |   |          
|CLASS A                                                      |  | $    | 0.48      |      | $ | 0.15      |  | $ | 0.36     
|                                                             |  |      |           |      |   |           |  |   |          
|CLASS B                                                      |  | $    | 5.84      |      | $ | 1.72      |  | $ | 0.00     
|                                                             |  |      |           |      |   |           |  |   |          
|WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:          |  |      |           |      |   |           |  |   |          
|CLASS A                                                      |  |      | 2,420,517 |      |   | 2,391,723 |  |   | 2,360,734
|                                                             |  |      |           |      |   |           |  |   |          
|CLASS B                                                      |  |      | 292,374   |      |   | 321,168   |  |   | 352,158  
|                                                             |  |      |           |      |   |           |  |   |          

See accompanying notes.



Page F-4



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.

STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                                                                                                       |  |                  |   |  |                  |            |                         |       |         |   |        |   |            |   |  |   |   |  |   |            |  
|---------------------------------------------------------------------------------------------------------------------- |  | ---------------- | - |  | ---------------- | ---------- | ----------------------- | ----- | ------- | - | ------ | - | ---------- | - |  | - | - |  | - | ---------- | -
|                                                                                                                       |  | Limited Partners |   |  | General Partners |            | Total Partners Capital |      
|                                                                                                                       |  | Class A          |   |  | Class B          |            |                         |      
|                                                                                                                       |  | Units            |   |  | Amount           |            |                         | Units |         |   | Amount |   |            |  
|BALANCE, DECEMBER 31, 2002                                                                                             |  | 2,328,014        |   |  | $                | 19,426,530 |                         |       | 384,877 |   |        | $ | 0          |   |  | $ | 0 |  | $ | 19,426,530 |  
|                                                                                                                       |  |                  |   |  |                  |           
|Class B conversion elections                                                                                           |  | 48,336           |   |  |                  | 0          |                         |       | (48,336 | ) |        |   | 0          |   |  |   | 0 |  |   | 0          |  
|Net income                                                                                                             |  | 0                |   |  |                  | 856,732    |                         |       | 0       |   |        |   | 0          |   |  |   | 0 |  |   | 856,732    |  
|Distributions of operating cash flow ($0.76 per weighted-average Class A Unit)                                         |  | 0                |   |  |                  | (1,800,593 | )                       |       | 0       |   |        |   | 0          |   |  |   | 0 |  |   | (1,800,593 | )
|                                                                                                                       |  |                  |   |  |                  |            |                         |       |         |   |        |   |            |   |  |   |   |  |   |            |  
|BALANCE, DECEMBER 31, 2003                                                                                             |  | 2,376,350        |   |  |                  | 18,482,669 |                         |       | 336,541 |   |        |   | 0          |   |  |   | 0 |  |   | 18,482,669 |  
|                                                                                                                       |  |                  |   |  |                  |           
|Class A conversion elections                                                                                           |  | (2,500           | ) |  |                  | (19,327    | )                       |       | 2,500   |   |        |   | 19,327     |   |  |   | 0 |  |   | 0          |  
|Class B conversion elections                                                                                           |  | 33,292           |   |  |                  | 0          |                         |       | (33,292 | ) |        |   | 0          |   |  |   | 0 |  |   | 0          |  
|Net income                                                                                                             |  | 0                |   |  |                  | 357,097    |                         |       | 0       |   |        |   | 550,760    |   |  |   | 0 |  |   | 907,857    |  
|Distributions of operating cash flow ($0.33 per Class A weighted-average Class A Unit)                                 |  | 0                |   |  |                  | (789,825   | )                       |       | 0       |   |        |   | 0          |   |  |   | 0 |  |   | (789,825   | )
|Distributions of net sales proceeds ($0.20 and $1.78 per weighted-average Class A Unit and Class B Unit, respectively) |  | 0                |   |  |                  | (464,913   | )                       |       | 0       |   |        |   | (570,087   | ) |  |   | 0 |  |   | (1,035,000 | )
|                                                                                                                       |  |                  |   |  |                  |            |                         |       |         |   |        |   |            |   |  |   |   |  |   |            |  
|BALANCE, DECEMBER 31, 2004                                                                                             |  | 2,407,142        |   |  |                  | 17,565,701 |                         |       | 305,749 |   |        |   | 0          |   |  |   | 0 |  |   | 17,565,701 |  
|                                                                                                                       |  |                  |   |  |                  |           
|Class A conversion elections                                                                                           |  | (2,000           | ) |  |                  | (14,595    | )                       |       | 2,000   |   |        |   | 14,595     |   |  |   | 0 |  |   | 0          |  
|Class B conversion elections                                                                                           |  | 17,500           |   |  |                  | 57,494     |                         |       | (17,500 | ) |        |   | (57,494    | ) |  |   | 0 |  |   | 0          |  
|Net income                                                                                                             |  | 0                |   |  |                  | 1,168,059  |                         |       | 0       |   |        |   | 1,707,052  |   |  |   | 0 |  |   | 2,875,111  |  
|Distributions of operating cash flow ($0.24 per weighted-average Class A Unit)                                         |  | 0                |   |  |                  | (576,245   | )                       |       | 0       |   |        |   | 0          |   |  |   | 0 |  |   | (576,245   | )
|Distributions of net sales proceeds ($1.40 and $5.01 per weighted-average Class A Unit and Class B Unit,
respectively) |  | 0                |   |  |                  | (3,385,409 | )                       |       | 0       |   |        |   | (1,464,592 | ) |  |   | 0 |  |   | (4,850,001 | )
|                                                                                                                       |  |                  |   |  |                  |            |                         |       |         |   |        |   |            |   |  |   |   |  |   |            |  
|BALANCE, DECEMBER 31, 2005                                                                                             |  | 2,422,642        |   |  | $                | 14,815,005 |                         |       | 290,249 |   |        | $ | 199,561    |   |  | $ | 0 |  | $ | 15,014,566 |  
|                                                                                                                       |  |                  |   |  |                  |            |                         |       |         |   |        |   |            |   |  |   |   |  |   |            |  

See accompanying notes.



Page F-5



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                  |  | 2005 |            |   | 2004 |   |            | 2003 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Net income                                                                        |  | $    | 2,875,111  |   |      | $ | 907,857    |      |  | $ | 856,732    |  
|Operating distributions received from joint ventures                              |  |      | 862,635    |   |      |   | 1,325,009  |      |  |   | 1,892,429  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |   |            |      |  |   |            |  
|Equity in income of joint ventures                                                |  |      | (3,032,297 | ) |      |   | (1,073,828 | )    |  |   | (1,006,287 | )
|Operating changes in assets and liabilities:                                      |  |      |            |   |      |   |            |      |  |   |            |  
|(Decrease) increase in accounts payable and accrued expenses                      |  |      | (2,032     | ) |      |   | 24,026     |      |  |   | (560       | )
|Increase in due to affiliates                                                     |  |      | 3,618      |   |      |   | 1,824      |      |  |   | 566        |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                         |  |      | 707,035    |   |      |   | 1,184,888  |      |  |   | 1,742,880  |  
|                                                                                  |  |      |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Net sales proceeds received from joint ventures                                   |  |      | 5,647,340  |   |      |   | 0          |      |  |   | 1,818,114  |  
|Investment in joint ventures                                                      |  |      | 0          |   |      |   | 0          |      |  |   | (40,154    | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash provided by investing activities                                         |  |      | 5,647,340  |   |      |   | 0          |      |  |   | 1,777,960  |  
|                                                                                  |  |      |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Distributions paid to limited partners in excess of accumulated operating income  |  |      | (534,051   | ) |      |   | (1,101,356 | )    |  |   | (1,377,008 | )
|Distributions paid to limited partners from accumulated operating income          |  |      | 0          |   |      |   | 0          |      |  |   | (487,576   | )
|Net sales proceeds distributions paid to limited partners                         |  |      | (4,850,001 | ) |      |   | (1,035,000 | )    |  |   | 0          |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                             |  |      | (5,384,052 | ) |      |   | (2,136,356 | )    |  |   | (1,864,584 | )
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |      | 970,323    |   |      |   | (951,468   | )    |  |   | 1,656,256  |  
|                                                                                  |  |      |           
|CASH AND CASH EQUIVALENTS, beginning of year                                      |  |      | 857,860    |   |      |   | 1,809,328  |      |  |   | 153,072    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|CASH AND CASH EQUIVALENTS, end of year                                            |  | $    | 1,828,183  |   |      | $ | 857,860    |      |  | $ | 1,809,328  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                                  |  |      |           
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:           |  |      |            |   |      |   |            |      |  |   |            |  
|Partnership distributions payable                                                 |  | $    | 161,376    |   |      | $ | 119,182    |      |  | $ | 430,713    |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |            |  

See accompanying notes.



Page F-6



---

##### Index to Financial Statements

WELLS REAL ESTATE FUND X, L.P.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2005, 2004, AND 2003



|1. | ORGANIZATION AND BUSINESS
|-- | -------------------------

Wells Real Estate Fund X, L.P. (the
Partnership) is a public limited partnership organized on June 20, 1996 under the laws of the state of Georgia with Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia nonpublic limited
partnership, serving as its general partners (collectively, the General Partners). Wells Capital, Inc. (Wells Capital) serves as the corporate general partner of Wells Partners. Wells Capital is a wholly owned subsidiary of
Wells Real Estate Funds, Inc. Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of Wells Real Estate Funds, Inc. Upon subscription for units, each limited partner must elect
whether to have its units treated as Class A Units or Class B Units. Thereafter, limited partners have the right to change their prior election 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) add 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 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, 1996, the Partnership commenced an offering of up to $35,000,000 of Class A or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of
1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units on February 4, 1997. The offering was terminated on December 30, 1997, at which time the Partnership had sold approximately
2,116,099 Class A Units and 596,792 Class B Units representing capital contributions of $27,128,912.

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



|                                                                                     |  |                                                                                                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                                        |  | Joint Venture Partners                                                                                                                          |  | Properties                                                                                                                                                                                                                                                                                                                                                             
|The Fund IX, Fund X, Fund XI and REIT Joint Venture (Fund IX-X-XI-REIT Associates) |  |   Wells Real Estate Fund IX, L.P.   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P.   Wells Operating Partnership, L.P.(2) |  | 1. Alstom Power  Knoxville Building(1) A
three-story office building located in Knoxville, Tennessee  2. 360 Interlocken Building A three-story office building located in Boulder,
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, Utah



Page F-7



---

##### Index to Financial Statements

|                                                       |  |                                                                      |  |                                                                                                                                 
|------------------------------------------------------ |  | -------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                          |  | Joint Venture Partners                                               |  | Properties                                                                                                                      
|                                                       |  |                                                                      |  | 5. 1315 West Century Drive (formerly known as the Ohmeda
Building) A two-story office building located in Louisville, Colorado
|Fund X and Fund XI Associates (Fund X-XI Associates) |  |   Wells Real Estate Fund X, L.P.   Wells Real Estate Fund XI, L.P. |  | This joint venture owns interests only in other joint ventures and does not own any properties directly.                        
|Wells/Fremont Associates                               |  |   Fund X and XI Associates   Wells Operating Partnership, L.P.(2)  |  | 6. 47320 Kato Road A two-story warehouse and office building located in Fremont, California                                     
|Wells/Orange County Associates                         |  |   Fund X and XI Associates   Wells Operating Partnership, L.P.(2)  |  | 7. Cort Building(3) A one-story office and warehouse building
located in Fountain Velley, California                            



| | (1) | This property was sold in March 2005.
| | --- | -------------------------------------



| | (2) | Wells Operating Partnership, L.P. (Wells OP) is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells REIT)
serving as its general partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | This property was sold in September 2003.
| | --- | -----------------------------------------

Wells
Real Estate Fund IX, L.P. and Wells Real Estate Fund XI, L.P. are affiliated with the Partnership through common general partners. Each of the properties described above was acquired on an all-cash basis.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Basis of
Presentation

The Partnerships financial statements are prepared in accordance with accounting principles generally accepted in the United States
(GAAP).

Use of Estimates

The preparation
of the Partnerships financial statements in conformity with GAAP 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.

Investment in Joint Ventures

The
Partnership adopted Financial Accounting Standards Board Interpretation No. (FIN) 46(R), Consolidation of Variable Interest Entities, which supersedes FIN 46 and is an interpretation of Accounting Research Bulletin
(ARB) No. 51, Consolidated Financial Statements, effective March 31, 2004. The Partnership and its partners in the Joint Ventures have disproportionate voting rights for certain major decisions relative to their
obligations to absorb expected losses and rights to receive residual returns of such ventures. Management has evaluated the Joint Ventures and determined that they are not variable interest entities under the provisions of FIN 46(R) because such
joint ventures do not conduct substantially all of their activities on behalf of a joint venture partner



Page F-8



---

##### Index to Financial Statements

with disproportionately fewer voting rights. Management has also determined that the joint venture partners are not related parties, as defined in FIN 46(R)
and Statement of Financial Accounting Standard (SFAS) No. 57. Accordingly, the adoption of FIN 46(R) did not result in the consolidation of any previously unconsolidated entities.

