##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

FORM 10-Q



---

(Mark One)



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

For the quarterly period ended September 30, 2006 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 0-27888



---

WELLS REAL ESTATE FUND VIII, L.P.

(Exact name of registrant as specified in
its charter)



---



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-2126618                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|6200 The Corners Pkwy., Norcross, Georgia                      |  | 30092-3365                             
|(Address of principal executive offices)                       |  | (Zip Code)                             
|                                                               | 
|Registrants telephone number, including area code             |  | (770) 449-7800                         

N/A

(Former name, former address, and former fiscal year, if changed since last report)

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 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



---



---

##### Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Fund VIII, L.P. (the Partnership or the Registrant)
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-Q, 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 distributions to partners, and maintain the value of our real estate properties, may be significantly hindered. See Item 1A in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2005 for a discussion
of 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.



Page 2



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                               |  |         
|-------- |  | --------------------- |  | ----------------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                               |  | Page No.
|         |  |                      
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                              
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements:                                                                                                         |  |         
|         |  |                       | 
|         |  |                       |  | Balance SheetsSeptember 30, 2006 (unaudited) and December 31, 2005                                                           |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Operations for the Three Months and Nine Months Ended September 30, 2006 (unaudited) and 2005 (unaudited)       |  | 6       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Year Ended December 31, 2005 and the Nine Months Ended September 30, 2006 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Nine Months Ended September 30, 2006 (unaudited) and 2005 (unaudited)                        |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                           |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                         |  | 16      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                                                    |  | 22      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                       |  | 22      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                              
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                             |  | 23      
|         |  |                       | 
|         |  | Item 1A.              |  | Risk Factors                                                                                                                  |  | 23      
|         |  |                       | 
|         |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                   |  | 23      
|         |  |                       | 
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                               |  | 23      
|         |  |                       | 
|         |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                           |  | 23      
|         |  |                       | 
|         |  | Item 5.               |  | Other Information                                                                                                             |  | 23      
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                                      |  | 23      



Page 3



---

##### Table of Contents

|PART I. | FINANCIAL STATEMENTS
|------- | --------------------

The information furnished in
the Partnerships accompanying balance sheets and consolidated statements of operations, partners capital, and cash flows reflects all adjustments that are, in managements opinion, necessary for a fair and consistent presentation of
the aforementioned financial statements.

The accompanying financial statements should be read in conjunction with the notes to the
Partnerships financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations included both in this report on Form 10-Q and in the Partnerships Annual Report on Form 10-K for the year
ended December 31, 2005. The Partnerships results of operations for the three months and nine months ended September 30, 2006 are not necessarily indicative of the operating results expected for the full year.



Page 4



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



BALANCE SHEETS

ASSETS



|                                                                                                                       |  |                                |            |                   |   |           
|---------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | ----------------- | - | ----------
|                                                                                                                       |  | (Unaudited) September 30, 2006 |            | December 31, 2005
|Investment in joint ventures                                                                                           |  | $                              | 8,917,931  |                   | $ | 10,495,726
|Cash and cash equivalents                                                                                              |  |                                | 6,012,654  |                   |   | 5,528,409 
|Due from joint ventures                                                                                                |  |                                | 0          |                   |   | 228,084   
|Other assets                                                                                                           |  |                                | 28,123     |                   |   | 0         
|                                                                                                                       |  |                                |            |                   |   |           
|Total assets                                                                                                           |  | $                              | 14,958,708 |                   | $ | 16,252,219
|                                                                                                                       |  |                                |            |                   |   |           
|                                                                                                                      
|LIABILITIES AND PARTNERS CAPITAL                                                                                     
|                                                                                                                       |  |                               
|LIABILITIES:                                                                                                           |  |                                |            |                   |   |           
|Accounts payable and accrued expenses                                                                                  |  | $                              | 61,848     |                   | $ | 75,518    
|Due to affiliates                                                                                                      |  |                                | 7,805      |                   |   | 10,811    
|Partnership distributions payable                                                                                      |  |                                | 181,169    |                   |   | 173,471   
|                                                                                                                       |  |                                |            |                   |   |           
|Total liabilities                                                                                                      |  |                                | 250,822    |                   |   | 259,800   
|                                                                                                                       |  |                               
|PARTNERS CAPITAL:                                                                                                     |  |                                |            |                   |   |           
|Limited partners:                                                                                                      |  |                                |            |                   |   |           
|Class A  2,952,679 units and 2,950,600 units outstanding as of September 30, 2006 and December 31, 2005,
respectively |  |                                | 13,461,876 |                   |   | 15,061,403
|Class B  250,590 units and 252,669 units outstanding as of September 30, 2006 and December 31, 2005,
respectively     |  |                                | 1,242,615  |                   |   | 931,016   
|General partners                                                                                                       |  |                                | 3,395      |                   |   | 0         
|                                                                                                                       |  |                                |            |                   |   |           
|Total partners capital                                                                                                |  |                                | 14,707,886 |                   |   | 15,992,419
|                                                                                                                       |  |                                |            |                   |   |           
|Total liabilities and partners capital                                                                                |  | $                              | 14,958,708 |                   | $ | 16,252,219
|                                                                                                                       |  |                                |            |                   |   |           

See accompanying notes.



