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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, 2004 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                         



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(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 an accelerated filer (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) 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, among others, we consider statements concerning projections of future operating
results and cash flows, our ability to meet future obligations, and the amount and timing of future distributions to limited partners and discussion of the outcome of current, pending, and future litigation 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 that this report is filed with the Securities and Exchange Commission. Neither the Partnership nor the general partners make any representations or warranties (expressed or implied) about the accuracy of
any such forward-looking statements. Actual results could differ materially from any forward-looking statements contained in this Form 10-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 known and unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are
difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations; provide
distributions to limited partners; and maintain the value of our real estate properties, may be significantly hindered. Some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to differ
materially from those presented in certain forward-looking statements follow:



General economic risks



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



| |  |  | Adverse economic conditions affecting the particular industry of one or more tenants in properties owned by the Partnership or our joint venture.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



Real estate risks inherent in properties owned directly and through joint ventures



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



| |  |  | Supply of or demand for similar or competing rentable space, which may adversely impact retaining or obtaining new tenants upon lease expiration at acceptable rental amounts;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow or net sale proceeds;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increases in property operating expenses, including property taxes, insurance, and other costs not recoverable from tenants;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



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



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



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



| |  |  | Ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any and all closing conditions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



Other operational risks



| |  |  | Dependency on Wells Capital, Inc. (Wells Capital), our corporate general partner, its key personnel, and its affiliates for various administrative services;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Increases in our operating expenses, including increased expenses associated with litigation involving the Partnership and operating as a public company in the current regulatory
environment;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Ability to demonstrate compliance with any governmental, tax, real estate, environmental, and zoning law or regulation in the event that any such position is questioned by the
respective authority; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Ability to distribute the net sale proceeds being held by the Partnership in view of litigation under appeal.
| | - |  | -------------------------------------------------------------------------------------------------------------



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                                            |  |         
|-------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | --------
|         |  |                       |  |                                                                                                                                            |  | Page No.
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                                           
|         |  |                       | 
|         |  | Item 1.               |  | Consolidated Financial Statements                                                                                                          |  |         
|         |  |                       | 
|         |  |                       |  | Consolidated Balance SheetsSeptember 30, 2004 (unaudited) and December 31, 2003                                                           |  | 5       
|         |  |                       | 
|         |  |                       |  | Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2004 (unaudited) and 2003 (unaudited)              |  | 6       
|         |  |                       | 
|         |  |                       |  | Consolidated Statements of Partners Capital for the Year Ended December 31, 2003 and the Nine Months Ended September 30, 2004 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 (unaudited) and 2003 (unaudited)                        |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Consolidated Financial Statements (unaudited)                                                                           |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                      |  | 14      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                                |  | 21      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                                    |  | 21      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  | 23                                                                                                                                        



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONSOLIDATED BALANCE SHEETS



ASSETS



|                                                                                                                                                   |  |                                |            |                  |   |           
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | ---------------- | - | ----------
|                                                                                                                                                   |  | (unaudited) September 30, 2004 |            | December 31,2003
|Real estate, at cost:                                                                                                                              |  |                                |            |                  |   |           
|Land                                                                                                                                               |  | $                              | 1,238,819  |                  | $ | 1,440,608 
|Building and improvements, less accumulated depreciation of $6,684,765 and $7,054,414 as of September 30, 2004 and December 31, 2003,
respectively |  |                                | 3,863,373  |                  |   | 4,561,192 
|                                                                                                                                                   |  |                                |            |                  |   |           
|Total real estate assets                                                                                                                           |  |                                | 5,102,192  |                  |   | 6,001,800 
|Investment in joint venture                                                                                                                        |  |                                | 2,211,321  |                  |   | 2,263,584 
|Cash and cash equivalents                                                                                                                          |  |                                | 12,306,118 |                  |   | 11,792,983
|Accounts receivable, net                                                                                                                           |  |                                | 116,180    |                  |   | 102,518   
|Due from joint ventures                                                                                                                            |  |                                | 11,447     |                  |   | 17,616    
|Prepaid expenses and other assets                                                                                                                  |  |                                | 129,383    |                  |   | 121,111   
|Deferred lease acquisition costs                                                                                                                   |  |                                | 116,530    |                  |   | 140,160   
|                                                                                                                                                   |  |                                |            |                  |   |           
|Total assets                                                                                                                                       |  | $                              | 19,993,171 |                  | $ | 20,439,772
|                                                                                                                                                   |  |                                |            |                  |   |           
|                                                                                                                                                  
|LIABILITIES AND PARTNERS CAPITAL                                                                                                                 
|Liabilities:                                                                                                                                       |  |                                |            |                  |   |           
|Accounts payable, accrued expenses, and refundable security deposits                                                                               |  | $                              | 247,649    |                  | $ | 303,958   
|Deferred rental income                                                                                                                             |  |                                | 4,961      |                  |   | 0         
|Due to affiliate                                                                                                                                   |  |                                | 2,240,604  |                  |   | 2,223,843 
|Minority interest                                                                                                                                  |  |                                | 670        |                  |   | 34,777    
|                                                                                                                                                   |  |                                |            |                  |   |           
|Total liabilities                                                                                                                                  |  |                                | 2,493,884  |                  |   | 2,562,578 
|Partners capital:                                                                                                                                 |  |                                |            |                  |   |           
|Limited partners:                                                                                                                                  |  |                                |            |                  |   |           
|Class A98,716 units outstanding                                                                                                                   |  |                                | 17,499,287 |                  |   | 17,877,194
|Class B42,568 units outstanding                                                                                                                   |  |                                | 0          |                  |   | 0         
|General partners                                                                                                                                   |  |                                | 0          |                  |   | 0         
|                                                                                                                                                   |  |                                |            |                  |   |           
|Total partners capital                                                                                                                            |  |                                | 17,499,287 |                  |   | 17,877,194
|                                                                                                                                                   |  |                                |            |                  |   |           
|Total liabilities and partners capital                                                                                                            |  | $                              | 19,993,171 |                  | $ | 20,439,772
|                                                                                                                                                   |  |                                |            |                  |   |           



