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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)



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

For the quarterly period ended March 31, 2009

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 0-17876





WELLS REAL ESTATE FUND II-OW

(Exact name of registrant as specified in its charter)







|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-1754703                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                               | 
|6200 The Corners Pkwy., Norcross, Georgia                      |  | 30092-3365                             
|(Address of principal executive offices)                       |  | (Zip Code)                             
|                                                               | 
|Registrant's telephone number, including area code             |  | (770) 449-7800                         

N/A

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [Not yet applicable to
registrant.]    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated
filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ̈                 Accelerated filer   ̈

Non-accelerated filer  x (Do not check if a smaller reporting
company)                Smaller reporting company   ̈

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









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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Any such forward-looking statements are
subject to unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or
impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide distributions to
partners, and maintain the value of our real estate properties, may be significantly hindered. See Item 1A. in the Partnerships Annual Report on Form 10-K for the year ended December 31, 2008 for a discussion of some of the risks and
uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in our forward-looking statements.



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WELLS REAL ESTATE FUND II-OW



TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                            |  |         
|-------- |  | --------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                            |  | Page No.
|         |  |                      
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                           
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                       |  |         
|         |  |                       | 
|         |  |                       |  | Balance Sheets  March 31, 2009 (unaudited) and December 31, 2008                                                          |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Operations for the Three Months Ended March 31, 2009 (unaudited) and 2008 (unaudited)                        |  | 6       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Year Ended December 31, 2008 and the Three Months Ended March 31, 2009 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Three Months Ended March 31, 2009 (unaudited) and 2008 (unaudited)                        |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                        |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                      |  | 15      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risk                                                                 |  | 21      
|         |  |                       | 
|         |  | Item 4T.              |  | Controls and Procedures                                                                                                    |  | 21      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                           
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                          |  | 21      
|         |  |                       | 
|         |  | Item 1A.              |  | Risk Factors                                                                                                               |  | 21      
|         |  |                       | 
|         |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                |  | 21      
|         |  |                       | 
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                            |  | 22      
|         |  |                       | 
|         |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                                                        |  | 22      
|         |  |                       | 
|         |  | Item 5.               |  | Other Information                                                                                                          |  | 22      
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                                   |  | 22      



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



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

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

The accompanying financial statements should be read in conjunction with the notes to the Partnerships
financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations included both in this report on Form 10-Q and in the Partnerships Annual Report on Form 10-K for the year ended
December 31, 2008. The Partnerships results of operations for the three months ended March 31, 2009 are not necessarily indicative of the operating results expected for the full year.



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WELLS REAL ESTATE FUND II-OW



BALANCE SHEETS

ASSETS



|                                             |  |                          |         |                  |   |        
|-------------------------------------------- |  | ------------------------ | ------- | ---------------- | - | -------
|                                             |  | (Unaudited)March 31,2009 |         | December 31,2008
|Investment in Fund II and Fund II-OW         |  | $                        | 407,859 |                  | $ | 442,566
|Due from Fund II and Fund II-OW              |  |                          | 0       |                  |   | 11,480 
|Cash and cash equivalents                    |  |                          | 11,674  |                  |   | 194    
|                                             |  |                          |         |                  |   |        
|Total assets                                 |  | $                        | 419,533 |                  | $ | 454,240
|                                             |  |                          |         |                  |   |        
|                                             |  |                          |         |                  |   |        
|PARTNERS CAPITAL                           
|Limited partners:                            |  |                          |         |                  |   |        
|Class A  6,062 units issued and outstanding |  | $                        | 419,533 |                  | $ | 454,240
|Class B  1,626 units issued and outstanding |  |                          | 0       |                  |   | 0      
|General partners                             |  |                          | 0       |                  |   | 0      
|                                             |  |                          |         |                  |   |        
|Total partners capital                      |  | $                        | 419,533 |                  | $ | 454,240
|                                             |  |                          |         |                  |   |        

See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



STATEMENTS OF OPERATIONS



|                                         |  |                                        |         |   |      |   |        |  
|---------------------------------------- |  | -------------------------------------- | ------- | - | ---- | - | ------ | -
|                                         |  | (Unaudited)Three Months EndedMarch 31, |        
|                                         |  | 2009                                   |         |   | 2008 |  
|                                         |  |                                       
|EQUITY IN LOSS OF FUND II AND FUND II-OW |  | $                                      | (34,707 | ) |      | $ | (8,608 | )
|                                         |  |                                        |         |   |      |   |        |  
|NET LOSS                                 |  | $                                      | (34,707 | ) |      | $ | (8,608 | )
|                                         |  |                                        |         |   |      |   |        |  
|                                         |  |                                       
|NET LOSS ALLOCATED TO LIMITED PARTNERS:  |  |                                        |         |   |      |   |        |  
|CLASS A                                  |  | $                                      | (34,707 | ) |      | $ | (8,608 | )
|                                         |  |                                        |         |   |      |   |        |  
|CLASS B                                  |  | $                                      | 0       |   |      | $ | 0      |  
|                                         |  |                                        |         |   |      |   |        |  
|                                         |  |                                       
|NET LOSS PER LIMITED PARTNER UNIT:       |  |                                        |         |   |      |   |        |  
|CLASS A                                  |  |                                        | $(5.73  | ) |      |   | $(1.42 | )
|                                         |  |                                        |         |   |      |   |        |  
|CLASS B                                  |  |                                        | $ 0.00  |   |      |   | $ 0.00 |  
|                                         |  |                                        |         |   |      |   |        |  