Page 5



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



STATEMENTS OF OPERATIONS



|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|------------------------------------------------------------ |  | -------------------------------------------- | --------- | ------------------------------------------- | ---- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                             |  | (Unaudited) Three Months Ended September 30, |           | (Unaudited) Nine Months Ended September 30,
|                                                             |  | 2006                                         |           |                                             | 2005 |   | 2006      |  | 2005
|EQUITY IN INCOME OF JOINT VENTURES                           |  | $                                            | 141,736   |                                             |      | $ | 164,773   |  | $    | 3,180,836 |  | $ | 2,353,362
|                                                             |  |                                              |           |                                            
|EXPENSES:                                                    |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|Partnership administration                                   |  |                                              | 33,345    |                                             |      |   | 41,246    |  |      | 115,987   |  |   | 126,585  
|Legal and accounting                                         |  |                                              | 15,058    |                                             |      |   | 26,059    |  |      | 49,680    |  |   | 50,736   
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|Total expenses                                               |  |                                              | 48,403    |                                             |      |   | 67,305    |  |      | 165,667   |  |   | 177,321  
|                                                             |  |                                              |           |                                            
|INTEREST AND OTHER INCOME                                    |  |                                              | 77,230    |                                             |      |   | 19,418    |  |      | 192,179   |  |   | 64,353   
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|                                                             |  |                                              |           |                                            
|NET INCOME                                                   |  | $                                            | 170,563   |                                             |      | $ | 116,886   |  | $    | 3,207,348 |  | $ | 2,240,394
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|                                                             |  |                                              |           |                                            
|NET INCOME (LOSS) ALLOCATED TO:                              |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS A LIMITED PARTNERS                                     |  | $                                            | 284,778   |                                             |      | $ | 116,886   |  | $    | 2,565,775 |  | $ | 758,511  
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS B LIMITED PARTNERS                                     |  | $                                            | (114,109  | )                                           |      | $ | 0         |  | $    | 638,178   |  | $ | 1,481,883
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|GENERAL PARTNERS                                             |  | $                                            | (106      | )                                           |      | $ | 0         |  | $    | 3,395     |  | $ | 0        
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|                                                             |  |                                              |           |                                            
|NET INCOME (LOSS) PER WEIGHTED-AVERAGE LIMITED PARTNER UNIT: |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS A                                                      |  | $                                            | 0.10      |                                             |      | $ | 0.04      |  | $    | 0.87      |  | $ | 0.26     
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS B                                                      |  | $                                            | (0.46     | )                                           |      | $ | 0.00      |  | $    | 2.54      |  | $ | 5.77     
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|                                                             |  |                                              |           |                                            
|WEIGHTED-AVERAGE LIMITED PARTNER UNITS OUTSTANDING:          |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS A                                                      |  |                                              | 2,952,679 |                                             |      |   | 2,947,600 |  |      | 2,951,979 |  |   | 2,946,538
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          
|CLASS B                                                      |  |                                              | 250,590   |                                             |      |   | 255,669   |  |      | 251,290   |  |   | 256,731  
|                                                             |  |                                              |           |                                             |      |   |           |  |      |           |  |   |          

See accompanying notes.



Page 6



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2005

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2006 (UNAUDITED)



|                                                                                                                      |  |                  |  |        |                  |   |                         |         |   |        |   |            |   |  |   |       |  |   |             |  
|--------------------------------------------------------------------------------------------------------------------- |  | ---------------- |  | ------ | ---------------- | - | ----------------------- | ------- | - | ------ | - | ---------- | - |  | - | ----- |  | - | ----------- | -
|                                                                                                                      |  | Limited Partners |  |        | General Partners |   | Total Partners Capital |        
|                                                                                                                      |  | Class A          |  |        | Class B          |   |                         |        
|                                                                                                                      |  | Units            |  | Amount |                  |   | Units                   |         |   | Amount |   |            |  
|BALANCE, December 31, 2004                                                                                            |  | 2,931,096        |  | $      | 21,206,578       |   |                         | 272,173 |   |        | $ | 509,422    |   |  | $ | 0     |  | $ | 21,716,000  |  
|                                                                                                                      |  |                  |  |        |                  |  
|Class B conversion elections                                                                                          |  | 19,504           |  |        | 28,978           |   |                         | (19,504 | ) |        |   | (28,978    | ) |  |   | 0     |  |   | 0           |  
|Net income                                                                                                            |  | 0                |  |        | 2,384,593        |   |                         | 0       |   |        |   | 2,829,597  |   |  |   | 0     |  |   | 5,214,190   |  
|Distributions of operating cash flow ($0.22 per weighted-average Class A Unit)                                        |  | 0                |  |        | (637,773         | ) |                         | 0       |   |        |   | 0          |   |  |   | 0     |  |   | (637,773    | )
|Distributions of net sale proceeds ($2.69 and $9.30 per weighted-average Class A Unit and Class B Unit,
respectively) |  | 0                |  |        | (7,920,973       | ) |                         | 0       |   |        |   | (2,379,025 | ) |  |   | 0     |  |   | (10,299,998 | )
|                                                                                                                      |  |                  |  |        |                  |   |                         |         |   |        |   |            |   |  |   |       |  |   |             |  
|BALANCE, December 31, 2005                                                                                            |  | 2,950,600        |  |        | 15,061,403       |   |                         | 252,669 |   |        |   | 931,016    |   |  |   | 0     |  |   | 15,992,419  |  
|                                                                                                                      |  |                  |  |        |                  |  
|Class B conversion elections                                                                                          |  | 2,079            |  |        | 8,493            |   |                         | (2,079  | ) |        |   | (8,493     | ) |  |   | 0     |  |   | 0           |  
|Net income                                                                                                            |  | 0                |  |        | 2,565,775        |   |                         | 0       |   |        |   | 638,178    |   |  |   | 3,395 |  |   | 3,207,348   |  
|Distributions of operating cash flow ($0.23 per weighted-average Class A Unit)                                        |  | 0                |  |        | (691,878         | ) |                         | 0       |   |        |   | 0          |   |  |   | 0     |  |   | (691,878    | )
|Distributions of net sale proceeds ($1.18 and $1.27 per weighted-average Class A Unit and Class B Unit,
respectively) |  | 0                |  |        | (3,481,917       | ) |                         | 0       |   |        |   | (318,086   | ) |  |   | 0     |  |   | (3,800,003  | )
|                                                                                                                      |  |                  |  |        |                  |   |                         |         |   |        |   |            |   |  |   |       |  |   |             |  
|BALANCE, September 30, 2006                                                                                           |  | 2,952,679        |  | $      | 13,461,876       |   |                         | 250,590 |   |        | $ | 1,242,615  |   |  | $ | 3,395 |  | $ | 14,707,886  |  
|                                                                                                                      |  |                  |  |        |                  |   |                         |         |   |        |   |            |   |  |   |       |  |   |             |  

See accompanying notes.