See accompanying notes.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|-------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | -------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                     |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                     |  | 2004                            |         |   | 2003                           |   |          | 2004 |  |   | 2003      |  
|REVENUES:                                                            |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|Rental income                                                        |  | $                               | 247,874 |   |                                | $ | 247,923  |      |  | $ | 749,351   |   |  | $ | 742,694   |  
|Tenant reimbursements                                                |  |                                 | 33,239  |   |                                |   | 23,912   |      |  |   | 100,156   |   |  |   | 79,748    |  
|Interest and other income                                            |  |                                 | 19,760  |   |                                |   | 27,519   |      |  |   | 60,543    |   |  |   | 107,819   |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|Total revenues                                                       |  |                                 | 300,873 |   |                                |   | 299,354  |      |  |   | 910,050   |   |  |   | 930,261   |  
|EXPENSES:                                                            |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|Legal and accounting                                                 |  |                                 | 134,100 |   |                                |   | 138,476  |      |  |   | 665,412   |   |  |   | 433,525   |  
|Operating costsrental properties                                    |  |                                 | 105,230 |   |                                |   | 81,367   |      |  |   | 372,810   |   |  |   | 290,255   |  
|Depreciation                                                         |  |                                 | 63,704  |   |                                |   | 136,650  |      |  |   | 337,035   |   |  |   | 402,370   |  
|Partnership administration                                           |  |                                 | 32,761  |   |                                |   | 35,416   |      |  |   | 130,516   |   |  |   | 114,273   |  
|Management and leasing fees                                          |  |                                 | 25,455  |   |                                |   | 25,242   |      |  |   | 77,352    |   |  |   | 74,601    |  
|Other general and administrative                                     |  |                                 | 1,071   |   |                                |   | 4,420    |      |  |   | 3,123     |   |  |   | 9,338     |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|Total expenses                                                       |  |                                 | 362,321 |   |                                |   | 421,571  |      |  |   | 1,586,248 |   |  |   | 1,324,362 |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|LOSS FROM REAL ESTATE OPERATIONS                                     |  |                                 | (61,448 | ) |                                |   | (122,217 | )    |  |   | (676,198  | ) |  |   | (394,101  | )
|                                                                     |  |                                 |         |  
|EQUITY IN INCOME (LOSS) OF JOINT VENTURE (Note 2)                    |  |                                 | 18,239  |   |                                |   | (10,846  | )    |  |   | (9,723    | ) |  |   | 165,285   |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|NET LOSS FROM CONTINUING OPERATIONS                                  |  |                                 | (43,209 | ) |                                |   | (133,063 | )    |  |   | (685,921  | ) |  |   | (228,816  | )
|DISCONTINUED OPERATIONS:                                             |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|Operating loss                                                       |  |                                 | (25,431 | ) |                                |   | (11,866  | )    |  |   | (5,685    | ) |  |   | (19,046   | )
|Gain on sale                                                         |  |                                 | 0       |   |                                |   | 0        |      |  |   | 349,361   |   |  |   | 0         |  
|Minority Interest                                                    |  |                                 | 1,433   |   |                                |   | 1,192    |      |  |   | (35,662   | ) |  |   | 1,914     |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS                           |  |                                 | (23,998 | ) |                                |   | (10,674  | )    |  |   | 308,014   |   |  |   | (17,132   | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|NET LOSS                                                             |  | $                               | (67,207 | ) |                                | $ | (143,737 | )    |  | $ | (377,907  | ) |  | $ | (245,948  | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|LOSS FROM CONTINUING OPERATIONS ALLOCATED TO:                        |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS A LIMITED PARTNERS                                             |  | $                               | (43,209 | ) |                                | $ | (133,063 | )    |  | $ | (685,921  | ) |  | $ | (228,816  | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS B LIMITED PARTNERS                                             |  | $                               | 0       |   |                                | $ | 0        |      |  | $ | 0         |   |  | $ | 0         |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS ALLOCATED TO:             |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS A LIMITED PARTNERS                                             |  | $                               | (25,431 | ) |                                | $ | (11,866  | )    |  | $ | 343,676   |   |  | $ | (19,046   | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS B LIMITED PARTNERS                                             |  | $                               | 0       |   |                                | $ | 0        |      |  | $ | 0         |   |  | $ | 0         |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|MINORITY INTEREST PARTNER                                            |  | $                               | 1,433   |   |                                | $ | 1,192    |      |  | $ | (35,662   | ) |  | $ | 1,914     |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|LOSS FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT:            |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS A                                                              |  | $                               | (0.44   | ) |                                | $ | (1.34    | )    |  | $ | (6.95     | ) |  | $ | (2.30     | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS B                                                              |  | $                               | 0.00    |   |                                | $ | 0.00     |      |  | $ | 0.00      |   |  | $ | 0.00      |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS PER LIMITED PARTNER UNIT: |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS A                                                              |  | $                               | (0.26   | ) |                                | $ | (0.12    | )    |  | $ | 3.48      |   |  | $ | (0.19     | )
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS B                                                              |  | $                               | 0.00    |   |                                | $ | 0.00     |      |  | $ | 0.00      |   |  | $ | 0.00      |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|DISTRIBUTION OF OPERATING CASH PER LIMITED PARTNER UNIT:             |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS A                                                              |  | $                               | 0.00    |   |                                | $ | 0.00     |      |  | $ | 0.00      |   |  | $ | 2.50      |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  
|CLASS B                                                              |  | $                               | 0.00    |   |                                | $ | 0.00     |      |  | $ | 0.00      |   |  | $ | 0.00      |  
|                                                                     |  |                                 |         |   |                                |   |          |      |  |   |           |   |  |   |           |  



See accompanying notes.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL



FOR THE YEAR ENDED DECEMBER 31, 2003

AND THE NINE MONTHS ENDED SEPTEMBER 30, 2004 (unaudited)



|                                     |  |                  |  |                 |            |                       |       |        |         |   |   |  |   |   |  |   |            |  
|------------------------------------ |  | ---------------- |  | --------------- | ---------- | --------------------- | ----- | ------ | ------- | - | - |  | - | - |  | - | ---------- | -
|                                     |  | Limited Partners |  | GeneralPartners |            | TotalPartnersCapital |      
|                                     |  | Class A          |  |                 | Class B    |                       |      
|                                     |  | Units            |  | Amounts         |            |                       | Units |        | Amounts |   |  
|BALANCE, December 31, 2002           |  | 98,716           |  | $               | 18,632,747 |                       |       | 42,568 |         | $ | 0 |  | $ | 0 |  | $ | 18,632,747 |  
|                                     |  |                  |  |                 |            |                      
|Net loss                             |  | 0                |  |                 | (508,763   | )                     |       | 0      |         |   | 0 |  |   | 0 |  |   | (508,763   | )
|Distributions of operating cash flow |  | 0                |  |                 | (246,790   | )                     |       | 0      |         |   | 0 |  |   | 0 |  |   | (246,790   | )
|                                     |  |                  |  |                 |            |                       |       |        |         |   |   |  |   |   |  |   |            |  
|BALANCE, December 31, 2003           |  | 98,716           |  |                 | 17,877,194 |                       |       | 42,568 |         |   | 0 |  |   | 0 |  |   | 17,877,194 |  
|                                     |  |                  |  |                 |            |                      
|Net loss                             |  | 0                |  |                 | (377,907   | )                     |       | 0      |         |   | 0 |  |   | 0 |  |   | (377,907   | )
|                                     |  |                  |  |                 |            |                       |       |        |         |   |   |  |   |   |  |   |            |  
|BALANCE, September 30, 2004          |  | 98,716           |  | $               | 17,499,287 |                       |       | 42,568 |         | $ | 0 |  | $ | 0 |  | $ | 17,499,287 |  
|                                     |  |                  |  |                 |            |                       |       |        |         |   |   |  |   |   |  |   |            |  