See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



STATEMENTS OF PARTNERS CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2008

AND THREE MONTHS ENDED MARCH 31,
2009 (UNAUDITED)



|                           |  |                  |  |                 |          |                       |       |       |        |    |  |    |  |   |          |  
|-------------------------- |  | ---------------- |  | --------------- | -------- | --------------------- | ----- | ----- | ------ | -- |  | -- |  | - | -------- | -
|                           |  | Limited Partners |  | GeneralPartners |          | TotalPartnersCapital |      
|                           |  | Class A          |  |                 | Class B  |                       |      
|                           |  | Units            |  | Amount          |          |                       | Units |       | Amount |    | 
|BALANCE, December 31, 2007 |  | 6,062            |  | $               | 613,593  |                       |       | 1,626 |        | $0 |  | $0 |  | $ | 613,593  |  
|                           |  |                  |  |                 |          |                      
|Net loss                   |  | 0                |  |                 | (159,353 | )                     |       | 0     |        | 0  |  | 0  |  |   | (159,353 | )
|                           |  |                  |  |                 |          |                       |       |       |        |    |  |    |  |   |          |  
|BALANCE, December 31, 2008 |  | 6,062            |  |                 | 454,240  |                       |       | 1,626 |        | 0  |  | 0  |  |   | 454,240  |  
|                           |  |                  |  |                 |          |                      
|Net loss                   |  | 0                |  |                 | (34,707  | )                     |       | 0     |        | 0  |  | 0  |  |   | (34,707  | )
|                           |  |                  |  |                 |          |                       |       |       |        |    |  |    |  |   |          |  
|BALANCE, March 31, 2009    |  | 6,062            |  | $               | 419,533  |                       |       | 1,626 |        | $0 |  | $0 |  | $ | 419,533  |  
|                           |  |                  |  |                 |          |                       |       |       |        |    |  |    |  |   |          |  

See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



STATEMENTS OF CASH FLOWS



|                                                                                |  |                                        |         |   |      |   |        |  
|------------------------------------------------------------------------------- |  | -------------------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                |  | (Unaudited)Three Months EndedMarch 31, |        
|                                                                                |  | 2009                                   |         |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |  |                                        |         |   |      |   |        |  
|Net loss                                                                        |  | $                                      | (34,707 | ) |      | $ | (8,608 | )
|Operating distribution received from Fund II and Fund II-OW                     |  |                                        | 11,480  |   |      |   | 0      |  
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                                        |         |   |      |   |        |  
|Equity in loss of Fund II and Fund II-OW                                        |  |                                        | 34,707  |   |      |   | 8,608  |  
|                                                                                |  |                                        |         |   |      |   |        |  
|Net cash provided by operating activities                                       |  |                                        | 11,480  |   |      |   | 0      |  
|                                                                                |  |                                        |         |   |      |   |        |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                       |  |                                        | 11,480  |   |      |   | 0      |  
|                                                                                |  |                                       
|CASH AND CASH EQUIVALENTS, beginning of period                                  |  |                                        | 194     |   |      |   | 5,184  |  
|                                                                                |  |                                        |         |   |      |   |        |  
|CASH AND CASH EQUIVALENTS, end of period                                        |  | $                                      | 11,674  |   |      | $ | 5,184  |  
|                                                                                |  |                                        |         |   |      |   |        |  

See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



CONDENSED NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2009 (unaudited)



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

Wells Real Estate Fund II-OW (the
Partnership) is a Georgia public limited partnership with Leo F. Wells, III and Wells Capital, Inc. (Wells Capital) a Georgia corporation, serving as its general partners (collectively, the General
Partners). Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. (WREF). Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of WREF. The
Partnership was formed on October 13, 1987 for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing, and managing income-producing 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 generally has equal voting
rights regardless of class.

On November 6, 1987, 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 7, 1988, upon receiving total limited partner capital contributions of $1,922,000 for 7,688 Class A and
Class B limited partner units at $250 per unit.

The Partnership owns interests in all of its real estate assets through its interest in Fund II and Fund
II-OW, a joint venture between the Partnership and Wells Real Estate Fund II. Fund II and Fund II-OW owns interests in real estate assets both directly and through joint ventures with other entities affiliated with the General Partners. During the
periods presented, the Partnership owned interests in the following joint ventures (the Joint Ventures) and properties:



|                                                           |  |                                                               |  |                                                                                           
|---------------------------------------------------------- |  | ------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------
|Joint Venture                                              |  | Joint Venture Partners                                        |  | Properties                                                                                
|Fund II and Fund II-OW                                     |  |   Wells Real Estate Fund II   Wells Real Estate Fund II-OW  |  | 1. Louis Rose Building(1) A two-story office building located in Charlotte, North
Carolina
|Fund I and Fund II Tucker(2)                               |  |   Wells Real Estate Fund I   Fund II and Fund II-OW         |  | No properties were owned by this joint venture during the periods presented.              
|Fund II and Fund III Associates (Fund II-III Associates) |  |   Fund II and Fund II-OW   Wells Real Estate Fund III, L.P. |  | 2. 2100 Space Park Drive(3) A four-story office building located in Houston,
Texas        



| | (1) | This property was sold in April 2009.
| | --- | -------------------------------------

| | (2) | This joint venture was liquidated and
dissolved in February 2008.
| | --- | -----------------------------------------------------------------

| | (3) | This property was sold in April 2009.
| | --- | -------------------------------------

Wells Real Estate Fund II and Wells Real Estate Fund III, L.P. are affiliated with the Partnership common general
partners. Wells Real Estate Fund I was affiliated with the Partnership through common general partners prior to its dissolution. Each of the properties described above was acquired on an all-cash basis. For further information regarding the Joint
Ventures and foregoing properties, refer to the Partnerships Annual Report on Form 10-K for the year ended December 31, 2008.