Page 7



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



STATEMENTS OF CASH FLOWS



|                                                                                  |  |                                            |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | (Unaudited) Nine Months EndedSeptember 30, |           
|                                                                                  |  | 2006                                       |            |   | 2005 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                                            |            |   |      |   |            |  
|Net income                                                                        |  | $                                          | 3,207,348  |   |      | $ | 2,240,394  |  
|Operating distributions received from joint ventures                              |  |                                            | 970,478    |   |      |   | 991,753    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                            |            |   |      |   |            |  
|Equity in income of joint ventures                                                |  |                                            | (3,180,836 | ) |      |   | (2,353,362 | )
|Changes in assets and liabilities:                                                |  |                                            |            |   |      |   |            |  
|Increase in other assets                                                          |  |                                            | (28,123    | ) |      |   | 0          |  
|(Decrease) increase in accounts payable and accrued expenses                      |  |                                            | (13,670    | ) |      |   | 21,332     |  
|Decrease in due to affiliates                                                     |  |                                            | (3,006     | ) |      |   | (812       | )
|                                                                                  |  |                                            |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                                            | 952,191    |   |      |   | 899,305    |  
|                                                                                  |  |                                           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                                            |            |   |      |   |            |  
|Investment in joint ventures                                                      |  |                                            | (161,773   | ) |      |   | (426,497   | )
|Net sale proceeds received from joint ventures                                    |  |                                            | 4,178,010  |   |      |   | 3,635,454  |  
|                                                                                  |  |                                            |            |   |      |   |            |  
|Net cash provided by investing activities                                         |  |                                            | 4,016,237  |   |      |   | 3,208,957  |  
|                                                                                  |  |                                           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |  |                                            |            |   |      |   |            |  
|Operating distributions paid to limited partners                                  |  |                                            | (684,180   | ) |      |   | (464,303   | )
|Net sale proceeds distributions paid to limited partners                          |  |                                            | (3,800,003 | ) |      |   | (5,299,999 | )
|                                                                                  |  |                                            |            |   |      |   |            |  
|Net cash used in investing activities                                             |  |                                            | (4,484,183 | ) |      |   | (5,764,302 | )
|                                                                                  |  |                                            |            |   |      |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |                                            | 484,245    |   |      |   | (1,656,040 | )
|                                                                                  |  |                                           
|CASH AND CASH EQUIVALENTS, beginning of period                                    |  |                                            | 5,528,409  |   |      |   | 6,906,555  |  
|                                                                                  |  |                                            |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, end of period                                          |  | $                                          | 6,012,654  |   |      | $ | 5,250,515  |  
|                                                                                  |  |                                            |            |   |      |   |            |  
|                                                                                  |  |                                           
|SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:           |  |                                            |            |   |      |   |            |  
|Partnership distributions payable                                                 |  | $                                          | 181,169    |   |      | $ | 173,471    |  
|                                                                                  |  |                                            |            |   |      |   |            |  

See accompanying notes.



Page 8



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



CONDENSED NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2006 (unaudited)



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

Wells Real Estate Fund VIII, 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, 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 August 15, 1994 for the purpose of acquiring,
developing, owning, operating, improving, leasing, and otherwise managing income-producing commercial properties for investment purposes. Upon subscription, limited partners elected 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 January 6, 1995, the Partnership commenced a public offering of up to $35,000,000 of Class A or Class B limited partnership units ($10 per unit) pursuant to a Registration Statement
on Form S-11 filed under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 125,000 units on February 24, 1995. The offering was terminated on January 4, 1996, at
which time the Partnership had sold approximately 2,613,534 Class A Units and 590,735 Class B Units representing capital contributions of $32,042,689.



Page 9



---

##### Table of Contents

During the periods presented, the Partnership owned interests in the following joint ventures (the
Joint Ventures) and properties:



|                                                                           |  |                                                                                                             |  |                                                                                                                                                                                                                                                                  
|-------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Joint Venture                                                              |  | Joint Venture Partners                                                                                      |  | Properties                                                                                                                                                                                                                                                       
|Fund VI, Fund VII and Fund VIII Associates (Fund VI-VII-VIII Associates) |  |   Wells Real Estate Fund VI, L.P.   Wells Real Estate Fund VII, L.P.   Wells Real Estate Fund VIII, L.P. |  | 1. BellSouth Building(1) A four-story office
building located in Jacksonville, Florida  2. Tanglewood Commons(2) A retail center in Clemmons, North Carolina, and four outparcels of land                                                                        
|Fund VII and Fund VIII Associates (Fund VII-VIII Associates)             |  |   Wells Real Estate Fund VII, L.P.
  Wells Real Estate Fund VIII, L.P.                                    |  | 3. CH2M Hill Building(3) An office building located
in Gainesville, Florida                                                                                                                                                                                      
|Fund VIII and Fund IX Associates (Fund VIII-IX Associates)               |  |   Wells Real Estate Fund VIII, L.P.
  Wells Real Estate Fund IX, L.P.                                     |  | 4. US Cellular Building A four-story office building located in Madison, Wisconsin  5. AT&T  Texas Building A one-story office building located in Farmers Branch, Texas  6. 305 Interlocken Parkway A two-story office building located in Broomfield, Colorado
|Fund VIII-IX-REIT Joint Venture (Fund VIII-IX-REIT Associates)           |  |   Fund VIII-IX Associates   Wells Operating Partnership, L.P.(4)                                          |  | No properties owned during the periods presented.                                                                                                                                                                                                                



| | (1) | This property was sold in May 2006.
| | --- | -----------------------------------



| | (2) | One outparcel of land was sold in October 2002; the shopping center and one outparcel of land was sold in April 2005; a portion of an
outparcel of land was condemned by the North Carolina Department of Transportation in October 2005, and two outparcels of land remain unsold as of September 30, 2006.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | This property was sold in December 2005.
| | --- | ----------------------------------------



| | (4) | Wells Operating Partnership, L.P. is a Delaware limited partnership with Wells Real Estate Investment Trust, Inc. (Wells REIT)
serving as its general partner; Wells REIT is a Maryland corporation that qualifies as a real estate investment trust.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Wells Real Estate Fund VI, L.P., Wells Real Estate Fund VII, L.P., and Wells Real Estate Fund IX, L.P. are affiliated with the Partnership through common general partners. Each of the properties described above was acquired on an all-cash
basis. For further information regarding the Joint Ventures and foregoing properties, refer to the Partnerships Annual Report on Form 10-K for the year ended December 31, 2005.

On April 21, 2005, Fund VI-VII-VIII Associates sold the Tanglewood Commons shopping center and one outparcel of land to an unrelated third party for a gross sales price of $11,500,000. As a
result of the sale, the Partnership received net sale proceeds of approximately $3,635,000 and was allocated a gain of approximately $1,755,000. On October 12, 2005, a portion of one of the remaining outparcels of land was condemned by the
North Carolina Department of Transportation. As a result of this condemnation, the Partnership received net sale proceeds of approximately $17,000 and was allocated a gain of approximately $10,000.



Page 10



---

##### Table of Contents

On December 7, 2005, Fund VII-VIII Associates sold the CH2M Hill Building to an unrelated third
party for a gross sales price of $8,200,000. As a result of the sale, the Partnership received net sale proceeds of approximately $5,028,000 and was allocated a gain of approximately $2,534,000.

On May 15, 2006, Fund VI-VII-VIII Associates and another Wells-affiliated joint venture sold the BellSouth Building and a second office property
owned by the other Wells-affiliated joint venture to an unaffiliated third party for an aggregate gross sales price of $24,000,000, less agreed-upon credits of approximately $228,000. As a result of the sale, the Partnership received net sale
proceeds of approximately $4,157,000 and was allocated a gain of approximately $2,176,000.



