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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 June 30, 2003



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                                  
|(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 ̈



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##### Table of Contents

FORM 10-Q



WELLS REAL ESTATE FUND I

(A
Georgia Public Limited Partnership)



TABLE OF CONTENTS





|         |  |  |  |  |  |                       |  |                                                                                                                                      |  | Page No.
|-------- |  |  |  |  |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | --------
|         |  |  |  | 
|PART I.  |  |  |  |  |  | FINANCIAL INFORMATION |  |                                                                                                                                     
|         |  |  |  |  | 
|         |  |  |  |  |  | Item 1.               |  | Consolidated Financial Statements                                                                                                    |  |         
|         |  |  |  |  | 
|         |  |  |  |  |  |                       |  | Consolidated Balance SheetsJune 30, 2003 (unaudited) and December 31, 2002                                                          |  | 3       
|         |  |  |  |  | 
|         |  |  |  |  |  |                       |  | Consolidated Statements of Loss for the Three Months and Six Months Ended June 30, 2003 (unaudited) and 2002 (unaudited)             |  | 4       
|         |  |  |  |  | 
|         |  |  |  |  |  |                       |  | Consolidated Statements of Partners Capital for the Six Months Ended June 30, 2003 (unaudited) and the Year Ended December 31, 2002 |  | 5       
|         |  |  |  |  | 
|         |  |  |  |  |  |                       |  | Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2003 (unaudited) and 2002 (unaudited)                        |  | 6       
|         |  |  |  |  | 
|         |  |  |  |  |  |                       |  | Condensed Notes to Consolidated Financial Statements (unaudited)                                                                     |  | 7       
|         |  |  |  |  | 
|         |  |  |  |  |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                |  | 11      
|         |  |  |  |  | 
|         |  |  |  |  |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                          |  | 14      
|         |  |  |  |  | 
|         |  |  |  |  |  | Item 4.               |  | Controls and Procedures                                                                                                              |  | 14      
|         |  |  |  | 
|PART II. |  |  |  |  |  | OTHER INFORMATION     |  | 15                                                                                                                                  



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WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)



CONSOLIDATED BALANCE SHEETS



|                                                                                                      |  | (unaudited)   |            |                  
|----------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -----------------
|                                                                                                      |  | June 30, 2003 |            | December 31, 2002
|ASSETS:                                                                                               |  |               |            |                  
|Real estate, at cost:                                                                                 |  |               |            |                  
|Building and improvements, less accumulated depreciation of $6,758,368 in 2003 and $6,472,283 in 2002 |  | $             | 4,834,038  |                  
|Land                                                                                                  |  |               | 1,440,608  |                  
|                                                                                                      |  |               |            |                  
|Total real estate assets                                                                              |  |               | 6,274,646  |                  
|                                                                                                      |  |              
|Cash and cash equivalents                                                                             |  |               | 11,825,312 |                  
|Investments in Joint Ventures                                                                         |  |               | 2,351,291  |                  
|Deferred lease acquisition costs                                                                      |  |               | 138,842    |                  
|Prepaid expenses and other assets                                                                     |  |               | 126,860    |                  
|Accounts receivable, net                                                                              |  |               | 115,889    |                  
|Due from joint ventures                                                                               |  |               | 0          |                  
|                                                                                                      |  |               |            |                  
|Total assets                                                                                          |  | $             | 20,832,840 |                  
|                                                                                                      |  |               |            |                  
|                                                                                                      |  |              
|LIABILITIES AND PARTNERS CAPITAL:                                                                    |  |               |            |                  
|Liabilities:                                                                                          |  |               |            |                  
|Due to affiliates                                                                                     |  | $             | 2,029,558  |                  
|Accounts payable, accrued expenses and refundable security deposits                                   |  |               | 319,175    |                  
|Partnership distributions payable                                                                     |  |               | 164,935    |                  
|Minority interest                                                                                     |  |               | 35,426     |                  
|                                                                                                      |  |               |            |                  
|Total liabilities                                                                                     |  |               | 2,549,094  |                  
|                                                                                                      |  |               |            |                  
|                                                                                                      |  |              
|Partners capital:                                                                                    |  |               |            |                  
|Limited partners:                                                                                     |  |               |            |                  
|Class A98,716 units outstanding as of June 30, 2003 and December 31, 2002                            |  |               | 18,283,746 |                  
|Class B42,568 units outstanding as of June 30, 2003 and December 31, 2002                            |  |               | 0          |                  
|                                                                                                      |  |               |            |                  
|Total partners capital                                                                               |  |               | 18,283,746 |                  
|                                                                                                      |  |               |            |                  
|Total liabilities and partners capital                                                               |  | $             | 20,832,840 |                  
|                                                                                                      |  |               |            |                  