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

Basis of
Presentation

The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the Securities and Exchange
Commission (SEC), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S. generally accepted
accounting principles (GAAP) for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and
necessary to fairly and consistently present the results for such periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and footnotes included in the
Partnerships Annual Report on Form 10-K for the year ended December 31, 2008.

Investment in Fund II and Fund II-OW

The Partnership has evaluated the Joint Ventures and concluded that none are variable interest entities. The Partnership does not have control over the operations of Fund
II and Fund II-OW; however, it does exercise significant influence. Approval by the Partnership as well as the other joint venture partners is required for any major decision or any action that would materially affect the Joint Ventures, or
their real property investments. Accordingly, the Partnership accounts for its investments in Fund II and Fund II-OW using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for
contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements, all income (loss) and distributions are allocated to joint venture partners in accordance with their
respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on a quarterly basis.

Evaluating the Recoverability of Real Estate Assets

The Partnership continually monitors events and changes in
circumstances that could indicate that the carrying amounts of the real estate assets owned through the Partnerships investment in the Joint Ventures may not be recoverable. When indicators of potential impairment are present which suggest
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 respective carrying values will be recovered through the estimated undiscounted
future operating cash flows expected from the use of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to sell, for assets held for sale. In the event that the expected undiscounted
future cash flows for assets held for use, or the estimated fair value, less costs to sell, for assets held for sale do not exceed the respective asset carrying value, management adjusts the real estate assets to the respective estimated fair
values, pursuant to the provisions of Statement of Financial Accounting Standard (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), and recognizes an
impairment loss. Estimated fair values are calculated based on the following information, in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable properties, or
(iii) the present value of future cash flows, including estimated salvage value.

Distribution of Net Cash from Operations

Net cash from operations, if available, is generally distributed to limited partners quarterly. In accordance with the partnership agreement, such distributions are paid
first to each limited partner holding Class A Units until he has received an 8% per annum return on his adjusted capital contribution, as defined. Net cash from operations is then distributed to each limited partner holding Class B Units
until he has received an 8% per annum return on his adjusted capital contribution, as defined. Any excess net cash from operations would then be distributed to the General Partners until they have received 10% of the total distributions for the
year. Thereafter, net cash from operations is distributed 90% to limited partners and 10% to the General Partners.



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Distribution of Net Sale Proceeds

Under the terms of the partnership agreement, as amended effective January 1, 2000, after satisfying all debts and liabilities and establishing such reserves as the General Partners in their sole discretion deem
reasonably necessary, net sale proceeds from the sale of the Partnerships properties, unless reserved, are to be distributed to partners in the following order:



| |  |  | To limited partners holding Class B Units until they have received an amount equal to the net cash available for distribution previously received by limited
partners holding Class A Units on a per-unit basis;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per-unit basis until limited partners have received 100% of their respective net capital contributions, as defined in the partnership
agreement, plus a cumulative 12% per annum return on their respective net capital contributions (less the sum of all prior distributions to such limited partner); and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Thereafter, 85% to the limited partners on a per-unit basis and 15% to the General Partners.
| | - |  | --------------------------------------------------------------------------------------------

Allocations of Net Income, Net Loss, and Gain on Sale

For the
purpose of determining allocations per the partnership agreement, net income is defined as net income recognized by the Partnership, excluding deductions for depreciation, amortization, cost recovery, interest expense, and the gain on the sale of
assets. 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 will be allocated as follows: (a) 99% to the limited partners holding Class B Units and 1% to the General Partners until their capital accounts are reduced to zero; (b) then, to any partner having a positive balance in his
capital account in an amount not to exceed such positive balance; and (c) thereafter, to the General Partners.

Gains on the sale or exchange of the
Partnerships properties will be 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 12% per annum return on his adjusted capital contribution, 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, subject to the requirement to initially allocate gain on sale to limited partners holding Class B Units until
they have been allocated an amount equal to the net cash from operations previously received by limited partners holding Class A Units on a per-unit basis; (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.

Recent Accounting Pronouncement

In September 2006,
the FASB issued SFAS No. 157, Fair Value Measurements(SFAS No. 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP,
including amending SFAS No. 144. SFAS No. 157 emphasizes that fair value is a market-based measurement, as opposed to an entity-specific measurement. In February 2008, the FASB issued Staff Position No. SFAS 157-2, Effective Date of
FASB Statement No. 157(FSP 157-2). FSP 157-2 delayed the effective date of SFAS No. 157 for all nonrecurring nonfinancial assets and liabilities until fiscal years beginning after November 15, 2008. Accordingly, FSP
157-2 was effective for the Partnership for the fiscal year beginning January 1, 2009. FSP 157-2 has not had a material impact on the Partnerships financial statements to date.