See accompanying notes.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                          |  |                                |            |   |      |   |            |  
|----------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                          |  | Nine Months EndedSeptember 30, |           
|                                                                                          |  | 2004                           |            |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |  |                                |            |   |      |   |            |  
|Net loss from continuing operations                                                       |  | $                              | (685,921   | ) |      | $ | (228,816   | )
|Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |                                |            |   |      |   |            |  
|Equity in (income) loss of joint venture                                                  |  |                                | 9,723      |   |      |   | (165,285   | )
|Depreciation                                                                              |  |                                | 337,035    |   |      |   | 402,370    |  
|Amortization of deferred lease acquisition costs                                          |  |                                | 23,101     |   |      |   | 27,045     |  
|Operating distributions received from joint venture                                       |  |                                | 48,709     |   |      |   | 160,873    |  
|Changes in assets and liabilities:                                                        |  |                                |            |   |      |   |            |  
|Accounts receivable, net                                                                  |  |                                | (36,112    | ) |      |   | (40,964    | )
|Prepaid expenses and other assets                                                         |  |                                | (8,272     | ) |      |   | (3,490     | )
|Accounts payable, accrued expenses, and refundable security deposits                      |  |                                | (66,580    | ) |      |   | 204,579    |  
|Deferred rental income                                                                    |  |                                | 4,961      |   |      |   | 0          |  
|Due to affiliate                                                                          |  |                                | 16,761     |   |      |   | 42,960     |  
|                                                                                          |  |                                |            |   |      |   |            |  
|Total adjustments                                                                         |  |                                | 329,326    |   |      |   | 628,088    |  
|                                                                                          |  |                                |            |   |      |   |            |  
|Net cash (used in) provided by continuing operations                                      |  |                                | (356,595   | ) |      |   | 399,272    |  
|Net cash provided by discontinued operations                                              |  |                                | 6,020      |   |      |   | 14,178     |  
|                                                                                          |  |                                |            |   |      |   |            |  
|Net cash (used in) provided by operating activities                                       |  |                                | (350,575   | ) |      |   | 413,450    |  
|                                                                                          |  |                               
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                     |  |                                |            |   |      |   |            |  
|Net sale proceeds received from joint venture                                             |  |                                | 0          |   |      |   | 1,665,121  |  
|Investment in deferred lease acquisition costs                                            |  |                                | (3,340     | ) |      |   | (2,917     | )
|Investment in real estate                                                                 |  |                                | (16,851    | ) |      |   | (66,873    | )
|Net proceeds from sale of real estate assets                                              |  |                                | 953,670    |   |      |   | 0          |  
|                                                                                          |  |                                |            |   |      |   |            |  
|Net cash provided by investing activities                                                 |  |                                | 933,479    |   |      |   | 1,595,331  |  
|                                                                                          |  |                               
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                     |  |                                |            |   |      |   |            |  
|Minority interest distributions paid for discontinued operations                          |  |                                | (69,769    | ) |      |   | (6,230     | )
|Partnership distributions paid                                                            |  |                                | 0          |   |      |   | (493,580   | )
|                                                                                          |  |                                |            |   |      |   |            |  
|Net cash used in financing activities                                                     |  |                                | (69,769    | ) |      |   | (499,810   | )
|                                                                                          |  |                               
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 |  |                                | 513,135    |   |      |   | 1,508,971  |  
|                                                                                          |  |                               
|CASH AND CASH EQUIVALENTS, beginning of period                                            |  |                                | 11,792,983 |   |      |   | 10,404,816 |  
|                                                                                          |  |                                |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, end of period                                                  |  | $                              | 12,306,118 |   |      | $ | 11,913,787 |  
|                                                                                          |  |                                |            |   |      |   |            |  



See accompanying notes.



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WELLS REAL ESTATE FUND I AND SUBSIDIARY



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



SEPTEMBER 30, 2004 (unaudited)



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



|(a) |  | General
|--- |  | -------



Wells Real Estate Fund I (the Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Capital, a Georgia corporation, serving as its general partners (collectively, the
General Partners). 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
generally has equal voting rights regardless of class.



On September 6, 1984,
the Partnership commenced a public offering of its limited partnership units pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership terminated its offering on September 5, 1986, upon receiving and
accepting gross proceeds of $35,321,000 for a total of 141,284 Class A and Class B limited partner units from 4,895 limited partners at $250 per unit.



As of September 30, 2004, the Partnership owned interests in the following two properties directly: (i) Black Oak Plaza, a shopping center located in Knoxville,
Tennessee, and (ii) a condominium interest in Paces Pavilion, a medical office building located in Atlanta, Georgia of approximately 27%.



During the periods presented, the Partnership also owned interests in the following joint venture (the Joint Venture):



|                                                          |  |                                                                                       |  |                                                                                
|--------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------
|Joint Venture                                             |  | Joint Venture Partners                                                                |  | Properties                                                                     
|Wells-Baker Associates                                    |  |    Wells Real Estate Fund I    Wells & Associates, Inc.(2)                          |  | 1. Peachtree Place(1) A commercial office building located in Norcross, Georgia
|Fund I and Fund II Tucker
(Fund I-II Tucker Associates) |  |    Wells Real
Estate Fund I    Fund II and Fund II-OW(3)(Fund II-IIOW Associates) |  | 2. Heritage Place A commercial office complex located in Tucker, Georgia       



|(1) |  | This property was sold on June 18, 2004.
|--- |  | ----------------------------------------

|(2) |  | Wells & Associates, Inc. is affiliated with the Partnership through common management.
|--- |  | --------------------------------------------------------------------------------------

|(3) |  | Fund II-IIOW Associates is a joint venture between Wells Real Estate Fund II and Wells Real Estate Fund II-OW.
|--- |  | --------------------------------------------------------------------------------------------------------------



Each of the aforementioned properties was acquired on an all-cash basis. 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. For further information regarding the Joint Ventures and
foregoing properties, refer to the Partnerships Form 10-K for the year ended December 31, 2003.



On April 7, 2003, Fund I-II Tucker Associates sold the retail portion of Heritage Place, which comprises approximately 30% of the total premises, to an unrelated third party for a gross selling price of $3,400,000. As
a



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result of this sale, the Partnership was allocated a gain of approximately $152,000 and received net sale proceeds of approximately $1,665,000.