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

Basis of Presentation

The financial statements of the Partnership have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission, including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S.
generally accepted accounting principles (GAAP) for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and
recurring nature and necessary to fairly and consistently present the results for these periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and
footnotes included in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2005.

Investment in Joint Ventures

The Partnership has evaluated the Joint Ventures and concluded that none are variable interest entities under the provisions of
Financial Accounting Standards Board Interpretation (FIN) No. 46(R), Consolidation of Variable Interest Entities, which supersedes FIN No. 46 and is an interpretation of Accounting Research Bulletin (ARB)
No. 51, Consolidated Financial Statements. 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 Statement of Financial Accounting Standard (SFAS)
No. 94, Consolidation of All Majority-Owned Subsidiaries, ARB No. 51, and Statement of Position 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.

Other Assets

As of September 30, 2006 and December 31, 2005, other assets is comprised of the following items:



|                            |  |                   |  |                 
|--------------------------- |  | ----------------- |  | ----------------
|                            |  | September 30,2006 |  | December 31,2005
|Interest income receivable  |  | $25,486           |  | $0              
|Insurance refund receivable |  | 2,637             |  | 0               
|                            |  |                   |  |                 
|Total                       |  | $28,123           |  | $0              
|                            |  |                   |  |                 



Page 11



---

##### Table of Contents

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, such 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 between the limited partners holding Class A Units and the General Partners on a basis of 90% and 10%, respectively. No cash distributions will be made to the
limited partners holding Class B Units.

Distribution of Sale Proceeds

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



| |  |  | In the event that the particular property sold is sold for a price less than its 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;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | To all limited partners on a per-unit basis until they 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 they have received an amount equal to their respective preferential limited partners returns (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; in the event that the limited partners have received aggregate
cash distributions from the Partnership over the life of their respective investments in excess of a return of their respective net capital contributions, plus the preferential limited partner return, the General Partners shall receive an additional
sum equal to 25% of such excess; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Allocations 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, amortization, and cost recovery and the gain on the sale of
assets. Net income, as defined, of the Partnership is generally allocated each year in the same proportions that net cash from operations is distributed to the limited 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 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.



Page 12



---

##### Table of Contents

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

Recent Accounting Pronouncements

In September 2006,
the Financial Accounting Standards Board issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP. SFAS
No. 157 emphasizes that fair value is a market-based measurement, as opposed to an entity-specific measurement. SFAS No. 157 will be effective for the Partnership beginning January 1, 2008. The Partnership is currently assessing provisions and
evaluating the financial impact of SFAS No. 157 on its financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin
No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements(SAB No. 108), which provides interpretive guidance on the consideration of the effects of
prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 is effective for fiscal years ending after November 15, 2006, and will be effective for the Partnership beginning
December 31, 2006. The Partnership is currently assessing provisions and evaluating the financial statement impact of SAB No. 108 on its financial statements.



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

Summary of
Financial Information

Condensed financial information for the joint ventures in which the Partnership held direct interests for the
three months and nine months ended September 30, 2006 and 2005, respectively, is presented below:



|                            |  |                                 |  |                                         |  |             |                                           |  |                                 |   |  |            |   |  |            |  |            |   |  |           
|--------------------------- |  | ------------------------------- |  | --------------------------------------- |  | ----------- | ----------------------------------------- |  | ------------------------------- | - |  | ---------- | - |  | ---------- |  | ---------- | - |  | ----------
|                            |  | Total Revenues                  |  | Income (Loss) FromContinuing Operations |  |             | Income FromDiscontinued Operations        |  | Net Income (Loss)              
|                            |  | Three Months EndedSeptember 30, |  | Three Months EndedSeptember 30,         |  |             | Three Months EndedSeptember 30,           |  | Three Months EndedSeptember 30,
|                            |  | 2006                            |  | 2005                                    |  | 2006        |                                           |  | 2005                            |   |  | 2006       |   |  | 2005       |  | 2006       |   |  | 2005      
|Fund VI-VII-VIII Associates |  | $           0                   |  | $           0                           |  | $ (13,236   | )                                         |  | $ (11,535                       | ) |  | $2,944     |   |  | $185,227   |  | $ (10,292  | ) |  | $173,692  
|Fund VII-VIII Associates    |  | 0                               |  | 0                                       |  | 0           |                                           |  | (5,465                          | ) |  | 0          |   |  | 30,626     |  | 0          |   |  | 25,161    
|Fund VIII-IX Associates     |  | 715,687                         |  | 616,950                                 |  | 264,734     |                                           |  | 169,048                         |   |  | 0          |   |  | 0          |  | 264,734    |   |  | 169,048   
|                            |  |                                 |  |                                         |  |             |                                           |  |                                 |   |  |            |   |  |            |  |            |   |  |           
|                            |  | $715,687                        |  | $616,950                                |  | $251,498    |                                           |  | $152,048                        |   |  | $2,944     |   |  | $215,853   |  | $254,442   |   |  | $367,901  
|                            |  |                                 |  |                                         |  |             |                                           |  |                                 |   |  |            |   |  |            |  |            |   |  |           
|                            |  |                                 |  |                                        
|                            |  | Total Revenues                  |  | Income (Loss) FromContinuing Operations |  |             | Income (Loss) FromDiscontinued Operations |  | Net Income (Loss)              
|                            |  | Nine Months EndedSeptember 30,  |  | Nine Months EndedSeptember 30,          |  |             | Nine Months EndedSeptember 30,            |  | Nine Months EndedSeptember 30, 
|                            |  | 2006                            |  | 2005                                    |  | 2006        |                                           |  | 2005                            |   |  | 2006       |   |  | 2005       |  | 2006       |   |  | 2005      
|Fund VI-VII-VIII Associates |  | $              0                |  | $              0                        |  | $   (31,364 | )                                         |  | $ (27,810                       | ) |  | $6,987,907 |   |  | $6,027,001 |  | $6,956,543 |   |  | $5,999,191
|Fund VII-VIII Associates    |  | 0                               |  | 0                                       |  | (2,767      | )                                         |  | (16,767                         | ) |  | (5,258     | ) |  | 84,232     |  | (8,025     | ) |  | 67,465    
|Fund VIII-IX Associates     |  | 3,025,936                       |  | 2,028,175                               |  | 1,706,598   |                                           |  | 674,491                         |   |  | 0          |   |  | 0          |  | 1,706,598  |   |  | 674,491   
|                            |  |                                 |  |                                         |  |             |                                           |  |                                 |   |  |            |   |  |            |  |            |   |  |           
|                            |  | $3,025,936                      |  | $2,028,175                              |  | $1,672,467  |                                           |  | $629,914                        |   |  | $6,982,649 |   |  | $6,111,233 |  | $8,655,116 |   |  | $6,741,147
|                            |  |                                 |  |                                         |  |             |                                           |  |                                 |   |  |            |   |  |            |  |            |   |  |           