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|3. | INVESTMENT IN FUND II AND FUND II-OW
|-- | ------------------------------------

Impairment of Real Estate
Assets

After careful consideration, Fund II-III Associates concluded that pursuing a strategy to sell 2100 Space Park Drive in its current condition
would be in the best interests of its joint venture partners. Effective April 24, 2009, Fund II-III Associates entered into a contract to sell 2100 Space Park Drive for $8,000,000. As a result, Fund II-III Associates reevaluated the
recoverability of the propertys carrying value and recorded an impairment loss of approximately $850,000 (approximately $29,000 of which was allocated to the Partnership) to reduce the carrying value of the property to a revised estimate of
its fair value based on the $8,000,000 contract price, less estimated selling costs, as of March 31, 2009.

Summary of Financial Information

Condensed financial information for Fund II and Fund II-OW for the three months ended March 31, 2009 and 2008, respectively, is presented below:



|                       |  |                             |  |                                |  |                                  |  |                             |  |           |  |           |  |            |  |           
|---------------------- |  | --------------------------- |  | ------------------------------ |  | -------------------------------- |  | --------------------------- |  | --------- |  | --------- |  | ---------- |  | ----------
|                       |  | Total Revenues              |  | Loss FromContinuing Operations |  | Loss FromDiscontinued Operations |  | Net Loss                   
|                       |  | Three Months EndedMarch 31, |  | Three Months EndedMarch 31,    |  | Three Months EndedMarch 31,      |  | Three Months EndedMarch 31,
|                       |  | 2009                        |  | 2008                           |  | 2009                             |  | 2008                        |  | 2009      |  | 2008      |  | 2009       |  | 2008      
|Fund II and Fund II-OW |  | $3,360                      |  | $29,720                        |  | $(580,931)                       |  | $(69,804)                   |  | $(72,686) |  | $(92,304) |  | $(653,617) |  | $(162,108)
|                       |  |                             |  |                                |  |                                  |  |                             |  |           |  |           |  |            |  |           

Condensed financial information for Fund II-III Associates in which the Partnership held an interest through its
equity interest in Fund II and Fund II-OW for the three months ended March 31, 2009 and 2008, respectively, is presented below:



|                       |  |                             |  |                                         |  |                                    |  |                             |  |      |  |      |  |            |  |        
|---------------------- |  | --------------------------- |  | --------------------------------------- |  | ---------------------------------- |  | --------------------------- |  | ---- |  | ---- |  | ---------- |  | -------
|                       |  | Total Revenues              |  | Income (Loss) FromContinuing Operations |  | Income FromDiscontinued Operations |  | Net Income (Loss)          
|                       |  | Three Months EndedMarch 31, |  | Three Months EndedMarch 31,             |  | Three Months EndedMarch 31,        |  | Three Months EndedMarch 31,
|                       |  | 2009                        |  | 2008                                    |  | 2009                               |  | 2008                        |  | 2009 |  | 2008 |  | 2009       |  | 2008   
|Fund II-III Associates |  | $507,141                    |  | $291,724                                |  | $(763,756)                         |  | $14,540                     |  | $0   |  | $857 |  | $(763,756) |  | $15,397
|                       |  |                             |  |                                         |  |                                    |  |                             |  |      |  |      |  |            |  |        

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



|                       |  |                                  |  |                                  |  |           |  |                        |  |             |  |          
|---------------------- |  | -------------------------------- |  | -------------------------------- |  | --------- |  | ---------------------- |  | ----------- |  | ---------
|                       |  | Three Months EndedMarch 31, 2009 |  | Three Months EndedMarch 31, 2008
|                       |  | OperatingLoss                    |  | Gainon Sale                      |  | Total     |  | OperatingIncome (Loss) |  | Gainon Sale |  | Total    
|Fund II and Fund II-OW |  | $(72,686)                        |  | $0                               |  | $(72,686) |  | $(92,304)              |  | $0          |  | $(92,304)
|Fund II-III Associates |  | 0                                |  | 0                                |  | 0         |  | 857                    |  | 0           |  | 857      
|                       |  |                                  |  |                                  |  |           |  |                        |  |             |  |          
|                       |  | $(72,686)                        |  | $0                               |  | $(72,686) |  | $(91,447)              |  | $0          |  | $(91,447)
|                       |  |                                  |  |                                  |  |           |  |                        |  |             |  |          



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

Management and Leasing Fees

In accordance with the property management and leasing agreement, 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 Fund II and Fund II-OW equal to (a) 3% for management services and 3% for leasing services of the gross revenues
collected monthly, plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic
area for similar properties, which is assessed periodically based on market studies, or (b) in the case of commercial properties leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal
to 3% of the gross revenues over the first five years of the lease term. Management and leasing fees are paid by the Joint Ventures and, accordingly, are included in equity in loss of Fund II and Fund II-OW in the accompanying statements of
operations. The Partnerships share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures and payable to Wells Management is $761 and $393 for the three months ended March 31, 2009 and 2008,
respectively.

Beginning in October 2008, Wells Management elected to defer the receipt of management and leasing fees due from the Partnership through its
interests in the Joint Ventures. As of March 31, 2009, the Partnership owed aggregate management and leasing fees, through its interests in the Joint Ventures, to Wells Management of approximately $1,000, which is due from Fund II-III
Associates and, accordingly, is included in investment in Fund II and Fund II-OW in the accompanying balance sheets.

Administrative Reimbursements

Wells Capital, one of our General Partners, and Wells Management perform certain administrative services for the Partnership and the Joint Ventures,
relating to accounting and other partnership administration, and incur the related expenses. Such expenses are allocated among various other entities affiliated with the General Partners based on time spent on each fund by individual administrative
personnel. In the opinion of the General Partners, this allocation is a reasonable estimation of such expenses. The administrative charges related to the Partnership are recorded by Fund II and Fund II-OW and, therefore, are included in equity
in loss of Fund II and Fund II-OW in the accompanying statements of operations. The Partnerships share of administrative costs incurred by Fund II and Fund II-OW and payable to Wells Capital and Wells Management is $2,447 and
$2,618 for the three months ended March 31, 2009 and 2008, respectively.