On June 18, 2004, Wells-Baker Associates sold Peachtree Place to an unrelated third party
for a gross selling price of $1,030,000. As a result of this sale, the Partnership was allocated a gain of approximately $314,000 and received net sale proceeds of approximately $858,000.



|(b) |  | Basis of Presentation
|--- |  | ---------------------



The consolidated financial statements include the accounts of the Partnership and Wells-Baker Associates. The Partnerships interest in Wells-Baker Associates was
approximately 90% for each of the periods presented. All significant intercompany balances have been eliminated in consolidation. Minority interest represents Wells & Associates, Inc.s interest in Wells-Baker Associates of approximately
10% for each of the periods presented.



The consolidated 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 accounting principles generally accepted in the United States (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 present the results for those periods. Results for interim periods are not necessarily indicative of full-year
results. For further information, refer to the consolidated financial statements and footnotes included in the Partnerships Form 10-K for the year ended December 31, 2003.



|(c) |  | Allocations of Net Income, Net Loss, and Gain on Sale
|--- |  | -----------------------------------------------------



For the purpose of determining allocations per the partnership agreement, net income is defined generally as Net Income recognized by the Partnership, excluding
deductions for depreciation, amortization, and cost recovery and 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
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 are 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.



Under the partnership agreement, gain on the sale or exchange of the
Partnerships properties is 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 excess of (i) each limited partners adjusted capital contribution, plus a cumulative 15% per annum return on his adjusted capital contribution (16% for investments made before December 31, 1984), less the sum of all prior
distributions of cash flow from operations previously made to such limited partner, over (ii) such limited partners capital account balance as of the sale date; (c) then to the General Partners in proportion to and to the extent of the excess
of (i) each General Partners adjusted capital contribution, less the sum of all prior distributions of cash flow from operations previously made to such General Partners, over (ii) such General Partners capital account balance as of the
sale date; and (d) thereafter 85% to the limited partners and 15% to the General Partners.



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|(d) |  | Distribution of Net Cash from Operations
|--- |  | ----------------------------------------



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.
| | - |  | -----------------------------------------------------------------------------------------------------------



|(e) |  | Change in Accounting Estimate
|--- |  | -----------------------------



In the third quarter of 2004, the Partnership completed a review of its real estate related depreciation by performing an analysis of the components of each property type
in an effort to determine the weighted-average composite useful lives of its real estate assets. As a result of this review, effective July 1, 2004, the Partnership extended the weighted-average composite useful life from 25 years to 40 years for
all building assets. This change resulted in an increase to net income of approximately $72,900, or $0.74 per unit, for Class A Units. This change had no effect on net income allocated to Class B Units. The Partnership believes that the change
reflects the estimated useful lives of the respective assets and is consistent with prevailing industry practice.



|(f) |  | Reclassifications
|--- |  | -----------------



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



|2. |  | INVESTMENT IN JOINT VENTURE
|-- |  | ---------------------------



|(a) |  | Basis of Presentation
|--- |  | ---------------------



The Partnership does not have control over the operations of Fund I-II Tucker Associates; however, it does exercise significant influence. Accordingly, the
Partnerships investment in Fund I-II Tucker Associates is recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss)
attributable to the Partnership. For further information, refer to the consolidated financial statements and footnotes included in the Partnerships Form 10-K for the year ended December 31, 2003.



|(b) |  | Summary of Operations
|--- |  | ---------------------



The following information summarizes the operations of Fund I-II Tucker Associates for the three months and nine months ended September 30, 2004 and 2003, respectively:



|                            |  |                                 |         |                                         |   |         |                                 |      |        |  |      |         |   |      |   |        |     |  |   |         |  
|--------------------------- |  | ------------------------------- | ------- | --------------------------------------- | - | ------- | ------------------------------- | ---- | ------ |  | ---- | ------- | - | ---- | - | ------ | --- |  | - | ------- | -
|                            |  | Total Revenues                  |         | Income (Loss) FromContinuing Operations |   |         | Net Income (Loss)               |     
|                            |  | Three Months EndedSeptember 30, |         | Three Months EndedSeptember 30,         |   |         | Three Months EndedSeptember 30, |     
|                            |  | 2004                            |         | 2003                                    |   | 2004    |                                 | 2003 |        |  | 2004 |         |   | 2003 |  
|Fund I-II Tucker Associates |  | $                               | 183,552 |                                         | $ | 184,486 |                                 | $    | 35,136 |  | $    | (20,893 | ) |      | $ | 35,136 | (1) |  | $ | (20,893 | )
|                            |  |                                 |         |                                         |   |         |                                 |      |        |  |      |         |   |      |   |        |     |  |   |         |  



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|                            |  |                                |         |                                 |   |         |                                    |   |                                |   |  |      |          |      |  |      |   |  |      |         |  |   |         |      |  |   |        
|--------------------------- |  | ------------------------------ | ------- | ------------------------------- | - | ------- | ---------------------------------- | - | ------------------------------ | - |  | ---- | -------- | ---- |  | ---- | - |  | ---- | ------- |  | - | ------- | ---- |  | - | -------
|                            |  | Total Revenues                 |         | Loss From Continuing Operations |   |         | Income FromDiscontinued Operations |   | Net Income (Loss)             
|                            |  | Nine Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,  |   |         | Nine Months EndedSeptember 30,     |   | Nine Months EndedSeptember 30,
|                            |  | 2004                           |         | 2003                            |   | 2004    |                                    |   | 2003                           |   |  | 2004 |          | 2003 |  | 2004 |   |  | 2003
|Fund I-II Tucker Associates |  | $                              | 537,054 |                                 | $ | 598,877 |                                    | $ | (18,731                        | ) |  | $    | (159,926 | )    |  | $    | 0 |  | $    | 478,333 |  | $ | (18,731 | )(1) |  | $ | 318,407
|                            |  |                                |         |                                 |   |         |                                    |   |                                |   |  |      |          |      |  |      |   |  |      |         |  |   |         |      |  |   |        



|(1) |  | Effective July 1, 2004, the Joint Venture extended the
weighted-average composite useful life for all building assets from 25 years to 40 years, which resulted in an increase to net income (loss) for the three and nine months ended September 30, 2004 of approximately $24,623 for Fund I-II Tucker
Associates. Management believes that this change more appropriately reflects the estimated useful lives of real estate assets and is consistent with prevailing industry practice.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|(a) |  | Management and Leasing Fees
|--- |  | ---------------------------



Wells Management Company, Inc. (Wells Management), an affiliate of the General Partners, is entitled to compensation for the management and leasing of the
Partnerships properties owned directly or through joint ventures equal to (a) of the gross revenues collected monthly, 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate
fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in
the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term. The on-site
management and leasing of Black Oak Plaza has been performed by an independent third-party property management company since the third quarter of 1998. Three percent of gross revenues from this property are payable to the third-party management
company, and the balance is due to Wells Management.