The Partnership does not have control over the operations of the Joint Ventures; however, it does exercise significant influence. Approval by the Partnership as well as
the other joint venture partners is required for any major decision or any action that would materially affect the Joint Ventures, or their real property investments. Accordingly, upon applying the provisions of SFAS No. 94, Consolidation of
All Majority-Owned Subsidiaries, ARB No. 51, and Statement of Position (SOP) No. 78-9, Accounting for Investments In Real Estate Ventures, the Partnership accounts for its investments in the Joint Ventures using the
equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements,
all income (loss) and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on
a quarterly basis.

In the third quarter of 2004, the Joint Ventures completed a review of their real estate depreciation by performing an analysis of the
components of each property type in an effort to determine the weighted-average composite useful lives of their real estate assets. As a result of this review, effective July 1, 2004, the Joint Ventures extended the weighted-average composite
useful life for all building assets from 25 years to 40 years. We believe that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry practice. The change resulted in an
increase to the Partnerships net income of approximately $136,000 for the year ended December 31, 2004. In the event that the Joint Ventures utilize inappropriate useful lives or methods of depreciation, the Partnerships net income
would be misstated.

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
approximates fair value, and consist of investments in money market accounts.

Distributions of Net Cash from Operations

Net cash from operations, if available, is generally distributed to limited partners quarterly. In accordance with the partnership agreement, such distributions are paid
first to the limited partners holding Class A Units until they have received a 10% per annum return on their respective net capital contributions, as defined. Then distributions are paid to the General Partners until they have received 10%
of the total amount distributed to date. Any remaining cash from operations is to be allocated 90% to the limited partners holding Class A Units and 10% to the General Partners. No distributions of net cash from operations will be made to the
limited partners holding Class B Units.

Distributions of Sales Proceeds

Upon the sale of the Partnerships properties, unless reserved, net sale proceeds will be distributed in the following order:



| |  |  | In the event that the particular property sold is sold for a price that is less than the original property purchase price, to the limited partners holding Class A Units until
they have received an amount equal to the excess of the original property purchase price over the price for which the property was sold, limited to the amount of depreciation, amortization, and cost recovery deductions taken by the limited partners
holding Class B Units with respect to such property;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-9



---

##### Index to Financial Statements

| |  |  | To limited partners holding units which at any time have been treated as Class B Units until such limited partners have received an amount necessary to equal the net cash available
for distribution received by the limited partners holding Class A Units on a per-unit basis;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per-unit basis until the limited partners have received 100% of their respective net capital contributions, as defined;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per-unit basis until the limited partners have received a cumulative 10% per annum return on their respective net capital contributions, as
defined;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | To the General Partners until they have received 100% of their respective 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; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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

For the purpose of determining allocations per the partnership
agreement, net income is defined as net income recognized by the Partnership, excluding deductions for depreciation and amortization and cost recovery and the gain on the sale of assets. 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 holding Class A Units and the General Partners. To the extent the Partnerships net income in any year exceeds net cash from operations, it will
be allocated 99% to the limited partners holding Class A Units and 1% to the General Partners.

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

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

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.



Page F-10



---

##### Index to Financial Statements

Reclassifications

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

Recent Accounting
Pronouncements

In June 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, Accounting Changes and Error
Corrections, which replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS No. 154 changes the method to account for
and report changes in accounting principles and corrections of errors. Previously, most voluntary changes in accounting principles required recognition as a cumulative effect adjustment to net income during the period in which the change was
adopted. Conversely, in circumstances where applicable accounting guidance does not include specific transition provisions, SFAS No. 154 requires retrospective application to prior periods financial statements unless it is impractical to
determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for fiscal years beginning after December 15, 2005; however, it does not change the transition provisions of any of the existing
accounting pronouncements. The adoption of this statement is not expected to have a material effect on the Partnerships financial statements.

In
March 2005, the FASB issued FIN 47, Accounting for Conditional Asset Retirement Obligations,an interpretation of SFAS No. 143, Asset Retirement Obligations, effective for fiscal years ending after December 15, 2005. FIN 47
clarifies the definition of a conditional asset retirement obligation provided in SFAS No. 143 as a legal obligation to perform an asset retirement activity for which the timing or method of settlement is conditional upon a future
event that may or may not be within control of the Partnership. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The
Partnership may have undetected asbestos at certain of the Partnerships properties. Because the obligations to remove asbestos from any of these properties have indeterminate settlement dates, the Partnership is unable to reasonably estimate
the fair values of these obligations. To the extent that these properties undergo major renovations or demolition, certain environmental regulations are in place, which specify the manner in which the asbestos must be handled and disposed. In such
circumstances, sufficient information may become available to reasonably estimate the fair value of the liability. There are currently no plans to undertake a major renovation that would require removal of the asbestos or demolition of a property.
The adoption of FIN 47 did not have a material effect on the Partnerships financial statements.



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

Due from Joint Ventures

As of December 31, 2005 and 2004, Due from Joint Ventures represents the Partnerships share of operating cash flow to be distributed for the
fourth quarters of 2005 and 2004, respectively, from the following Joint Ventures:



|                             |  |      |         |      |   |        
|---------------------------- |  | ---- | ------- | ---- | - | -------
|                             |  | 2005 |         | 2004
|Fund IX-X-XI-REIT Associates |  | $    | 112,877 |      | $ | 363,697
|Fund X-XI Associates         |  |      | 12,195  |      |   | 29,152 
|                             |  |      |         |      |   |        
|                             |  | $    | 125,072 |      | $ | 392,849
|                             |  |      |         |      |   |        



Page F-11



---

##### Index to Financial Statements

Summary of Investments

The Partnerships investments and approximate ownership percentages in the Joint Ventures as of December 31, 2005 and 2004 are summarized below:



|                             |  |        |            |            |      |   |        |   |            |  |    |  
|---------------------------- |  | ------ | ---------- | ---------- | ---- | - | ------ | - | ---------- |  | -- | -
|                             |  | 2005   |            |            | 2004 |  
|                             |  | Amount |            | Percentage |      |   | Amount |   | Percentage | 
|Fund IX-X-XI-REIT Associates |  | $      | 12,292,659 |            | 48   | % |        | $ | 15,487,048 |  | 48 | %
|Fund X-XI Associates         |  |        | 975,196    |            | 58   | % |        |   | 990,708    |  | 58 | %
|                             |  |        |            |            |      |   |        |   |            |  |    |  
|                             |  | $      | 13,267,855 |            |      |   |        | $ | 16,477,756 |  |    |  
|                             |  |        |            |            |      |   |        |   |            |  |    |  

Summary of Activity

Roll-forwards of the Partnerships investment in the Joint Ventures for the years ended December 31, 2005 and 2004 are presented below:



|                                                |  |      |            |   |      |   |            |  
|----------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                |  | 2005 |            |   | 2004 |  
|Investment in Joint Ventures, beginning of year |  | $    | 16,477,756 |   |      | $ | 16,642,806 |  
|Equity in income of Joint Ventures              |  |      | 3,032,297  |   |      |   | 1,073,828  |  
|Contributions to Joint Ventures                 |  |      | 0          |   |      |   | 0          |  
|Distributions from Joint Ventures               |  |      | (6,242,198 | ) |      |   | (1,238,878 | )
|                                                |  |      |            |   |      |   |            |  
|Investment in Joint Ventures, end of year       |  | $    | 13,267,855 |   |      | $ | 16,477,756 |  
|                                                |  |      |            |   |      |   |            |  

Summary of Financial Information

Condensed financial information for the Joint Ventures as of December 31, 2005 and 2004, and for the years ended December 31, 2005, 2004, and 2003 is presented below:



|                             |  |                   |            |                   |   |                   |  |                   |         |                   |   |                   |  |   |            |  |   |           
|---------------------------- |  | ----------------- | ---------- | ----------------- | - | ----------------- |  | ----------------- | ------- | ----------------- | - | ----------------- |  | - | ---------- |  | - | ----------
|                             |  | Total Assets      |            | Total Liabilities |   | Total Equity     
|                             |  | December 31, 2005 |            | December 31, 2004 |   | December 31, 2005 |  | December 31, 2004 |         | December 31, 2005 |   | December 31, 2004
|Fund IX-X-XI-REIT Associates |  | $                 | 26,163,790 |                   | $ | 33,591,791        |  | $                 | 813,530 |                   | $ | 1,653,981         |  | $ | 25,350,260 |  | $ | 31,937,810
|Fund X-XI Associates         |  |                   | 1,702,202  |                   |   | 1,745,326         |  |                   | 21,021  |                   |   | 37,568            |  |   | 1,681,181  |  |   | 1,707,758 
|                             |  |                   |            |                   |   |                   |  |                   |         |                   |   |                   |  |   |            |  |   |           
|                             |  | $                 | 27,865,992 |                   | $ | 35,337,117        |  | $                 | 834,551 |                   | $ | 1,691,549         |  | $ | 27,031,441 |  | $ | 33,645,568
|                             |  |                   |            |                   |   |                   |  |                   |         |                   |   |                   |  |   |            |  |   |           



|                             |  |                                  |           |                                   |   |                                     |  |                                  |           |      |   |           |  |      |           |      |   |           |  |      |           |      |   |         |  |   |         |  |   |           |  |   |           |  |   |          
|---------------------------- |  | -------------------------------- | --------- | --------------------------------- | - | ----------------------------------- |  | -------------------------------- | --------- | ---- | - | --------- |  | ---- | --------- | ---- | - | --------- |  | ---- | --------- | ---- | - | ------- |  | - | ------- |  | - | --------- |  | - | --------- |  | - | ---------
|                             |  | Total Revenues                   |           | Income From Continuing Operations |   | Income From Discontinued Operations |  | Net Income(1)                   
|                             |  | For The Years Ended December 31, |           | For The Years Ended December 31,  |   | For The Years Ended December 31,    |  | For The Years Ended December 31,
|                             |  | 2005                             |           | 2004                              |   | 2003                                |  | 2005                             |           | 2004 |   | 2003      |  | 2005 |           | 2004 |   | 2003      |  | 2005 |           | 2004 |   | 2003   
|Fund IX-X-XI-REIT Associates |  | $                                | 2,909,160 |                                   | $ | 3,467,085                           |  | $                                | 3,609,231 |      | $ | 1,016,463 |  | $    | 1,386,719 |      | $ | 1,316,827 |  | $    | 5,177,161 |      | $ | 696,453 |  | $ | 605,668 |  | $ | 6,193,624 |  | $ | 2,083,172 |  | $ | 1,922,495
|Fund X-XI Associates         |  |                                  | 0         |                                   |   | 0                                   |  |                                  | 0         |      |   | 49,867    |  |      | 109,754   |      |   | 127,635   |  |      | 0         |      |   | 0       |  |   | 0       |  |   | 49,867    |  |   | 109,754   |  |   | 127,635  
|                             |  |                                  |           |                                   |   |                                     |  |                                  |           |      |   |           |  |      |           |      |   |           |  |      |           |      |   |         |  |   |         |  |   |           |  |   |           |  |   |          
|                             |  | $                                | 2,909,160 |                                   | $ | 3,467,085                           |  | $                                | 3,609,231 |      | $ | 1,066,330 |  | $    | 1,496,473 |      | $ | 1,444,462 |  | $    | 5,177,161 |      | $ | 696,453 |  | $ | 605,668 |  | $ | 6,243,491 |  | $ | 2,192,926 |  | $ | 2,050,130
|                             |  |                                  |           |                                   |   |                                     |  |                                  |           |      |   |           |  |      |           |      |   |           |  |      |           |      |   |         |  |   |         |  |   |           |  |   |           |  |   |          



| | (1) | Effective July 1, 2004, the Joint Ventures extended the weighted-average composite
useful life for all building assets from 25 years to 40 years, which resulted in an increase (decrease) to net income (loss) for the year ended December 31, 2004 of approximately $263,964 for Fund IX-X-XI-REIT Associates. Management believes
that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry practice.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-12