Page 13



---

##### Table of Contents

Condensed financial information for the joint venture in which Fund VIII-IX Associates held an equity
interest for the three months and nine months ended September 30, 2006 and 2005, respectively, is presented below:



|                             |  |                                 |  |                                         |  |         |                                  |  |         |                                 |  |          |   |  |         |   |  |          |   |  |         |  
|---------------------------- |  | ------------------------------- |  | --------------------------------------- |  | ------- | -------------------------------- |  | ------- | ------------------------------- |  | -------- | - |  | ------- | - |  | -------- | - |  | ------- | -
|                             |  | Total Revenues                  |  | Income (Loss) FromContinuing Operations |  |         | Loss FromDiscontinued Operations |  |         | Net Loss                        | 
|                             |  | Three Months EndedSeptember 30, |  | Three Months EndedSeptember 30,         |  |         | Three Months EndedSeptember 30,  |  |         | Three Months EndedSeptember 30, | 
|                             |  | 2006                            |  | 2005                                    |  | 2006    |                                  |  | 2005    |                                 |  | 2006     |   |  | 2005    |   |  | 2006     |   |  | 2005    |  
|Fund VIII-IX-REIT Associates |  | $198                            |  | $0                                      |  | $(9,076 | )                                |  | $(4,373 | )                               |  | $(18,055 | ) |  | $(1,192 | ) |  | $(27,131 | ) |  | $(5,565 | )
|                             |  |                                 |  |                                         |  |         |                                  |  |         |                                 |  |          |   |  |         |   |  |          |   |  |         |  



|                             |  |                                |  |                                |  |          |                                  |  |          |                                |  |          |   |  |           |   |  |          |   |  |           |  
|---------------------------- |  | ------------------------------ |  | ------------------------------ |  | -------- | -------------------------------- |  | -------- | ------------------------------ |  | -------- | - |  | --------- | - |  | -------- | - |  | --------- | -
|                             |  | Total Revenues                 |  | Loss From ContinuingOperations |  |          | Loss From DiscontinuedOperations |  |          | Net Loss                       | 
|                             |  | Nine Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |  |          | Nine Months EndedSeptember 30,   |  |          | Nine Months EndedSeptember 30, | 
|                             |  | 2006                           |  | 2005                           |  | 2006     |                                  |  | 2005     |                                |  | 2006     |   |  | 2005      |   |  | 2006     |   |  | 2005      |  
|Fund VIII-IX-REIT Associates |  | $1,435                         |  | $0                             |  | $(17,048 | )                                |  | $(19,758 | )                              |  | $(17,118 | ) |  | $(165,939 | ) |  | $(34,166 | ) |  | $(185,697 | )
|                             |  |                                |  |                                |  |          |                                  |  |          |                                |  |          |   |  |           |   |  |          |   |  |           |  

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



|                             |  |                                      |   |  |                                      |  |            |   |  |                 |  |                     |      |  |            |  
|---------------------------- |  | ------------------------------------ | - |  | ------------------------------------ |  | ---------- | - |  | --------------- |  | ------------------- | ---- |  | ---------- | -
|                             |  | Nine Months Ended September 30, 2006 |   |  | Nine Months Ended September 30, 2005 | 
|                             |  | OperatingIncome (Loss)               |   |  | Gain on Sale                         |  | Total      |   |  | OperatingIncome |  | Gain (Loss) on Sale |      |  | Total      |  
|Fund VI-VII-VIII Associates  |  | $262,702                             |   |  | $6,725,205                           |  | $6,987,907 |   |  | $604,025        |  | $5,422,976          |      |  | $6,027,001 |  
|Fund VII-VIII Associates     |  | (5,258                               | ) |  | 0                                    |  | (5,258     | ) |  | 84,232          |  | 0                   |      |  | 84,232     |  
|Fund VIII-IX Associates      |  | 0                                    |   |  | 0                                    |  | 0          |   |  | 0               |  | 0                   |      |  | 0          |  
|Fund VIII-IX-REIT Associates |  | (17,118                              | ) |  | 0                                    |  | (17,118    | ) |  | 31,819          |  | (197,758            | )(1) |  | (165,939   | )
|                             |  |                                      |   |  |                                      |  |            |   |  |                 |  |                     |      |  |            |  
|                             |  | $240,326                             |   |  | $6,725,205                           |  | $6,965,531 |   |  | $720,076        |  | $5,225,218          |      |  | $5,945,294 |  
|                             |  |                                      |   |  |                                      |  |            |   |  |                 |  |                     |      |  |            |  



| | (1) | Represents an adjustment to the gain recognized on the December 2004
sale of 15253 Bake Parkway, resulting from a change in estimate of the amount of capital expenditures required to be funded by Fund VIII-IX-REIT Associates pursuant to the purchase and sale agreement.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due from Joint Ventures

As presented in the
accompanying balance sheets, due from joint ventures as of September 30, 2006 and December 31, 2005 represents operating cash flow generated by the Joint Ventures for the three months ended September 30, 2006 and December 31,
2005, respectively, which is attributable to the Partnership.



|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 accordance with the property management and leasing agreement, Wells Management receives compensation for the management and leasing of the Partnerships properties owned
through the 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, which is assessed periodically based on market studies, or (b) in the case of
commercial properties 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 statements of operations. The Partnerships share of management and leasing fees and lease



Page 14



---

##### Table of Contents

acquisition costs incurred through the Joint Ventures is $19,951 and $25,656 for the three months ended September 30, 2006 and 2005, respectively, and
$70,186 and $86,760 for the nine months ended September 30, 2006 and 2005, respectively.

Administration Reimbursements

Wells Capital, the corporate general partner of Wells Partners, one of the Partnerships 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 $21,357 and $26,274 for the three months ended September 30, 2006 and 2005, respectively, and $65,451 and $87,474 for the nine months ended September 30, 2006 and 2005, respectively. In addition, Wells Capital
pays for certain operating expenses of the Partnership (bill-backs) directly and invoices the Partnership for the reimbursement thereof. As of September 30, 2006 and December 31, 2005, due to affiliates represents
administrative reimbursements and bill-backs due to Wells Capital and/or Wells Management.