Wells Management has
elected to defer the current receipt of management and leasing fees and initial lease-up costs due from the Partnership with respect to the properties owned by the Partnership directly and through its interest in joint ventures. Accordingly, such
fees are expensed as incurred and recorded as due to affiliate in the accompanying consolidated balance sheets. As of September 30, 2004, the Partnership owed aggregate management and leasing fees to Wells Management of $3,014,303, of which
$2,240,604 is recorded as due to affiliate and $773,699 is attributable to the Partnerships interest in Fund I-II Tucker Associates and, therefore, included in investment in joint ventures in the respective accompanying consolidated balance
sheet. As of December 31, 2003, the Partnership owed aggregate management and leasing fees to Wells Management of $2,981,611, of which $2,223,843 is recorded as due to affiliate and $757,768 is attributable to the Partnerships interest in Fund
I-II Tucker Associates and, therefore, included in investment in joint ventures in the respective accompanying consolidated balance sheet.



|(b) |  | Administration Reimbursements
|--- |  | -----------------------------



Wells Capital, one of the General Partners, and its affiliates perform certain administrative services for the Partnership, such as accounting, property management, and
other partnership administration, and incur the related expenses. Such expenses are allocated among various other entities affiliated with the General Partners (Wells Real Estate Funds) based on time spent on each fund by individual
administrative personnel. In the opinion of management, this allocation is a reasonable estimation of such expenses. The Partnership and properties consolidated by the Partnership reimbursed Wells Capital $52,681 and $37,352 for the three months
ended



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September 30, 2004 and 2003, respectively, and $182,055 and $112,939 for the nine months ended September 30, 2004 and 2003, respectively, for these services
and expenses.



|(c) |  | Conflicts of Interest
|--- |  | ---------------------



The General Partners are also general partners of other Wells Real Estate Funds. In addition, Well Capital sponsors and advises two affiliated real estate investment
trusts (the REITs) in which it retains a residual interest. As such, there may exist conflicts of interest where the General Partners in their capacity as general partners of other Wells Real Estate Funds, or as the advisor to the REITs,
may be in competition with the Partnership in connection with property acquisitions or for tenants in similar geographic markets.



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



Statement of Financial Accounting Standards No. 144 Accounting for the Impairment or Disposal of Long Lived Assets (SFAS 144), requires,
among other things, the operating results of real estate assets sold or held for sale to be included in discontinued operations in the statements of operations for all periods presented, and to classify the carrying value of such assets as held for
sale for all periods presented. Peachtree Place was sold on June 18, 2004. Accordingly, the results of operations of Peachtree Place are included in discontinued operations in the accompanying consolidated statements of operations.



The condensed operating results for Peachtree Place are summarized below (unaudited):



|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                    |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|                                                                    |  | 2004                            |         |   | 2003                           |   |         | 2004 |  |   | 2003    |  
|Total property revenues                                             |  | $                               | 132     |   |                                | $ | 33,422  |      |  | $ | 95,737  |   |  | $ | 94,982  |  
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating costsrental property                                     |  |                                 | 25,563  |   |                                |   | 32,290  |      |  |   | 85,770  |   |  |   | 73,325  |  
|Depreciation                                                        |  |                                 | 0       |   |                                |   | 10,332  |      |  |   | 10,888  |   |  |   | 30,697  |  
|Management and leasing fees                                         |  |                                 | 0       |   |                                |   | 2,077   |      |  |   | 3,947   |   |  |   | 7,479   |  
|Amortization of deferred lease acquisition costs                    |  |                                 | 0       |   |                                |   | 589     |      |  |   | 817     |   |  |   | 2,527   |  
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Total expenses                                                      |  |                                 | 25,563  |   |                                |   | 45,288  |      |  |   | 101,422 |   |  |   | 114,028 |  
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Operating loss                                                      |  |                                 | (25,431 | ) |                                |   | (11,866 | )    |  |   | (5,685  | ) |  |   | (19,046 | )
|Gain on sale                                                        |  |                                 | 0       |   |                                |   | 0       |      |  |   | 349,361 |   |  |   | 0       |  
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from discontinued operations before minority interest |  |                                 | (25,431 | ) |                                |   | (11,866 | )    |  |   | 343,676 |   |  |   | (19,046 | )
|Minority interest                                                   |  |                                 | 1,433   |   |                                |   | 1,192   |      |  |   | (35,662 | ) |  |   | 1,914   |  
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from discontinued operations                          |  | $                               | (23,998 | ) |                                | $ | (10,674 | )    |  | $ | 308,014 |   |  | $ | (17,132 | )
|                                                                    |  |                                 |         |   |                                |   |         |      |  |   |         |   |  |   |         |  



|5. |  | CONTINGENCIES
|-- |  | -------------



On January 17, 2003, the Partnership was served with a putative class action by a limited partner holding Class B Units, on behalf of all limited partners holding Class B Units as of January 15, 2003, that seeks
equitable relief with regard to the rights and obligations of all the Partnerships limited partners and general partners under the partnership agreement. This litigation was filed in the Superior Court of Gwinnett County, Georgia (Roy
Johnston v. Wells Real Estate Fund I, Civil Action No. 03-A00525-6) (the Johnston Action). The plaintiff in the Johnston Action generally alleges that the terms of the partnership agreement, as it relates to the allocation and
distribution of net sale



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##### Table of Contents

proceeds, are inconsistent with the original intent of the parties. The plaintiff alleges that the original intent was that limited partners holding Class B
Units would have a priority in payment of cash distributions of net sale proceeds to bring them even with the amount of cash distributions previously made to limited partners holding Class A Units. The Johnston Action seeks, among other things, to
have the Partnerships partnership agreement equitably reformed consistent with the alleged original intent or, in the alternative, to have the investments made by limited partners holding Class B Units equitably rescinded, and requests an
injunction prohibiting the General Partners of the Partnership from distributing net sale proceeds until the resolution of the action.



On May 7, 2004, the Court granted summary judgment in favor of the Partnership on grounds of statutes of limitation and laches. On May 24, 2004, the Partnership filed a
motion to recover its attorneys fees and expenses of litigation from plaintiff and his counsel. On or about June 4, 2004, another defendant in the Johnston Action moved the Court to award attorneys fees from the Partnership in the form
of five percent of the Partnerships net sale proceeds. The Partnership has opposed that motion.



On or about June 4, 2004, the plaintiff filed a Notice of Appeal with respect to the May 7, 2004 Orders granting summary judgment. Pursuant to Statement of Financial Accounting Standard No. 5 and the General
Partners estimate of our current exposure under the Johnston Action, no reserves have been provided for in the accompanying financial statements.



|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 Partnerships accompanying consolidated financial
statements and notes thereto.



|(a) |  | Overview
|--- |  | --------



We believe that we will operate through the following five key life cycle phases. The time expected to be spent in each phase is dependent upon various economic, industry, market, and other internal/external factors.
Some overlap naturally exists in the transition from one phase to the next.



| |  |  | 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 real
estate assets are owned and operated by the Partnership during the initial lease terms of the tenants;



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

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



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

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



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##### Table of Contents

Portfolio Overview



We have moved from the positioning-for-sale phase into the disposition and liquidation phase of our life cycle. We have now sold three
assets and a portion of another asset. Our focus on the remaining assets in our portfolio involves leasing and marketing efforts that we believe will result in the best disposition pricing for our investors.



