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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(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, 2007 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 0-14463



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WELLS REAL ESTATE FUND I

(Exact name of registrant as specified in its
charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-1565512                             
|(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



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q of Wells Real Estate Fund I (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 and provide distributions to
partners may be significantly hindered. See Item 1A. in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2006 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.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                       |  |         
|-------- |  | --------------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                       |  | Page No.
|         |  |                      
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                      
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                  |  |         
|         |  |                       | 
|         |  |                       |  | Statement of Net Assets in Liquidation as of September 30, 2007 (unaudited) and Balance Sheet as of December 31, 2006 |  | 5       
|         |  |                       | 
|         |  |                       |  | Statement of Changes in Net Assets in Liquidation for the nine months ended September 30, 2007 (unaudited)            |  | 6       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                   |  | 7       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition                                                           |  | 16      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                                            |  | 19      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                               |  | 19      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                      
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                     |  | 20      
|         |  |                       | 
|         |  | Item 1A.              |  | Risk Factors                                                                                                          |  | 21      
|         |  |                       | 
|         |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                           |  | 21      
|         |  |                       | 
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                       |  | 21      
|         |  |                       | 
|         |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                   |  | 21      
|         |  |                       | 
|         |  | Item 5.               |  | Other Information                                                                                                     |  | 21      
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                              |  | 21      



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|PART I. | FINANCIAL INFORMATION
|------- | ---------------------



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

The information furnished in the
Partnerships accompanying balance sheet and statements of net assets in liquidation and changes in net assets in liquidation 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 included in this report on Form 10-Q and Managements Discussion and Analysis of Financial Condition and Results of Operations in the Partnerships
Annual Report on Form 10-K for the year ended December 31, 2006.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



STATEMENT OF NET ASSETS IN LIQUIDATION

AS OF SEPTEMBER 30, 2007 (UNAUDITED)

AND

BALANCE SHEET

AS OF DECEMBER 31, 2006

ASSETS



|                                |  |                              |           |                  |   |          
|------------------------------- |  | ---------------------------- | --------- | ---------------- | - | ---------
|                                |  | (Unaudited)September 30,2007 |           | December 31,2006
|REAL ESTATE ASSETS, AT COST:    |  |                              |           |                  |   |          
|Assets held for sale, net       |  | $                            | 0         |                  | $ | 2,852,545
|Cash and cash equivalents       |  |                              | 2,826,228 |                  |   | 6,438,572
|Tenant receivables, net         |  |                              | 0         |                  |   | 93,005   
|Other assets                    |  |                              | 14,693    |                  |   | 51,610   
|Other assets held for sale, net |  |                              | 0         |                  |   | 162,117  
|                                |  |                              |           |                  |   |          
|Total assets                    |  | $                            | 2,840,921 |                  | $ | 9,597,849
|                                |  |                              |           |                  |   |          

LIABILITIES AND PARTNERS CAPITAL, AND NET ASSETS IN LIQUIDATION



|                                                                     |  |   |           |  |   |          
|-------------------------------------------------------------------- |  | - | --------- |  | - | ---------
|LIABILITIES:                                                         |  |   |           |  |   |          
|Accounts payable, accrued expenses, and accrued capital expenditures |  | $ | 26,763    |  | $ | 70,545   
|Deferred income                                                      |  |   | 0         |  |   | 35,640   
|Due to joint venture                                                 |  |   | 0         |  |   | 2,211    
|Due to affiliates                                                    |  |   | 10,317    |  |   | 17,406   
|                                                                     |  |   |           |  |   |          
|Total liabilities                                                    |  |   | 37,080    |  |   | 125,802  
|                                                                     |  |   |           |  |   |          
|Total net assets in liquidation                                      |  | $ | 2,803,841 |  |   |          
|                                                                     |  |   |           |  |   |          
|                                                                     |  |  
|PARTNERS CAPITAL:                                                   |  |   |           |  |   |          
|Limited partners:                                                    |  |   |           |  |   |          
|Class A  98,716 units issued and outstanding                        |  |   |           |  |   | 8,781,994
|Class B  42,568 units issued and outstanding                        |  |   |           |  |   | 689,109  
|General partners                                                     |  |   |           |  |   | 944      
|                                                                     |  |   |           |  |   |          
|Total partners capital                                              |  |   |           |  |   | 9,472,047
|                                                                     |  |   |           |  |   |          
|Total liabilities and partners capital                              |  |   |           |  | $ | 9,597,849
|                                                                     |  |   |           |  |   |          

See accompanying notes.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2007 (UNAUDITED)



|                                                      |  |                                                 |            |  
|----------------------------------------------------- |  | ----------------------------------------------- | ---------- | -
|                                                      |  | Nine months endedSeptember 30, 2007 (unaudited) |           
|Net assets in liquidation, January 1, 2007            |  | $                                               | 9,472,047  |  
|Changes in net assets in liquidation attributable to: |  |                                                 |            |  
|Net income                                            |  |                                                 | 531,789    |  
|Distributions to limited partners                     |  |                                                 | (7,199,995 | )
|                                                      |  |                                                 |            |  
|Net assets in liquidation, September 30, 2007         |  | $                                               | 2,803,841  |  
|                                                      |  |                                                 |            |  

See accompanying notes.





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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONDENSED NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2007 (unaudited)



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

Wells Real Estate Fund I (the
Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Capital, Inc. (Wells Capital), a Georgia corporation, serving as its general partners (collectively, the General
Partners). Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. (WREF). Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of WREF. The
Partnership was formed on April 26, 1984 for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing, and managing income-producing commercial properties for investment purposes. The Partnership has two classes
of limited partnership interests, Class A and Class B Units. 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 September 6, 1984, the Partnership commenced an offering of up to $50,000,000 of Class A or Class B
limited partnership units ($250.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 5,000 units on
February 15, 1985. The offering was terminated on September 5, 1986, at which time the Partnership had sold approximately 98,716 Class A Units and 42,568 Class B Units representing capital contributions of $35,321,000.