---

##### Index to Financial Statements

Condensed financial information for the joint ventures in which the Partnership held an interest through its interest in
Fund X-XI Associates as of December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003 is presented below:



|                                |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          
|------------------------------- |  | ----------------- | --------- | ----------------- | - | ----------------- |  | ----------------- | ------- | ----------------- | - | ----------------- |  | - | --------- |  | - | ---------
|                                |  | Total Assets      |           | Total Liabilities |   | Total Equity     
|                                |  | December 31, 2005 |           | December 31, 2004 |   | December 31, 2005 |  | December 31, 2004 |         | December 31, 2005 |   | December 31, 2004
|Wells/ Orange County Associates |  | $                 | 0         |                   | $ | 0                 |  | $                 | 0       |                   | $ | 0                 |  | $ | 0         |  | $ | 0        
|Wells/Fremont Associates        |  |                   | 7,583,387 |                   |   | 7,776,806         |  |                   | 110,095 |                   |   | 185,371           |  |   | 7,473,292 |  |   | 7,591,435
|                                |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          
|                                |  | $                 | 7,503,387 |                   | $ | 7,776,806         |  | $                 | 110,095 |                   | $ | 185,371           |  | $ | 7,473,292 |  | $ | 7,591,435
|                                |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          



|                                |  |                                  |         |                                          |   |         |                                            |      |                                  |      |   |         |      |   |         |      |  |      |         |   |      |   |      |  |      |         |   |      |   |        |  |   |         |  |   |         |   |  |   |        
|------------------------------- |  | -------------------------------- | ------- | ---------------------------------------- | - | ------- | ------------------------------------------ | ---- | -------------------------------- | ---- | - | ------- | ---- | - | ------- | ---- |  | ---- | ------- | - | ---- | - | ---- |  | ---- | ------- | - | ---- | - | ------ |  | - | ------- |  | - | ------- | - |  | - | -------
|                                |  | Total Revenues                   |         | Income (Loss) From Continuing Operations |   |         | Income (Loss) From Discontinued Operations |      | Net Income (Loss)(1)            
|                                |  | For The Years Ended December 31, |         | For The Years Ended December 31,         |   |         | For The Years EndedDecember 31,            |      | For The Years Ended December 31,
|                                |  | 2005                             |         | 2004                                     |   | 2003    |                                            | 2005 |                                  | 2004 |   |         | 2003 |   |         | 2005 |  | 2004 |         |   | 2003 |   | 2005 |  | 2004 |         |   | 2003
|Wells/ Orange County Associates |  | $                                | 0       |                                          | $ | 0       |                                            | $    | 0                                |      | $ | 0       |      | $ | (7,573  | )    |  | $    | (7,866  | ) |      | $ | 0    |  | $    | (18,944 | ) |      | $ | 22,433 |  | $ | 0       |  | $ | (26,517 | ) |  | $ | 14,567 
|Wells/Fremont Associates        |  |                                  | 475,989 |                                          |   | 880,778 |                                            |      | 902,927                          |      |   | 221,672 |      |   | 556,594 |      |  |      | 548,993 |   |      |   | 0    |  |      | 0       |   |      |   | 0      |  |   | 221,672 |  |   | 556,594 |   |  |   | 548,993
|                                |  |                                  |         |                                          |   |         |                                            |      |                                  |      |   |         |      |   |         |      |  |      |         |   |      |   |      |  |      |         |   |      |   |        |  |   |         |  |   |         |   |  |   |        
|                                |  | $                                | 475,989 |                                          | $ | 880,778 |                                            | $    | 902,927                          |      | $ | 221,672 |      | $ | 549,021 |      |  | $    | 541,127 |   |      | $ | 0    |  | $    | (18,944 | ) |      | $ | 22,433 |  | $ | 221,672 |  | $ | 530,077 |   |  | $ | 563,560
|                                |  |                                  |         |                                          |   |         |                                            |      |                                  |      |   |         |      |   |         |      |  |      |         |   |      |   |      |  |      |         |   |      |   |        |  |   |         |  |   |         |   |  |   |        



| | (1) | Effective July 1, 2004, the Wells/Fremont Associates extended the weighted-average
composite useful life for all building assets from 25 years to 40 years, which resulted in an increase to net income for the year ended December 31, 2004 of approximately $62,984. Management believes that this change more appropriately reflects
the estimated useful lives of real estate assets and is consistent with prevailing industry practice
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Partnership allocates operating
income (loss) and gain (loss) on sale of properties generated by the Joint Ventures to its Class A and Class B limited partners pursuant to the respective partnership agreement provisions outlined in Note 2. The components of income (loss)
from discontinued operations recognized by the Joint Ventures are provided below:



|                                |  |                 |         |              |   |           |      |                 |           |  |             |         |       |  |   |                 |  |             |         |   |       |   |           |  |   |          |   |  |   |        
|------------------------------- |  | --------------- | ------- | ------------ | - | --------- | ---- | --------------- | --------- |  | ----------- | ------- | ----- |  | - | --------------- |  | ----------- | ------- | - | ----- | - | --------- |  | - | -------- | - |  | - | -------
|                                |  | 2005            |         | 2004         |   |           | 2003
|                                |  | OperatingIncome |         | Gain on Sale |   | Total     |      | OperatingIncome |           |  | Gain onSale |         | Total |  |   | OperatingIncome |  | Loss onSale |         |   | Total
|Fund IX-X-XI-REIT Associates    |  | $               | 145,199 |              | $ | 5,031,962 |      | $               | 5,177,161 |  | $           | 696,453 |       |  | $ | 0               |  | $           | 696,453 |   |       | $ | 605,668   |  | $ | 0        |   |  | $ | 605,668
|Fund X-XI Associates            |  |                 | 0       |              |   | 0         |      |                 | 0         |  |             | 0       |       |  |   | 0               |  |             | 0       |   |       |   | 0         |  |   | 0        |   |  |   | 0      
|Wells/ Orange County Associates |  |                 | 0       |              |   | 0         |      |                 | 0         |  |             | (18,944 | )     |  |   | 0               |  |             | (18,944 | ) |       |   | 401,090   |  |   | (378,657 | ) |  |   | 22,433 
|Wells/Fremont Associates        |  |                 | 0       |              |   | 0         |      |                 | 0         |  |             | 0       |       |  |   | 0               |  |             | 0       |   |       |   | 0         |  |   | 0        |   |  |   | 0      
|                                |  |                 |         |              |   |           |      |                 |           |  |             |         |       |  |   |                 |  |             |         |   |       |   |           |  |   |          |   |  |   |        
|                                |  | $               | 145,199 |              | $ | 5,031,962 |      | $               | 5,177,161 |  | $           | 677,509 |       |  | $ | 0               |  | $           | 677,509 |   |       | $ | 1,006,758 |  | $ | (378,657 | ) |  | $ | 628,101
|                                |  |                 |         |              |   |           |      |                 |           |  |             |         |       |  |   |                 |  |             |         |   |       |   |           |  |   |          |   |  |   |        



|4. | RELATED-PARTY TRANSACTIONS
|-- | --------------------------

Management and Leasing Fees

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 the management and leasing of the Partnerships properties, the joint ventures pay Wells Management management and leasing fees equal to (a) of the gross revenues collected monthly,
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. Management and leasing fees are paid by the Joint Ventures and, accordingly, included in equity in income (loss) of joint
ventures in the accompanying statements of operations. The Partnerships share of management and leasing fees and lease acquisition cost incurred through the Joint Ventures is $64,051, $117,505, and $142,944 for the years ended
December 31, 2005, 2004, and 2003, respectively.



Page F-13



---

##### Index to Financial Statements

Administration Reimbursements

Wells Capital, the corporate general partner of Wells Partners, one of our general partners, and Wells Management perform certain administrative services for the Partnership, relating to accounting and other partnership administration, and
incur the related expenses. Such expenses are allocated among other entities affiliated with the General Partners based on estimates of the amount of time dedicated to each fund by individual administrative personnel. In the opinion of the General
Partners, this allocation is a reasonable estimation of such expenses. The Partnership reimbursed Wells Capital and Wells Management for administrative expenses of $81,934, $84,837, and $49,558 for the years ended December 31, 2005, 2004, and
2003, respectively. In addition, Wells Capital pays for certain operating expenses of the Partnership (bill-backs) directly and invoices the Partnership for the reimbursement thereof on a monthly basis. As of December 31, 2005 and
2004, due to affiliates represents administrative reimbursements and bill-backs due to Wells Capital and/or Wells Management.



|5. | PER-UNIT AMOUNTS
|-- | ----------------

Income (loss) per limited partnership unit
amounts are calculated based upon weighted-average units outstanding during the respective periods. Income (loss) per limited partnership unit, as presented in the accompanying financial statements, will vary from the per-unit amounts attributable
to the individual investors due to the differences between the GAAP and tax basis treatment of certain items of income and expense and the fact that, within the respective classes of Class A Units and Class B Units, individual units have
different characteristics including capital bases, cumulative operating and net property sales proceeds distributions, and cumulative earnings allocations as a result of, among other things, the ability of unit holders to elect to be treated as
Class A Units or Class B Units, or to change their prior elections, on a quarterly basis.

For the reasons mentioned above, distributions of net sale
proceeds per unit also vary among individual unit holders. Distributions of net sale proceeds have been calculated at the investor level pursuant to the partnership agreement and allocated between the Class A and Class B limited partners in the
period paid. Accordingly, distributions of net sale proceeds per unit, as presented in the accompanying financial statements, vary from the per-unit amounts attributable to the individual investors.



|6. | 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, 2005, 2004, and 2003:



|                                                                                                               |  |      |           |   |      |   |          |      |  |   |           |  
|-------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | ---- |  | - | --------- | -
|                                                                                                               |  | 2005 |           |   | 2004 |   |          | 2003 | 
|Financial statement net income                                                                                 |  | $    | 2,875,111 |   |      | $ | 907,857  |      |  | $ | 856,732   |  
|Increase (decrease) in net income resulting from:                                                              |  |      |           |   |      |   |          |      |  |   |           |  
|Bad debt expense for financial reporting purposes in excess of amounts for income tax purposes                 |  |      | 0         |   |      |   | 473      |      |  |   | 0         |  
|Depreciation expense for financial reporting purposes greater than (less than) amounts for income tax purposes |  |      | (14,265   | ) |      |   | 164,339  | (1)  |  |   | 299,190   |  
|Rental income for financial reporting purposes (greater than) less than amounts for income tax purposes        |  |      | (100,681  | ) |      |   | (161,531 | )    |  |   | 141,939   |  
|Expenses capitalized for financial reporting purposes less than amounts deducted for income tax purposes       |  |      | 0         |   |      |   | 0        |      |  |   | (8,475    | )
|Gains on sale of properties for financial reporting purposes in excess of amounts for income tax purposes      |  |      | (359,472  | ) |      |   | 0        |      |  |   | (100,607  | )
|Other                                                                                                          |  |      | 14,616    |   |      |   | (14,564  | )    |  |   | 0         |  
|                                                                                                               |  |      |           |   |      |   |          |      |  |   |           |  
|Income tax basis net income                                                                                    |  | $    | 2,415,309 |   |      | $ | 896,574  |      |  | $ | 1,188,779 |  
|                                                                                                               |  |      |           |   |      |   |          |      |  |   |           |  



| | (1) | Effective July 1, 2004, the Joint Ventures
extended the weighted-average composite useful lives for all building assets from 25 years to 40 years. This change has no impact on the statutory life used for Federal income tax purposes of 40 years, upon which Tax depreciation is based
(see Note 2).
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-14



---

##### Index to Financial Statements

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, 2005, 2004, and 2003:



|                                                                                                                                     |  |      |            |   |      |   |            |      |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                                                                     |  | 2005 |            |   | 2004 |   |            | 2003 | 
|Financial statement partners capital                                                                                                |  | $    | 15,014,566 |   |      | $ | 17,565,701 |      |  | $ | 18,482,669 |  
|Increase (decrease) in partners capital resulting from:                                                                             |  |      |            |   |      |   |            |      |  |   |            |  
|Accumulated meals and entertainment                                                                                                  |  |      | 351        |   |      |   | 351        |      |  |   | 351        |  
|Accumulated penalties                                                                                                                |  |      | 3,191      |   |      |   | 3,191      |      |  |   | 3,191      |  
|Accumulated bad debt expense, net, for financial reporting purposes in excess of amounts for income tax purposes                     |  |      | 473        |   |      |   | 473        |      |  |   | 0          |  
|Accumulated depreciation expense for financial reporting purposes greater than amounts for income tax purposes                       |  |      | 2,063,028  |   |      |   | 2,077,293  |      |  |   | 1,912,954  |  
|Accumulated rental income accrued for financial reporting purposes greater than amounts for income tax purposes                      |  |      | (475,562   | ) |      |   | (374,881   | )    |  |   | (213,350   | )
|Syndication costs capitalized for income tax purposes, which are accounted for as a cost of capital for financial reporting
purposes |  |      | 4,038,088  |   |      |   | 4,038,088  |      |  |   | 4,038,088  |  
|Accumulated amortization expense for income tax purposes greater than amounts for financial reporting purposes                       |  |      | (94,486    | ) |      |   | (94,486    | )    |  |   | (94,486    | )
|Accumulated expenses deductible when paid for income tax purposes less than amounts accrued for financial reporting purposes         |  |      | 104,762    |   |      |   | 104,762    |      |  |   | 104,762    |  
|Accumulated gains on sale of properties for financial reporting purposes in excess of amounts for income tax purposes                |  |      | (460,079   | ) |      |   | (100,607   | )    |  |   | (100,607   | )
|Partnerships distributions payable                                                                                                  |  |      | 161,376    |   |      |   | 119,182    |      |  |   | 430,713    |  
|Other                                                                                                                                |  |      | 52         |   |      |   | (14,564    | )    |  |   | 0          |  
|                                                                                                                                     |  |      |            |   |      |   |            |      |  |   |            |  
|Income tax basis partners capital                                                                                                   |  | $    | 20,355,760 |   |      | $ | 23,324,503 |      |  | $ | 24,564,285 |  
|                                                                                                                                     |  |      |            |   |      |   |            |      |  |   |            |  



