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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 March 31, 2004



OR



| ̈ |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission file number 0-17876



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WELLS REAL ESTATE FUND II-OW

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Georgia                                                        |  | 58-1754703                             
|(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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CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS



Certain statements contained in this Form 10-Q
of Wells Real Estate Fund II-OW (the Partnership) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from
those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as
may, will, expect, intend, anticipate, estimate, believe, continue, or other similar words. 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. Neither the Partnership nor the general partners make any representations or warranties (expressed or implied) about the
accuracy of any such forward-looking statements. Actual results could differ materially from any forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.



Any such
forward-looking statements are subject to known and unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market
conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from
operations; provide distributions to limited partners; and maintain the value of our real estate properties, may be significantly hindered. Following are some of the risks and uncertainties, although not all risks and uncertainties, which could
cause actual results to differ materially from those presented in certain forward-looking statements:



General economic risks



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



| |  |  | Adverse economic conditions affecting the particular industry of one or more of our tenants;
| | - |  | --------------------------------------------------------------------------------------------



Real estate risks



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



| |  |  | Supply of or demand for similar or competing rentable space, which may adversely impact our ability to retain or obtain new tenants at lease expiration at acceptable rental amounts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Our potential need to fund tenant improvements, lease-up costs, or other capital expenditures out of operating cash flow;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | Increases in property operating expenses, including property taxes, insurance, and other costs at our properties;
| | - |  | -----------------------------------------------------------------------------------------------------------------



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



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



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



| |  |  | Our ability to sell a property when desirable at an acceptable return, including the ability of the purchaser to satisfy any continuing obligations to us;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



Other operational risks



| |  |  | Our dependency on Wells Capital, Inc., our corporate General Partner, its key personnel, and its affiliates for various administrative services;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Increases in our administrative operating expenses, including increased expenses associated with operating as a public company;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | Our ability to prove compliance with any governmental, tax, real estate, environmental, and zoning in the event that any such position is questioned by the respective authority; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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





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TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                            |  |         
|-------- |  | --------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | --------
|         |  |                       |  |                                                                                                                            |  | Page No.
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                           
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                       |  |         
|         |  |                       | 
|         |  |                       |  | Balance SheetsMarch 31, 2004 (unaudited) and December 31, 2003                                                            |  | 5       
|         |  |                       | 
|         |  |                       |  | Statements of Operations for the Three Months Ended March 31, 2004 (unaudited) and 2003 (unaudited)                        |  | 6       
|         |  |                       | 
|         |  |                       |  | Statements of Partners Capital for the Year Ended December 31, 2003 and the Three Months Ended March 31, 2004 (unaudited) |  | 7       
|         |  |                       | 
|         |  |                       |  | Statements of Cash Flows for the Three Months Ended March 31, 2004 (unaudited) and 2003 (unaudited)                        |  | 8       
|         |  |                       | 
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                        |  | 9       
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                      |  | 14      
|         |  |                       | 
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                |  | 19      
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                    |  | 20      
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  | 20                                                                                                                        



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WELLS REAL ESTATE FUND II-OW



BALANCE SHEETS



|                                              |  |                |         |                  |   |        
|--------------------------------------------- |  | -------------- | ------- | ---------------- | - | -------
|ASSETS                                       
|                                              |  | (unaudited)    |         |                 
|                                              |  | March 31, 2004 |         | December 31,2003
|Investment in Fund II and Fund II-OW (Note 2) |  | $              | 713,101 |                  | $ | 728,828
|Due from Fund II and Fund II-OW               |  |                | 265,462 |                  |   | 258,553
|Cash and cash equivalents                     |  |                | 6,161   |                  |   | 6,161  
|                                              |  |                |         |                  |   |        
|Total assets                                  |  | $              | 984,724 |                  | $ | 993,542
|                                              |  |                |         |                  |   |        
|                                             
|LIABILITIES AND PARTNERS CAPITAL            
|                                              |  |               
|Liabilities:                                  |  |                |         |                  |   |        
|Accounts payable                              |  | $              | 871     |                  | $ | 871    
|                                              |  |                |         |                  |   |        
|Partners capital:                            |  |                |         |                  |   |        
|Limited partners:                             |  |                |         |                  |   |        
|Class A6,062 units outstanding               |  |                | 983,853 |                  |   | 992,671
|Class B1,626 units outstanding               |  |                | 0       |                  |   | 0      
|General partners                              |  |                | 0       |                  |   | 0      
|                                              |  |                |         |                  |   |        
|Total partners capital                       |  |                | 983,853 |                  |   | 992,671
|                                              |  |                |         |                  |   |        
|Total liabilities and partners capital       |  | $              | 984,724 |                  | $ | 993,542
|                                              |  |                |         |                  |   |        