During the periods presented, the Partnership owned direct interests in the following properties:



|                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.      Paces Pavilion(1) A medical office building located in Atlanta, Georgia in which the Partnership owns a condominium interest of approximately 27% of the property.
|2.      Black Oak Plaza(2) A retail shopping center located in Knoxville,
Tennessee.                                                                                      
|                                                                                                                                                                          



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



| | (2) | This property was sold in January 2007.
| | --- | ---------------------------------------

During the periods presented, the Partnership owned interests in the following joint venture
and property:



|                          |  |                                                          |  |                                                                            
|------------------------- |  | -------------------------------------------------------- |  | ---------------------------------------------------------------------------
|Joint Venture             |  | Joint Venture Partners                                   |  | Properties                                                                 
|Fund I and Fund II Tucker |  |   Wells Real Estate Fund I   Fund II and Fund II-OW(1) |  | 1. Heritage Place(2) A commercial office complex located in Tucker,
Georgia



| | (1) | Fund II and Fund II-OW is a joint venture between Wells Real Estate Fund II and
Wells Real Estate Fund II-OW.
| | --- | -------------------------------------------------------------------------------------------------------------



| | (2) | The retail component of this property (approximately 30%) was sold in April
2003, and the remaining office component of this property was sold in May 2006.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

Wells Real Estate Fund II and Wells Real
Estate Fund II-OW 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 Fund I and Fund II Tucker and foregoing
properties, refer to the Partnerships Annual Report on Form 10-K for the year ended December 31, 2006.



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On May 10, 2006, Fund I and Fund II Tucker sold the office component of Heritage Place to an unrelated third party
for a gross sale price of $4,215,000, excluding closing costs. As a result of the sale, Fund I and Fund II Tucker received net sale proceeds of approximately $4,028,000, of which approximately $2,091,000 was distributed to the Partnership. As of
March 31, 2006, Fund I and Fund II Tucker recognized an impairment loss of approximately $795,000 in order to reduce the carrying value of Heritage Place to its estimated fair value, less costs to sell, and recognized an additional loss on sale
of approximately $10,000. Approximately $413,000 and $5,000 of the impairment loss and loss on sale were allocable to the Partnership, respectively.

On
November 6, 2006, the Partnership sold Paces Pavilion to an unrelated third party for a gross sale price of $4,300,000, excluding closing costs. As a result of the sale, the Partnership received net sale proceeds of approximately $4,066,000 and
recognized a gain of approximately $1,817,000.

On January 25, 2007, the Partnership sold Black Oak Plaza to an unrelated third party for a gross sale
price of $3,700,000, excluding closing costs. As a result of the sale, the Partnership received net sale proceeds of approximately $3,469,000 and recognized a gain of approximately $457,000.



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

Basis of
Presentation

The Partnership has disposed of all of its real estate assets and does not intend to invest in additional properties. The Partnership is
focusing its resources on concluding its activities and dissolving the Partnership upon resolution of certain litigation related to partnership matters (See Part II, Item 1, Legal Proceedings) and has begun to wind up its affairs by
distributing net sale proceeds to the limited partners of approximately $7,200,000 in May 2007. Once a definitive dissolution date is determined, the General Partners intend to establish cash reserves in an amount necessary to settle the net
liabilities and distribute any proceeds that are not required to fund final dissolution costs of the Partnership to the limited partners. The General Partners will use the cash reserves to settle the outstanding net liabilities of the Partnership.

The accompanying financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission
(SEC), 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 those 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, 2006. Effective April 1, 2007, the first day of the quarter following the completion of the sale of all of its real estate assets, the Partnership adopted the
liquidation basis of accounting, under which assets and liabilities are stated at their estimated net realizable values and net settlement amounts, respectively, and statements of operations, statements of cash flows, and statements of
partners capital are no longer presented.

The General Partners intend to terminate the Partnership in accordance with the relevant dissolution and
termination provisions of the partnership agreement and Georgia Uniform Limited Partnership Act upon resolution of certain litigation related to partnership matters discussed herein. Specifically, on behalf of the Partnership, the General Partners
intend to file (i) a certificate of cancellation of the Partnership, and (ii) a Form 15 with the Securities and Exchange Commission in order to de-register the Partnerships securities under the Securities Exchange Act of 1934.



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Investment in Joint Venture

The Partnership evaluated its investment in Fund I and Fund II Tucker and concluded that it was not a variable-interest entity 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 did not have
control over the operations of Fund I and Fund II Tucker; however, it did exercise significant influence. Approval by the Partnership as well as the other joint venture partners was required for any major decision or any action that would
materially affect Fund I and Fund II Tucker, or its 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 accounted for its investments in Fund I and Fund II Tucker using the equity method of accounting,
whereby original investments were 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 agreement, all income (loss) and
distributions were allocated to joint venture partners in accordance with their respective ownership interests. The Partnership was obligated to fund its pro rata share of Fund I and Fund II Tuckers deficit balances, and these amounts are
included in due to joint venture in the accompanying balance sheet. Distributions of net cash from operations, if available, were generally distributed to the joint venture partners on a quarterly basis.

Distribution of Net Cash from Operations

As more fully described in
the partnership agreement, net cash from operations, if available, is generally distributed quarterly to the limited partners as follows:



| |  |  | First, to the Class A limited partners until such limited partners have received distributions equal to a 9% per annum return on their respective adjusted
capital contributions, as defined.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Second, to the Class B limited partners until such limited partners have received distributions equal to a 9% per annum return on their respective
adjusted capital contributions, as defined.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Third, to the General Partners until they have received 10% of total distributions for such year.
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | Fourth, to the limited partners and the General Partners allocated on a basis of 90% and 10%, respectively.
| | - |  | -----------------------------------------------------------------------------------------------------------

Distribution of Net Sale Proceeds

As more fully described in the
partnership agreement, after satisfying all debts and liabilities and establishing reserves deemed reasonably necessary in the sole discretion of the General Partners, net proceeds from the sale of the Partnerships properties are to be
distributed to partners in accordance with their respective positive capital account balances after the allocation of any gain on sale.