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 and 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
September 30, 2006, the General Partners 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.



|5. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

The Partnership and its General Partners are from time to time a party to legal proceedings, which arise in the ordinary course of its business. The Partnership is not currently involved in any legal proceedings of which the outcome is
reasonably possible to have a material adverse effect on results of operations or financial condition. The Partnership is not aware of any legal proceedings contemplated by governmental authorities.



|6. | SUBSEQUENT EVENT
|-- | ----------------

The sales
of the CH2M Hill Building and the BellSouth Building generated aggregate net sale proceeds to the Partnership of approximately $9,185,000, of which approximately $3,698,000 has previously been distributed to the limited partners through
September 30, 2006. Upon evaluating the capital needs of the existing properties in which the Partnership holds an interest, the General Partners have determined that reserves of approximately $487,000 will be required to fund the
Partnerships share of re-leasing costs for the US Cellular Building. In accordance with the terms of the partnership agreement, the General Partners distributed the residual net sale proceeds in November 2006 of approximately $5,000,000 to the
limited partners of record as of September 30, 2006, which, under the terms of the partnership agreement does not include limited partners acquiring units after June 30, 2006.



Page 15



---

##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion and analysis should be read in conjunction with the accompanying financial statements and notes thereto. See also Cautionary Note Regarding Forward-Looking
Statements preceding Part I, as well as the notes to our financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended
December 31, 2005.

Overview

Management believes that the Partnership typically operates through the following five key life cycle phases. 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



| |  |  | 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.

Portfolio Overview

We have moved into the
disposition-and-liquidation phase of our life cycle. We have now sold five assets, with the sale of the Bellsouth Building in the second quarter of 2006. Our focus on the remaining assets involves concentrating on re-leasing and marketing efforts
that we believe will ultimately result in the best disposition pricing for our limited partners.

During the third quarter of 2006, Fund
VIII-IX Associates completed a lease amendment with United States Cellular Operating Company (US Cellular), the sole tenant at the US Cellular Building, that (i) extends the termination date of the lease from May 31, 2007 to
January 31, 2013; (ii) allows for a seven-month rental abatement period commencing July 1, 2006 through January 31, 2007; (iii) reduces the contract rental rate following the rental abatement period; and (iv) reduces
the square footage leased from approximately 102,000 square feet to approximately 75,000 square feet commencing January 1, 2007. We believe securing the additional lease term with a creditworthy tenant paves the way for the ultimate sale of the
property once the remaining vacant space is leased. We are now moving toward marketing the remaining assets for sale.

The third quarter
2006 operating distributions to limited partners holding Class A Units decreased slightly over the previous quarter primarily as a result of funding re-leasing costs at the US Cellular Building. We anticipate that operating distributions may
decline in the future as a result of (i) funding our remaining pro-rata share of re-leasing costs at the US Cellular Building, and (ii) absorbing the free rental period through January 2007 at the US Cellular Building.



Page 16



---

##### Table of Contents

In November 2006, the General Partners distributed net sale proceeds from the sales of the CH2M Hill
Building and the Bellsouth Building of approximately $5,000,000 to limited partners. Once the details surrounding the timing of the capital requirements and the potential sales of the properties become known, the General Partners will evaluate if
distributions of the remaining net sale proceeds would be appropriate.

Property Summary

As we continue to operate in the disposition-and liquidation 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 disposition-and-liquidation phase, 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 to minimize contingencies
and our post-closing involvement with the buyer.

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



| |  |  | The Hannover Center property was sold on April 29, 2004.
| | - |  | --------------------------------------------------------



| |  |  | The 15253 Bake Parkway building was sold on December 2, 2004.
| | - |  | -------------------------------------------------------------



| |  |  | The Tanglewood Commons shopping center was sold on April 21, 2005. On October 12, 2005, a portion of one of the remaining outparcels of land was
condemned. We retain an ownership interest in two remaining outparcels of land.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The CH2M Hill Building was sold on December 7, 2005.
| | - |  | ----------------------------------------------------



| |  |  | The BellSouth Building was sold on May 15, 2006.
| | - |  | ------------------------------------------------



| |  |  | The US Cellular Building is located in Madison, Wisconsin. During the third quarter of 2006, a lease amendment was signed with US Cellular that extends the lease
termination date through January 2013, reduces the contract rental rate following a rental abatement period commencing July 1, 2006 through January 31, 2007, and reduces the square footage leased from approximately 102,000 square feet to
approximately 75,000 square feet as of January 1, 2007. We are actively working on re-leasing the remaining approximate 27,000 square feet.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The AT&T  Texas Building, located in Farmers Branch, Texas, is 100% leased through July 2011.
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | The 305 Interlocken Parkway property is located in the Broomfield submarket of Denver, Colorado. During the fourth quarter of 2005, we signed a lease with
Flextronics International USA, Inc. (Flextronics) for the entire building through August 2011.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 quarterly. To the extent that operating cash flows are insufficient to fund our recurring operations, net sale proceeds will be utilized. 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.



Page 17



---

##### Table of Contents

Short-Term Liquidity

During the nine months ended September 30, 2006, we generated net operating cash flows, including operating distributions received from the Joint Ventures, of approximately $952,000, as compared to approximately
$899,000 for the nine months ended September 30, 2005. The 2006 increase is primarily attributable to (i) an increase in rental revenue collected at 305 Interlocken Parkway as a result of the lease executed with Flextronics in December
2005; (ii) additional lease termination income recognized in the first two quarters of 2006 as a result of satisfying the remaining conditions of a termination agreement with a tenant previously in occupancy at 305 Interlocken Parkway; and
(iii) an increase in interest income as a result of an increase in the average amount of net sale proceeds held during the respective periods primarily as a result of the net sale proceeds received from the sales of the CH2M Hill Building in
December 2005 and BellSouth Building in May 2006 and an increase in the daily interest yield, partially offset by (iv) decrease in cash flows from the sales of properties in the previous periods. 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. We have used net operating cash flow to fund operating
distributions to limited partners.

Future operating distributions from the Joint Ventures are expected to decline as a result of funding
our pro-rata share of the additional re-leasing costs for the US Cellular Building. Future operating distributions paid to limited partners will be largely dependent upon the amount of cash generated from the Joint Ventures, our expectations of
future cash flows, and determination of near-term cash needs for tenant re-leasing costs for properties owned by the Joint Ventures.

We
believe that the cash on hand and operating distributions due from the Joint Ventures are sufficient to cover our working capital needs, including liabilities of approximately $251,000, as of September 30, 2006. At this time, we expect to
continue to generate cash flows from operations, including operating distributions from the Joint Ventures, sufficient to cover our estimated future operating expenses.

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 sale 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 on an all-cash
basis that are pre-leased to creditworthy tenants 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 our properties, and tenant improvements for the purpose of readying our properties 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. Any capital or other expenditures not provided for by the operations of the Joint
Ventures will be required to be funded by the Partnership and respective joint venture partners on a pro-rata basis.