Beginning in October 2008, Wells Management and Wells Capital elected to
defer the receipt of administrative reimbursements due from the Partnership through its interest in Fund II and Fund II-OW. As of March 31, 2009, the Partnership owed aggregate administrative reimbursements to Wells Management and Wells Capital
of approximately $4,200, which is due from Fund II and Fund II-OW and, accordingly, is included in investment in Fund II and Fund II-OW in the accompanying balance sheets.

Economic Dependency

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

Wells Capital and Wells Management are both owned and controlled by WREF. The operations of Wells Capital and Wells Management represent substantially all of the
business of WREF. Accordingly, the Partnership focuses 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, the Partnership might be required to find alternative service providers.



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Future net income generated by WREF will be largely dependent upon the amount of fees earned by Wells Capital and Wells
Management based on, among other things, the level of investor proceeds raised from the sale of common stock for certain WREF-sponsored programs and the volume of future acquisitions and dispositions of real estate assets by WREF-sponsored programs,
as well as anticipated dividend income earned from its holdings of common stock of Piedmont Office Realty Trust, Inc. (Piedmont REIT), which was acquired in connection with the Piedmont REIT internalization transaction (see Assertion of
Legal Action Against Related-Parties below). In addition, WREF guarantees debt of another WREF-sponsored product which was in the amount of approximately $49.4 million as of April 30, 2009. The General Partners believe that WREF generates
adequate cash flow from operations and has adequate liquidity available in the form of cash on hand and other investments necessary to meet its current and future obligations as they become due.

The Partnership is also dependent upon the ability of its current tenants to pay their contractual rent amounts as they become due. The inability of a tenant to pay
future rental amounts would be likely to have a negative impact on the Partnerships results of operations. The Partnership is not currently aware of any reason why its existing tenants will not be able to pay their contractual rental amounts
as they become due in all material respects. Situations preventing the tenants from paying contractual rents could result in a material adverse impact on the Partnerships results of operations.

Assertion of Legal Action Against Related-Parties

On March 12,
2007, a stockholder of Piedmont REIT, filed a putative class action and derivative complaint, presently styled In re Wells Real Estate Investment Trust, Inc. Securities Litigation, in the United States District Court for the District of
Maryland against, among others, Piedmont REIT; Leo F. Wells, III and Wells Capital, the Partnerships General Partners; Wells Management, the Partnerships property manager; certain affiliates of WREF; the directors of Piedmont REIT;
and certain individuals who formerly served as officers or directors of Piedmont REIT prior to the closing of the internalization transaction on April 16, 2007. The complaint alleges, among other things, violations of the federal proxy rules
and breaches of fiduciary duty arising from the Piedmont REIT internalization transaction and the related proxy statement filed with the SEC on February 26, 2007, as amended. The complaint seeks, among other things, unspecified monetary damages
and nullification of the Piedmont REIT internalization transaction. On April 9, 2007, the District Court denied the plaintiffs motion for an order enjoining the internalization transaction. On April 17, 2007, the Court granted the
defendants motion to transfer venue to the United States District Court for the Northern District of Georgia, and the case was docketed in the Northern District of Georgia on April 24, 2007. On June 7, 2007, the Court granted a
motion to designate the class lead plaintiff and class co-lead counsel. On June 27, 2007, the plaintiff filed an amended complaint, which attempts to assert class action claims on behalf of those persons who received and were entitled to vote
on the Piedmont REIT proxy statement filed with the SEC on February 26, 2007 and derivative claims on behalf of Piedmont REIT. On July 9, 2007, the Court denied the plaintiffs motion for expedited discovery related to an anticipated
motion for a preliminary injunction. On August 13, 2007, the defendants filed a motion to dismiss the amended complaint. On March 31, 2008, the Court granted in part the defendants motion to dismiss the amended complaint. The Court
dismissed five of the seven counts of the amended complaint in their entirety. The Court dismissed the remaining two counts with the exception of allegations regarding the failure to disclose in the Piedmont REIT proxy statement details of certain
expressions of interest in acquiring Piedmont REIT. On April 21, 2008, the plaintiff filed a second amended complaint, which alleges violations of the federal proxy rules based upon allegations that the proxy statement to obtain approval for
the Piedmont REIT internalization transaction omitted details of certain expressions of interest in acquiring Piedmont REIT. The second amended complaint seeks, among other things, unspecified monetary damages, to nullify and rescind the
internalization transaction, and to cancel and rescind any stock issued to the defendants as consideration for the internalization transaction. On May 12, 2008, the defendants answered and raised certain defenses to the second amended
complaint. On June 23, 2008, the plaintiff filed a motion for class certification. The defendants responded to the plaintiffs motion for class certification on January 16, 2009. The plaintiff filed its reply in support of its motions
for class certification on February 19, 2009. The motion for class certification is currently pending before the court. The parties are presently engaged in discovery. On April 13, 2009, the plaintiff moved



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for leave to amend the second amended complaint to add additional defendants. The time for the defendants to respond to the motion for leave to amend the
complaint has not yet expired. Mr. Wells, Wells Capital, and Wells Management intend to vigorously defend this action. Any financial loss incurred by Wells Capital, Wells Management, or their affiliates could hinder their ability to
successfully manage the Partnerships operations and portfolio of investments.