See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



STATEMENTS OF OPERATIONS



|                                                   |  |                                          |        |   |      |   |        |  
|-------------------------------------------------- |  | ---------------------------------------- | ------ | - | ---- | - | ------ | -
|                                                   |  | (unaudited) Three Months Ended March 31, |       
|                                                   |  | 2004                                     |        |   | 2003 |  
|REVENUES:                                          |  |                                          |        |   |      |   |        |  
|Interest and other income                          |  | $                                        | 0      |   |      | $ | 0      |  
|                                                   |  |                                          |        |   |      |   |        |  
|EXPENSES:                                          |  |                                          |        |   |      |   |        |  
|Equity in loss of Fund II and Fund II-OW (Note 2)  |  |                                          | (8,818 | ) |      |   | (5,960 | )
|                                                   |  |                                          |        |   |      |   |        |  
|NET LOSS                                           |  | $                                        | (8,818 | ) |      | $ | (5,960 | )
|                                                   |  |                                          |        |   |      |   |        |  
|NET LOSS ALLOCATED TO CLASS A LIMITED PARTNERS     |  | $                                        | (8,818 | ) |      | $ | (5,960 | )
|                                                   |  |                                          |        |   |      |   |        |  
|NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS     |  | $                                        | 0      |   |      | $ | 0      |  
|                                                   |  |                                          |        |   |      |   |        |  
|NET LOSS PER CLASS A LIMITED PARTNER UNIT          |  | $                                        | (1.45  | ) |      | $ | (0.98  | )
|                                                   |  |                                          |        |   |      |   |        |  
|NET LOSS PER CLASS B LIMITED PARTNER UNIT          |  | $                                        | 0.00   |   |      | $ | 0.00   |  
|                                                   |  |                                          |        |   |      |   |        |  
|CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT |  | $                                        | 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, 2004

AND THE THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)



|                           |  |                  |  |         |           |   |                 |       |                        |   |   |  |   |   |  |   |           |  
|-------------------------- |  | ---------------- |  | ------- | --------- | - | --------------- | ----- | ---------------------- | - | - |  | - | - |  | - | --------- | -
|                           |  | Limited Partners |  |         |           |   |                
|                           |  | Class A          |  |         | Class B   |   | GeneralPartners |       | Total PartnersCapital |  
|                           |  | Units            |  | Amounts |           |   | Units           |       | Amounts                |   |  
|BALANCE, December 31, 2002 |  | 6,062            |  | $       | 1,021,212 |   |                 | 1,626 |                        | $ | 0 |  | $ | 0 |  | $ | 1,021,212 |  
|Net loss                   |  | 0                |  |         | (28,541   | ) |                 | 0     |                        |   | 0 |  |   | 0 |  |   | (28,541   | )
|                           |  |                  |  |         |           |   |                 |       |                        |   |   |  |   |   |  |   |           |  
|BALANCE, December 31, 2003 |  | 6,062            |  |         | 992,671   |   |                 | 1,626 |                        |   | 0 |  |   | 0 |  |   | 992,671   |  
|Net loss                   |  | 0                |  |         | (8,818    | ) |                 | 0     |                        |   | 0 |  |   | 0 |  |   | (8,818    | )
|                           |  |                  |  |         |           |   |                 |       |                        |   |   |  |   |   |  |   |           |  
|BALANCE, March 31, 2004    |  | 6,062            |  | $       | 983,853   |   |                 | 1,626 |                        | $ | 0 |  | $ | 0 |  | $ | 983,853   |  
|                           |  |                  |  |         |           |   |                 |       |                        |   |   |  |   |   |  |   |           |  



See accompanying notes.