Page F-15



---

##### Index to Financial Statements

|7. | QUARTERLY RESULTS (UNAUDITED)
|-- | -----------------------------

Presented below is a summary of the
unaudited quarterly financial information for the years ended December 31, 2005 and 2004:



|                                                                          |  |                     |           |         |   |          |              |  |   |             |   |  |   |         |  
|------------------------------------------------------------------------- |  | ------------------- | --------- | ------- | - | -------- | ------------ |  | - | ----------- | - |  | - | ------- | -
|                                                                          |  | 2005 Quarters Ended |          
|                                                                          |  | March 31            |           | June 30 |   |          | September 30 |  |   | December 31 |  
|Equity in income of joint ventures                                        |  | $                   | 2,754,797 |         | $ | 201,033  |              |  | $ | 43,153      |   |  | $ | 33,314  |  
|Interest and other income                                                 |  | $                   | 4,442     |         | $ | 17,303   |              |  | $ | 48,018      |   |  | $ | 66,197  |  
|Net income                                                                |  | $                   | 2,706,151 |         | $ | 162,850  |              |  | $ | (28,627     | ) |  | $ | 34,737  |  
|Net income allocated to limited partners:                                 |  |                     |           |         |   |          |              |  |   |             |   |  |   |         |  
|Class A                                                                   |  | $                   | 714,587   |         | $ | 272,807  |              |  | $ | 56,303      |   |  | $ | 124,362 |  
|Class B                                                                   |  | $                   | 1,991,564 |         | $ | (109,957 | )            |  | $ | (84,930     | ) |  | $ | (89,625 | )
|Net income (loss) per weighted-average limited partner unit:              |  |                     |           |         |   |          |              |  |   |             |   |  |   |         |  
|Class A                                                                   |  | $                   | 0.30      |         | $ | 0.11     |              |  | $ | 0.02        |   |  | $ | 0.05    |  
|Class B(a)                                                                |  | $                   | 6.67      |         | $ | (0.38    | )            |  | $ | (0.29       | ) |  | $ | (0.31   | )
|Distribution of operating cash per weighted-average limited partner unit: |  |                     |           |         |   |          |              |  |   |             |   |  |   |         |  
|Class A                                                                   |  | $                   | 0.11      |         | $ | 0.06     |              |  | $ | 0.00        |   |  | $ | 0.07    |  
|Class B                                                                   |  | $                   | 0.00      |         | $ | 0.00     |              |  | $ | 0.00        |   |  | $ | 0.00    |  
|Distribution of NSP per weighted-average limited partner unit:            |  |                     |           |         |   |          |              |  |   |             |   |  |   |         |  
|Class A                                                                   |  | $                   | 0.00      |         | $ | 0.00     |              |  | $ | 0.00        |   |  | $ | 1.40    |  
|Class B                                                                   |  | $                   | 0.00      |         | $ | 0.00     |              |  | $ | 0.00        |   |  | $ | 5.01    |  



| | (a) | The quarterly per unit amounts have been calculated using actual income (loss) for the
respective quarters. Conversely, the corresponding annual income (loss) per unit amounts have been calculated assuming that income (loss) was earned ratably over the year. As a result, the sum of these quarterly per unit amounts does not equal the
respective annual per unit amount presented in the accompanying financial statements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page F-16



---

##### Index to Financial Statements

|                                                                          |  |                     |         |         |   |              |  |             |         |  |   |          |  
|------------------------------------------------------------------------- |  | ------------------- | ------- | ------- | - | ------------ |  | ----------- | ------- |  | - | -------- | -
|                                                                          |  | 2004 Quarters Ended |        
|                                                                          |  | March 31            |         | June 30 |   | September 30 |  | December 31 |        
|Equity in income of joint ventures                                        |  | $                   | 273,809 |         | $ | 226,998      |  | $           | 289,790 |  | $ | 283,230  |  
|Interest and other income                                                 |  | $                   | 4,018   |         | $ | 4,022        |  | $           | 4,381   |  | $ | 6,402    |  
|Net income                                                                |  | $                   | 248,897 |         | $ | 157,715      |  | $           | 261,318 |  | $ | 239,927  |  
|Net income allocated to limited partners:                                 |  |                     |         |         |   |              |  |             |         |  |   |          |  
|Class A                                                                   |  | $                   | 248,897 |         | $ | 157,715      |  | $           | 261,318 |  | $ | (310,833 | )
|Class B                                                                   |  | $                   | 0       |         | $ | 0            |  | $           | 0       |  | $ | 550,760  |  
|Net income (loss) per weighted-average limited partner unit:              |  |                     |         |         |   |              |  |             |         |  |   |          |  
|Class A                                                                   |  | $                   | 0.09    |         | $ | 0.07         |  | $           | 0.11    |  | $ | (0.12    | )
|Class B                                                                   |  | $                   | 0.00    |         | $ | 0.00         |  | $           | 0.00    |  | $ | 1.72     |  
|Distribution of operating cash per weighted-average limited partner unit: |  |                     |         |         |   |              |  |             |         |  |   |          |  
|Class A(a)                                                                |  | $                   | 0.17    |         | $ | 0.11         |  | $           | 0.00    |  | $ | 0.05     |  
|Class B                                                                   |  | $                   | 0.00    |         | $ | 0.00         |  | $           | 0.00    |  | $ | 0.00     |  
|Distribution of NSP per weighted-average limited partner unit:            |  |                     |         |         |   |              |  |             |         |  |   |          |  
|Class A                                                                   |  | $                   | 0.00    |         | $ | 0.00         |  | $           | 0.00    |  | $ | 0.20     |  
|Class B                                                                   |  | $                   | 0.00    |         | $ | 0.00         |  | $           | 0.00    |  | $ | 1.78     |  



| | (a) | The sum of the four quarterly amounts does not equal the respective annual amount presented in the accompanying financial statements due to rounding.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|8. | PARTNERSHIP ADMINISTRATION AND LEGAL AND ACCOUNTING COSTS
|-- | ---------------------------------------------------------

Partnership administration and legal and accounting costs for the years ended December 31, 2005, 2004, and 2003 are comprised of the following items:



|                                                                |  |      |         |      |   |         |      |  |   |        
|--------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | ---- |  | - | -------
|                                                                |  | 2005 |         | 2004 |   |         | 2003
|Salary reimbursements                                           |  | $    | 81,934  |      | $ | 84,837  |      |  | $ | 49,558 
|Taxes and licensing fees                                        |  |      | 95,549  |      |   | 30,270  |      |  |   | 48,189 
|Independent accounting fees                                     |  |      | 21,132  |      |   | 26,869  |      |  |   | 15,647 
|Printing expenses                                               |  |      | 27,728  |      |   | 19,070  |      |  |   | 12,232 
|Postage and delivery expenses                                   |  |      | 4,326   |      |   | 11,618  |      |  |   | 5,449  
|Other professional fees                                         |  |      | 3,694   |      |   | 1,771   |      |  |   | 5,301  
|Legal fees                                                      |  |      | 49,252  |      |   | 14,139  |      |  |   | 3,119  
|Bank service charge                                             |  |      | 0       |      |   | 469     |      |  |   | 1,446  
|Life insurance                                                  |  |      | 279     |      |   | 559     |      |  |   | 0      
|Computer costs                                                  |  |      | 1,865   |      |   | 2,297   |      |  |   | 10,119 
|Other                                                           |  |      | 7,387   |      |   | (7,105  | )    |  |   | 0      
|                                                                |  |      |         |      |   |         |      |  |   |        
|Total partnership administration and legal and accounting costs |  | $    | 293,146 |      | $ | 184,794 |      |  | $ | 151,060
|                                                                |  |      |         |      |   |         |      |  |   |        



|9. | POTENTIAL TAX IMPACT FOR LIMITED PARTNERS HOLDING CLASS B UNITS  AMERICAN JOBS CREATION ACT OF 2004
|-- | ----------------------------------------------------------------------------------------------------

The American Jobs Creation Act of 2004 (the Act) added Section 470 to the Internal Revenue Code, which provides certain limitations on the utilization of
losses allocable to leased property owned by a partnership having both taxable and tax-exempt partners such as the Partnership. In March 2005, the Internal Revenue Service issued IRS Notice 2005-29 announcing that the IRS would not be
applying Section 470 to partnerships for taxable year 2004 based solely on the fact that a partnership had both taxable and tax-exempt partners; however, it is important to note that IRS Notice 2005-29 provided relief for partnerships
for taxable year 2004 only. Although the IRS has indicated that it is continuing to study the application of Section 470 to partnerships, such as the Partnership, unless Congress passes legislation which addresses this issue or some
other form of relief from the provisions of Section 470 of the Act is granted, beginning in taxable year 2005 and thereafter, passive losses allocable to limited partners holding Class B Units may only be used to offset passive income
generated from the same property or within the same fund.



Page F-17



---

##### Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The General Partners of

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 (the Joint Venture) as of December 31, 2005 and 2004, and the related statements of operations,
partners capital, and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in the index at Item 15(a). These financial statements and schedule
are the responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Joint Ventures internal control over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Joint Ventures internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by
management, and 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, 2005 and 2004, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. 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 2, 2006



Page F-18



---

##### Index to Financial Statements

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

BALANCE SHEETS

DECEMBER 31, 2005 AND 2004

ASSETS



|                                                                                                                                  |  |      |            |      |   |           
|--------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                                                                                                                  |  | 2005 |            | 2004
|Real estate assets, at cost:                                                                                                      |  |      |            |      |   |           
|Land                                                                                                                              |  | $    | 6,090,090  |      | $ | 6,698,020 
|Building and improvements, less accumulated depreciation of $7,292,823 and $9,662,126 at December 31, 2005 and 2004,
respectively |  |      | 18,815,022 |      |   | 23,891,461
|                                                                                                                                  |  |      |            |      |   |           
|Total real estate assets, net                                                                                                     |  |      | 24,905,112 |      |   | 30,589,481
|                                                                                                                                  |  |     
|Cash and cash equivalents                                                                                                         |  |      | 693,878    |      |   | 1,153,824 
|Accounts receivable, net                                                                                                          |  |      | 241,801    |      |   | 962,419   
|Deferred leasing costs, net                                                                                                       |  |      | 211,267    |      |   | 776,208   
|Other assets                                                                                                                      |  |      | 111,732    |      |   | 109,859   
|                                                                                                                                  |  |      |            |      |   |           
|Total assets                                                                                                                      |  | $    | 26,163,790 |      | $ | 33,591,791
|                                                                                                                                  |  |      |            |      |   |           
|LIABILITIES AND PARTNERS CAPITAL                                                                                                 |  |      |            |      |   |           
|Liabilities:                                                                                                                      |  |      |            |      |   |           
|Accounts payable and refundable security deposits                                                                                 |  | $    | 573,544    |      | $ | 895,985   
|Due to affiliate                                                                                                                  |  |      | 7,208      |      |   | 20,009    
|Deferred income                                                                                                                   |  |      | 0          |      |   | 124,569   
|Partnership distributions payable                                                                                                 |  |      | 232,778    |      |   | 613,418   
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities                                                                                                                 |  |      | 813,530    |      |   | 1,653,981 
|Partners capital:                                                                                                                |  |      |            |      |   |           
|Wells Real Estate Fund IX, L.P.                                                                                                   |  |      | 9,894,351  |      |   | 12,465,512
|Wells Real Estate Fund X, L.P.                                                                                                    |  |      | 12,292,658 |      |   | 15,487,047
|Wells Real Estate Fund XI, L.P.                                                                                                   |  |      | 2,227,884  |      |   | 2,806,837 
|Wells Operating Partnership, L.P.                                                                                                 |  |      | 935,367    |      |   | 1,178,414 
|                                                                                                                                  |  |      |            |      |   |           
|Total partners capital                                                                                                           |  |      | 25,350,260 |      |   | 31,937,810
|                                                                                                                                  |  |      |            |      |   |           
|Total liabilities and partners capital                                                                                           |  | $    | 26,163,790 |      | $ | 33,591,791
|                                                                                                                                  |  |      |            |      |   |           

See accompanying notes.