See accompanying notes





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WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)



CONSOLIDATED STATEMENTS OF LOSS



|                                                   |  | (unaudited)        |          |   | (unaudited)      |  
|-------------------------------------------------- |  | ------------------ | -------- | - | ---------------- | -
|                                                   |  | Three Months Ended |          |   | Six Months Ended |  
|                                                   |  | June 30, 2003      |          |   | June 30, 2002    |  
|REVENUES:                                          |  |                    |          |   |                  |  
|Rental income                                      |  | $                  | 274,520  |   |                  | $
|Equity in income of Joint Ventures (Note 2)        |  |                    | 128,190  |   |                  |  
|Interest income                                    |  |                    | 34,147   |   |                  |  
|Tenant reimbursements                              |  |                    | 19,249   |   |                  |  
|Other income                                       |  |                    | 1,352    |   |                  |  
|                                                   |  |                    |          |   |                  |  
|                                                   |  |                    | 457,458  |   |                  |  
|                                                   |  |                    |          |   |                  |  
|EXPENSES:                                          |  |                    |          |   |                  |  
|Legal and accounting                               |  |                    | 252,735  |   |                  |  
|Depreciation                                       |  |                    | 142,878  |   |                  |  
|Operating costsrental properties                  |  |                    | 122,643  |   |                  |  
|Partnership administration                         |  |                    | 40,473   |   |                  |  
|Management and leasing fees                        |  |                    | 27,416   |   |                  |  
|Other general and administrative                   |  |                    | 3,226    |   |                  |  
|Write-off of real estate asset                     |  |                    | 0        |   |                  |  
|                                                   |  |                    |          |   |                  |  
|                                                   |  |                    | 589,371  |   |                  |  
|                                                   |  |                    |          |   |                  |  
|                                                   |  |                    |          |  
|NET LOSS BEFORE MINORITY INTEREST                  |  |                    | (131,913 | ) |                  |  
|MINORITY INTEREST                                  |  |                    | 627      |   |                  |  
|                                                   |  |                    |          |   |                  |  
|NET LOSS                                           |  | $                  | (131,286 | ) |                  | $
|                                                   |  |                    |          |   |                  |  
|NET LOSS ALLOCATED TO CLASS A LIMITED PARTNERS     |  | $                  | (131,286 | ) |                  | $
|                                                   |  |                    |          |   |                  |  
|NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS     |  | $                  | 0        |   |                  | $
|                                                   |  |                    |          |   |                  |  
|NET LOSS PER CLASS A LIMITED PARTNER UNIT          |  | $                  | (1.33    | ) |                  | $
|                                                   |  |                    |          |   |                  |  
|NET LOSS PER CLASS B LIMITED PARTNER UNIT          |  | $                  | 0.00     |   |                  | $
|                                                   |  |                    |          |   |                  |  
|CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT |  | $                  | 0.00     |   |                  | $
|                                                   |  |                    |          |   |                  |  



See accompanying notes



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WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)



CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2002

AND FOR THE SIX MONTHS ENDED JUNE 30, 2003 (UNAUDITED)



|                                   |  | Limited Partners |  |         | TotalPartnersCapital |  
|---------------------------------- |  | ---------------- |  | ------- | --------------------- | -
|                                   |  | Class A          |  |         | Class B               |  
|                                   |  | Units            |  | Amounts |                       |  
|BALANCE, December 31, 2001         |  | 98,716           |  | $       | 19,831,902            |  
|Net loss                           |  | 0                |  |         | (211,995              | )
|Partnership distributions          |  | 0                |  |         | (987,160              | )
|                                   |  |                  |  |         |                       |  
|BALANCE, December 31, 2002         |  | 98,716           |  |         | 18,632,747            |  
|Net loss                           |  | 0                |  |         | (102,211              | )
|Partnership distributions          |  | 0                |  |         | (246,790              | )
|                                   |  |                  |  |         |                       |  
|BALANCE, June 30, 2003 (unaudited) |  | 98,716           |  | $       | 18,283,746            |  
|                                   |  |                  |  |         |                       |  