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WELLS REAL ESTATE FUND II-OW



STATEMENTS OF CASH FLOWS



|                                                                            |  |                              |        |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------- | -
|                                                                            |  | (unaudited)                  |       
|                                                                            |  | Three Months Ended March 31, |       
|                                                                            |  | 2004                         |        |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |                              |        |   |      |   |         |  
|Net loss                                                                    |  | $                            | (8,818 | ) |      | $ | (5,960  | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                              |        |   |      |   |         |  
|Equity in loss of Fund II and Fund II-OW                                    |  |                              | 8,818  |   |      |   | 5,960   |  
|Changes in assets and liabilities:                                          |  |                              |        |   |      |   |         |  
|Accounts payable                                                            |  |                              | 0      |   |      |   | (1,166  | )
|                                                                            |  |                              |        |   |      |   |         |  
|Net cash used in operating activities                                       |  |                              | (0     | ) |      |   | (1,166  | )
|                                                                            |  |                              |        |   |      |   |         |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                   |  |                              | (0     | ) |      |   | (1,166  | )
|CASH AND CASH EQUIVALENTS, beginning of period                              |  |                              | 6,161  |   |      |   | 23,110  |  
|                                                                            |  |                              |        |   |      |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                                    |  | $                            | 6,161  |   |      | $ | 21,944  |  
|                                                                            |  |                              |        |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                             |  |                              |        |   |      |   |         |  
|Due from Fund II and Fund II-OW                                             |  | $                            | 6,909  |   |      | $ | 173,702 |  
|                                                                            |  |                              |        |   |      |   |         |  



See accompanying notes.





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WELLS REAL ESTATE FUND II-OW



CONDENSED NOTES TO FINANCIAL STATEMENTS



MARCH 31, 2004 (UNAUDITED)



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



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



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). 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 gross offering proceeds of $1,922,000 for 7,688 Class A and Class B limited partner units at $250 per unit from 219 limited partners.



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



|                                                                     |  |                                                                                               |  |                                                                                        
|-------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------
|                                                                    
|                                                                     |  |                                                                                              
|Joint Venture                                                        |  | Joint Venture Partners                                                                        |  | Properties                                                                             
|                                                                    
|Fund II and Fund II-OW (Fund II-IIOW Associates)                   |  |  Wells Real Estate Fund II  Wells Real Estate Fund II-OW                                    |  | 1. Louis Rose Building A two-story office building located in Charlotte, North Carolina
|                                                                    
|Fund I and Fund II Tucker (Fund I-II Tucker Associates)            |  |  Wells Real Estate Fund I  Fund II-IIOW Associates                                          |  | 2. Heritage Place A retail and commercial office complex located in Tucker, Georgia    
|                                                                    
|Fund II and Fund III Associates (Fund II-III Associates )          |  |  Fund II-IIOW Associates  Wells Real Estate Fund III, L.P.                                  |  | 3. Boeing at the Atrium A four-story office building located in Houston, Texas         
|                                                                     |  |                                                                                              
|                                                                     |  |                                                                                               |  | 4. Brookwood Grill A restaurant located in Roswell, Georgia                            
|                                                                    
|Fund II, III, VI and VII Associates(Fund II-III-VI-VII Associates) |  |  Fund II-III Associates  Wells Real Estate Fund VI, L.P.  Wells Real Estate Fund VII, L.P. |  | 5. Holcomb Bridge Property An office/retail center located in Roswell, Georgia         
|                                                                    



Each of the aforementioned properties
was acquired on an all-cash basis. The investment objectives of each of the joint venture partners listed in the above table are substantially identical to those of the Partnership. For



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further information regarding the foregoing
Joint Ventures and properties, refer to the report filed for the Partnership on Form 10-K for the year ended December 31, 2003.



On April 7, 2003, Fund I-II Tucker Associates sold the retail portion of Heritage Place, which comprises approximately 30% of the total premises, to an unrelated third
party for a gross selling price of $3,400,000. As a result of this sale, net sales proceeds of approximately $82,000 and a gain of approximately $7,000 were allocated to the Partnership in the second quarter of 2003.



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



The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, including the
instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by accounting principles generally accepted in the United States
(GAAP) for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly
present the results for 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 Form 10-K for the year
ended December 31, 2003.



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



For the purpose of determining allocations per the partnership agreement, net income is defined generally as net income recognized by the Partnership, excluding
deductions for depreciation, amortization, and cost recovery and gain on the sale of assets. Net income, as defined, of the Partnership is generally allocated each year in the same proportions that net cash from operations is distributed to the
limited partners holding Class A Units and the General Partners. To the extent the Partnerships net income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners and 1% to the General Partners.