Page F-19



---

##### Index to Financial Statements

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

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED

DECEMBER 31,
2005, 2004, AND 2003



|                                      |  |      |           |      |   |           |  |   |          
|------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                      |  | 2005 |           | 2004 |   | 2003     
|REVENUES:                             |  |      |           |      |   |           |  |   |          
|Rental income                         |  | $    | 2,476,339 |      | $ | 3,116,052 |  | $ | 3,051,281
|Tenant reimbursements                 |  |      | 402,654   |      |   | 350,544   |  |   | 557,950  
|Interest and other income             |  |      | 30,167    |      |   | 489       |  |   | 0        
|                                      |  |      |           |      |   |           |  |   |          
|Total revenues                        |  |      | 2,909,160 |      |   | 3,467,085 |  |   | 3,609,231
|                                      |  |      |          
|EXPENSES:                             |  |      |           |      |   |           |  |   |          
|Property operating costs              |  |      | 941,078   |      |   | 878,422   |  |   | 903,651  
|Depreciation                          |  |      | 635,428   |      |   | 829,246   |  |   | 1,033,076
|Management and leasing fees           |  |      | 156,420   |      |   | 227,178   |  |   | 206,572  
|Joint venture administration          |  |      | 103,724   |      |   | 92,970    |  |   | 106,069  
|Legal and accounting                  |  |      | 56,047    |      |   | 52,550    |  |   | 43,036   
|                                      |  |      |           |      |   |           |  |   |          
|Total expenses                        |  |      | 1,892,697 |      |   | 2,080,366 |  |   | 2,292,404
|                                      |  |      |           |      |   |           |  |   |          
|NET INCOME FROM CONTINUING OPERATIONS |  |      | 1,016,463 |      |   | 1,386,719 |  |   | 1,316,827
|                                      |  |      |          
|DISCONTINUED OPERATIONS:              |  |      |           |      |   |           |  |   |          
|Operating income                      |  |      | 145,199   |      |   | 696,453   |  |   | 605,668  
|Gain on disposition                   |  |      | 5,031,962 |      |   | 0         |  |   | 0        
|                                      |  |      |           |      |   |           |  |   |          
|Income from discontinued operations   |  |      | 5,177,161 |      |   | 696,453   |  |   | 605,668  
|                                      |  |      |           |      |   |           |  |   |          
|NET INCOME                            |  | $    | 6,193,624 |      | $ | 2,083,172 |  | $ | 1,922,495
|                                      |  |      |           |      |   |           |  |   |          

See accompanying notes.



Page F-20



---

##### Index to Financial Statements

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

STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31,
2005, 2004, AND 2003



|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |             |  
|-------------------------- |  | ------------------------------ | ---------- | - | ----------------------------- | - | ---------- | ------------------------------ |  | - | -------------------------------- | - |  | ----------------------- | --------- | - |  | - | ----------- | -
|                           |  | Wells RealEstate Fund IX, L.P. |            |   | Wells RealEstate Fund X, L.P. |   |            | Wells RealEstate Fund XI, L.P. |  |   | Wells OperatingPartnership, L.P. |   |  | Total Partners Capital |          
|Balance, December 31, 2002 |  | $                              | 13,176,010 |   |                               | $ | 16,369,765 |                                |  | $ | 2,966,822                        |   |  | $                       | 1,245,576 |   |  | $ | 33,758,173  |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 750,361    |   |                               |   | 932,243    |                                |  |   | 168,960                          |   |  |                         | 70,931    |   |  |   | 1,922,495   |  
|Partnership contributions  |  |                                | 32,320     |   |                               |   | 40,154     |                                |  |   | 7,278                            |   |  |                         | 3,055     |   |  |   | 82,807      |  
|Partnership distributions  |  |                                | (1,400,822 | ) |                               |   | (1,740,369 | )                              |  |   | (315,426                         | ) |  |                         | (132,417  | ) |  |   | (3,589,034  | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |             |  
|Balance, December 31, 2003 |  |                                | 12,557,869 |   |                               |   | 15,601,793 |                                |  |   | 2,827,634                        |   |  |                         | 1,187,145 |   |  |   | 32,174,441  |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 813,076    |   |                               |   | 1,010,157  |                                |  |   | 183,081                          |   |  |                         | 76,858    |   |  |   | 2,083,172   |  
|Partnership distributions  |  |                                | (905,433   | ) |                               |   | (1,124,903 | )                              |  |   | (203,878                         | ) |  |                         | (85,589   | ) |  |   | (2,319,803  | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |             |  
|Balance, December 31, 2004 |  |                                | 12,465,512 |   |                               |   | 15,487,047 |                                |  |   | 2,806,837                        |   |  |                         | 1,178,414 |   |  |   | 31,937,810  |  
|                           |  |                                |            |   |                              
|Net income                 |  |                                | 2,417,408  |   |                               |   | 3,003,369  |                                |  |   | 544,333                          |   |  |                         | 228,514   |   |  |   | 6,193,624   |  
|Partnership distributions  |  |                                | (4,988,569 | ) |                               |   | (6,197,758 | )                              |  |   | (1,123,286                       | ) |  |                         | (471,561  | ) |  |   | (12,781,174 | )
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |             |  
|Balance, December 31, 2005 |  | $                              | 9,894,351  |   |                               | $ | 12,292,658 |                                |  | $ | 2,227,884                        |   |  | $                       | 935,367   |   |  | $ | 25,350,260  |  
|                           |  |                                |            |   |                               |   |            |                                |  |   |                                  |   |  |                         |           |   |  |   |             |  

See accompanying notes.



Page F-21



---

##### Index to Financial Statements

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

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31,
2005, 2004, AND 2003



|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|----------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                                    |  | 2005 |             |   | 2004 |   |            | 2003 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                               |  |      |             |   |      |   |            |      |  |   |            |  
|Net income                                                                          |  | $    | 6,193,624   |   |      | $ | 2,083,172  |      |  | $ | 1,922,495  |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |      |             |   |      |   |            |      |  |   |            |  
|Depreciation                                                                        |  |      | 681,018     |   |      |   | 1,177,848  |      |  |   | 1,438,897  |  
|Amortization of deferred leasing costs                                              |  |      | 62,275      |   |      |   | 55,189     |      |  |   | 74,625     |  
|Gain on sale of property                                                            |  |      | (5,031,962  | ) |      |   | 0          |      |  |   | 0          |  
|Changes in assets and liabilities:                                                  |  |      |             |   |      |   |            |      |  |   |            |  
|Increase in accounts receivable, net                                                |  |      | (66,259     | ) |      |   | (390,820   | )    |  |   | (88,843    | )
|(Increase) decrease in other assets                                                 |  |      | (1,873      | ) |      |   | (12,167    | )    |  |   | 3,065      |  
|(Decrease) increase in accounts payable and refundable security deposits            |  |      | (322,441    | ) |      |   | 290,077    |      |  |   | (59,855    | )
|(Decrease) increase in due to affiliate                                             |  |      | (12,801     | ) |      |   | (626       | )    |  |   | 15,730     |  
|(Decrease) increase in deferred income                                              |  |      | (124,569    | ) |      |   | (19,758    | )    |  |   | 144,327    |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|Net cash provided by operating activities                                           |  |      | 1,377,012   |   |      |   | 3,182,915  |      |  |   | 3,450,441  |  
|                                                                                    |  |      |            
|CASH FLOWS FROM INVESTING ACTIVITIES:                                               |  |      |             |   |      |   |            |      |  |   |            |  
|Net proceeds from sale of real estate                                               |  |      | 11,646,089  |   |      |   | 0          |      |  |   | 0          |  
|Investment in real estate assets                                                    |  |      | (79,675     | ) |      |   | (308,577   | )    |  |   | (135,871   | )
|Payment of deferred lease acquisition costs                                         |  |      | (241,558    | ) |      |   | (589,504   | )    |  |   | 0          |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|Net cash provided by (used in) investing activities                                 |  |      | 11,324,856  |   |      |   | (898,081   | )    |  |   | (135,871   | )
|                                                                                    |  |      |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                                               |  |      |             |   |      |   |            |      |  |   |            |  
|Net sale proceeds distributions to joint venture partners                           |  |      | (11,646,089 | ) |      |   | 0          |      |  |   | 0          |  
|Operating distributions to joint venture partners in excess of accumulated earnings |  |      | (1,515,725  | ) |      |   | (2,641,497 | )    |  |   | (3,224,854 | )
|Contributions received from partners                                                |  |      | 0           |   |      |   | 0          |      |  |   | 82,807     |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|Net cash used in financing activities                                               |  |      | (13,161,814 | ) |      |   | (2,641,497 | )    |  |   | (3,142,047 | )
|                                                                                    |  |      |            
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                |  |      | (459,946    | ) |      |   | (356,663   | )    |  |   | 172,523    |  
|                                                                                    |  |      |            
|CASH AND CASH EQUIVALENTS, beginning of year                                        |  |      | 1,153,824   |   |      |   | 1,510,487  |      |  |   | 1,337,964  |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|CASH AND CASH EQUIVALENTS, end of year                                              |  | $    | 693,878     |   |      | $ | 1,153,824  |      |  | $ | 1,510,487  |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:              |  |      |             |   |      |   |            |      |  |   |            |  
|Partnership distributions payable                                                   |  | $    | 232,778     |   |      | $ | 613,418    |      |  | $ | 935,112    |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  
|Write-off of fully amortized deferred leasing costs                                 |  | $    | 0           |   |      | $ | 52,232     |      |  | $ | 827        |  
|                                                                                    |  |      |             |   |      |   |            |      |  |   |            |  

See accompanying notes.



Page F-22



---

##### Index to Financial Statements

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

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2005, 2004, AND 2003



|1. | ORGANIZATION AND BUSINESS
|-- | -------------------------

In March 1997, Wells Real Estate
Fund IX, L.P. entered into a Georgia general partnership with Wells Real Estate Fund X, L.P. to form Fund IX and Fund X Associates (Fund IX-X Associates) for the purpose of acquiring, developing, operating, and selling
real properties. On March 20, 1997, Wells Real Estate Fund IX, L.P. contributed a 5.62-acre tract of real property in Knoxville, Tennessee, and improvements thereon to Fund IX-X Associates on which an approximately 84,000 square foot,
three-story office building, the Alstom Power-Knoxville Building, was constructed and commenced operations. On February 13, 1998, Fund IX-X Associates purchased an approximate 107,000 square foot, two-story office building, 1315 West Century
Drive, in Louisville, Colorado. On March 20, 1998, Fund IX-X Associates purchased an approximately 52,000 square foot, three-story office building, the 360 Interlocken Building, in Broomfield, Colorado. On June 11, 1998,
Fund IX-X Associates was amended and restated as The Fund IX, Fund X, Fund XI and REIT Joint Venture (the Joint Venture) upon admitting Wells Real Estate Fund XI, L.P. and Wells Operating Partnership, L.P. (Wells
OP). On June 24, 1998, the Joint Venture purchased an approximately 57,000 square foot, one-story office building, the Avaya Building, in Oklahoma City, Oklahoma. On April 1, 1998, Wells Real Estate Fund X, L.P. purchased an
approximately 108,000 square foot, one-story office and warehouse building, the Iomega Building, in Ogden, Utah. On July 1, 1998, Wells Real Estate Fund X, L.P. contributed the Iomega Building to the Joint Venture. Ownership interests were
recomputed based on the relative cumulative capital contributions from the joint venture partners.

On March 15, 2005, the Joint Venture sold the
Alstom Power  Knoxville Building to an unrelated third party for a gross sales price of $12,000,000. As a result of the sale, the Joint Venture received net sale proceeds of approximately $11,646,000 and recognized a gain of approximately
$5,032,000.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Basis of
Presentation

The Joint Ventures financial statements are prepared in accordance with accounting principles generally accepted in the United
States.

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. Rents and tenant reimbursements collected in advance are recorded as deferred income in the accompanying balance sheets.

Lease termination income is recognized when the tenant loses the right to lease the space and the Joint Venture has satisfied all obligations under the related lease or lease termination agreement.



Page F-23



---

##### Index to Financial Statements

The Joint Venture records the sale of real estate assets pursuant to the provisions of Statement of Financial Accounting
Standards (SFAS) No. 66, Accounting for Sales of Real Estate. Accordingly, gains are recognized upon completing the sale and, among other things, determining the sale price and transferring all of the risks and rewards of
ownership without significant continuing involvement with the seller. Recognition of all or a portion of the gain would be deferred until both of these conditions are met. Losses are recognized in full as of the sale date.

Real Estate Assets

Real estate assets are stated at cost, less
accumulated depreciation. Amounts capitalized to real estate assets consist of the cost of acquisition or construction, and any tenant improvements or major improvements and betterments which extend the useful life of the related asset. All repairs
and maintenance are expensed as incurred.

The estimated useful lives of the Joint Ventures real estate assets by class are provided below:



|                      |  |                                       
|--------------------- |  | --------------------------------------
|Buildings             |  | 40 years                              
|Building improvements |  | 5-25 years                            
|Land improvements     |  | 20 years                              
|Tenant Improvements   |  | Shorter of lease term or economic life

Management continually monitors events and changes in circumstances that could indicate that the carrying amounts
of the real estate in which the Joint Venture has an ownership interest, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate may not be recoverable, management assesses
the recoverability of these assets by determining whether the carrying value will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected
undiscounted future cash flows do not exceed the carrying value, the Joint Venture adjusts the real estate to the estimated fair values, as defined by SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,
(SFAS No. 144) and recognizes impairment losses. Estimated fair values are calculated based on the following information, dependent upon availability, in order of preference: (i) recently quoted market prices, (ii) market
prices for comparable properties, or (iii) the present value of undiscounted cash flows, including estimated salvage value.