The closing of the sale of the remaining building at Peachtree Place on June 18, 2004, in
which we held an approximate 90% interest, is evidence of our continuing efforts to liquidate the portfolio.



Our General Partners are currently reserving operating cash flows in order to fund additional legal costs anticipated in connection with the litigation discussed herein and lease-up costs anticipated with increasing
occupancy of Black Oak Plaza and the remaining office portion of Heritage Place.



While operating distributions to Class A Unit holders are currently being reserved, as of September 30, 2004, Class A Unit holders have received cumulative net operating cash flows of approximately $22.1 million since inception, which
equates to approximately 89% of the $24.7 million originally invested. For Class A Unit holders, this equates to approximately $223.69 per unit from inception to date. Class B Unit holders have cumulatively received $250 per unit in allocated tax
losses over that same period.



Property Summary



Information related to the properties owned, or previously owned, by the Partnership or its
joint ventures follows:



| |  |  | The Black Oak shopping center is currently 65% leased, and leasing efforts at the center continue;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | The Paces Pavilion building continues to operate at a 90% occupancy level;
| | - |  | --------------------------------------------------------------------------



| |  |  | The Crowes Crossing property, a shopping center located in DeKalb County, Georgia, was sold in 2001;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | The Peachtree Place property originally included two buildings. One building was sold in 2000. The second building was sold in June 2004;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Heritage Place originally included both an office component and a retail shopping center. The retail center, which represented approximately 30% of the premises, was sold in 2003.
The remaining office component at Heritage Place is currently 57% leased, and leasing efforts continue; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Cherokee Commons property, a shopping center located in Cherokee County, Georgia, was sold in 2001.
| | - |  | -------------------------------------------------------------------------------------------------------



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



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##### Table of Contents

Industry Factors



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



General Economic and Real Estate Market Commentary



The U.S. economy appears to be on the road to recovery. The economy has
shown signs of growth recently, as companies have recommenced making investments in new employees. Job growth is the most significant demand driver for office markets. Market fundamentals are improving, and new office jobs are slowly being created.
In general, the real estate office market lags behind the overall economic recovery and, therefore, recovery is not expected until late 2004 or 2005 at the earliest, and then will vary by market.



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



The office market has significant excess space. Vacancy levels are believed to have peaked and are expected to trend
downward moderately through the end of 2004. There is some encouraging news in that construction continues to taper off and has come to a complete halt in many markets. As a result of the slowdown in new construction and the modest decline in
sublease space, net absorption has turned positive. Many industry professionals believe that office market fundamentals have bottomed-out; however, a recovery cannot be expected until job growth and corresponding demand for office space begins to
significantly increase.



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



Real
estate funds, such as the Partnership, that invest in properties with current vacancies or near-term tenant rollover may face a challenging leasing environment. In connection with re-leasing vacant space, the properties within these funds are
generally encountering lower market rental rates and higher concession packages to tenants.



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



|(b) |  | Results of Operations
|--- |  | ---------------------



Revenues of the Partnership



Revenues of the Partnership were $300,873 and $299,354 for the three months ended September 30, 2004 and 2003, respectively, and $910,050 and $930,261 for the nine months
ended September 30, 2004 and 2003, respectively. Revenues remained relatively stable for the three months ended September 30, 2004, as compared to 2003, as the decline in interest income resulting from a reduction in the interest rate earned on net
sale proceeds was substantially offset through an increase in billings to tenants of Paces Pavilion for additional extra-hours HVAC reimbursements in 2004. Total revenues declined for the nine months ended September 30, 2004, as compared to 2003, as
the magnitude of the decline in interest income for nine months ended September 30, 2004 was greater than the magnitude of the increase in reimbursement billings to tenants of Paces Pavilion for the same period.



Equity in Income (Loss) of Joint Venture



Equity in income (loss) of joint venture was $18,239 and $(10,846) for the three months
ended September 30, 2004 and 2003, respectively, and $(9,723) and $165,285 for the nine months ended September 30, 2004 and 2003, respectively. The increase for the three months ended September 30, 2004, as compared to 2003, is primarily due
to declines in (a) depreciation expense as a result of changing the useful life of all buildings owned through joint



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ventures from 25 to 40 years effective July 1, 2004, and (b) property tax expenses. Following the April 2003 sale of the retail portion of Heritage Place,
Fund I-II Tucker has recorded property tax expenses for the remaining office portion of the property based on estimates. Fund I-II Tucker decreased current property tax expenses beginning in the third quarter of 2004 upon receiving the first
property tax invoice for the unsold portion of the property on a stand-alone basis. Property tax reimbursement billings have not been adjusted, as operating cost reimbursements, including property taxes, are billable to the majority of the tenants
of Heritage Place equal to amounts in excess of annual preset cap amounts per the respective leases. As of September 30, 2004, operating costs attributable to tenants in occupancy of the majority of space leased at Heritage Place are not projected
to reach the respective preset caps on an annual basis.



The decrease in equity
in income (loss) of Joint Venture for the nine months ended September 30, 2004, as compared to 2003, is primarily attributable to the gain recognized by Fund I-II Tucker Associates on the sale of the retail portion of Heritage Place in April 2003,
and the reduction in income in 2004 as a result of this property sale.



Expenses of the Partnership



Our total expenses were
$362,321 and $421,571 for the three months ended September 30, 2004 and 2003, respectively, and $1,586,248 and $1,324,362 for the nine months ended September 30, 2004 and 2003, respectively. The decrease for the three months ended September 30,
2004, as compared to 2003, is primarily attributable to a decline in depreciation expense due to changing the useful life of buildings owned directly by the Partnership from 25 to 40 years effective July 1, 2004, partially offset by an increase in
association dues for Paces Pavilion as a result of receiving a reimbursement in the third quarter of 2003.