Net loss, depreciation, and amortization deductions for each fiscal year are
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.



Gain
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 available for distribution 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, less the sum of all prior distributions of cash flow from operations previously made to such General Partners, over (ii) such General Partners capital account balance as
of the sale date; and (d) thereafter 85% to the limited partners and 15% to the General Partners.



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|(d) |  | Distributions of Net Cash From Operations
|--- |  | -----------------------------------------



Cash available for distribution, if available, is generally distributed to limited partners quarterly. In accordance with the partnership agreement, 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 contributions, as defined. Cash available for distribution is then distributed to each limited partner holding Class B
Units until he has received an 8% per annum return on his adjusted capital contributions, as defined. Excess cash available for distribution will be distributed to the General Partners until each has received 10% of total distributions to each
limited partner for the year. Thereafter, cash available for distribution is distributed 90% to limited partners and 10% to the General Partners.



|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
investment in Fund II-IIOW Associates and 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, 2003.



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



The following information summarizes the operations of the Fund II-IIOW Associates for the three months ended March 31, 2004 and 2003, respectively:



|                        |  |                              |        |                              |   |         |  |   |          |   |  |   |          |  
|----------------------- |  | ---------------------------- | ------ | ---------------------------- | - | ------- |  | - | -------- | - |  | - | -------- | -
|                        |  | Total Revenues               |        | Net Loss                     |  
|                        |  | Three Months Ended March 31, |        | Three Months Ended March 31, |  
|                        |  | 2004                         |        | 2003                         |   | 2004    |  |   | 2003     |  
|Fund II-IIOW Associates |  | $                            | 45,040 |                              | $ | 102,164 |  | $ | (167,546 | ) |  | $ | (112,238 | )
|                        |  |                              |        |                              |   |         |  |   |          |   |  |   |          |  



|(c) |  | Summary of Operations
|--- |  | ---------------------



The following information summarizes the operations of the Joint Ventures in which the Partnership holds interests through its ownership in Fund II-IIOW Associates for
the three months ended March 31, 2004 and 2003, respectively:



|                            |  |                             |         |      |                                         |         |                                   |  |                             |         |   |      |   |         |  |      |   |  |      |        |  |   |         |   |  |   |        
|--------------------------- |  | --------------------------- | ------- | ---- | --------------------------------------- | ------- | --------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- |  | ---- | - |  | ---- | ------ |  | - | ------- | - |  | - | -------
|                            |  | Total Revenues              |         |      | (Loss) Income FromContinuing Operations |         | Income FromDiscontinuedOperations |  | Net (Loss) Income          
|                            |  | Three Months EndedMarch 31, |         |      | Three Months EndedMarch 31,             |         | Three Months EndedMarch 31,       |  | Three Months EndedMarch 31,
|                            |  | 2004                        |         | 2003 |                                         |         | 2004                              |  |                             | 2003    |   | 2004 |   | 2003    |  | 2004 |   |  | 2003
|Fund I-II Tucker Associates |  | $                           | 178,220 |      | $                                       | 200,654 |                                   |  | $                           | (28,520 | ) |      | $ | 22,286  |  | $    | 0 |  | $    | 70,066 |  | $ | (28,520 | ) |  | $ | 92,352 
|Fund II-III Associates      |  |                             | 536,327 |      |                                         | 520,988 | *                                 |  |                             | 76,941  |   |      |   | 78,731  |  |      | 0 |  |      | 0      |  |   | 76,941  |   |  |   | 78,731 
|                            |  |                             |         |      |                                         |         |                                   |  |                             |         |   |      |   |         |  |      |   |  |      |        |  |   |         |   |  |   |        
|                            |  | $                           | 714,547 |      | $                                       | 721,642 |                                   |  | $                           | 48,421  |   |      | $ | 101,017 |  | $    | 0 |  | $    | 70,066 |  | $ | 48,421  |   |  | $ | 171,083
|                            |  |                             |         |      |                                         |         |                                   |  |                             |         |   |      |   |         |  |      |   |  |      |        |  |   |         |   |  |   |        

|* |  | The Partnerships share of income earned from its investment in Fund II-III-VI-VII Associates is recorded by Fund II-III Associates as equity in income of joint ventures,
which is classified as revenue.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(d) |  | Summary of Operations
|--- |  | ---------------------