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 and 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 proportion that net
cash from operations is distributed to the partners.

As more fully described in the partnership agreement, net loss, depreciation, and amortization
deductions for each fiscal year will be allocated as follows: (a) 99% to the Class B limited partners 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.



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As more fully described in the partnership agreement, gain on the sale or exchange of the Partnerships properties
is generally allocated as follows: (a) first, to partners having negative capital accounts, if any, until all negative capital accounts have been restored to zero; (b) then, to the limited partners, in proportion to and to the extent of,
the amount by which (i) the excess of each limited partners capital contribution over all prior distributions to such limited partner under certain partnership agreement provisions, plus an amount equal to such limited partners
cumulative distribution, less the sum of all prior distributions of cash available for distribution previously made to such limited partner, exceeds (ii) such limited partners adjusted capital account balance as of the sale date;
(c) then, to the General Partners, in proportion to and to the extent of, the amount by which (i) the excess of each of the General Partners adjusted capital contribution over all prior distributions to such General Partner under
certain partnership agreement provisions, exceeds (ii) such General Partners adjusted capital account balance as of the sale date; and (d) thereafter, 85% to the limited partners and 15% to the General Partners.

Recent Accounting Pronouncements

In June 2007, the American
Institute of Certified Public Accountants (AICPA) issued SOP 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for
Investments in Investment Companies, which provides guidance for determining which entities fall within the scope of the AICPA Audit and Accounting Guide for Investment Companies and requires additional disclosures for certain of those entities.
In October 2007, the Financial Accounting Standards Board (FASB) elected to indefinitely defer the effective date of SOP 07-1. As a result, the Partnership has postponed its evaluation of the provisions of SOP 07-1 and related
impact on its financial statements and accompanying notes.

In July 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income
Taxes, an interpretation of SFAS No. 109, Accounting for Income Taxes, which clarifies the relevant criteria and approach for the recognition, derecognition, and measurement of uncertain tax positions. FIN No. 48 was effective
for the Partnership beginning January 1, 2007. The adoption of this pronouncement has not had a material impact on the Partnerships financial statements.



|3. | INVESTMENT IN JOINT VENTURE
|-- | ---------------------------

Impairment of Real Estate Assets

The Partnership continually monitored events and changes in circumstances that could indicate that the carrying amounts of the real estate assets owned
through the Partnerships investment in Fund I and Fund II Tucker may not be recoverable pursuant to Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock, and SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. When indicators of potential impairment were present, management assessed whether the respective carrying values would be recovered with the undiscounted future operating cash
flows expected from the use of the asset and its eventual disposition for assets held for use, or with the estimated fair values for assets held for sale. In the event that the expected undiscounted future cash flows for assets held for use or the
estimated fair value, less costs to sell, for assets held for sale did not exceed the respective asset carrying value, management adjusted such assets to the respective estimated fair values, as defined by SFAS No. 144, and recognized an
impairment loss. Estimated fair values were 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.

Fund I and Fund II Tucker considered real estate assets to be
held for sale, as defined by SFAS No. 144, at the point at which a sale contract is executed. During first quarter 2006, Fund I and Fund II Tucker recognized an impairment loss of approximately $795,000, of which approximately $413,000 was
allocable to the Partnership, to reduce the carrying value of Heritage Place to its fair value, less costs to sell. This impairment was prompted by a change in managements intended holding period for this asset. This impairment loss is
included in loss



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##### Table of Contents

from discontinued operations for the nine months ended September 30, 2006 in the Summary of Financial Information table below.

Summary of Financial Information

Condensed financial information for
Fund I and Fund II Tucker for the three months and nine months ended September 30, 2007 and 2006, respectively, is presented below:



|                          |  |                                 |  |                                 |  |                                 |  |                                 |  |      |  |          |  |      |  |          
|------------------------- |  | ------------------------------- |  | ------------------------------- |  | ------------------------------- |  | ------------------------------- |  | ---- |  | -------- |  | ---- |  | ---------
|                          |  | Total Revenues                  |  | Loss FromContinuing Operations  |  | Loss FromDiscontinuedOperations |  | Net Loss                       
|                          |  | Three Months EndedSeptember 30, |  | Three Months EndedSeptember 30, |  | Three Months EndedSeptember 30, |  | Three Months EndedSeptember 30,
|                          |  | 2007                            |  | 2006                            |  | 2007                            |  | 2006                            |  | 2007 |  | 2006     |  | 2007 |  | 2006     
|Fund I and Fund II Tucker |  | $0                              |  | $97                             |  | $0                              |  | $(10,991)                       |  | $0   |  | $(6,136) |  | $0   |  | $(17,127)
|                          |  |                                 |  |                                 |  |                                 |  |                                 |  |      |  |          |  |      |  |          



|                          |  |                                |  |                                |  |                                  |  |                                |  |          |  |            |  |          |  |           
|------------------------- |  | ------------------------------ |  | ------------------------------ |  | -------------------------------- |  | ------------------------------ |  | -------- |  | ---------- |  | -------- |  | ----------
|                          |  | Total Revenues                 |  | Loss FromContinuing Operations |  | Loss FromDiscontinued Operations |  | Net Loss                      
|                          |  | Nine Months EndedSeptember 30, |  | Nine Months EndedSeptember 30, |  | Nine Months EndedSeptember 30,   |  | Nine Months EndedSeptember 30,
|                          |  | 2007                           |  | 2006                           |  | 2007                             |  | 2006                           |  | 2007     |  | 2006       |  | 2007     |  | 2006      
|Fund I and Fund II Tucker |  | $0                             |  | $2,286                         |  | $(2,263)                         |  | $(21,795)                      |  | $(1,899) |  | $(816,278) |  | $(4,162) |  | $(838,073)
|                          |  |                                |  |                                |  |                                  |  |                                |  |          |  |            |  |          |  |           