The increase in expenses for the nine months ended September 30, 2004, as compared to 2003, is primarily attributable to additional (i) legal costs related to defending the litigation discussed in Part II, Item 1 of
this report, (ii) bad debt expense recognized for tenants of Paces Pavilion, (iii) administrative costs related to evaluating various re-leasing and exit strategies for the remainder of the Partnerships portfolio, and (iv) increased
partnership administration expenses associated with additional reporting and regulatory requirements. We anticipate additional increases related to implementing and adhering to such reporting and regulatory requirements going forward.



|(c) |  | Liquidity and Capital Resources
|--- |  | -------------------------------



Our operating strategy entails funding expenses related to the recurring operations of the properties owned by Fund I-II Tucker Associates with rental revenues collected
by the properties, and assessing the amount of remaining cash flows that will be required to fund portfolio expenses, known re-leasing costs, and other capital improvements. Any residual operating cash flows are distributed from Fund I-II Tucker
Associates to the Partnership, and are considered available for distribution to the limited partners. Unless distributions of operating cash flow are being reserved, distributions are generally paid to the limited partners quarterly. As a result,
the ongoing monitoring of our cash position is critical to ensuring that adequate liquidity and capital resources are available. Economic downturns in one or more of our core markets could adversely impact the ability of Fund I-II Tucker
Associates tenants to honor lease payments and our ability to assist Fund I-II Tucker Associates in re-leasing 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 would be adversely affected.



Short-Term Liquidity



Cash used
in operating activities, including operating distributions received from Fund I-II Tucker Associates, was approximately $(351,000) for the nine months ended September 30, 2004, as compared to cash provided by operating activities of approximately
$413,000 for the nine months ended September 30, 2003. Cash flows from operating activities decreased significantly from 2003 to 2004 primarily as a result of (a) foregone distributions received from joint venture due to the sale of the retail
portion of Heritage Place in April 2003, and (b) funding additional partnership expenses as described in section (b) above. Cash flows provided by investing activities for



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2004 are primarily attributable to the June 2004 sale of Peachtree Place for net proceeds of approximately $954,000, of which approximately $858,000 is
attributable to the Partnership. Operating cash flows are generally used to pay operating distributions to limited partners; however, the Partnership reserved such distributions for the first nine months of 2004. The General Partners anticipate
continuing to reserve such distributions in order to fund additional legal costs anticipated in connection with the litigation discussed in Part II, Item 1., and lease-up costs anticipated with increasing occupancy of Paces Pavilion, Black Oak
Plaza, and the remaining office portion of Heritage Place.



We believe that the
cash on hand, including net proceeds from the sale of properties, is sufficient to cover our working capital needs, including liabilities of approximately $2,490,000, as of September 30, 2004.



Long-Term Liquidity



We expect that our future sources of capital will be primarily derived from net proceeds
generated from the sale of properties and operating cash flows generated from Fund I-II Tucker Associates. Our future long-term liquidity requirements will include, but not be limited to, tenant improvements, renovations, expansions, and other
significant capital improvements necessary for properties owned directly and through Fund I-II Tucker Associates. Future cash flows from operating activities will be primarily effected by distributions received from the Joint Venture, which is
dependent upon net operating income generated by the properties owned by the Partnership or the Joint Venture, 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 purposes, and has invested all of the partners original capital contributions. Thus, it is unlikely that we will acquire interests in any additional properties or Joint Ventures. Historically, our investment strategy has
generally involved acquiring properties that are pre-leased to creditworthy tenants on an all-cash basis through joint ventures with affiliated partnerships.



Fund I-II Tucker Associates incurs capital expenditures primarily in the form of building improvements for the purpose of maintaining the quality of our properties, and
tenant improvements for the purpose of readying its properties for re-leasing. As leases expire, we will work with Fund I-II Tucker Associates 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 Fund I-II Tucker Associates will be funded by the Partnership and Fund I-II Tucker Associates other partners on
a pro-rata basis.



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



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As of September 30, 2004, the Partnership has received, used, and held net proceeds from the sale of properties as
presented below:



|                                          |  |              |           |                                     |        |   |                                            |   |                                 |  |                                |   |                                                   |   |  |   |   |  |   |           
|----------------------------------------- |  | ------------ | --------- | ----------------------------------- | ------ | - | ------------------------------------------ | - | ------------------------------- |  | ------------------------------ | - | ------------------------------------------------- | - |  | - | - |  | - | ----------
|                                          |  | Net Proceeds |           | PartnershipsApproximateOwnership % |        |   | Net ProceedsAttributable to thePartnership |   | CumulativeNet Proceeds Invested |  | Distributed toPartners to date |   | Undistributed NetProceeds as ofSeptember 30, 2004
|Property Sold                             |  |              |           |                                     | Amount |   | Purpose                                    |   |                                
|Peachtree Place (partial sale in 2000)    |  | $            | 704,496   |                                     | 90.0   | % |                                            | $ | 633,695                         |  | $                              | 0 |                                                   |  |  | $ | 0 |  | $ | 633,695   
|Crowes Crossing (sold 2001)              |  |              | 6,486,652 |                                     | 100    | % |                                            |   | 6,486,652                       |  |                                | 0 |                                                   |  |  |   | 0 |  |   | 6,486,652 
|Cherokee Commons (sold 2001)              |  |              | 8,414,089 |                                     | 25.3   | % |                                            |   | 2,126,109                       |  |                                | 0 |                                                   |  |  |   | 0 |  |   | 2,126,109 
|Heritage Place retail portion (sold 2003) |  |              | 3,207,708 |                                     | 51.9   | % |                                            |   | 1,665,121                       |  |                                | 0 |                                                   |  |  |   | 0 |  |   | 1,665,121 
|Peachtree Place (remainder sold 2004)     |  |              | 953,670   |                                     | 90.0   | % |                                            |   | 857,826                         |  |                                | 0 |                                                   |  |  |   | 0 |  |   | 857,826   
|                                          |  |              |           |                                     |        |   |                                            |   |                                 |  |                                |   |                                                   |   |  |   |   |  |   |           
|Total                                     |  |              |           |                                     |        |   |                                            | $ | 11,769,403                      |  | $                              | 0 |                                                   |   |  | $ | 0 |  | $ | 11,769,403
|                                          |  |              |           |                                     |        |   |                                            |   |                                 |  |                                |   |                                                   |   |  |   |   |  |   |           



In accordance with Section 9.3 of the
partnership agreement, except for reinvestment of net sale proceeds as provided in Section 11.3(g) (as amended), and after the payment or reserves allowed for Partnership debts and liabilities (including without limitation the deferred management
fees owed to Wells Management in the amount of approximately $3,014,000 as of September 30, 2004), and after the establishment of reserves which our General Partners, in their sole discretion, deem reasonably necessary, as of September 30, 2004,
there were net sale proceeds in the amount of approximately $8,755,000 available for distribution to limited partners, which sum is being held in a separate, interest-bearing bank account. As more fully set forth therein, Section 9.3 of the
partnership agreement provides that the net sale proceeds are to be distributed to each Partner in accordance with the positive balance in his Capital Account as of the date of distribution under this Section 9.3 (after allocation of the Gain
on Sale as provided in Section 10.4 hereof). Due to pending litigation, however, we are not in a position to distribute net sale proceeds until final resolution of the litigation described in Part II, Item 1.



|(d) |  | Related-Party Transactions
|--- |  | --------------------------



We have entered into agreements with Wells Capital and its affiliates, whereby we pay certain fees or reimbursements to Wells Capital or its affiliates for property
management and leasing fees, and reimbursement of operating and administrative costs. See Note 3 to our consolidated financial statements included in this report for a discussion of the various related-party transactions, agreements, and fees.



|(e) |  | Inflation
|--- |  | ---------



The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases which would
protect the Partnership from the impact of inflation. These provisions include reimbursement billings for operating expense pass-through charges, real estate tax, and insurance reimbursements on a per-square-foot basis, or in some cases, annual
reimbursement of operating expenses above a certain per-square-foot allowance. There is no assurance, however, that we would be able to replace existing leases with new leases at higher base rental rates.