The following information summarizes the operations of the joint venture in which the Partnership holds an interest through its ownership in Fund II-III Associates for
the three months ended March 31, 2004 and 2003, respectively:



|                              |  |                              |         |                              |   |         |  |      |        |  |   |       
|----------------------------- |  | ---------------------------- | ------- | ---------------------------- | - | ------- |  | ---- | ------ |  | - | ------
|                              |  | Total Returns                |         | Net Loss                    
|                              |  | Three Months Ended March 31, |         | Three Months Ended March 31,
|                              |  | 2004                         |         | 2003                         |   | 2004    |  | 2003
|Fund II-III-VI-VII Associates |  | $                            | 210,913 |                              | $ | 135,573 |  | $    | 94,378 |  | $ | 10,398
|                              |  |                              |         |                              |   |         |  |      |        |  |   |       



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



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



Wells Management Company, Inc. (Wells Management), an affiliate of the General Partners, is entitled to compensation for the management and leasing of the
Partnerships properties owned 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. The properties in which the Partnership owns an interest incurred
management and leasing fees payable to Wells Management of $56,487 and $45,390 for the three months ended March 31, 2004 and 2003, respectively.



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



Wells Capital and its affiliates perform certain administrative services for the Partnership, such as accounting and other partnership administration, and incur 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. In the opinion of management, this allocation is a reasonable estimation of such
expenses. Fund II-IIOW Associates and the Joint Ventures have reimbursed Wells Capital $64,265 and $62,918 for the three months ended March 31, 2004 and 2003, respectively.



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



The General Partners 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.



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|4. |  | SUBSEQUENT EVENT
|-- |  | ----------------



On April 6, 2004, Fund II-III Associates and Fund II-III-VI-VII Associates (collectively, the Seller) entered into an agreement to sell the two properties listed below to an unrelated third party (the
Purchaser) for a gross sales price of $9,500,000. This transaction is currently subject to a due diligence period expiring on May 21, 2004, during which the Purchaser has the right to terminate the agreement for any reason. Accordingly,
there are no assurances that this sale will close.



|                              |  |                                                                                               |  |                                                                               
|----------------------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|                             
|Seller                        |  | Joint Venture Partners                                                                        |  | Properties                                                                    
|                             
|Fund II-III Associates        |  |  Fund II-IIOW Associates  Wells Real Estate Fund III, L.P.                                  |  | 1. Brookwood Grill A restaurant located in Fulton County, Georgia             
|                             
|Fund II-III-VI-VII Associates |  |  Fund II-III Associates  Wells Real Estate Fund VI, L.P.  Wells Real Estate Fund VII, L.P. |  | 2. Holcomb Bridge Property An office/retail center located in Roswell, Georgia
|                             



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



On or about March 12, 2004, a putative class action complaint (the complaint) relating to Wells Real Estate Fund I, a public limited partnership that offered units from September 6, 1984 through September
5, 1986 (Wells Fund I), was filed by four individuals (the plaintiffs) against Leo F. Wells, III, Wells Capital, Wells Investment Securities, Inc., Wells Management, and Wells Fund I (collectively, the Wells
Defendants) (Hendry et al. v. Leo F. Wells, III et al., Superior Court of Gwinnett County, Georgia, Civil Action No. 04-A-2791 2). The Wells Defendants received notice of the complaint on or about March 19, 2004. The plaintiffs filed
the complaint purportedly on behalf of all limited partners holding B units of Wells Fund I as of January 15, 2003. The complaint alleges, among other things, that (a) during the offering period (September 6, 1984 through September 5, 1986), Mr.
Wells, Wells Capital, Wells Investment Securities, Inc., and Wells Fund I negligently or fraudulently made false statements and made material omissions in connection with the initial sale of the B units to investors of Wells Fund I by making false
statements and omissions in the Wells Fund I sales literature relating to the distribution of net sale proceeds to holders of B units; (b) Mr. Wells, Wells Capital and Wells Fund I negligently or fraudulently misrepresented and concealed disclosure
of, among other things, alleged discrepancies between such statements and the provisions in the partnership agreement for a period of time in order to delay such investors from taking any legal, equitable or other action to protect their investments
in Wells Fund I, among other reasons; and (c) Mr. Wells, Wells Capital and Wells Fund I breached their fiduciary duties to the limited partners. The plaintiffs seek, among other remedies, the following: rescission of all purported class
members purchases of B units and an order for a full refund of all money paid for such units together with interest; judgment against the Wells Defendants, jointly and severally, in an amount to be proven at trial; punitive damages; judicial
dissolution of Wells Fund I and the appointment of a receiver to wind up and terminate the partnership; and an award to plaintiffs of their attorneys fees, costs and expenses.