See accompanying notes



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WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                          |  | (unaudited)      |           
|----------------------------------------------------------------------------------------- |  | ---------------- | ----------
|                                                                                          |  | Six Months Ended |           
|                                                                                          |  | June 30, 2003    |           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |  |                  |           
|Net loss                                                                                  |  | $                | (102,211  
|                                                                                          |  |                  |           
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                  |           
|Equity in income of Joint Ventures                                                        |  |                  | (176,130  
|Depreciation                                                                              |  |                  | 286,085   
|Write-off of real estate asset                                                            |  |                  | 2,775     
|Amortization of deferred lease costs                                                      |  |                  | 20,453    
|Changes in assets and liabilities:                                                        |  |                  |           
|Accounts receivable                                                                       |  |                  | (34,064   
|Prepaid expenses and other assets                                                         |  |                  | (4,535    
|Accounts payable, accrued expenses and refundable security deposits                       |  |                  | 124,261   
|Due to affiliates                                                                         |  |                  | 28,643    
|Minority interest                                                                         |  |                  | (722      
|                                                                                          |  |                  |           
|Total adjustments                                                                         |  |                  | 246,766   
|                                                                                          |  |                  |           
|Net cash provided by (used in) operating activities                                       |  |                  | 144,555   
|                                                                                          |  |                  |           
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                     |  |                  |           
|Distributions received from Joint Ventures                                                |  |                  | 1,825,994 
|Investment in deferred lease acquisition costs                                            |  |                  | 0         
|Investment in real estate                                                                 |  |                  | (47,707   
|                                                                                          |  |                  |           
|Net cash provided by investing activities                                                 |  |                  | 1,778,287 
|                                                                                          |  |                  |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                     |  |                  |           
|Minority interest distributions                                                           |  |                  | (8,781    
|Partnership distributions paid                                                            |  |                  | (493,565  
|                                                                                          |  |                  |           
|Net cash used in financing activities                                                     |  |                  | (502,346  
|                                                                                          |  |                  |           
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 |  |                  | 1,420,496 
|                                                                                          |  |                 
|CASH AND CASH EQUIVALENTS, beginning of period                                            |  |                  | 10,404,816
|                                                                                          |  |                  |           
|CASH AND CASH EQUIVALENTS, end of period                                                  |  | $                | 11,825,312
|                                                                                          |  |                  |           
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                                           |  |                  |           
|Due from joint ventures                                                                   |  | $                | 0         
|                                                                                          |  |                  |           
|Partnership distributions payable                                                         |  | $                | 164,935   
|                                                                                          |  |                  |           



See accompanying notes



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WELLS REAL ESTATE FUND I

(A Georgia Public Limited Partnership)



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2003 (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, Inc. (Wells
Capital), a Georgia corporation, serving as its general partners (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) remove a general partner. A majority vote on any of the above described matters will bind the Partnership without
the concurrence of the General Partners. Each limited partnership unit has equal voting rights regardless of class.



On September 6, 1984, the Partnership commenced 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 June 30, 2003, the Partnership owned
interests in the following two properties directly: (i) Paces Pavilion, a medical office building located in Atlanta, Georgia, in which the Partnership owns an approximately 27% condominium interest, and (ii) Black Oak Plaza, a shopping center
located in Knoxville, Tennessee.