The Partnership allocated its share of operating income (loss) and gain (loss) on sale of the property generated
by Fund I and Fund II Tucker to its Class A and Class B limited partners pursuant to the respective partnership agreement provisions outlined in Note 2. The components of loss from discontinued operations recognized by Fund I and Fund II
Tucker are provided below:



|                          |  |                                      |  |                                      |  |             |  |          |  |               |  |                 |  |             |  |           
|------------------------- |  | ------------------------------------ |  | ------------------------------------ |  | ----------- |  | -------- |  | ------------- |  | --------------- |  | ----------- |  | ----------
|                          |  | Nine Months Ended September 30, 2007 |  | Nine Months Ended September 30, 2006
|                          |  | OperatingLoss                        |  | Impairment Loss                      |  | Losson Sale |  | Total    |  | OperatingLoss |  | Impairment Loss |  | Loss onSale |  | Total     
|Fund I and Fund II Tucker |  | $(1,899)                             |  | $0                                   |  | $0          |  | $(1,899) |  | $(12,233)     |  | $(794,812)      |  | $(9,233)    |  | $(816,278)
|                          |  |                                      |  |                                      |  |             |  |          |  |               |  |                 |  |             |  |           



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##### Table of Contents

|4. | DISCONTINUED OPERATIONS
|-- | -----------------------

On December 22, 2006, the Partnership
entered into a contract to sell Black Oak Plaza to an unrelated third party. The sale closed on January 25, 2007 for a gross sale price of $3.7 million, exclusive of closing costs. Accordingly, the assets related to Black Oak Plaza are
classified as held for sale as of December 31, 2006. The details comprising assets held for sale are provided below:



|                                                                                               |  |                   |          
|---------------------------------------------------------------------------------------------- |  | ----------------- | ---------
|                                                                                               |  | December 31, 2006
|Real estate assets held for sale, net:                                                         |  |                   |          
|Land                                                                                           |  | $                 | 737,770  
|Building and improvements, less accumulated depreciation of $3,520,444 as of December 31, 2006 |  |                   | 2,114,775
|                                                                                               |  |                   |          
|Total real estate assets held for sale, net                                                    |  | $                 | 2,852,545
|                                                                                               |  |                   |          
|                                                                                               | 
|                                                                                               |  | December 31,2006 
|Other assets held for sale, net:                                                               |  |                   |          
|Tenant receivables, net                                                                        |  | $                 | 35,774   
|Deferred leasing costs, less accumulated amortization of $41,220 as of December 31, 2006       |  |                   | 126,343  
|                                                                                               |  |                   |          
|Total other assets held for sale, net                                                          |  | $                 | 162,117  
|                                                                                               |  |                   |          



|5. | 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 received compensation for the management and leasing of the Partnerships properties, owned directly or through Fund I and
Fund II Tucker, equal to (a) 3% for management services and 3% for leasing services of the gross revenues collected monthly, plus a separate fee for the one-time 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 was 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.

Administrative Reimbursements

Wells Capital and Wells Management
perform certain administrative services for the Partnership, relating to accounting, property management, 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 spent on the respective entities by individual personnel. In the opinion of the General Partners, this allocation is a reasonable estimation of such expenses.



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Due to Affiliates

As
of September 30, 2007 and December 31, 2006, due to affiliates was comprised of the following amounts:



|                                                                           |  |                    |        |                   |   |       
|-------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                                                                           |  | September 30, 2007 |        | December 31, 2006
|Administrative reimbursements due to Wells Management and/or Wells Capital |  | $                  | 10,317 |                   | $ | 15,719
|Management and leasing fees due to Wells Management                        |  |                    | 0      |                   |   | 1,687 
|                                                                           |  |                    |        |                   |   |       
|                                                                           |  | $                  | 10,317 |                   | $ | 17,406
|                                                                           |  |                    |        |                   |   |       

Economic Dependency

We have engaged Wells Capital and Wells Management to provide certain essential services for us, including supervision of the management and leasing of our properties, asset acquisition and disposition services, as well as other
administrative responsibilities, 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 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 were 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 well as anticipated dividend income earned from its holdings of common stock of Piedmont Office Realty Trust, Inc. (Piedmont REIT), formerly known as
Wells Real Estate Investment Trust, Inc. In addition, WREF guarantees unsecured debt of $160 million held by another WREF-sponsored product that is in the start-up phase of its operations. As of September 30, 2007, 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.

Assertion of Legal Actions Against Related-Parties

On March 12,
2007, a stockholder of Piedmont REIT, formerly known as Wells REIT, filed a putative class action and derivative complaint, styled Washtenaw County Employees Retirement System v. Wells Real Estate Investment Trust, Inc., et al., in the
United States District Court for the District of Maryland against, among others, Piedmont REIT, Leo F. Wells, III and Wells Capital, our General Partners, Wells Management, our property manager, certain affiliates of WREF, the directors of
Piedmont REIT, and certain individuals who formerly served as officers or directors of Piedmont REIT prior to the closing of the internalization transaction on April 16, 2007. The complaint alleges, among other things, violations of the federal
proxy rules and breaches of fiduciary duty arising from the Piedmont REIT internalization transaction and the related proxy statement filed with the SEC on February 26, 2007, as amended. The complaint seeks, among other things, unspecified
monetary damages and nullification of the Piedmont REIT internalization transaction. On April 9, 2007, the District Court denied the plaintiffs motion for an order enjoining the internalization transaction. On April 17, 2007, the
Court granted the defendants motion to transfer venue to the United States District Court for the Northern District of Georgia, and the case was docketed in the Northern District of Georgia on April 24, 2007. On June 7, 2007, the
Court granted a motion to designate the class lead plaintiff and class co-lead counsel. On June 27, 2007, the plaintiff filed an amended complaint, which attempts to assert class action claims on behalf of those persons who



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received and were entitled to vote on the Piedmont REIT proxy statement filed with the SEC on February 26, 2007 and derivative claims on behalf of
Piedmont REIT. On July 9, 2007, the Court denied the plaintiffs motion for expedited discovery related to an anticipated motion for a preliminary injunction. On August 13, 2007, the defendants filed a motion to dismiss the amended
complaint. The motion to dismiss has been fully briefed and is currently pending before the Court. Mr. Wells, Wells Capital, and Wells Management intend to vigorously defend this action. Any financial loss incurred by Wells Capital, Wells
Management, or their affiliates could hinder their ability to successfully manage our operations and our portfolio of investments.