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|(f) |  | Application of Critical Accounting Policies
|--- |  | -------------------------------------------



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.



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



Investment in Real Estate Assets



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



|                      |  |            
|--------------------- |  | -----------
|Buildings             |  | 40 years   
|Building improvements |  | 10-25 years
|Land improvements     |  | 20 years   
|Tenant improvements   |  | Lease term 



In the third quarter of 2004, the
Partnership completed a review of its real estate related depreciation by performing an analysis of the components of each property type in an effort to determine the weighted-average composite useful lives of its real estate assets. As a result of
this review, effective July 1, 2004, we extended the weighted-average composite useful life from 25 years to 40 years for all building assets. This change resulted in an increase to our net income of approximately $72,900, or $0.74 per unit, for
Class A Units. This change had no effect on net income allocated to Class B Units. Fund I-II Tucker Associates also extended the weighted-average composite useful life for all building assets from 25 years to 40 years, which resulted in an increase
(decrease) to equity in income (loss) of joint venture for the three and nine months ended September 30, 2004. We believe that the change reflects the estimated useful lives of the respective assets and is consistent with prevailing industry
practice. In the event that we use inappropriate useful lives or methods for 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,
either directly or through investments in Joint Ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the
recoverability of the real estate assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In
the event that such expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. We have determined that there has been no impairment in the
carrying value of real estate assets we held as of September 30, 2004.



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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.



|(g) |  | Economic Dependency
|--- |  | -------------------



We have engaged Wells Management to supervise the management and leasing of properties owned through the Joint Ventures, and Wells Capital to perform certain administrative services, including accounting, shareholder
communications, and investor relations. As a result of these relationships, we are dependent upon Wells Management, Wells Capital, and other affiliates thereof to provide certain services that are essential to the Partnerships operations,
including asset management and property management services, asset acquisition and disposition services, and other administrative responsibilities under agreements, some of which have terms of one year or less.



Wells Management and Wells Capital are 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. Due to their common ownership and importance to WREF, 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, it may become necessary for the Partnership and/or the Joint Ventures to find alternative service
providers.



For the nine months ended September 30, 2004, WREFs operating
expenses exceeded operating revenues by approximately $11 million. During the first two quarters of 2004, WREF incurred net losses primarily due to the fact that revenues from acquisition, advisory, asset management services, and property management
services were less than the costs to provide such services. In planning for 2004, WREF anticipated incurring short-term losses and, accordingly, has reserved funds adequate to cover such a shortfall. WREF anticipated generating lower revenues in
2004, as compared to 2003, primarily due to the fact that the majority of its revenues are earned as a percentage of sales of affiliated investment products. The sale of shares of Wells Real Estate Investment Trust II, Inc. (REIT II), an
investment product sponsored by WREF whose offering commenced in December 2003, was anticipated to be significantly less in 2004 than the sale of shares of Wells Real Estate Investment Trust, Inc. (REIT I), another investment product
sponsored by WREF whose offering closed in December 2003. Consistent with sale of shares of REIT I during the beginning of its offering period, the sale of shares of REIT II was anticipated to remain relatively low in the beginning of its offering
period.



For the three months ended September 30, 2004, on a consolidated
basis, WREFs operating revenues exceeded operating expenses by approximately $6 million. WREF is also expecting operating revenues to exceed operating expenses during the fourth quarter of 2004. WREF believes that the cash availability
provided by both funds on hand and borrowing capacity through various credit facilities will be adequate to meet its obligations.



|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|------- |  | -----------------------------------------------------------



Since the Partnership does not borrow any money, make any foreign investments, or invest in any market risk-sensitive instruments, it is 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
|------- |  | -----------------------



The Partnership carried out an evaluation, under the supervision and with the participation of management of Wells Capital, the corporate general partner of the
Partnership, including the Principal Executive Officer and Principal



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Financial Officer, of the effectiveness of the design and operation of the Partnerships disclosure controls and procedures as of the end of the period
covered by this report pursuant to the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Partnerships disclosure controls and procedures were
effective.



There were no significant changes in the Partnerships
internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Partnerships internal control over financial reporting.



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PART II.    OTHER INFORMATION



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



On January 17, 2003, the Partnership was served with a putative class action by a limited partner holding Class B Units, on behalf of all limited partners holding Class B Units as of January 15, 2003, that seeks
equitable relief with regard to the rights and obligations of all the Partnerships limited partners and general partners under the partnership agreement. This litigation was filed in the Superior Court of Gwinnett County, Georgia (Roy
Johnston v. Wells Real Estate Fund I, Civil Action No. 03-A00525-6) (the Johnston Action). The plaintiff in the Johnston Action generally alleges that the terms of the partnership agreement, as it relates to the allocation and
distribution of net sale proceeds, are inconsistent with the original intent of the parties. The plaintiff alleges that the original intent was that limited partners holding Class B Units would have a priority in payment of cash distributions of net
sale proceeds to bring them even with the amount of cash distributions previously made to limited partners holding Class A Units. The Johnston Action seeks, among other things, to have the Partnerships partnership agreement equitably reformed
consistent with the alleged original intent or, in the alternative, to have the investments made by limited partners holding Class B Units equitably rescinded, and requests an injunction prohibiting the General Partners of the Partnership from
distributing net sale proceeds until the resolution of the action.



On May 7,
2004, the Court granted summary judgment in favor of the Partnership on grounds of statutes of limitation and laches. On May 24, 2004, the Partnership filed a motion to recover its attorneys fees and expenses of litigation from plaintiff and
his counsel. On or about June 4, 2004, another defendant in the Johnston Action moved the Court to award attorneys fees from the Partnership in the form of five percent of the Partnerships net sale proceeds. The Partnership has opposed
that motion.



On or about June 4, 2004, the plaintiff filed a Notice of Appeal
with respect to the May 7, 2004 Orders granting summary judgment. Pursuant to Statement of Financial Accounting Standard No. 5 and the General Partners estimate of our current exposure under the Johnston Action, no reserves have been provided
for in the accompanying financial statements.



|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 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 12, 2004 |  |  |  | /s/    LEO F. WELLS, III                                              
|                  |  |  |  | Leo F. Wells, III President                                           
|                  |  | 
|November 12, 2004 |  |  |  | /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