As of June 30, 2003, the
Partnership owned interests in the following two properties through the affiliated joint ventures (the Joint Ventures) listed below:



|Joint Venture                                             |  | Joint Venture Partners                                   |  | Properties                                                                   
|--------------------------------------------------------- |  | -------------------------------------------------------- |  | -----------------------------------------------------------------------------
|                                                         
|Wells-Baker Associates                                    |  |   Wells Real Estate Fund I   Wells & Associates, Inc.* |  | 1. Peachtree Place 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 IIOW **  |  | 2. Heritage Place A commercial office complex located in Tucker, Georgia.    
|                                                         



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



| | ** |  | Fund II and Fund IIOW is a joint venture between Wells Real Estate Fund II and Wells Real Estate Fund II-OW.
| | -- |  | ------------------------------------------------------------------------------------------------------------



On October 1, 2001, Fund I, II, II-OW, VI and VII Associates, a joint venture
among the Partnership, Fund II and Fund IIOW, Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P. sold the Cherokee Commons property to an unrelated third-party for a gross sales price of $8,660,000. The Cherokee Commons property is
a retail shopping center located in Cherokee County, Georgia. Fund I, II, II-OW, VI and VII



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Associates were liquidated in the fourth quarter of 2002, and approximately $2,126,000 in net sales proceeds was allocated to the Partnership as a result of
this sale.



On April 7, 2003, Fund I-II Tucker Associates sold
the retail portion of Heritage Place, which comprises approximately 30% of the total premises. The retail portion of Heritage Place was sold for a gross sales price of $3,400,000, resulting in a gain of approximately $293,000, net of selling
expenses of approximately $158,000. Of this gain, the Partnership recognized approximately $152,000 in equity in income of Joint Ventures. The Partnership was allocated approximately $1,637,000 in net sales proceeds as a result of this sale.



Each of the above properties was acquired on an all cash
basis. For further information regarding the foregoing properties and joint ventures, refer to the report filed for the Partnership on Form 10-K for the year ended December 31, 2002.



(b) Basis of Presentation



The consolidated financial statements include the financial information 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. The quarterly
statements included herein have not been examined by independent auditors. However, 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 financial statements and footnotes included in the
Partnerships Form 10-K for the year ended December 31, 2002.



(c) Allocation of Net Income, Net Loss, and Gain on Sale



For the purposes of determining allocations per the partnership agreement, net income is defined generally as net income recognized by the Partnership, excluding deductions for depreciation and amortization. Net
income, as defined, of the Partnership will be allocated each year in the same 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/her 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/her 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, 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



As defined by the partnership agreement, cash available for distributions is
distributed quarterly on a cumulative non-compounded basis 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 limited partners and the General Partners allocated on a basis of 90% and 10%, respectively.
| | - |  | ----------------------------------------------------------------------------------------------------------



2.    INVESTMENTS IN JOINT VENTURES



(a) Basis of Presentation



The Partnership does not have control over the operations of the Joint
Ventures however, it does exercise significant influence. Accordingly, the Partnerships investments in the Joint Ventures are recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently
adjusted for contributions, distributions and net income (loss) attributable to the Partnership. For further information, refer to the report filed for the Partnership on Form 10-K for the year ended December 31, 2002.



(b) Summary of Operations



The following information summarizes the operations of the unconsolidated
joint ventures, in which the Partnership held ownership interests, for the three and six months ended June 30, 2003 and 2002:



|                                 |  | Total Revenues     |         |               | Net Income         |         | Partnerships Share of Net Income
|-------------------------------- |  | ------------------ | ------- | ------------- | ------------------ | ------- | ---------------------------------
|                                 |  | Three Months Ended |         |               | Three Months Ended |         | Three Months Ended               
|                                 |  | June 30, 2003      |         | June 30, 2002 |                    |         | June 30, 2003                    
|Fund I-II Tucker Associates      |  | $                  | 635,577 |               | $                  | 344,605 |                                  
|Fund I-II-IIOW-VI-VII Associates |  |                    | 0       |               |                    | 26,952  |                                  
|                                 |  |                    |         |               |                    |         |                                  
|                                 |  | $                  | 635,577 |               | $                  | 371,557 | (1)                              
|                                 |  |                    |         |               |                    |         |                                  