On August 24,
2007, two stockholders of Piedmont REIT filed a putative derivative complaint, styledDonald and Donna Goldstein, Derivatively on behalf of Defendant Wells Real Estate Investment Trust, Inc. v. Leo F. Wells, III, et. al.,in the Superior
Court of Fulton County, Georgia on behalf of Piedmont REIT against, among others, Leo F. Wells, III and Wells Capital, our General Partners, and a number of individuals who currently or formerly served as officers or directors of Piedmont
REIT. The complaint alleges, among other things, that the consideration paid by Piedmont REIT as part of the internalization transaction was excessive; that the defendants breached their fiduciary duties to Piedmont REIT; and that the
internalization transaction unjustly enriched the defendants. The complaint seeks, among other things, a judgment declaring that the defendants committed breaches of their fiduciary duties and were unjustly enriched at the expense of Piedmont
REIT; monetary damages equal to the amount by which Piedmont REIT was damaged by the defendants; an order awarding Piedmont REIT restitution from the defendants and ordering disgorgement of all profits and benefits obtained by the defendants from
their wrongful conduct and fiduciary breaches; an order rescinding the internalization transaction; and the establishment of a constructive trust upon any benefits improperly received by the defendants as a result of their wrongful conduct. On
October 19, 2007, the Court granted the defendants motion for a protective order staying discovery until the Court rules on the defendants motion to dismiss the complaint. On October 31, 2007, the defendants filed their
motion to dismiss the plaintiffs derivative complaint, which is currently pending before the Court. Mr. Wells and Wells Capital intend to vigorously defend this action. Any financial loss incurred by Wells Capital or its affiliates
could hinder their ability to successfully manage our operations and our portfolio of investments.



|6. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

On or about November 24, 2004,
four individuals (the plaintiffs) filed a putative class action complaint (Hendry et al. v. Leo F. Wells, III et al., Superior Court of Gwinnett County, Georgia, Civil Action No. 04A-13051-6, the Hendry
Action) against the Partnership, the General Partners, and Wells Management. The Hendry Action states that the Partnership is named only as an allegedly necessary party defendant and that the plaintiffs seek no money from or relief at the
expense of the Partnership. As of September 30, 2007, Wells Capital had incurred approximately $893,000 in legal fees, costs, and expenses related to defending against the Hendry Action. The indemnification provisions of the partnership
agreement require the Partnership to indemnify the General Partners for their costs of defending the Hendry Action under certain circumstances, including if they are successful in defending such litigation, upon the conclusion of this litigation. At
this time, management is unable to determine whether the likelihood of an unfavorable outcome is either probable or remote. Accordingly, no reserves have been provided for in the accompanying financial statements.

The plaintiffs filed the Hendry Action purportedly on behalf of all limited partners of the Partnership holding Class B Units as of January 9, 2002. The Hendry
Action alleges, among other things, that the General Partners breached their fiduciary duties to the limited partners by, among other things: (a) failing to timely disclose alleged inconsistencies between sales literature and the partnership
agreement relating to the distribution of net sale proceeds; (b) engaging in a scheme to fraudulently conceal alleged inconsistencies between sales literature and the partnership agreement relating to the distribution of net sale proceeds; and
(c) not accepting a settlement offer proposed by a holder of Class A Units and a holder of Class A and Class B Units in other litigation naming the Partnership as a defendant, in which the Court subsequently granted summary judgment
in favor of the Partnership. The Hendry Action also alleges that misrepresentations and omissions in an April 2002 consent solicitation to the limited partners caused that consent solicitation to be materially misleading. In addition, the



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Hendry Action alleges that the General Partners and Wells Management breached an alleged contract arising out of a June 2000 consent solicitation to the
limited partners relating to an alleged waiver of deferred management fees. The plaintiffs seek, among other remedies, the following: judgment against the General Partners of the Partnership, jointly and severally, in an amount to be proven at
trial; punitive damages; disgorgement of fees earned by the General Partners directly or through their affiliates; a declaration that the consent obtained as a result of an April 2002 consent solicitation is null and void; enforcement of an alleged
contract arising out of the June 2000 consent solicitation to allegedly waive Wells Managements deferred management fees; and an award to the plaintiffs of their attorneys fees, costs, and expenses.

On January 28, 2005, the defendants filed motions for summary judgment and motions to dismiss the plaintiffs claims. On March 31, 2005, the plaintiffs
filed briefs in opposition to the defendants motions. Pursuant to Orders entered July 1, 2005, the Court granted the defendants motions to dismiss and for summary judgment on all counts in the complaint. Thus, this action was at the
time dismissed, subject to plaintiffs right to file a notice of appeal within the required time period. On August 3, 2005, the plaintiffs filed a motion requesting the Court to vacate and re-enter the orders to give the plaintiffs an
opportunity to file a motion for the reconsideration or notice of appeal. After both sides had filed briefs in support of their respective positions, on February 15, 2006, the Court heard argument on plaintiffs motion to vacate and to
re-enter the judgments previously entered on July 1, 2005.