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##### Table of Contents



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



The following discussion and analysis should be read in conjunction with the Partnerships accompanying financial statements and notes
thereto.



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



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



| |  |  | Fund-raising 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 fund-raising phase, less upfront fees, into the acquisition of real estate assets



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

The period during which real
estate assets are owned and operated by the Partnership during the initial lease terms of the tenants



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

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



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

The period
during which the Partnership positions and markets its real estate investments for sale, sells its real estate investments and distributes net sales proceeds to the partner



Currently, management believes that the Partnership generally straddles the positioning-for-sale phase and the disposition and liquidation
phase. Upon investing all capital proceeds and exiting the investing phase, the Partnership owned interests in six properties through interests in the Joint Ventures. As of March 31, 2004, two properties are fully leased to tenants under renewed
lease terms, one property is approximately 83% leased, one property is vacant, one property was sold in 2001, and part of one property was sold in 2003, while the remainder of this property is 54% occupied as of March 31, 2004.



As the Partnership evolves through the life cycle detailed above, our most significant risks
and challenges continue to evolve concurrently. During the positioning-for-sale phase, we will continue to focus on re-leasing vacant space and space that may become vacant upon the expiration of our current leases. In doing so, we seek to maximize
returns to the limited partners by negotiating long-term leases at market rental rates while attempting to minimize down time, re-leasing expenditures, ongoing property level costs and portfolio costs. As we embark further into the disposition and
liquidation phase, our attention will shift to locating suitable acquirers, negotiating purchase-sale contracts that will attempt to maximize the total return to the limited partners, and minimize contingencies and our post-closing involvement with
the acquirer.



In 2004, net loss increased primarily due to the sale of the
retail portion of Heritage Place in the second quarter of 2003 partially offset by an increase in occupancy of Boeing at the Atrium and the Holcomb Bridge Property



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##### Table of Contents



beginning in the second half of 2003. Cash
flows remained relatively stable in the first quarter of 2004 as compared to the first quarter of 2003.



During 2004, the Partnership anticipates transitioning further into the disposition and liquidation phase. Substantially all of the Partnerships operational revenues are generated from the operations of the
properties in the Partnerships portfolio. On a quarterly basis, we deduct the expenses related to the recurring operations of the properties and the portfolio from such revenues and assess the amount of the remaining cash flows that will be
required to fund known re-leasing costs and other capital improvements. Any residual operating cash flows are considered available for distribution to the limited partners and are generally paid quarterly. As further outlined in section (c) below,
we anticipate reinstating distributions to limited partners once tenants are found for the vacant Louis Rose Building and funding of related leasing costs and tenant improvements required in connection therewith.



Industry Factors



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



General Economic and Real Estate Market Commentary



The U.S. economy appears to be recovering; however, thus far it has been
a jobless recovery, and because of this, real estate office fundamentals may not improve until employment growth strengthens. The economy has shown signs of growth recently, as companies have recommenced making investments in new employees. Job
growth is the most significant demand driver for office markets. The jobless recovery has resulted in a demand deficit for office space. In general, the real estate office market lags behind the overall economic recovery and, therefore, recovery is
not expected until late 2004 or 2005 at the earliest, and then will vary by market.



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



The office market has
significant excess space. Vacancy levels are believed to be at or near their peak. There is some encouraging news, new construction continues to taper off, coming to a complete halt in many markets.



As a result of the slowdown in new construction and the modest decline in
sublease space, net absorption has turned positive, although barely, at year-end. Many industry professionals believe office market fundamentals are bottoming-out; however, a recovery cannot be expected until job growth and corresponding demand for
office space increases.



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



Real
estate funds, such as the Partnership, that contain properties with current vacancies or near-term tenant rollover may face a challenging leasing environment. The properties within these funds will face lower rents and higher concession packages to
the tenants in order to re-lease vacant space.



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



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



Gross Revenues



The Partnership had no gross revenues for the three months ended March 31, 2004 and 2003.



Expenses of the Partnership



Expenses of the Partnership were $8,818 and $5,960 for the three months ended March 31, 2004 and 2003, respectively, and comprised solely of equity in loss of Fund
II-IIOW Associates, which is further described below.