|(1) |  | Amounts have been restated to reflect tenant reimbursements of $22,853 as revenues for the three months ended June 30, 2002, which has no impact on net loss.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                 |  | Total Revenues   |         |              | Net Income       |         | Partnerships Share of Net Income
|-------------------------------- |  | ---------------- | ------- | ------------ | ---------------- | ------- | ---------------------------------
|                                 |  | Six Months Ended |         |              | Six Months Ended |         | Six Months Ended                 
|                                 |  | June 30, 2003    |         | June30, 2002 |                  |         | June 30, 2003                    
|Fund I-II Tucker Associates      |  | $                | 956,203 |              | $                | 708,764 |                                  
|Fund I-II-IIOW-VI-VII Associates |  |                  | 0       |              |                  | 70,278  |                                  
|                                 |  |                  |         |              |                  |         |                                  
|                                 |  | $                | 956,203 |              | $                | 779,042 | (2)                              
|                                 |  |                  |         |              |                  |         |                                  



|(2) |  | Amounts have been restated to reflect tenant reimbursements of $54,753 as revenues for the six months ended June 30, 2002, which has no impact on net loss.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------





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3.    RECENT ACCOUNTING PRONOUNCEMENTS



In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, which clarifies the application of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements, relating to consolidation of
certain entities. FIN 46 requires the identification of the Partnerships participation in variable interest entities (VIEs), which are defined as entities with a level of invested equity that is not sufficient to fund future
activities to permit them to operate on a stand alone basis, or whose equity holders lack certain characteristics of a controlling financial interest. For entities identified as VIEs, FIN 46 sets forth a model to evaluate potential consolidation
based on an assessment of which party to the VIE, if any, bears a majority of the exposure to its expected losses, or stands to gain from a majority of its expected returns. FIN 46 is effective for all new VIEs created or acquired after January 31,
2003. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. FIN 46 also sets forth certain disclosures regarding interests in VIEs that
are deemed significant, even if consolidation is not required. As the Joint Ventures do not fall under the definition of VIEs provided above, the Partnership does not believe that the adoption of FIN 46 will result in the consolidation of any
previously unconsolidated entities.



Effective January 1, 2002,
the Company adopted the Statement of Financial Accounting Standards No. 144 Accounting for the Impairment or Disposal of Long Lived Assets (SFAS 144), which supersedes Statement of Financial Accounting Standards No.
121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121) and Accounting Principles Board No. 30 Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual or Infrequently Occurring Events or Transactions, with regard to impairment assessment and discontinued operations respectively. In the current year, adoption of this standard
did not have a significant impact on the Company, as SFAS 144 did not significantly change the measurement criteria for impairment under SFAS 121 and no properties were disposed of in the current year resulting in discontinued operations.



4.    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 through joint ventures equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing
(aggregate maximum of 6%) plus a separate fee for the one-time 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.



Since the third quarter of
1998, the on-site management and leasing of Black Oak Plaza has been performed by an independent third-party property management company. The management company receives a 3% fee and the balance due to Wells Management is accrued. 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 during and through its interest in joint ventures. Accordingly, such
fees are expensed as incurred and are included as due to affiliates in the accompanying balance sheets.



(b) Administration Reimbursements



Wells Capital, Inc. and its affiliates perform certain administrative services for the Partnership, such as accounting, property management and other
partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel. The Partnership reimbursed $30,651 and
$27,587 for the three months ended June 30, 2003 and 2002,



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respectively, and $75,587 and $68,927 for the six months ended June 30, 2003 and 2002, respectively, to Wells Capital, Inc. and its affiliates for these
services and expenses. The Joint Ventures reimbursed $8,600 and $9,296 for the three months ended June 30, 2003 and 2002, respectively, and $21,825 and $17,747 for the six months ended June 30, 2003 and 2002, respectively, to Wells Capital, Inc. and
its affiliates for these services and expenses.



(c)
Conflicts of Interests



The General Partners of the
Partnership are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the General Partners in their capacity as general partners of other Wells Real Estate Funds may be in competition with the
Partnership in connection with property acquisitions or for tenants in similar geographic markets.



|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 financial
statements and notes thereto.