On or about August 8, 2005, the defendants filed a motion for attorneys fees
and expenses of litigation. On or about August 12, 2005, the plaintiffs filed a motion for attorneys fees and expenses of litigation as to one of the defenses asserted by defendants. On April 20, 2006, the Court held a hearing
addressing only the liability aspects on the defendants and plaintiffs motions for attorneys fees and expenses. By Orders entered May 24, 2006, the Court denied the plaintiffs and the defendants motions to recover
attorneys fees and expenses of litigation. Also by Orders entered May 24, 2006, the Court re-entered its July 1, 2005 judgments granting the Wells defendants motions to dismiss and for summary judgment on all counts in the
complaint, so as to allow the plaintiffs 30 days within which to file a notice of appeal. On or about June 21, 2006, the plaintiffs filed a notice of appeal with respect to the Courts Order granting the defendants motions to dismiss
and for summary judgment. On July 5, 2006, the defendants filed a notice of cross appeal with respect to the Courts Order denying the defendants motion for attorneys fees and expenses of litigation. On August 18, 2006,
the appeal and cross appeal were docketed in the Georgia Court of Appeals. On July 10, 2007, the Georgia Court of Appeals entered a decision that affirmed the trial court rulings in favor of the defendants for summary judgment on the
main counts I and V alleging breach of fiduciary duty and fraud or negligence in communications with limited partners and other conduct by the General Partners. The decision also affirmed the trial court's dismissal of count IV
alleging breach of contract in connection with the June 2000 consent solicitation. The decision reversed the dismissal on two counts, finding that the plaintiffs had standing to assert as direct claims in count II alleging breach
of fiduciary duty by the General Partners decision not to negotiate for a settlement in a prior related action and in count III alleging that the April 2002 consent solicitation for approval of an amendment to allow net sale
proceeds to be reinvested in the Partnership's condominium property, Paces Pavilion, was invalid. The decision reversing dismissal of counts II and III does not mean those claims have merit, but only that the plaintiffs have
standing to proceed in an action for either or both of those two counts. The decision also ruled on the cross appeal by affirming the trial court's denial of the defendants' request for an award of litigation fees and
expenses. The plaintiffs then filed a motion for reconsideration of this decision, and on July 26, 2007, the Court of Appeals denied the plaintiffs motion for reconsideration. On July 31, 2007, the plaintiffs filed a notice
of intention to petition the Georgia Supreme Court for a writ of certiorari to review the judgment of the Georgia Court of Appeals. On August 15, 2007, the plaintiffs filed a petition for writ of certiorari with the Georgia
Supreme Court requesting review of the Georgia Court of Appeals decision on the breach of fiduciary duty claims in counts I and V. The petition for writ of certiorari has been briefed and is currently pending in the Georgia
Supreme Court. We cannot reasonably predict when the Georgia Supreme Court will rule on this petition. The decision by the Georgia Court of Appeals was adopted by the Gwinnett Superior Court in an Order entered on August 6, 2007,
and it is anticipated that there will be further proceedings in the trial court on counts II and III.



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##### Table of Contents

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

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 provided in our Annual Report on Form 10-K for the year ended December 31, 2006.

Overview

We are in the disposition-and-liquidation phase of our life
cycle. We have sold all of our real estate assets with the sale of Black Oak Plaza in the first quarter of 2007. As a result of having sold all of the properties, we will focus resources on concluding the Partnerships activities and dissolving
the Partnership upon resolution of certain litigation related to partnership matters (See Part II, Item 1, Legal Proceedings).

We distributed
net sale proceeds from the sales of the office component of Heritage Place, Paces Pavilion, and Black Oak Plaza of approximately $7,200,000 to limited partners in May 2007. Our General Partners are currently reserving the remaining net sale proceeds
and operating cash flows in order to fund any additional legal costs or indemnification obligations in connection with the litigation discussed herein, and any remaining expenses and obligations of the Partnership associated with its final
dissolution. The dissolution expenses include, but are not limited to, legal fees, audit and tax fees, printing and postage costs, potential liabilities under the final purchase and sale agreements, and other administrative expenses. We expect that
a final distribution of any remaining proceeds that are not required to fund final dissolution costs of the Partnership will be made to the limited partners as soon as practical.

Liquidity and Capital Resources

Short-Term Liquidity

We believe that the cash on hand is sufficient to cover our working capital needs, including liabilities of approximately $37,000 as of September 30, 2007. We
anticipate that we will be able to fund any additional legal costs or indemnification obligations in connection with the litigation discussed herein and any final dissolution costs using current and future operating cash flow and net sale proceeds
currently being reserved.

Long-Term Liquidity

We have
sold all of the real estate assets in which we owned interests and do not anticipate acquiring additional properties. Accordingly, we expect that our future source of capital will primarily include net proceeds that were generated from the sale of
our properties as previously described.



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Capital Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning, and operating income-producing real properties and has invested all of the partners original capital contributions. 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, 2007, we had received, used, distributed, and held net sale proceeds allocated to
the Partnership from the sale of properties as presented below:



|                                            |  |                  |  |                                      |        |                                              |            |                          |   |                                                                  |  |                                                                       |  |   |            |  |   |          
|------------------------------------------- |  | ---------------- |  | ------------------------------------ | ------ | -------------------------------------------- | ---------- | ------------------------ | - | ---------------------------------------------------------------- |  | --------------------------------------------------------------------- |  | - | ---------- |  | - | ---------
|                                            |  | Net SaleProceeds |  | PartnershipsApproximate Ownership % |        | Net SaleProceeds Allocated tothe Partnership |            | Use of Net Sale Proceeds |   | Net Sale ProceedsDistributed
toPartners as of September 30, 2007 |  | Undistributed NetSale Proceeds BeingReserved as of September 30, 2007
|Property Sold                               |  |                  |  |                                      | Amount |                                              | Purpose    |                          |  
|Peachtree Place(partial sale in 2000)       |  | $704,496         |  | 90.0%                                |        | $                                            | 633,695    |                          | $ | 633,695                                                          |  |   Payment of deferred management fee                                 |  | $ | 0          |  | $ | 0        
|Crowes Crossing(sold in 2001)              |  | $6,486,652       |  | 100%                                 |        |                                              | 6,486,652  |                          |   | 1,481,087                                                        |  |   Payment of deferred management fee                                 |  |   | 5,005,565  |  |   | 0        
|Cherokee Commons(sold in 2001)              |  | $8,414,089       |  | 25.3%                                |        |                                              | 2,126,109  |                          |   | 23,331                                                           |  |   Payment of deferred management fee                                 |  |   | 2,102,778  |  |   | 0        
|Heritage Place retail portion(sold in 2003) |  | $3,207,708       |  | 51.9%                                |        |                                              | 1,665,121  |                          |   | 266,967                                                          |  |   Payment of deferred management fee                                 |  |   | 1,398,154  |  |   | 0        
|Peachtree Place(remainder sold in 2004)     |  | $953,670         |  | 90.0%                                |        |                                              | 857,826    |                          |   | 253,200                                                          |  |   Payment of deferred management fee                                 |  |   | 604,626    |  |   | 0        
|Heritage Place office portion(sold in 2006) |  | $4,028,043       |  | 51.9%                                |        |                                              | 2,090,957  |                          |   | 0                                                                |  |                                                                       |  |   | 2,090,957  |  |   | 0        
|Paces Pavilion(sold in 2006)                |  | $4,065,700       |  | 100.0%                               |        |                                              | 4,065,700  |                          |   | 0                                                                |  |                                                                       |  |   | 4,065,700  |  |   | 0        
|Black Oak Plaza(sold in 2007)               |  | $3,469,432       |  | 100.0%                               |        |                                              | 3,469,432  |                          |   | 0                                                                |  |                                                                       |  |   | 1,332,218  |  |   | 2,137,214
|                                            |  |                  |  |                                      |        |                                              |            |                          |   |                                                                  |  |                                                                       |  |   |            |  |   |          
|Total                                       |  |                  |  |                                      |        | $                                            | 21,395,492 |                          | $ | 2,658,280                                                        |  |                                                                       |  | $ | 16,599,998 |  | $ | 2,137,214
|                                            |  |                  |  |                                      |        |                                              |            |                          |   |                                                                  |  |                                                                       |  |   |            |  |   |          