Page 18



---

##### Table of Contents

Operating cash flows, if available, are generally distributed from the Joint Ventures to the Partnership
approximately one month following calendar quarter-ends. 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 September 30, 2006, we have received, used, distributed, and held net sale proceeds allocated to the Partnership from the sale of properties
as presented below:



|                                                    |  |                   |     |        |                                       |         |  |                                              |  |                          |         |                                                                   |                                                                           |                                                      |               |  |                 
|--------------------------------------------------- |  | ----------------- | --- | ------ | ------------------------------------- | ------- |  | -------------------------------------------- |  | ------------------------ | ------- | ----------------------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------------- | ------------- |  | ----------------
|Property                                            |  | Net Sale Proceeds |     |        | Partnerships Approximate Ownership % |         |  | Net
SaleProceeds Allocated tothe Partnership |  | Use of Net Sale Proceeds |         | Net Sale Proceeds Distributed toPartners as of September 30, 2006 |                                                                           | UndistributedNet SaleProceeds as
ofSeptember 30,2006
|                                                    |  |                   |     | Amount |                                       | Purpose |  |                                             
|                                                    |  |                   |     |        |                                       |         | 
|Tanglewood Commons Outparcel(sold in 2002)          |  | $524,398          |     |        | 32.4                                  | %       |  | $     169,643                                |  | $                        | 0       |                                                                   | -                                                                         |                                                      | $     169,643 |  | $              0
|                                                    |  |                   |     |        |                                       |         | 
|Hannover Center (sold in 2004)                      |  | $1,703,431        |     |        | 63.4                                  | %       |  | 1,079,364                                    |  |                          | 0       |                                                                   | -                                                                         |                                                      | 1,079,364     |  | 0               
|                                                    |  |                   |     |        |                                       |         | 
|305 Interlocken Parkway                             |  | $800,000          | (1) |        | 54.8                                  | %       |  | 438,374                                      |  |                          | 0       |                                                                   | -                                                                         |                                                      | 438,374       |  | 0               
|(early termination in 2004)                         |  |                   |     |        |                                       |         |  |                                              |  |                          |         |                                                                   |                                                                           |                                                      |               |  |                 
|                                                    |  |                   |     |        |                                       |         | 
|15253 Bake Parkway(sold in 2004)                    |  | $11,892,035       |     |        | 46.1                                  | %       |  | 5,487,476                                    |  |                          | 424,857 |                                                                   |   Re-leasing 15253 Bake Parkway (2004) and the CH2M Hill Building (2005) |                                                      | 5,062,619     |  | 0               
|                                                    |  |                   |     |        |                                       |         | 
|Tanglewood Commons shopping center (sold in 2005)   |  | $11,236,283       |     |        | 32.4                                  | %       |  | 3,635,454                                    |  |                          | 0       |                                                                   | -                                                                         |                                                      | 3,635,454     |  | 0               
|                                                    |  |                   |     |        |                                       |         | 
|Tanglewood Commons land condemnation (sold in 2005) |  | $52,050           |     |        | 32.4                                  | %       |  | 16,841                                       |  |                          | 0       |                                                                   | -                                                                         |                                                      | 16,841        |  | 0               
|                                                    |  |                   |     |        |                                       |         | 
|CH2M Hill Building(sold in 2005)                    |  | $7,935,259        |     |        | 63.4                                  | %       |  | 5,028,105                                    |  |                          | 0       |                                                                   | -                                                                         |                                                      | 3,697,706     |  | 1,330,399       
|                                                    |  |                   |     |        |                                       |         | 
|BellSouth Building(sold in 2006)                    |  | $12,846,928       |     |        | 32.4                                  | %       |  | 4,156,572                                    |  |                          | 0       |                                                                   | -                                                                         |                                                      | 0             |  | 4,156,572       
|                                                    |  |                   |     |        |                                       |         |  |                                              |  |                          |         |                                                                   |                                                                           |                                                      |               |  |                 
|                                                    |  |                   |     |        |                                       |         | 
|Total                                               |  |                   |     |        |                                       |         |  | $20,011,829                                  |  | $                        | 424,857 |                                                                   |                                                                           |                                                      | $14,100,001   |  | $5,486,971      
|                                                    |  |                   |     |        |                                       |         |  |                                              |  |                          |         |                                                                   |                                                                           |                                                      |               |  |                 



| | (1) | Represents payment received for unamortized tenant improvements in connection with the Cirrus Logic, Inc. lease termination.
| | --- | ----------------------------------------------------------------------------------------------------------------------------

Upon evaluating the capital needs of the properties in which we currently hold an interest, our General Partners
have determined that reserves of net sale proceeds of approximately $487,000 will be required to fund our pro-rata share of re-leasing costs for the US Cellular Building. Accordingly, in November 2006, net sale proceeds of approximately $5,000,000
from the sales of CH2M Hill Building and the BellSouth Building were distributed to the limited partners of record as of September 20, 2006, which, under the terms of the partnership agreement does not include limited partners acquiring units
after June 30, 2006.

Results of Operations

Equity in Income of Joint Ventures

Equity in income of Joint Ventures was $141,736 and $164,773 for the three months ended
September 30, 2006 and 2005, respectively. The decrease for the three months ended 2006, as compared to the three months ended 2005, is primarily attributable to a decline in operating income resulting from the sales of the CH2M Hill Building
in December 2005 and the BellSouth Building in May 2006.

Equity in income of Joint Ventures was $3,180,836 and $2,353,362 for the nine
months ended September 30, 2006 and 2005, respectively. The increase for the nine months ended 2006, as compared to the nine months ended 2005, is primarily attributable to (i) the gain recognized on the sale of the BellSouth Building in
May 2006, and (ii) additional lease termination income recognized in the first two quarters of 2006 as a result of satisfying the remaining conditions of a termination



Page 19



---

##### Table of Contents

agreement with a tenant previously in occupancy at 305 Interlocken Parkway, partially offset by (iii) the gain on the sale of the Tanglewood Commons
shopping center recognized in April 2005, and (iv) a decrease in operating income resulting from the sales of the Tanglewood Commons shopping center, the CH2M Hill Building, and the BellSouth Building.

We expect equity in income of Joint Ventures to decrease in future periods due to the lease amendment executed at the US Cellular Building, which will
result in reductions in space as well as the contractual rental rate.

Expenses

Expenses of the Partnership were $48,403 and $67,305 for the three months ended September 30, 2006 and 2005, respectively, and $165,667 and $177,321 for the nine months ended
September 30, 2006 and 2005, respectively. The 2006 decreases, as compared to 2005, are primarily attributable to a decline in administrative costs relative to the decrease in the size of the portfolio as a result of the sales of aforementioned
properties.