(a)  Forward
Looking Statements



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



(b)  Results of Operations



Gross Revenues

Gross revenues of the Partnership were $457,458 and $418,571 for the three
months ended June 30, 2003 and 2002, respectively, and $868,594 and $750,040 for the six months ended June 30, 2003 and 2002, respectively. The 2003 increase from 2002 resulted primarily from (i) the corresponding increase in equity in income of
Joint Ventures further described below, (ii) an increase in occupancy of Paces Pavilion during 2003, partially offset by a decline in property tax reimbursement billings to tenants at Black Oak as further described in the Expenses of Joint Ventures
section below.



Equity In Income of Joint Ventures



Gross Revenues of Joint Ventures

Gross revenues of the Joint Ventures increased in 2003, as compared to 2002, primarily due to the gain recognized on the sale of the
retail portion of Heritage Place of approximately $293,000 during the second quarter of 2003, partially offset by a reduction in interest income earned by Fund I-II-IIOW-VI-VII Associates as a result of liquidating this joint venture during the
fourth quarter of 2002.



Expenses of Joint
Ventures

The expenses of the Joint Ventures decreased in 2003, as compared to 2002, primarily as a result
of (i) liquidating Fund I-II-IIOW-VI-VII Associates during the fourth quarter of 2002 and (ii) selling the retail portion of Heritage Place in April 2003.



Expenses

Expenses of the
Partnership were $589,371 and $562,184 for the three months ended June 30, 2003 and 2002, respectively. The slight increase for the three months ended June 30, 2003, as compared to the three



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months ended June 30, 2002, is primarily due to an increase in recoverable expenses for Paces Pavilion and legal fees related to the litigation discussed in
Part II, Item 1.



Expenses of the Partnership were $971,527 and
$1,038,058 for the six months ended June 30, 2003 and 2002, respectively. The 2003 slight decrease from 2002 is primarily due to (i) the decline in operating expenses for Black Oak Plaza resulting from a lower property value assessment for 2003, and
(ii) a non-recurring reserve of doubtful accounts receivable due from tenants at this property recorded in the first quarter of 2002, partially offset by (iii) additional legal and accounting fees incurred in connection with the litigation discussed
in Part II, Item 1 below, and (iv) an increase in administrative costs incurred partially in response to new regulatory requirements. We anticipate additional increases related to the implementation of new reporting regulations during the second
half of 2003.



Net Loss

As a result, the Partnership reported net loss of $(131,286) and $(141,728) for the three months ended June 30, 2003 and 2002, respectively, and
$(102,211) and $(286,411) for the six months ended June 30, 2003 and 2002, respectively.



(c)  Liquidity and Capital Resources



Cash Flows From Operating Activities

Net cash flows from operating activities was $144,555
and $(28,368) for the six months ended June 30, 2003 and 2002, respectively.The 2003 increase from 2002 resulted primarily from (i) the increase in gross revenues further described above, and (ii) a change in the timing of payments of
accounts payable in 2003, as compared to 2002.



Cash
Flows From Investing Activities

Net cash flows from investing activities was $1,778,287 and $219,157 for the six months ended June
30, 2003 and 2002, respectively. The 2003 increase from 2002 is primarily a result of receiving net proceeds from the sales of the retail portion of Heritage Place from Fund I-II Tucker Associates during the second quarter of 2003.



Cash Flows From Financing Activities

Net cash flows from financing activities was $(502,346) and $(567,132) for the six months ended June 30, 2003 and 2002, respectively. The 2003 decrease in
financing cash flows used from 2002 resulted primarily from reserving a portion of operating and investing cash flows in order to fund tenant improvements and releasing costs for Paces Pavilion and Black Oak Plaza.



Distributions

The Partnership declared distributions of net cash from operations to the limited partners holding Class A Units of $0 and $246,790 for the quarters ended
June 30, 2003 and 2002, respectively. The lack of distributions to limited partners to date in 2003, as compared to 2002, is primarily a result of reserving operating cash flows and cash flows received from operations of Joint Ventures to fund legal
costs associated with the litigation discussed in Part II, Item 1. Such disbursements for legal costs have been made from operating cash flow and distributions of operating cash flow received from investments in Joint Ventures. No distributions were
made to limited partners holding Class B Units.