Our General Partners have reserved net sale proceeds of approximately $2.1 million to fund any additional legal
costs or indemnification obligations in connection with the litigation discussed herein, and any remaining expenses and obligations of the Partnership associated with its final dissolution.

Changes in Net Assets in Liquidation

We have begun to dissolve the
Partnership by, among other things, selling all of our real estate assets and shutting down Fund I and Fund II Tucker by collecting the outstanding receivables, satisfying outstanding payables, and distributing residual cash balances to the joint
venture partners. In connection therewith, our net assets in liquidation fluctuated during the six months ended September 30, 2007, primarily as a result of the distribution of approximately $7.2 million of net sale proceeds to the limited
partners in May 2007.



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##### Table of Contents

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 affected 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 was possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may have utilized different estimates
that may have impacted comparability of our results of operations to those of companies in similar businesses.

Effective April 1, 2007, the first day
of the quarter following the completion of the sale of all real estate assets, we adopted the liquidation basis of accounting, under which assets and liabilities are stated at their estimated net realizable values and net settlement amounts,
respectively, and statements of operations, statements of cash flows, and statements of partners capital are no longer presented.

Below is a
discussion of the accounting policies used by the Partnership and Fund I and Fund II Tucker, which were considered to be critical in that they may have required complex judgment in their application or have required estimates about matters that were
inherently uncertain.

Investment in Real Estate Assets

We were required to make subjective assessments as to the useful lives of our depreciable assets. We considered the period of future benefit of the assets to determine the appropriate useful lives. These assessments have had a direct impact
on net income. The estimated useful lives of the Partnerships and Fund I and Fund II Tuckers assets by class were 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 we used inappropriate useful lives or methods for depreciation, our net income would have been
misstated.

Valuation of Real Estate Assets

We
monitored events and changes in circumstances that could have indicated that the carrying amounts of the real estate assets in which we have had an ownership interest, either directly or through investments in Fund I and Fund II Tucker, may not have
been recoverable. When indicators of potential impairment were present which indicated that the carrying amounts of real estate assets may not have been recoverable, management assessed the recoverability of the real estate assets by determining
whether the carrying value of the real estate assets would been 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 did not exceed the carrying value, management adjusted the real estate assets to the fair value, as defined by SFAS No. 144, and recognized an impairment loss. Estimated fair values were 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, included estimated salvage value. In the
first quarter of 2006, Fund I and Fund II Tucker recognized an impairment loss of approximately $795,000, of which approximately $413,000 was allocated to the Partnership, in order to reduce the carrying value of the office component of Heritage
Place to its fair value, less costs to sell, as a result of a change in managements intended holding period for this asset.



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##### Table of Contents

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 have resulted in an incorrect assessment of the propertys future cash flows and fair value, and could have resulted in the overstatement of the carrying value of real estate assets owned by the Partnership
or Fund I and Fund II Tucker and net income of the Partnership.

Related-Party Transactions

We have entered into agreements with Wells Capital, Wells Management, an affiliate 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 5 to our financial statements included in this report for a description of these fees and expense reimbursements we have incurred.



|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, 2007 that have materially affected, or are likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

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



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

On or about November 24, 2004, four
individuals (the plaintiffs) filed a putative class action complaint (Hendry et al. v. Leo F. Wells, III et al., Superior Court of Gwinnett County, Georgia, Civil Action No. 04A-13051-6, the Hendry Action)
against the Partnership, the General Partners, and Wells Management. The Hendry Action states that the Partnership is named only as an allegedly necessary party defendant and that the plaintiffs seek no money from or relief at the expense of the
Partnership. As of September 30, 2007, Wells Capital had incurred approximately $893,000 in legal fees, costs, and expenses related to defending against the Hendry Action. The indemnification provisions of the partnership agreement require the
Partnership to indemnify the General Partners for their costs of defending the Hendry Action under certain circumstances, including if they are successful in defending such litigation, upon the conclusion of this litigation. At this time, management
is unable to determine whether the likelihood of an unfavorable outcome is either probable or remote. Accordingly, no reserves have been provided for in the accompanying financial statements.