We anticipate increases in our administrative expenses in future periods resulting from increased costs relating to compliance
with reporting and regulatory requirements

Interest and Other Income

Interest and other income was $77,230 and $19,418 for the three months ended September 30, 2006 and 2005, respectively, and $192,179 and $64,353 for the nine months ended September 30, 2006 and 2005,
respectively. The 2006 increases are primarily attributable to (i) an increase in the average amount of net sale proceeds held during 2006 as a result of the net sales proceeds received from the sales of the Tanglewood Commons shopping center
in April 2005, the CH2M Hill Building in December 2005, and the BellSouth Building in May 2006; and (ii) an increase in the daily interest yield, partially offset by (iii) the distribution of net sale proceeds in November 2005 and May
2006.

Future levels of interest income will be largely dependent upon the timing of future dispositions and net sales proceeds
distributions to the investors.

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

Summary

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



Page 20



---

##### Table of Contents

Below is a discussion of the accounting policies used by the Partnership and the Joint Ventures, which
are considered 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 our
depreciable assets. We will consider the period of future benefit of the assets to determine the appropriate useful lives. These assessments have a direct impact on net income. The estimated useful lives of the Joint Ventures assets by class
are as follows:



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

In the event that the Joint Ventures utilize inappropriate useful lives or methods of
depreciation, our net income would be misstated.

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 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 assets and their 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 SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, 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 September 30, 2006.

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

We have
entered into agreements with Wells Capital and Wells Management, affiliates of our General Partners, and their affiliates, whereby we pay certain fees and expense reimbursements to Wells Capital, Wells Management, and their affiliates for asset
management; the management and leasing of our properties; administrative services relating to accounting, property management, and other partnership administration; and incur the related expenses. See Note 4 to our financial statements included
in this report for a description of these fees and expense reimbursements we have incurred.



Page 21



---

##### Table of Contents

Potential Tax Impact on Limited Partners Holding Class B Units  American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 added Section 470 to the Internal Revenue Code, which provides for certain limitations on
the utilization of losses by investors that are attributable to leased property owned by a partnership having both taxable and tax-exempt partners such as the Partnership. If Section 470 were deemed to apply to the Partnership, passive losses
allocable to limited partners holding Class B Units could only be utilized to offset passive income generated from the same property or potentially from properties owned by the same partnership. In March 2005, the Internal Revenue Service
(IRS) announced that the IRS would not apply Section 470 to partnerships for the taxable year 2004 based solely on the fact that a partnership had both taxable and tax-exempt partners, and in December 2005, the IRS extended the
period for transitional relief through the 2005 tax year. In addition, pursuant to Section 403(ff) of the Gulf Opportunity Zone Act of 2005, the effective date provisions regarding the applicability of Section 470 were amended to provide
that, in the case of leased property treated as tax-exempt use property by reason of its being owned by a partnership having both taxable and tax-exempt partners, Section 470 will apply only to property acquired after March 12, 2004. Since
the Partnership acquired all of its properties prior to March 12, 2004, and is not expected to acquire interests in any additional properties in the future, we do not believe that the provisions of Section 470 should apply to limit the
utilization of losses attributable to the properties owned by the Partnership; however, due to the uncertainties and lack of guidance relating to this provision, it is unclear as to whether the acquisition of a limited partnership interest in the
Partnership after the March 12, 2004 effective date may be deemed to be an acquisition of property within the meaning of the effective date provisions of Section 470.



|ITEM 3. | 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 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

We carried out an
evaluation, under the supervision and with the participation of management of Wells Capital, our corporate General Partner, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, of the effectiveness of the
design and operation of the Partnerships 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 covered by this report. Based upon that evaluation, the Principal
Executive Officer and the Principal Financial Officer of Wells Capital concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly 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 the Principal Executive Officer and the Principal Financial Officer of Wells
Capital, 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 September 30, 2006 that have materially affected, or are likely to materially affect, our internal control over financial reporting.



Page 22



---

##### Table of Contents

|PART II. | OTHER INFORMATION
|-------- | -----------------



|I
TEM 1. | LEGAL PROCEEDINGS
|-------- | -----------------

We are from time to time a party
to other legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any litigation the outcome of which would, in managements judgment based on information currently available, have a material
adverse effect on our results of operations or financial condition, nor is management aware of any such litigation threatened against us during the quarter ended September 30, 2006, requiring disclosure under Item 103 of Regulation S-K.



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

There have been no material changes
from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2005.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------



|(a) | We did not sell any equity securities that were not registered under the Securities Act of 1933 during the quarter ended September 30, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



|(c) | We did not redeem any securities during the quarter ended September 30, 2006.
|--- | -----------------------------------------------------------------------------



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------



|(a) | We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended September 30, 2006.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



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

No matters were submitted to a vote of our limited partners during the quarter ended September 30, 2006.



|ITEM 5. | OTHER INFORMATION
|------- | -----------------



|(a) | During the quarter ended September 30, 2006, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a
report on Form 8-K.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Not applicable.
|--- | ---------------



|ITEM 6. | EXHIBITS
|------- | --------

The Exhibits to this report are set forth
on Exhibit Index to Third Quarter Form 10-Q attached hereto.



Page 23



---

##### Table of Contents

SIGNATURES

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



|                  |  |  |  |                                                                                  |  |                            
|----------------- |  |  |  | -------------------------------------------------------------------------------- |  | ---------------------------
|                  |  |  |  | WELLS REAL ESTATE FUND VIII, L.P. (Registrant)                                  
|                  |  |  | 
|                  |  |  |  | By:                                                                              |  | WELLS PARTNERS, L.P.       
|                  |  |  |  |                                                                                  |  | (General Partner)          
|                  |  |  | 
|                  |  |  |  | By:                                                                              |  | WELLS CAPITAL, INC.        
|                  |  |  |  |                                                                                  |  | (Corporate General Partner)
|                  |  | 
|November 13, 2006 |  |  |  | /s/    LEO F. WELLS,
III                                                        
|                  |  |  |  | Leo F. Wells, III                                                               
|                  |  |  |  | President, Principal Executive Officer, and Sole Director of Wells Capital, Inc.
|                  |  | 
|November 13, 2006 |  |  |  | /s/    DOUGLAS P.
WILLIAMS                                                      
|                  |  |  |  | Douglas P. Williams                                                             
|                  |  |  |  | Principal Financial Officer of Wells Capital, Inc.                              



Page 24



---

##### Table of Contents

WELLS REAL ESTATE FUND VIII, L.P.



EXHIBIT INDEX

TO THIRD QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND VIII, L.P.



|            |  |                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                   
|10.1        |  | Second Amendment to Lease Agreement with United States Cellular Operating Company for US Cellular Building                    
|            | 
|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