In the third quarter of
2004, the Joint Venture completed a review of its real estate depreciation by performing an analysis of the components of each property type in an effort to determine weighted-average composite useful lives of its real estate assets. As a result of
this review, the Joint Venture changed its estimate of the weighted-average composite useful lives for all building assets. Effective July 1, 2004, for all building assets, the Joint Venture extended the weighted-average composite useful life
from 25 years to 40 years. The change resulted in an increase to net income of approximately $263,964 for the year ended December 31, 2004. We believe the change more appropriately reflects the estimated useful lives of the building assets and
is consistent with prevailing industry practice.

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 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. Allowances of $0 and $975 are included in accounts receivable, as of December 31, 2005 and 2004, respectively.



Page F-24



---

##### Index to Financial Statements

Deferred Leasing Costs, net

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 respective leases. Deferred leasing costs are presented net of accumulated
amortization of $77,615 and $386,886 as of December 31, 2005 and 2004, respectively.

Other Assets

Other assets as of December 31, 2005 and 2004 is comprised of the following items:



|                             |  |      |         |      |   |        
|---------------------------- |  | ---- | ------- | ---- | - | -------
|                             |  | 2005 |         | 2004
|Refundable security deposits |  | $    | 102,253 |      | $ | 97,887 
|Prepaid expenses             |  |      | 9,479   |      |   | 11,972 
|                             |  |      |         |      |   |        
|Total                        |  | $    | 111,732 |      | $ | 109,859
|                             |  |      |         |      |   |        

Refundable security deposits represent cash deposits received from tenants. Pursuant to the respective leases, the
Joint Venture may apply such balances toward unpaid receivable balances or property damages, where applicable, and is obligated to refund any residual balances to the tenants upon the expiration of the related lease terms.

Prepaid expenses are primarily comprised of prepaid insurance and contract labor costs. Prepaid expenses are recognized as the related services are provided. Balances
without a future economic benefit are written off as they are identified.

Allocation of Income and Distributions

Pursuant to the terms of the joint venture agreement, income and distributions are allocated to the joint venture partners based on their respective ownership interests
as determined by relative cumulative capital contributions, as defined. For the periods presented, Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P., Wells Real Estate Fund XI, L.P., and Wells OP held ownership interests in the Joint
Venture of approximately 39%, 48%, 9%, and 4% respectively. Net cash from operations is generally distributed to the joint venture on a quarterly basis.

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 Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P., Wells Real Estate Fund XI, L.P., and Wells OP are required to include their respective share of profits and losses from the Joint Venture in their
individual income tax returns.

Reclassifications

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

Recent Accounting Pronouncements

In March 2005, the Financial Accounting Standards Board (FASB) issued Financial Accounting Standards Board Interpretation No.
(FIN) 47, Accounting for Conditional Asset Retirement Obligations,an interpretation of SFAS No. 143, Asset Retirement Obligations, effective for fiscal years ending after December 15, 2005. FIN 47 clarifies the
definition of a conditional asset retirement obligation provided in SFAS No. 143 as a legal obligation to perform an asset retirement activity for which the timing or method of settlement is conditional upon a future event that may
or may not be within control of the Joint Venture. An entity is required to recognize



Page F-25



---

##### Index to Financial Statements

a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The Joint Venture
may have undetected asbestos at certain of the Joint Ventures properties. Because the obligations to remove asbestos from any of these properties have indeterminate settlement dates, the Joint Venture is unable to reasonably estimate the fair
values of these obligations. To the extent that these properties undergo major renovations or demolition, certain environmental regulations are in place, which specify the manner in which the asbestos must be handled and disposed. In such
circumstances, sufficient information may become available to reasonably estimate the fair value of the liability. There are currently no plans to undertake a major renovation that would require removal of the asbestos or demolition of a property.
The adoption of FIN 47 did not have a material effect on the Joint Ventures financial statements.



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

Management and Leasing Fees

Wells Real Estate Fund IX, L.P. and Wells Real Estate Fund X, L.P. entered into property management and leasing agreements with Wells Management
Company, Inc. (Wells Management), an affiliate of the general partners of Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P., Wells Real Estate Fund XI, L.P., and Wells OP. In consideration for asset management and the
management and leasing of the Joint Ventures properties, the Joint Venture will generally pay Wells Management management and leasing fees equal to (a) of the gross revenues collected monthly, 3% for management services and 3% for leasing
services, 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 Real Estate Fund XI, L.P. also entered into property management and leasing agreements with Wells Management. In
consideration for supervising the management and leasing of the Joint Ventures properties, the Joint Venture will pay Wells Management management and leasing fees equal to (a) 2.5% for management services and 2% for leasing services, plus
a separate competitive fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area
for similar properties (aggregate maximum of 6%) or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), the maximum property management fee from such leases shall be 1% of the gross revenues
generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term.

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

Management and leasing fees are recognized in accordance with the terms of the aforementioned agreements,
weighted based on joint venture partners respective ownership interests in the Joint Venture. During the years ended December 31, 2005, 2004, and 2003, the Joint Venture incurred management and leasing fee expenses of $127,392, $232,074, and
$269,718, respectively, portions of which are included in income from discontinued operations in the accompanying statements of operations.

Administration Reimbursements

Wells Management and its affiliates perform certain administrative services for the Joint Venture, relating
to accounting, property management, and other partnership administration, and incur the related expenses. Such expenses are allocated among these entities based on the amount of time spent on the respective entities by individual personnel. In the
opinion of management, this allocation is a reasonable estimation of such expenses.



Page F-26



---

##### Index to Financial Statements

During 2005, 2004, and 2003, the Joint Venture reimbursed $79,832, $90,107, and $106,652, respectively, to Wells Management and its affiliates for these
services, portions of which are included in income from discontinued operations in the accompanying statements of operations.

On December 21, 2005,
Wells Capital, Inc. (Wells Capital) and Wells Management assigned rights to receive certain fees and reimbursements to Wells Advisory Services I, LLC (WASI), an unaffiliated entity. Accordingly, the Joint Venture will make
all future payments of management and leasing fees and administrative reimbursements to WASI.

Due to Affiliate

As of December 31, 2005 and December 31, 2004, due to affiliate balances reflect amounts due to Wells Management for the following items:



|                                      |  |      |       |      |   |       
|------------------------------------- |  | ---- | ----- | ---- | - | ------
|                                      |  | 2005 |       | 2004
|Reimbursement of administration costs |  | $    | 4,549 |      | $ | 5,748 
|Management and leasing fees           |  |      | 2,659 |      |   | 14,261
|                                      |  |      |       |      |   |       
|                                      |  | $    | 7,208 |      | $ | 20,009
|                                      |  |      |       |      |   |       

4.    DISCONTINUED OPERATIONS

SFAS No. 144 requires, among other things, that the operating results of real estate assets sold or held for sale be included in discontinued operations in the
statement of operations for all periods presented. The Joint Venture sold the Alstom Power  Knoxville Building on March 15, 2005. The results of operations of the Alstom Power  Knoxville Building, which are included as discontinued
operations in the accompanying statements of operations, are presented below:



|                                    |  |      |           |      |   |           |  |   |          
|----------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                                    |  | 2005 |           | 2004 |   | 2003     
|Total property revenues             |  | $    | 309,482   |      | $ | 1,617,130 |  | $ | 1,603,161
|                                    |  |      |          
|Property operating costs            |  |      | 90,130    |      |   | 424,151   |  |   | 420,216  
|Depreciation                        |  |      | 45,590    |      |   | 348,603   |  |   | 405,821  
|Management and leasing fees         |  |      | 27,551    |      |   | 141,321   |  |   | 163,885  
|Legal and accounting                |  |      | 1,012     |      |   | 6,602     |  |   | 7,571    
|                                    |  |      |           |      |   |           |  |   |          
|Total expenses                      |  |      | 164,283   |      |   | 920,677   |  |   | 997,493  
|                                    |  |      |           |      |   |           |  |   |          
|Operating income                    |  |      | 145,199   |      |   | 696,453   |  |   | 605,668  
|Gain on disposition                 |  |      | 5,031,962 |      |   | 0         |  |   | 0        
|                                    |  |      |           |      |   |           |  |   |          
|Income from discontinued operations |  | $    | 5,177,161 |      | $ | 696,453   |  | $ | 605,668  
|                                    |  |      |           |      |   |           |  |   |          

5.    RENTAL INCOME

The future minimum rental income due to the Joint Venture under noncancelable operating leases as of December 31, 2005 follows:



|                        |  |   |          
|----------------------- |  | - | ---------
|Year ended December 31: |  |   |          
|2006                    |  | $ | 2,078,309
|2007                    |  |   | 2,119,048
|2008                    |  |   | 1,193,629
|2009                    |  |   | 487,551  
|2010                    |  |   | 250,394  
|Thereafter              |  |   | 167,184  
|                        |  |   |          
|                        |  | $ | 6,296,115
|                        |  |   |          

Five tenants generated approximately 24%, 23%, 22%, 14%, and 11% of rental income for the year ended
December 31, 2005, and five tenants will generate approximately 31%, 24%, 21%, 9%, and 8% of future minimum rental income.



Page F-27



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##### Index to Financial Statements

SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2005



|                           |  |              |  |              |           |                            |   |                                               |  |      |           |                            |   |                          |  |       |            |                             |   |                      |  |               |            |  |   |           |  |      |  |        
|-------------------------- |  | ------------ |  | ------------ | --------- | -------------------------- | - | --------------------------------------------- |  | ---- | --------- | -------------------------- | - | ------------------------ |  | ----- | ---------- | --------------------------- | - | -------------------- |  | ------------- | ---------- |  | - | --------- |  | ---- |  | -------
|                           |  |              |  | Initial Cost |           |                            |   | Gross Carrying Amount as of December 31, 2005 |  |      |           |                            |   |                         
|Description                |  | Encumbrances |  | Land         |           | Buildings and Improvements |   | CostsCapitalizedSubsequent To Acquisition(f)  |  | Land |           | Buildings and Improvements |   | Construction in Progress |  | Total |            | Accumulated Depreciation(e) |   | Date of Construction |  | Date Acquired
|AVAYABUILDING(a)           |  | None         |  | $            | 1,051,138 |                            | $ | 4,461,334                                     |  | $    | 118,866   |                            | $ | 1,051,138                |  | $     | 4,580,200  |                             | $ | 0                    |  | $             | 5,631,338  |  | $ | 1,267,789 |  | 1998 |  | 6/24/98
|                           |  |              |  |              |           |                            |   |                                               |  |      |          
|360 INTERLOCKENBUILDING(b) |  | None         |  |              | 1,650,070 |                            |   | 6,917,274                                     |  |      | 946,675   |                            |   | 1,650,070                |  |       | 7,863,949  |                             |   | 0                    |  |               | 9,514,019  |  |   | 2,165,402 |  | 1996 |  | 3/20/98
|                           |  |              |  |              |           |                            |   |                                               |  |      |          
|IOMEGA BUILDING(c)         |  | None         |  |              | 641,988   |                            |   | 5,292,262                                     |  |      | 213,832   |                            |   | 641,988                  |  |       | 5,506,094  |                             |   | 0                    |  |               | 6,148,082  |  |   | 1,495,007 |  | 1998 |  | 7/01/98
|                           |  |              |  |              |           |                            |   |                                               |  |      |          
|1315 WEST CENTURY DRIVE(d) |  | None         |  |              | 2,746,894 |                            |   | 7,614,176                                     |  |      | 543,426   |                            |   | 2,746,894                |  |       | 8,157,602  |                             |   | 0                    |  |               | 10,904,496 |  |   | 2,364,625 |  | 1998 |  | 2/13/98
|                           |  |              |  |              |           |                            |   |                                               |  |      |           |                            |   |                          |  |       |            |                             |   |                      |  |               |            |  |   |           |  |      |  |        
|Total                      |  |              |  | $            | 6,090,090 |                            | $ | 24,285,046                                    |  | $    | 1,822,799 |                            | $ | 6,090,090                |  | $     | 26,107,845 |                             | $ | 0                    |  | $             | 32,197,935 |  | $ | 7,292,823 |  |      |  |        
|                           |  |              |  |              |           |                            |   |                                               |  |      |           |                            |   |                          |  |       |            |                             |   |                      |  |               |            |  |   |           |  |      |  |        



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



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



| | (c) | The Iomega Building is a one-story office and warehouse building located in Ogden, Utah.
| | --- | ----------------------------------------------------------------------------------------



| | (d) | 1315 West Century Drive is a two-story office building located in Louisville, Colorado.
| | --- | ---------------------------------------------------------------------------------------



| | (e) | Buildings, land improvements, building improvements, and tenant improvements are depreciated using the straight-line method over 40 years, 20 years, 10 to 25 years,
and the shorter of the economic life or corresponding lease terms, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Includes acquisition and advisory fees and acquisition expense reimbursements applied at acquisition.
| | --- | -----------------------------------------------------------------------------------------------------



Page F-28



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##### Index to Financial Statements

SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2005



|                             |  |      |            |   |                          |   |            |  
|---------------------------- |  | ---- | ---------- | - | ------------------------ | - | ---------- | -
|                             |  | Cost |            |   | Accumulated Depreciation |  
|BALANCE AT DECEMBER 31, 2002 |  | $    | 39,807,159 |   |                          | $ | 7,045,381  |  
|                             |  |     
|2003 additions               |  |      | 135,871    |   |                          |   | 1,438,897  |  
|                             |  |      |            |   |                          |   |            |  
|BALANCE AT DECEMBER 31, 2003 |  |      | 39,943,030 |   |                          |   | 8,484,278  |  
|                             |  |     
|2004 additions               |  |      | 308,577    |   |                          |   | 1,177,848  |  
|                             |  |      |            |   |                          |   |            |  
|BALANCE AT DECEMBER 31, 2004 |  |      | 40,251,607 |   |                          |   | 9,662,126  |  
|                             |  |     
|2005 additions               |  |      | 79,675     |   |                          |   | 681,018    |  
|2005 dispositions            |  |      | (8,133,347 | ) |                          |   | (3,050,321 | )
|                             |  |      |            |   |                          |   |            |  
|BALANCE AT DECEMBER 31, 2005 |  | $    | 32,197,935 |   |                          | $ | 7,292,823  |  
|                             |  |      |            |   |                          |   |            |  



Page F-29



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##### Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The General Partners of

Fund X and Fund XI Associates:

We
have audited the accompanying statements of operations, partners capital, and cash flows of Fund X and Fund XI Associates (the Joint Venture) for the year ended December 31, 2003. These financial statements are the
responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of the Joint Ventures internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Joint Ventures internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the results of operations of Fund X and Fund XI Associates and its cash flows for the year ended December 31, 2003, in conformity with U.S. generally accepted accounting principles.