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

From time to time, the Partnership
and its General Partners are party to legal proceedings which arise in the ordinary course of our business. The Partnership is not currently involved in any litigation for which the outcome would, in the judgment of the General Partners based on
information currently available, have a materially adverse impact on the results of operations or financial condition of the Partnership, nor is management aware of any such litigation threatened against us.



|6. | SUBSEQUENT EVENTS
|-- | -----------------

Louis Rose Building Sale

On April 20, 2009, Fund II and Fund II-OW sold the Louis Rose Building to an unrelated third party for a gross sale price of $2,122,000. In 2008, Fund II and
Fund II-OW reduced the carrying value of Louis Rose Building to its estimated fair value, less estimated costs to sell, by recording an impairment loss of approximately $2,136,000. As a result of this sale, net proceeds of approximately
$105,000 and a gain of approximately $900 were allocated to the Partnership in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

2100 Space Park Drive Sale

On April 30, 2009, Fund II-III
Associates sold 2100 Space Park Drive to an unrelated third party for a gross sale price of $8,000,000. During the first quarter of 2009, Fund II-III Associates reduced the carrying value of 2100 Space Park Drive to its estimated fair value,
less estimated costs to sell, by recording an impairment loss of approximately $850,000. As a result of this sale, net proceeds of approximately $261,000 and a gain of approximately $1,500 were allocated to the Partnership in the second quarter of
2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.



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

The following discussion and analysis should be read in conjunction with the accompanying financial statements and notes thereto. See also Cautionary Note Regarding Forward-Looking Statements preceding
Part I, as well as the notes to our financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended December 31, 2008.

Overview

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



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

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



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

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



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

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



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

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



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

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

Portfolio Overview

We are currently in the
disposition-and-liquidation phase of our life cycle. With the sale of the Louis Rose Building and 2100 Space Park Drive in April 2009, we have sold all of the real estate assets in which we owned interests. We have begun to take the steps necessary
to liquidate and dissolve the Partnership.

Having sold all of the real estate assets within the portfolio, the General Partners are currently reserving
operating cash and a portion of net sale proceeds to fund anticipated costs necessary to liquidate and dissolve the Partnership.

Property Summary

As of March 31, 2009, we were in the disposition-and-liquidation phase of our life cycle. With the sale of the Louis Rose Building and 2100 Space Park
Drive in April 2009, we have sold all of the real estate assets in which we owned interests. We have begun to take steps necessary to liquidate and dissolve the Partnership.

Information relating to the properties owned, or previously owned, by the joint ventures is provided below:



| |  |  | Cherokee Commons was sold on October 1, 2001.
| | - |  | ---------------------------------------------



| |  |  | 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 on April 7, 2003. The remaining office component was sold on May 10, 2006.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Brookwood Grill was sold on July 1, 2004.
| | - |  | -----------------------------------------



| |  |  | The Holcomb Bridge Property was sold on July 1, 2004.
| | - |  | -----------------------------------------------------



| |  |  | The Louis Rose Building was sold on April 20, 2009.
| | - |  | ---------------------------------------------------



| |  |  | The 2100 Space Park Drive property was sold on April 30, 2009.
| | - |  | --------------------------------------------------------------

Liquidity and Capital Resources

Overview

Our operating strategy has entailed funding expenditures related to the recurring operations of the Joint Ventures properties and the portfolio with operating cash flows, including current and prior period
operating distributions received from the Joint Ventures, and assessing the amount of remaining cash flows that will be required to fund known future re-leasing costs and other capital improvements. Historically, any residual operating cash flows
were generally considered available for distribution to the limited partners and, unless reserved, were generally paid quarterly. To the extent that operating cash flows were not sufficient to fund our recurring operations, net sale proceeds would
have been utilized. As a result, the ongoing monitoring of our cash position has been critical to ensuring that adequate liquidity and capital resources were available.



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Short-Term Liquidity

During the three months ended March 31, 2009, we generated net operating cash flows of approximately $11,500. Fund II and Fund II-OW continues to hold operating distributions received from the Joint Ventures and otherwise payable to
the Partnership. Accordingly, no operating distributions were paid to limited partners during the three months ended March 31, 2009.

We believe that
the cash on hand, including net proceeds from the sale of properties, will be sufficient to cover our working capital needs.

Long-Term Liquidity

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

Capital
Resources

Following the sale of the remaining real estate assets in which the Partnership held interests in April 2009, we have begun to take the steps
necessary to liquidate and dissolve the Partnership. We are in the process of evaluating the amount cash reserves needed to settle estimated liabilities of the Partnership and intend to distribute the remaining cash balances to the limited
partners pursuant to the provisions of the partnership agreement.