Equity In Loss of Fund II-IIOW Associates



Gross Revenues of Fund II-IIOW Associates



Gross revenues of Fund II-IIOW Associates decreased in 2004, as compared to 2003, resulting primarily from the decrease in equity in income of Joint Ventures as described in the following section.



Equity in Loss of Affiliated Joint Ventures  Continuing
Operations



Gross Revenues of Joint Ventures in
which Fund II-IIOW Associates Holds Interests



Gross
revenues of the joint ventures in which Fund II-IIOW Associates holds interests decreased in 2004, as compared to 2003, primarily due to a decrease in occupancy for the Heritage Place, partially offset by an increase in occupancy for Boeing at the
Atrium and the Holcomb Bridge Property.



Expenses of Joint
Ventures in which Fund II-IIOW Associates Holds Interests



The expenses of the joint ventures in which Fund II-IIOW Associates holds interests increased in 2004, as compared to 2003, primarily due to an increase in operating costs related to the increases in occupancy of Boeing at the Atrium and
the Holcomb Bridge Property.



Equity In Loss of
Affiliated Joint Ventures  Discontinued Operations



On April 7, 2003, the 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.



Equity in income of Fund II-IIOW Associates from discontinued operations of the Joint Ventures decreased for the three months ended March 31, 2004, as
compared to the same period in 2003, due to the sale of the retail portion of Heritage Place on April 7, 2003.



As a result of all of the aforementioned factors, Fund II-IIOW Associates equity in income of Joint Ventures decreased to $34,259 from $93,387 for
the three months ended March 31, 2004 and 2003, respectively.



Expenses of Fund II-IIOW Associates



Expenses
of Fund II-IIOW Associates remained relatively stable at $212,586 in 2004 and $214,402 in 2003.



Net Loss of the Partnership



As
a result of the aforementioned factors, the Partnership reported a net loss of $8,818 and $5,960 for the three months ended March 31, 2004 and 2003, respectively.



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



Cash Flows From Operating Activities



Net cash flows from operating activities were $0 and $(1,166) for the three months ended March 31, 2004 and 2003, respectively. The 2004 increase from 2003 resulted
primarily from the changes in the timing of paying accounts payable.



Distributions



No distributions were paid to the
limited partners holding Class A Units in either the first quarter of 2004 or the first quarter of 2003. The General Partners anticipate that distributions per unit to limited partners holding Class A Units will be reinstated following the
re-leasing of the Louis Rose Building and funding related leasing costs and tenant improvements required in connection therewith. In accordance with the partnership agreement, no distributions have been made to the limited partners holding Class B
Units or to the General Partners.



Sales Proceeds



Rather than distributing to the limited partners, the Partnerships share of the net
proceeds generated from the sales of the Cherokee Commons property and the retail portion of the Heritage Place property are being held in reserve as the General Partners continue to evaluate the capital needs of the existing properties in which the
Partnership holds an interest in consideration of the best interests of the limited partners.



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. In the near term, the General Partners anticipate that the Partnership will utilize capital resources to fund its pro-rata portion of the costs necessary to (i) re-lease the Louis Rose Building, (ii)
increase the occupancy of Heritage Place, and (iii) fund building improvements for Boeing at the Atrium.



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



The Partnership and its Joint Ventures have entered into agreements with Wells Capital and its affiliates, whereby the Partnership or its Joint Ventures pay certain fees
or reimbursements to Wells Capital or its affiliates for property management and leasing fees, and reimbursement of operating and administrative costs. See Note 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.



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|(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 Joint Ventures assets by
class are as follows:



|                      |  |                                      
|--------------------- |  | -------------------------------------
|Building              |  | 25 years                             
|Building improvements |  | Remaining useful life of the building
|Land improvements     |  | 20 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.



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 as of March 31, 2004.