/S/    ERNST & YOUNG LLP

Atlanta, Georgia

March 10, 2005



Page F-30



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##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

BALANCE SHEETS

DECEMBER 31, 2005 AND 2004

ASSETS



|                             |  |             |           |             |   |          
|---------------------------- |  | ----------- | --------- | ----------- | - | ---------
|                             |  | 2005        |           | 2004       
|                             |  | (unaudited) |           | (unaudited)
|Investment in joint ventures |  | $           | 1,681,181 |             | $ | 1,707,758
|Due from joint ventures      |  |             | 21,021    |             |   | 37,568   
|                             |  |             |           |             |   |          
|Total assets                 |  | $           | 1,702,202 |             | $ | 1,745,326
|                             |  |             |           |             |   |          

LIABILITIES AND PARTNERS CAPITAL



|                                        |  |   |           |  |   |          
|--------------------------------------- |  | - | --------- |  | - | ---------
|Liabilities:                            |  |   |           |  |   |          
|Partnership distributions payable       |  | $ | 21,021    |  | $ | 37,568   
|                                        |  |  
|Partners capital:                      |  |   |           |  |   |          
|Wells Real Estate Fund X, L.P.          |  |   | 975,290   |  |   | 990,708  
|Wells Real Estate Fund XI, L.P.         |  |   | 705,891   |  |   | 717,050  
|                                        |  |   |           |  |   |          
|Total partners capital                 |  |   | 1,681,181 |  |   | 1,707,758
|                                        |  |   |           |  |   |          
|Total liabilities and partners capital |  | $ | 1,702,202 |  | $ | 1,745,326
|                                        |  |   |           |  |   |          

See accompanying notes.



Page F-31



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##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                   |  |             |        |             |   |         |      |  |   |         |  
|---------------------------------- |  | ----------- | ------ | ----------- | - | ------- | ---- |  | - | ------- | -
|                                   |  | 2005        |        | 2004        |   |         | 2003 | 
|                                   |  | (unaudited) |        | (unaudited) |   |        
|EQUITY IN INCOME OF JOINT VENTURES |  | $           | 49,867 |             | $ | 110,273 |      |  | $ | 131,707 |  
|                                   |  |             |       
|EXPENSES                           |  |             | 0      |             |   | (519    | )    |  |   | (4,072  | )
|                                   |  |             |        |             |   |         |      |  |   |         |  
|NET INCOME                         |  | $           | 49,867 |             | $ | 109,754 |      |  | $ | 127,635 |  
|                                   |  |             |        |             |   |         |      |  |   |         |  

See accompanying notes.



Page F-32



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##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

STATEMENTS OF PARTNERS CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                       |  |                               |            |   |                                |   |            |                         |  |   |            |  
|-------------------------------------- |  | ----------------------------- | ---------- | - | ------------------------------ | - | ---------- | ----------------------- |  | - | ---------- | -
|                                       |  | Wells RealEstate Fund X, L.P. |            |   | Wells RealEstate Fund XI, L.P. |   |            | Total Partners Capital | 
|Balance, December 31, 2002             |  | $                             | 3,044,345  |   |                                | $ | 2,203,420  |                         |  | $ | 5,247,765  |  
|                                       |  |                               |           
|Net income                             |  |                               | 74,044     |   |                                |   | 53,591     |                         |  |   | 127,635    |  
|Partnership distributions              |  |                               | (2,077,377 | ) |                                |   | (1,503,389 | )                       |  |   | (3,580,766 | )
|                                       |  |                               |            |   |                                |   |            |                         |  |   |            |  
|Balance, December 31, 2003             |  |                               | 1,041,012  |   |                                |   | 753,622    |                         |  |   | 1,794,634  |  
|                                       |  |                               |           
|Net income                             |  |                               | 63,671     |   |                                |   | 46,083     |                         |  |   | 109,754    |  
|Partnership distributions              |  |                               | (113,975   | ) |                                |   | (82,655    | )                       |  |   | (196,630   | )
|                                       |  |                               |            |   |                                |   |            |                         |  |   |            |  
|Balance, December 31, 2004 (unaudited) |  |                               | 990,708    |   |                                |   | 717,050    |                         |  |   | 1,707,758  |  
|                                       |  |                               |           
|Net income                             |  |                               | 28,929     |   |                                |   | 20,938     |                         |  |   | 49,867     |  
|Partnership distributions              |  |                               | (44,347    | ) |                                |   | (32,097    | )                       |  |   | (76,444    | )
|                                       |  |                               |            |   |                                |   |            |                         |  |   |            |  
|Balance, December 31, 2005 (unaudited) |  | $                             | 975,290    |   |                                | $ | 705,891    |                         |  | $ | 1,681,181  |  
|                                       |  |                               |            |   |                                |   |            |                         |  |   |            |  

See accompanying notes.



Page F-33



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##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2005, 2004, AND 2003



|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|----------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- | - | -------- | ---- |  | - | ---------- | -
|                                                                                    |  | 2005        |         |   | 2004        |   |          | 2003 | 
|                                                                                    |  | (unaudited) |         |   | (unaudited) |   |         
|CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES:                                    |  |             |         |   |             |   |          |      |  |   |            |  
|Net income                                                                          |  | $           | 49,867  |   |             | $ | 109,754  |      |  | $ | 127,635    |  
|Operating distributions received from joint ventures                                |  |             | 92,992  |   |             |   | 203,591  |      |  |   | 564,965    |  
|Adjustments to reconcile net income to net cash provided by operating activities:   |  |             |         |   |             |   |          |      |  |   |            |  
|Equity in income of joint ventures                                                  |  |             | (49,867 | ) |             |   | (110,273 | )    |  |   | (131,707   | )
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|Net cash provided by operating activities                                           |  |             | 92,992  |   |             |   | 203,072  |      |  |   | 560,893    |  
|                                                                                    |  |             |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                               |  |             |         |   |             |   |          |      |  |   |            |  
|Net sale proceeds distributions received from joint ventures                        |  |             | 0       |   |             |   | 0        |      |  |   | 3,134,020  |  
|                                                                                    |  |             |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                               |  |             |         |   |             |   |          |      |  |   |            |  
|Net sale proceeds distributions to joint venture partners                           |  |             | 0       |   |             |   | 0        |      |  |   | (3,134,020 | )
|Operating distributions to joint venture partners in excess of accumulated earnings |  |             | (92,992 | ) |             |   | (203,072 | )    |  |   | (560,893   | )
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|Net cash used in financing activities                                               |  |             | (92,992 | ) |             |   | (203,072 | )    |  |   | (3,694,913 | )
|                                                                                    |  |             |        
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                             |  |             | 0       |   |             |   | 0        |      |  |   | 0          |  
|                                                                                    |  |             |        
|CASH AND CASH EQUIVALENTS, beginning of year                                        |  |             | 0       |   |             |   | 0        |      |  |   | 0          |  
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|CASH AND CASH EQUIVALENTS, end of year                                              |  | $           | 0       |   |             | $ | 0        |      |  | $ | 0          |  
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:              |  |             |         |   |             |   |          |      |  |   |            |  
|Partnership distributions payable                                                   |  | $           | 21,021  |   |             | $ | 37,568   |      |  | $ | 44,010     |  
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  
|Due from joint ventures                                                             |  | $           | 21,021  |   |             | $ | 37,568   |      |  | $ | 44,011     |  
|                                                                                    |  |             |         |   |             |   |          |      |  |   |            |  

See accompanying notes.



Page F-34



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##### Index to Financial Statements

FUND X AND FUND XI ASSOCIATES

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2005 (UNAUDITED), 2004 (UNAUDITED), AND 2003



|1. | ORGANIZATION AND BUSINESS
|-- | -------------------------

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

In July 1998, Wells Operating Partnership, L.P. (Wells OP) entered into a joint venture agreement with Wells Development Corporation, referred to as
Wells/Fremont Associates, which acquired an approximate 58,000 square foot two-story manufacturing and office buildings, 47320 Kato Road, located in Fremont, California. During 1998, the Joint Venture acquired Wells Development Corporations
interest in Wells/Fremont Associates, which resulted in the Joint Venture becoming a joint venture partner with Wells OP.

In July 1998, Wells OP
entered into a joint venture agreement with Wells Development Corporation, referred to as Wells/Orange County Associates, which acquired an approximate 52,000 square foot warehouse and office building, the Cort Building, located in Fountain Valley,
California. During 1998, the Joint Venture acquired Wells Development Corporations interest in Wells/Orange County Associates, which resulted in the Joint Venture becoming a joint venture partner with Wells OP.

On September 11, 2003, Wells/Orange County Associates sold the Cort Building to an unrelated third party for a gross selling price of $5,770,000. As a result of the
sale, the Joint Venture recognized a loss of approximately $213,000 and received net sale proceeds of approximately $3,134,000.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Basis of
Presentation

The Joint Ventures financial statements are prepared in accordance with accounting principles generally accepted in the United
States.

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.

Investment in Joint Ventures

The Joint Venture adopted Financial Accounting Standards Board Interpretation No. (FIN) 46(R), Consolidation of Variable Interest Entities, effective March 31, 2004. The joint venture partners
of Wells/Fremont Associates and Wells/Orange County Associates have disproportionate voting rights for certain major decisions relative to their obligations to absorb expected losses and rights to receive residual returns of such ventures. However,
management has evaluated Wells/Fremont Associates and Wells/Orange County Associates and has determined that they are not variable interest entities under the provisions of FIN 46(R) because not substantially all of the activities are conducted on
behalf of a joint venture partner with disproportionately fewer voting rights. Management has also determined that the joint venture partners of Wells/Fremont Associates and Wells/Orange County Associates are not related parties, as defined in FIN
46(R) and Statement of Financial Standard (SFAS) No. 57, Related Party Disclosures. Accordingly, the adoption of FIN 46(R) did not result in the consolidation of a previously unconsolidated entity.



Page F-35



---

##### Index to Financial Statements

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

In the third quarter of 2004, Wells/Fremont Associates
completed a review of its real estate depreciation by performing an analysis of the components of each property type in an effort to determine weighted-average composite useful lives of its real estate assets. As a result of this review,
Wells/Fremont Associates changed its estimate of the weighted-average composite useful lives for all building assets. Effective July 1, 2004, for all building assets, Wells/Fremont Associates extended the weighted-average composite useful life
from 25 years to 40 years. The change resulted in an increase to net income of approximately $62,984 for the year ended December 31, 2004. We believe the change more appropriately reflects the estimated useful lives of the building assets and
is consistent with prevailing industry practice.

Allocation of Income and Distributions

Pursuant to the terms of the joint venture agreement, income and distributions are allocated to the joint venture partners based upon their respective ownership interests
as determined by relative cumulative capital contributions, as defined. For the periods presented, Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P. held ownership interests in the Joint Venture of approximately 58% and 42%,
respectively. Net cash from operations is generally distributed to the joint venture partners on a quarterly basis.

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
Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P. are required to include their respective share of profits and losses from the Joint Venture in their individual income tax returns.

Reclassifications

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

Recent Accounting Pronouncements

In March 2005, the Financial Accounting Standards Board (FASB) issued FIN 47, Accounting for Conditional Asset Retirement Obligations,an interpretation of SFAS No. 143, Asset Retirement
Obligations, effective for fiscal years ending after December 15, 2005. FIN 47 clarifies the definition of a conditional asset retirement obligation provided in SFAS No. 143 as a legal obligation to perform an asset
retirement activity for which the timing or method of settlement is conditional upon a future event that may or may not be within control of the Joint Venture. An entity is required to recognize a liability for the fair value of a conditional asset
retirement obligation if the fair value of the liability can be reasonably estimated. The Joint Venture may have undetected asbestos at the remaining property. Because the obligation to remove asbestos from this property has an indeterminate
settlement date, the Joint Venture is unable to reasonably estimate the fair value of this obligation. To the extent that this property undergoes major renovations or demolition, certain environmental regulations are in place, which specify the
manner in which the asbestos must be handled and disposed. In such circumstances, sufficient information may become available to reasonably estimate the fair value of the liability. There are currently no plans to undertake a major renovation that
would require removal of the asbestos or demolition of this property. The adoption of FIN 47 did not have a material effect on the Joint Ventures financial statements.