The plaintiffs filed the Hendry Action purportedly on behalf of all limited partners of the Partnership holding Class B Units as of January 9, 2002. The Hendry
Action alleges, among other things, that the General Partners breached their fiduciary duties to the limited partners by, among other things: (a) failing to timely disclose alleged inconsistencies between sales literature and the partnership
agreement relating to the distribution of net sale proceeds; (b) engaging in a scheme to fraudulently conceal alleged inconsistencies between sales literature and the partnership agreement relating to the distribution of net sale proceeds; and
(c) not accepting a settlement offer proposed by a holder of Class A Units and a holder of Class A and Class B Units in other litigation naming the Partnership as a defendant, in which the Court subsequently granted summary judgment
in favor of the Partnership. The Hendry Action also alleges that misrepresentations and omissions in an April 2002 consent solicitation to the limited partners caused that consent solicitation to be materially misleading. In addition, the Hendry
Action alleges that the General Partners and Wells Management breached an alleged contract arising out of a June 2000 consent solicitation to the limited partners relating to an alleged waiver of deferred management fees. The plaintiffs seek, among
other remedies, the following: judgment against the General Partners of the Partnership, jointly and severally, in an amount to be proven at trial; punitive damages; disgorgement of fees earned by the General Partners directly or through their
affiliates; a declaration that the consent obtained as a result of an April 2002 consent solicitation is null and void; enforcement of an alleged contract arising out of the June 2000 consent solicitation to allegedly waive Wells Managements
deferred management fees; and an award to the plaintiffs of their attorneys fees, costs, and expenses.

On January 28, 2005, the defendants
filed motions for summary judgment and motions to dismiss the plaintiffs claims. On March 31, 2005, the plaintiffs filed briefs in opposition to the defendants motions. Pursuant to Orders entered July 1, 2005, the Court granted
the defendants motions to dismiss and for summary judgment on all counts in the complaint. Thus, this action was at the time dismissed, subject to plaintiffs right to file a notice of appeal within the required time period. On
August 3, 2005, the plaintiffs filed a motion requesting the Court to vacate and re-enter the orders to give the plaintiffs an opportunity to file a motion for the reconsideration or notice of appeal. After both sides had filed briefs in
support of their respective positions, on February 15, 2006, the Court heard argument on plaintiffs motion to vacate and to re-enter the judgments previously entered on July 1, 2005.

On or about August 8, 2005, the defendants filed a motion for attorneys fees and expenses of litigation. On or about August 12, 2005, the plaintiffs
filed a motion for attorneys fees and expenses of litigation as to one of the defenses asserted by defendants. On April 20, 2006, the Court held a hearing addressing only the liability aspects on the defendants and plaintiffs
motions for attorneys fees and expenses. By Orders entered May 24, 2006, the Court denied the plaintiffs and the defendants motions to recover attorneys fees and expenses of litigation. Also by Orders entered
May 24, 2006, the Court re-entered its July 1, 2005 judgments granting the Wells defendants motions to dismiss and for summary judgment on all counts in the complaint, so as to allow the plaintiffs 30 days within which to file a
notice of appeal. On or about June 21, 2006, the plaintiffs filed a notice of appeal with respect to the Courts Order granting the defendants motions to dismiss and for summary judgment. On July 5, 2006, the



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defendants filed a notice of cross appeal with respect to the Courts Order denying the defendants motion for attorneys fees and expenses of
litigation. On August 18, 2006, the appeal and cross appeal were docketed in the Georgia Court of Appeals. On July 10, 2007, the Georgia Court of Appeals entered a decision that affirmed the trial court rulings in favor of the defendants
for summary judgment on the main counts I and V alleging breach of fiduciary duty and fraud or negligence in communications with limited partners and other conduct by the General Partners. The decision also affirmed the trial court's dismissal
of count IV alleging breach of contract in connection with the June 2000 consent solicitation. The decision reversed the dismissal on two counts, finding that the plaintiffs had standing to assert as direct claims in count II alleging breach of
fiduciary duty by the General Partners decision not to negotiate for a settlement in a prior related action and in count III alleging that the April 2002 consent solicitation for approval of an amendment to allow net sale proceeds to be
reinvested in the Partnership's condominium property, Paces Pavilion, was invalid. The decision reversing dismissal of counts II and III does not mean those claims have merit, but only that the plaintiffs have standing to proceed in an action for
either or both of those two counts. The decision also ruled on the cross appeal by affirming the trial court's denial of the defendants' request for an award of litigation fees and expenses. The plaintiffs then filed a motion for reconsideration of
this decision, and on July 26, 2007, the Court of Appeals denied the plaintiffs motion for reconsideration. On July 31, 2007, the plaintiffs filed a notice of intention to petition the Georgia Supreme Court for a writ of certiorari
to review the judgment of the Georgia Court of Appeals. On August 15, 2007, the plaintiffs filed a petition for writ of certiorari with the Georgia Supreme Court requesting review of the Georgia Court of Appeals decision on the breach of
fiduciary duty claims in counts I and V. The petition for writ of certiorari has been briefed and is currently pending in the Georgia Supreme Court. We cannot reasonably predict when the Georgia Supreme Court will rule on this petition. The decision
by the Georgia Court of Appeals was adopted by the Gwinnett Superior Court in an Order entered on August 6, 2007, and it is anticipated that there will be further proceedings in the trial court on counts II and III.



|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, 2006.



|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, 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



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



|(c) | We did not redeem any securities during the quarter ended September 30, 2007.
|--- | -----------------------------------------------------------------------------



|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, 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(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, 2007.



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



|(a) | During the quarter ended September 30, 2007, 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.



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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 I (Registrant)                                                            
|                 |  |  | 
|                 |  |  |  | By:                                                                                               |  | WELLS CAPITAL, INC.        
|                 |  |  |  |                                                                                                   |  | (Corporate General Partner)
|                 |  | 
|November 8, 2007 |  |  |  | /S/    LEO F. WELLS,
III                                                                         
|                 |  |  |  | Leo F. Wells, III President, Principal
Executive Officer,and Sole Director of Wells Capital, Inc.
|                 |  | 
|November 8, 2007 |  |  |  | /S/    DOUGLAS P.
WILLIAMS                                                                       
|                 |  |  |  | Douglas P. Williams Principal Financial
Officer of Wells Capital, Inc.                           



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EXHIBIT INDEX

TO THIRD QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND I



|            |  |                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                   
|            | 
|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