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As of March 31, 2009, Fund II and Fund II-OW received, used, and held net sale proceeds allocated to the Partnership
from the sale of properties as presented below:



|                                             |  |                       |  |                                     |  |                                              |         |                         |   |                                                             |  |                                                                                                                                                                            |  |   |         |  |   |       
|-------------------------------------------- |  | --------------------- |  | ----------------------------------- |  | -------------------------------------------- | ------- | ----------------------- | - | ----------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- |  | - | ------
|Property Sold                                |  | TotalNet SaleProceeds |  | PartnershipsApproximateOwnership % |  | Net Sale ProceedsAllocated to ThePartnership |         | Use ofNet Sale Proceeds |   | Net Sale ProceedsDistributed toPartners
as ofMarch 31, 2009 |  | Undistributed NetSale Proceeds BeingReserved as ofMarch 31, 2009                                                                                                          
|                                             |  |                       |  | Amount                              |  | Purpose                                      |         |                        
|                                             |  |                       |  |                                     |  |                                              |        
|Cherokee Commons(sold in 2001)               |  | $8,414,089            |  | 2.9%                                |  | $                                            | 239,776 |                         | $ | 77,421                                                      |  |   Re-leasing of 2100 Space Park Drive (2002 and 2003)    Funding for Fund I and Fund II Tucker
operating expenses (2005)                                                 |  | $ | 162,355 |  | $ | 0     
|                                             |  |                       |  |                                     |  |                                              |        
|Heritage Place retail portion(sold in 2003) |  | $3,207,708            |  | 2.6%                                |  |                                              | 81,797  |                         |   | 1,332                                                       |  |   Funding for Fund I and Fund II Tucker operating expenses (2005)                                                                                                         |  |   | 80,465  |  |   | 0     
|                                             |  |                       |  |                                     |  |                                              |        
|Brookwood Grill(sold in 2004)                |  | $2,318,115            |  | 3.3%                                |  |                                              | 76,730  |                         |   | 28,401                                                      |  |   Funding for Fund I and Fund II Tucker operating expenses (2005)    Capital improvements for 2100 Space
Park Drive (2008)    Funding
for Fund II and Fund II-OW (2008) |  |   | 48,329  |  |   | 0     
|                                             |  |                       |  |                                     |  |                                              |        
|Holcomb Bridge Property(sold in 2004)        |  | $6,889,379            |  | 0.8%                                |  |                                              | 53,737  |                         |   | 19,886                                                      |  |   Funding for Fund I and Fund II Tucker operating expenses (2005)    Capital improvements for 2100 Space
Park Drive (2008)    Funding
for Fund II and Fund II-OW (2008) |  |   | 33,851  |  |   | 0     
|                                             |  |                       |  |                                     |  |                                              |        
|Heritage Placeoffice portion(sold in 2006)   |  | $4,028,043            |  | 2.6%                                |  |                                              | 102,715 |                         |   | 27,383                                                      |  |   Capital improvements for 2100 Space Park
Drive (2008 and 2009)    Funding for Fund II and Fund II-OW (2008 and 2009)                                                   |  |   | 0       |  |   | 75,332
|                                             |  |                       |  |                                     |  |                                              |         |                         |   |                                                             |  |                                                                                                                                                                            |  |   |         |  |   |       
|                                             |  |                       |  |                                     |  |                                              |        
|Total                                        |  |                       |  |                                     |  | $                                            | 554,755 |                         | $ | 154,423                                                     |  |                                                                                                                                                                            |  | $ | 325,000 |  | $ | 75,332
|                                             |  |                       |  |                                     |  |                                              |         |                         |   |                                                             |  |                                                                                                                                                                            |  |   |         |  |   |       

After quarter-end, we were allocated approximately $105,000 and $261,000 of net sale proceeds from the April 2009
dispositions of the Louis Rose Building and 2100 Space Park Drive, respectively. The net sale proceeds allocated from the April 2009 dispositions of the Louis Rose Building and 2100 Space Park Drive, in addition to the net sale proceeds listed in
the table above, are currently being held in reserve by Fund II and Fund II-OW.

Results of Operations

Equity in loss of Fund II and Fund II-OW was $34,707 and $8,608 for the three months ended March 31, 2009 and 2008, respectively. This increase in loss is primarily
attributable to (i) an impairment loss recognized by



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Fund II-III Associates related to 2100 Space Park Drive in the first quarter of 2009, of which approximately $29,000 was allocated to the Partnership (see
Note 3 to our financial statements included in this report), partially offset by (ii) an increase in rental income at 2100 Space Park Drive during the first quarter of 2009 as a result of the 2008 leasing activity and (iii) receipt of
insurance proceeds in the first quarter of 2009 at 2100 Space Park Drive associated with clean-up costs incurred as a result of Hurricane Ike.

We
anticipate that equity in loss of Fund II and Fund II-OW will decline in the near term as a result of the April 2009 sale of the vacant Louis Rose Building as well as incurring an impairment loss on 2100 Space Park Drive, of which approximately
$29,000 was allocated to the Partnership in the first quarter of 2009.

Application of Critical Accounting Policies

Summary

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

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

Investment in Real Estate Assets

We were
required to make subjective assessments as to the useful lives of our depreciable assets. We considered the period of future benefit of the assets to determine the appropriate useful lives. These assessments had a direct impact on net income. The
estimated useful lives of the Joint Ventures assets were depreciated using the straight-line method over the following useful lives:



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

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

Evaluating the Recoverability of Real Estate Assets

We continually monitored events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which we had an ownership interest through investments in the Joint Ventures may
not be recoverable. When indicators of potential impairment were present which suggested that the carrying amounts of real estate assets may not be recoverable, we assessed the recoverability of the real estate assets by determining whether the
respective carrying values would be recovered through the estimated undiscounted future operating cash flows expected from the use of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to
sell, for assets held for sale. In the event that such expected undiscounted future cash flows for assets held for use, or the estimated fair values, less costs to sell, for assets held for sale, did



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not exceed the respective assets carrying values, we adjust the real estate assets to the respective estimated fair values, pursuant to the provisions
of SFAS No. 144, and recognize an impairment loss. Estimated fair values were calculated based on the following information, in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices
for comparable properties, or (iii) the present value of future cash flows, including estimated salvage value.