Page F-36



---

##### Index to Financial Statements

3.    RELATED-PARTY TRANSACTIONS

Management and Leasing Fees

Wells Real Estate Fund X, L.P. entered into a property management and leasing agreement
with Wells Management Company, Inc. (Wells Management), an affiliate of its General Partners. In consideration for asset management and the management and leasing of the Joint Ventures properties owned through Wells/Fremont
Associates and Wells/Orange County Associates, these joint ventures pay Wells Management management and leasing fees equal to (a) of the gross revenues collected monthly, 3% for management services and 3% for leasing services, 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 Real Estate Fund XI, L.P. entered into a property management and leasing agreement with Wells Management, an affiliate of its General Partners. In
consideration for asset management and the management and leasing of the Joint Ventures properties owned through Wells/Fremont Associates and Wells/Orange County Associates, these joint ventures pay Wells Management management and leasing fees
equal to (a) of the gross revenues collected monthly, 2.5% management services and 2% for leasing services, plus a separate competitive fee for the one-time initial lease-up of newly constructed properties in an amount not to exceed the fee
customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more
years), the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five
full years of the original lease term.

Management and leasing fees are recognized in accordance with the terms of the aforementioned agreements, weighted
based on joint venture partners respective ownership interests in the Joint Venture. Through its interests in Wells/Fremont Associates and Wells/Orange County Associates, the Joint Venture incurred management and leasing fees payable to Wells
Management of $3,928, $8,571, and $21,051 during the years ended December 31, 2005, 2004 and 2003, respectively.

Administration Reimbursements

Wells Management and its affiliates performs certain administrative services for the Joint Ventures properties owned through Wells/Fremont
Associates and Wells/Orange County Associates, relating to accounting, property management, and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on
estimates of the amount of time dedicated to each fund by individual administrative personnel. In the opinion of management, this allocation is a reasonable estimation of such expenses. Through its interests in Wells/Fremont Associates and
Wells/Orange County Associates, the Joint Venture reimbursed through its equity in income of joint ventures $3,545, $3,271, and $19,548 to Wells Management and its affiliates for these services during the years ended December 31, 2005, 2004 and
2003, respectively.



Page F-37



---

##### Index to Financial Statements

4.    Investment in Joint Ventures

The Joint Ventures investments and approximate ownership percentages in Wells/Fremont Associates and Wells/ Orange County Associates as of December 31, 2005
and 2004 are presented below:



|                               |  |        |           |         |      |   |        |   |           |  |    |  
|------------------------------ |  | ------ | --------- | ------- | ---- | - | ------ | - | --------- |  | -- | -
|                               |  | 2005   |           |         | 2004 |  
|                               |  | Amount |           | Percent |      |   | Amount |   | Percent   | 
|Wells/Orange County Associates |  | $      | 0         |         | 56   | % |        | $ | 0         |  | 56 | %
|Wells/Fremont Associates       |  |        | 1,681,181 |         | 23   | % |        |   | 1,707,758 |  | 23 | %
|                               |  |        |           |         |      |   |        |   |           |  |    |  
|                               |  | $      | 1,681,181 |         |      |   |        | $ | 1,707,758 |  |    |  
|                               |  |        |           |         |      |   |        |   |           |  |    |  

Roll-forwards of the Joint Ventures investment in Wells/Fremont Associates and Wells/Orange County
Associates for the years ended December 31, 2005 and 2004 are presented below:



|                                                |  |      |           |   |      |   |           |  
|----------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                |  | 2005 |           |   | 2004 |  
|Investment in joint ventures, beginning of year |  | $    | 1,707,758 |   |      | $ | 1,794,633 |  
|Equity in income of joint ventures              |  |      | 49,867    |   |      |   | 110,273   |  
|Distributions from joint ventures               |  |      | (76,444   | ) |      |   | (197,148  | )
|                                                |  |      |           |   |      |   |           |  
|Investment in joint ventures, end of year       |  | $    | 1,681,181 |   |      | $ | 1,707,758 |  
|                                                |  |      |           |   |      |   |           |  

Condensed financial information for the joint ventures in which the Joint Venture held an interest as of
December 31, 2005 and 2004 and for the years ended December 31, 2005, 2004, and 2003 is presented below:



|                               |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          
|------------------------------ |  | ----------------- | --------- | ----------------- | - | ----------------- |  | ----------------- | ------- | ----------------- | - | ----------------- |  | - | --------- |  | - | ---------
|                               |  | Total Assets      |           | Total Liabilities |   | Total Equity     
|                               |  | December 31, 2005 |           | December 31, 2004 |   | December 31, 2005 |  | December 31, 2004 |         | December 31, 2005 |   | December 31, 2004
|Wells/Fremont Associates       |  | $                 | 7,583,387 |                   | $ | 7,776,806         |  | $                 | 110,095 |                   | $ | 185,371           |  | $ | 7,473,292 |  | $ | 7,591,435
|Wells/Orange County Associates |  |                   | 0         |                   |   | 0                 |  |                   | 0       |                   |   | 0                 |  |   | 0         |  |   | 0        
|                               |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          
|                               |  | $                 | 7,583,387 |                   | $ | 7,776,806         |  | $                 | 110,095 |                   | $ | 185,371           |  | $ | 7,473,292 |  | $ | 7,591,435
|                               |  |                   |           |                   |   |                   |  |                   |         |                   |   |                   |  |   |           |  |   |          



|                               |  |                                 |         |                                          |   |         |                                            |      |         |                                 |   |         |      |   |         |      |  |      |         |   |      |   |   |      |   |         |   |  |      |        |     |  |   |         |  |   |         |     |  |   |        
|------------------------------ |  | ------------------------------- | ------- | ---------------------------------------- | - | ------- | ------------------------------------------ | ---- | ------- | ------------------------------- | - | ------- | ---- | - | ------- | ---- |  | ---- | ------- | - | ---- | - | - | ---- | - | ------- | - |  | ---- | ------ | --- |  | - | ------- |  | - | ------- | --- |  | - | -------
|                               |  | Total Revenues                  |         | Income (Loss) From Continuing Operations |   |         | Income (Loss) From Discontinued Operations |      |         | Net Income (Loss)              
|                               |  | For The Years EndedDecember 31, |         | For The Years EndedDecember 31,          |   |         | For The Years EndedDecember 31,            |      |         | For The Years EndedDecember 31,
|                               |  | 2005                            |         | 2004                                     |   | 2003    |                                            | 2005 |         | 2004                            |   |         | 2003 |   |         | 2005 |  | 2004 |         |   | 2003 |   |   | 2005 |   | 2004    |   |  | 2003
|Wells/Orange County Associates |  | $                               | 0       |                                          | $ | 0       |                                            | $    | 0       |                                 | $ | 0       |      | $ | (7,573  | )    |  | $    | (7,866  | ) |      | $ | 0 |      | $ | (18,944 | ) |  | $    | 22,433 | (1) |  | $ | 0       |  | $ | (26,517 | )   |  | $ | 14,567 
|Wells/Fremont Associates       |  |                                 | 475,989 |                                          |   | 880,778 |                                            |      | 902,927 |                                 |   | 221,672 |      |   | 556,594 |      |  |      | 548,993 |   |      |   | 0 |      |   | 0       |   |  |      | 0      |     |  |   | 221,672 |  |   | 556,594 | (2) |  |   | 548,993
|                               |  |                                 |         |                                          |   |         |                                            |      |         |                                 |   |         |      |   |         |      |  |      |         |   |      |   |   |      |   |         |   |  |      |        |     |  |   |         |  |   |         |     |  |   |        
|                               |  | $                               | 475,989 |                                          | $ | 880,778 |                                            | $    | 902,927 |                                 | $ | 221,672 |      | $ | 549,021 |      |  | $    | 541,127 |   |      | $ | 0 |      | $ | (18,944 | ) |  | $    | 22,433 |     |  | $ | 221,672 |  | $ | 530,077 |     |  | $ | 563,560
|                               |  |                                 |         |                                          |   |         |                                            |      |         |                                 |   |         |      |   |         |      |  |      |         |   |      |   |   |      |   |         |   |  |      |        |     |  |   |         |  |   |         |     |  |   |        



| | (1) | Includes a loss of approximately $379,000 recognized on the sale of the Cort Building, of
which approximately $213,000 is attributable to the Joint Venture.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Effective July 1, 2004, Wells/Fremont Associates extended the weighted-average composite useful life for all building assets from 25 years to 40 years, which
resulted in an increase to net income for the year ended December 31, 2004 of approximately $62,984. Management believes that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with
prevailing industry practice.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due from Joint Ventures

Due from joint ventures as of December 31, 2005 and 2004 represents the Joint Ventures share of operating cash to be distributed from the Wells/Fremont Associates for the fourth quarters of 2005 and 2004,
respectively.



Page F-38



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##### Index to Financial Statements

EXHIBIT INDEX

TO

2005 FORM 10-K

OF

WELLS REAL ESTATE FUND X, 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.



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



---

##### Index to Financial Statements

|              |     |  |                                                                                                                                                                                                                                                                                                                                                                  
|------------- | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |     |  | Description of Document                                                                                                                                                                                                                                                                                                                                          
|              |    
|*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)                                                                                                                                                   
|              |    
|*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 Fund X and XI 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. 33-32099)                              
|              |    
|*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)                           



---

##### Index to Financial Statements

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                               
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                       
|              | 
|*10(w)        |  | First Amendment to Joint Venture Agreement of Wells/Fremont Associates dated October 8, 1998 (Exhibit 10(w) to Form 10-K of Wells Real Estate Fund X, L.P. for the fiscal year ended December
31, 1998, Commission File No. 0-23719)                                                                                                                                                                          
|              | 
|*10(x)        |  | Purchase and Sale Agreement and Joint Escrow Instructions relating to the Cort Furniture Building dated June 12, 1998 between the Cort Joint Venture (as successor in interest by assignment)
and Spencer Fountain Valley Holdings, Inc. (Exhibit 10.21 to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date, Commission File No. 333-32099)                   
|              | 
|*10(y)        |  | First Amendment to Purchase and Sale Agreement and Joint Escrow Instructions relating to the Cort Furniture Building dated July 16, 1998 between the Cort Joint Venture (as successor in
interest by assignment) and Spencer Fountain Valley Holdings, Inc. (Exhibit 10.22 to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date, Commission File No. 333-32099)
|              | 
|*10(z)        |  | Joint Venture Agreement of Wells/Orange County Associates (the Cort Joint Venture) dated July 27, 1998 between Wells Development Corporation and Wells Operating Partnership, L.P.
(Exhibit 10.25 to Form S-11 Registration Statement of Wells Real Estate Investment Trust, Inc., as amended to date, Commission File No. 333-32099)                                                                       
|              | 
|*10(aa)       |  | Agreement for the Purchase and Sale of Joint Venture Interest relating to the Cort Joint Venture dated July 30, 1998 between Wells Development Corporation and Fund X and Fund XI Associates
(Exhibit 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)       |  | Purchase and Sale Agreement relating to the sale of the Cort Building (Exhibit 10.1 to the Form 10-Q of Wells Real Estate Fund X, L.P. for the quarter ended September 30, 2003,
Commission File No. 0-23719)                                                                                                                                                                                                 
|              | 
|*10(ee)       |  | Fourth Amendment to Lease Agreement with Alstom Power, Inc. for the Alstom Power  Knoxville Building (Exhibit 10.2 to the Form 10-Q of Wells Real Estate Fund IX, L.P. for the quarter
ended September 30, 2004, Commission File No. 0-22039)                                                                                                                                                                
|              | 
|*10(ff)       |  | Lease Agreement for the 360 Interlocken Building with GAIAM, Inc. (Exhibit 10(qq) to Form 10-K of Wells Real Estate Fund IX, L.P. for the year ended December 31, 2004, Commission
File No. 0-22039)                                                                                                                                                                                                          
|              | 
|*10(gg)       |  | Lease Agreement for the 47320 Kato Road Building with TCI International, Inc. (Exhibit 10(qq) to Form 10-K of Wells Real Estate Fund X, L.P. for the year ended December 31, 2004, Commission
File No. 0-23719)                                                                                                                                                                                               
|              | 
|*10(hh)       |  | Purchase and Sale Agreement for the Alstom Power  Knoxville Building (Exhibit 10.1 to the Form 10-Q of Wells Real Estate Fund IX, L.P. for the quarter ended March 31, 2005, Commission
File No. 0-22039)                                                                                                                                                                                                    
|              | 
|31.1          |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                        
|              | 
|31.2          |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                        
|              | 
|32.1          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002