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



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|(g) |  | Certain Litigation involving our General Partners
|--- |  | -------------------------------------------------



On or about March 12, 2004, a putative class action complaint (the complaint) relating to Wells Real Estate Fund I, a public limited partnership that offered
units from September 6, 1984 through September 5, 1986 (Wells Fund I), was filed by four individuals (the plaintiffs) against Leo F. Wells, III, Wells Capital, Wells Investment Securities, Inc., Wells Management, and Wells
Fund I (collectively, the Wells Defendants) (Hendry et al. v. Leo F. Wells, III et al., Superior Court of Gwinnett County, Georgia, Civil Action No. 04-A-2791 2). The Wells Defendants received notice of the complaint on or about
March 19, 2004. The plaintiffs filed the complaint purportedly on behalf of all limited partners holding B units of Wells Fund I as of January 15, 2003. The complaint alleges, among other things, that (a) during the offering period (September 6,
1984 through September 5, 1986), Mr. Wells, Wells Capital, Wells Investment Securities, Inc., and Wells Fund I negligently or fraudulently made false statements and made material omissions in connection with the initial sale of the B units to
investors of Wells Fund I by making false statements and omissions in the Wells Fund I sales literature relating to the distribution of net sale proceeds to holders of B units; (b) Mr. Wells, Wells Capital, and Wells Fund I negligently or
fraudulently misrepresented and concealed disclosure of, among other things, alleged discrepancies between such statements and the provisions in the partnership agreement for a period of time in order to delay such investors from taking any legal,
equitable or other action to protect their investments in Wells Fund I, among other reasons; and (c) Mr. Wells, Wells Capital, and Wells Fund I breached their fiduciary duties to the limited partners. The plaintiffs seek, among other remedies, the
following: rescission of all purported class members purchases of B units and an order for a full refund of all money paid for such units together with interest; judgment against the Wells Defendants, jointly and severally, in an amount to be
proven at trial; punitive damages; judicial dissolution of Wells Fund I and the appointment of a receiver to wind up and terminate the partnership; and an award to plaintiffs of their attorneys fees, costs and expenses.



|(h) |  | Subsequent Event
|--- |  | ----------------



On April 6, 2004, Fund II-III Associates and Fund II-III-VI-VII Associates (collectively, the Seller) entered into an agreement to sell the two properties listed below to an unrelated third party (the
Purchaser) for a gross sales price of $9,500,000. This transaction is currently subject to a due diligence period expiring on May 21, 2004, during which the Purchaser has the right to terminate the agreement for any reason. Accordingly,
there are no assurances that this sale will close.



|                              |  |                                                                                               |  |                                                                               
|----------------------------- |  | --------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|                             
|                              |  |                                                                                              
|Seller                        |  | Joint Venture Partners                                                                        |  | Properties                                                                    
|                             
|Fund II-III Associates        |  |  Fund II-IIOW Associates  Wells Real Estate Fund III, L.P.                                  |  | 1. Brookwood Grill A restaurant located in Fulton County, Georgia             
|                             
|Fund II-III-VI-VII Associates |  |  Fund II-III Associates  Wells Real Estate Fund VI, L.P.  Wells Real Estate Fund VII, L.P. |  | 2. Holcomb Bridge Property An office/retail center located in Roswell, Georgia
|                             



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.



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##### Table of Contents



ITEM 4.    CONTROLS AND PROCEDURES



The Partnership carried out an evaluation, under the supervision and with the participation of management of Wells Capital, the corporate general partner of the Partnership, including the Principal Executive Officer and Principal 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 controls over financial reporting that have materially affected, or are reasonably likely to
materially affect, the Partnerships internal control over financial reporting.



PART II.    OTHER INFORMATION



ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K



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



|(b) |  | On March 26, 2004, the Partnership filed a Current Report on Form 8-K dated March 26, 2004 disclosing certain litigation which had been filed against our General Partners, Leo
Wells, and Wells Capital, Inc., and certain other Wells affiliated entities.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 II-OW
|             |  | (Registrant)                
|             | 
|             |  | By: WELLS CAPITAL, INC.     
|             |  | (Corporate General Partner) 
|             | 
|May 10, 2004 |  | /S/    LEO F. WELLS, III    
|             |  |                             
|             |  | Leo F. Wells, III           
|             |  | President                   
|             | 
|May 10, 2004 |  | /S/    DOUGLAS P. WILLIAMS  
|             |  |                             
|             |  | Douglas P. Williams         
|             |  | Principal Financial Officer 
|             |  | of Wells Capital, Inc.      



Page 20



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##### Table of Contents

EXHIBIT INDEX

TO

FIRST QUARTER FORM 10-Q

OF

WELLS REAL ESTATE FUND II-OW



|            |  |                                                                                                                               
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                   
|            | 
|31.1        |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        
|            | 
|31.2        |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                        
|            | 
|32.1        |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



|
|