In the first quarter of 2009, Fund
II-III Associates recorded an impairment loss on 2100 Space Park Drive of approximately $850,000 (approximately $29,000 of which was allocated to the Partnership) to reduce the carrying value of the property to a revised estimate of its fair value
estimated based on an executed contract to sell the property for $8,000,000, less estimated selling costs.

In the second quarter of 2008, Fund II and Fund
II-OW recorded an impairment loss on the Louis Rose Building of approximately $931,000 (approximately $49,000 of which was allocated to the Partnership) in order to reduce the carrying value of the property to its estimated fair value prompted by
managements decision to refine its strategy for disposing of the building. In the fourth quarter of 2008, Fund II and Fund II-OW recorded an additional impairment loss on the Louis Rose Building of approximately $1,205,000 (approximately
$64,000 of which was allocated to the Partnership) in order to reduce the carrying value of the property to a revised estimate of its fair value estimated based on an executed contract to sell the property for $2,122,000, less estimated selling
costs.

Projections of expected future cash flows required that we estimate future market rental income amounts subsequent to the expiration of current
lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow
analysis, including discount rates, would have resulted in an incorrect assessment of the propertys future cash flows and fair value, and could have resulted in the misstatement of the carrying value of real estate assets held by the Joint
Ventures and net income of the Partnership.

Related-Party Transactions

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

Subsequent
Events

Louis Rose Building Sale

On April 20,
2009, Fund II and Fund II-OW sold the Louis Rose Building to an unrelated third party for a gross sale price of $2,122,000. In 2008, Fund II and Fund II-OW reduced the carrying value of Louis Rose Building to its estimated fair value, less
estimated costs to sell, by recording an impairment loss of approximately $2,136,000. As a result of this sale, net proceeds of approximately $105,000 and a gain of approximately $900 were allocated to the Partnership in the second quarter of
2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

2100 Space Park Drive Sale

On April 30, 2009, Fund II-III Associates sold 2100 Space Park Drive to an unrelated third party for a gross sale price of $8,000,000. During the
first quarter of 2009, Fund II-III Associates reduced the carrying value of 2100 Space Park Drive to its estimated fair value, less estimated costs to sell, by recording an impairment loss of



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##### Table of Contents

approximately $850,000. As a result of this sale, net proceeds of approximately $261,000 and a gain of approximately $1,500 were allocated to the Partnership
in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.



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

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



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

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

There were no changes in our internal control over
financial reporting during the quarter ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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



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

We are from time to time a party to legal
proceedings, which arise in the ordinary course of our business. We are not currently involved in any litigation the outcome of which would, in managements judgment based on information currently available, have a material adverse effect on
our results of operations or financial condition, nor is management aware of any such litigation threatened against us during the quarter ended March 31, 2009, requiring disclosure under Item 103 of Regulation S-K. For a description of
pending litigation involving certain related parties, see Assertion of Legal Action Against Related-Parties in Note 4 to our financial statements included in this report.



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

There have been no material changes from the risk
factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008.



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



|(a) | We did not sell any equity securities that were not registered under the Securities Act of 1933 during the quarter ended March 31, 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



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



|(c) | We did not redeem any securities during the quarter ended March 31, 2009.
|--- | -------------------------------------------------------------------------



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



|(a) | We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended March 31, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------



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



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

No matters were submitted to a vote of our limited partners during the quarter ended March 31, 2009.



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



|(a) | During the quarter ended March 31, 2009, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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

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



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SIGNATURES

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



|             |  |  |  |                                                                                                    |  |                                                
|------------ |  |  |  | -------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|             |  | 
|             |  |  |  | WELLS REAL ESTATE FUND II-OW (Registrant)                                                         
|             |  |  | 
|             |  |  |  | By:                                                                                                |  | WELLS CAPITAL, INC. (Corporate General Partner)
|             |  | 
|May 13, 2009 |  |  |  | /s/ LEO F. WELLS, III                                                                             
|             |  |  |  | Leo F. Wells, III President, Principal Executive Officer, and Sole Director of Wells Capital, Inc.
|             |  | 
|May 13, 2009 |  |  |  | /s/ DOUGLAS P. WILLIAMS                                                                           
|             |  |  |  | Douglas P. Williams Principal Financial Officer of Wells Capital, Inc.                            



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##### Table of Contents

EXHIBIT INDEX

TO FIRST QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND II-OW



|              |  |                                                                                                                                                                                                                    
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Document                                                                                                                                                                                            
|              | 
|*10.1         |  | Purchase and Sale Agreement for the sale of the Louis Rose Building (Exhibit 10(ll) to the Form 10-K of Wells Real Estate Fund II for the fiscal year ended December 31, 2008,
Commission File No. 0-16518)        
|              | 
|*10.2         |  | Purchase and Sale Agreement for the sale of 2100 Space Park Drive (Exhibit 10.2 to the Form 10-Q of Wells Real Estate Fund II for the quarter ended March 31, 2009, Commission File No.
1-16518)                   
|              | 
|*10.3         |  | First Amendment to Purchase and Sale Agreement for the sale of 2100 Space Park Drive (Exhibit 10.3 to the Form 10-Q of Wells Real Estate Fund II for the quarter ended March 31,
2009, Commission File No. 1-16518)
|              | 
|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                                                                                     



|* | Previously filed and incorporated herein by reference
|- | -----------------------------------------------------



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