Sales
Proceeds

The Partnerships share of the net proceeds generated from the sales of the Cherokee Commons property, the
Crowes Crossing property, a portion of Peachtree Place, and a portion of Heritage Place have not been distributed. The General Partners believe that it is in the best interest of the limited partners to hold such proceeds in reserve while the
General Partners continue to negotiate with the owners of the other interests in Paces Pavilion and pending resolution of the litigation described in Part II, Item 1 below.



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Capital Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning and operating income-producing real properties and has invested all
of its funds available for investment. Accordingly, it is unlikely that the Partnership will acquire interests in any additional properties, except potentially for the acquisition of other interests in Paces Pavilion. Other than those mentioned
above, the General Partners are unaware of any specific need requiring capital resources.



(d)  Related-Party Transactions



The Partnership and its joint ventures have entered into agreements with Wells Capital, Inc. and its affiliates, whereby the Partnership or its joint ventures pay certain fees or reimbursements to Wells Capital, Inc.
or its affiliates for property management and leasing fees, and reimbursement of operating and administrative costs. See Note 4 to the Partnerships 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 the Partnership would be able to replace existing leases with new leases at higher base rental rates.



(f)  Application of Critical Accounting Policies



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



Below is a discussion of the accounting policies that management considers to be critical in that they may require complex judgment in their application
or require estimates about matters that are inherently uncertain.



Investment in Real Estate Assets

Management is required to make subjective assessments as to the useful lives of its
depreciable assets. Management considers the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. The estimated useful lives of the Partnerships assets by class
are as follows:



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



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





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Valuation of Real Estate Assets

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



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



|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, Inc., the corporate general
partner of one of the General Partners of the Partnership, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Partnerships disclosure controls and procedures 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 have materially affected, or are 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 sales proceeds until the resolution of the action.



On April 2, 2003, the Court denied the Partnerships previously filed motion to compel arbitration. Subsequently, several limited partners holding
Class A units filed a motion to intervene in the Johnston Action on the grounds that Mr. Johnston seeks relief that would be detrimental to limited partners holding Class A units, and that judgment in favor of Mr. Johnston would impair or impede the
Class A unit holders ability to protect their interests. The Partnership then filed its answer, a counterclaim seeking a declaratory judgment and an interpleader action, and a motion to join the intervenor Class A unit holders and recast the
action as one in interpleader. In its counterclaim, the Partnership seeks a declaratory judgment as to how net sale proceeds should be distributed as between limited partners holding Class A units and limited partners holding Class B units.



On June 27, 2003, the Court entered an order granting the
motion to intervene filed by certain Class A unit holders (the Class A Intervenors). On July 29, 2003, the Class A Intervenors filed a cross-claim against the Partnership seeking that the Partnership be required and directed to disburse
funds in accordance with the partnership documents. The Court has not yet ruled on this cross-claim or the Partnerships motion to recast the action as one in interpleader.



|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K
|------- |  | --------------------------------



|(a) |  | The Exhibits to this report are set forth on Exhibit Index to Second Quarter Form 10-Q attached hereto.
|--- |  | -------------------------------------------------------------------------------------------------------



|(b) |  | The Partnership filed the following reports on Form 8-K during the second quarter of 2003:
|--- |  | ------------------------------------------------------------------------------------------



| | (i) |  | On April 21, 2003, the Partnership filed a Current Report on Form 8-K dated April 7, 2003 disclosing the sale of the retail portion of Heritage Place; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) |  | On June 2, 2003, the Partnership filed a Current Report on Form 8-K dated April 7, 2003 as an amendment to the 8-K filed on April 21, 2003, disclosing certain financial information
in connection with the sale of the retail portion of Heritage Place.
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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)                                             
|               |  | 
|August 8, 2003 |  |  |  | /s/    LEO F. WELLS, IIILeo F. Wells, III President                                             
|August 8, 2003 |  |  |  | /s/    DOUGLAS P. WILLIAMSDouglas P. Williams Principal Financial Officer of Wells Capital, Inc.







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EXHIBIT INDEX

TO

SECOND QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND I



|Exhibit No. |  | Description                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|            | 
|10.1        |  | Purchase and Sale Agreement relating to the Heritage Place Shopping Center                                                    
|            | 
|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



17