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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, 2003



OR



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



For the transition period from
 to



Commission
file number 0-17876



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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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FORM 10-Q



WELLS REAL ESTATE FUND II-OW



(A Georgia Public Limited Partnership)



INDEX



|         |  |                       |  |                                                                                                                            |  | Page No.
|-------- |  | --------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | --------
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                           
|        
|         |  | Item 1.               |  | Financial Statements                                                                                                       |  |         
|        
|         |  |                       |  | Balance SheetsMarch 31, 2003 (unaudited) and December 31, 2002                                                            |  | 3       
|        
|         |  |                       |  | Statements of Loss for the Three Months Ended March 31, 2003 and 2002 (unaudited)                                          |  | 4       
|        
|         |  |                       |  | Statements of Partners Capital for the Three Months Ended March 31, 2003 (unaudited) and the Year Ended December 31, 2002 |  | 5       
|        
|         |  |                       |  | Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 (unaudited)                                    |  | 6       
|        
|         |  |                       |  | Condensed Notes to Financial Statements (unaudited)                                                                        |  | 7       
|        
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                      |  | 12      
|        
|         |  | Item 3.               |  | Quantitative and Qualitative Disclosures about Market Risks                                                                |  | 16      
|        
|         |  | Item 4.               |  | Controls and Procedures                                                                                                    |  | 16      
|        
|PART II. |  | OTHER INFORMATION     |  | 17                                                                                                                        





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WELLS REAL
ESTATE FUND II-OW



(A Georgia Public
Limited Partnership)



BALANCE SHEETS



|                                        |  | (unaudited) March 31, 2003 |           | December 31, 2002
|--------------------------------------- |  | -------------------------- | --------- | -----------------
|ASSETS:                                 |  |                            |           |                  
|Investments in Joint Venture (Note 2)   |  | $                          | 820,478   |                  
|Cash and cash equivalents               |  |                            | 21,944    |                  
|Due from Joint Venture                  |  |                            | 173,702   |                  
|                                        |  |                            |           |                  
|Total assets                            |  | $                          | 1,016,124 |                  
|                                        |  |                            |           |                  
|LIABILITIES AND PARTNERS CAPITAL:      |  |                            |           |                  
|Liabilities:                            |  |                            |           |                  
|Accounts payable                        |  | $                          | 872       |                  
|                                        |  |                            |           |                  
|Partners capital:                      |  |                            |           |                  
|Limited partners:                       |  |                            |           |                  
|Class A6,062 units                     |  |                            | 1,015,252 |                  
|Class B1,626 units                     |  |                            | 0         |                  
|                                        |  |                            |           |                  
|Total partners capital                 |  |                            | 1,015,252 |                  
|                                        |  |                            |           |                  
|Total liabilities and partners capital |  | $                          | 1,016,124 |                  
|                                        |  |                            |           |                  



See
accompanying notes.



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WELLS REAL
ESTATE FUND II-OW



(A Georgia Public
Limited Partnership)



STATEMENTS OF LOSS



|                                                   |  | (unaudited) Three Months Ended |       
|-------------------------------------------------- |  | ------------------------------ | ------
|                                                   |  | March 31, 2003                 |       
|REVENUES:                                          |  |                                |       
|Equity in loss of Joint Venture (Note 2)           |  | $                              | (5,960
|                                                   |  |                                |       
|EXPENSES                                           |  |                                |       
|Legal and Accounting                               |  |                                | 0     
|                                                   |  |                                |       
|NET LOSS                                           |  | $                              | (5,960
|                                                   |  |                                |       
|NET LOSS ALLOCATED TO CLASS A LIMITED PARTNERS     |  | $                              | (5,960
|                                                   |  |                                |       
|NET LOSS ALLOCATED TO CLASS B LIMITED PARTNERS     |  | $                              | 0     
|                                                   |  |                                |       
|NET LOSS PER CLASS A LIMITED PARTNER UNIT          |  | $                              | (0.98 
|                                                   |  |                                |       
|NET LOSS PER CLASS B LIMITED PARTNER UNIT          |  | $                              | 0.00  
|                                                   |  |                                |       
|CASH DISTRIBUTION PER CLASS A LIMITED PARTNER UNIT |  | $                              | 0.00  
|                                                   |  |                                |       



See
accompanying notes.





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WELLS REAL
ESTATE FUND II-OW



(A Georgia Public
Limited Partnership)



STATEMENTS OF PARTNERS CAPITAL



FOR THE YEAR ENDED DECEMBER 31, 2002 AND



THREE MONTHS ENDED MARCH 31, 2003 (UNAUDITED)



|                                    |  | Limited Partners |  | Total Partners Capital |          
|----------------------------------- |  | ---------------- |  | ----------------------- | ---------
|                                    |  | Class A          |  |                         | Class B  
|                                    |  | Units            |  | Amounts                 |          
|BALANCE, December 31, 2001          |  | 6,062            |  | $                       | 1,082,635
|Net loss                            |  | 0                |  |                         | (61,423  
|                                    |  |                  |  |                         |          
|BALANCE, December 31, 2002          |  | 6,062            |  |                         | 1,021,212
|Net loss                            |  | 0                |  |                         | (5,960   
|                                    |  |                  |  |                         |          
|BALANCE, March 31, 2003 (unaudited) |  | 6,062            |  | $                       | 1,015,252
|                                    |  |                  |  |                         |          



See
accompanying notes.



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WELLS REAL
ESTATE FUND II-OW



(A Georgia Public
Limited Partnership)



STATEMENTS OF CASH FLOWS



|                                                                            |  | (unaudited) Three Months Ended |        
|--------------------------------------------------------------------------- |  | ------------------------------ | -------
|                                                                            |  | March 31, 2003                 |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |                                |        
|Net loss                                                                    |  | $                              | (5,960 
|Adjustments to reconcile net loss to net cash used in operating
activities: |  |                                |        
|Equity in loss of Joint Venture                                             |  |                                | 5,960  
|Changes in assets and liabilities:                                          |  |                                |        
|Accounts payable                                                            |  |                                | (1,166 
|                                                                            |  |                                |        
|Net cash used in operating activities                                       |  |                                | (1,166 
|                                                                            |  |                                |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |  |                                |        
|Distributions received from to Joint Venture                                |  |                                | 0      
|                                                                            |  |                                |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                   |  |                                | (1,166 
|                                                                           
|CASH AND CASH EQUIVALENTS, beginning of period                              |  |                                | 23,110 
|                                                                            |  |                                |        
|CASH AND CASH EQUIVALENTS, end of period                                    |  | $                              | 21,944 
|                                                                            |  |                                |        
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                             |  |                                |        
|Joint venture distributions receivable                                      |  | $                              | 173,702
|                                                                            |  |                                |        



See
accompanying notes.



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WELLS REAL
ESTATE FUND II-OW



(A Georgia Public
Limited Partnership)



CONDENSED NOTES TO FINANCIAL STATEMENTS



MARCH 31, 2003 (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. serving as its General Partners. The Partnership was formed on October 13, 1987 for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing, and otherwise 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 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 REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)



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The
Partnership owns interests in all of its real estate assets through joint ventures with other Wells Real Estate Funds. As of March 31, 2003, the Partnership owned interests in the following five properties through the affiliated joint ventures
listed below:



|Joint Venture                                                             |  | Joint Venture Partners                                                                        |  | Properties                                                                                   
|------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------
|                                                                         
|Fund I and Fund II (Fund I-II Tucker Associates)                        |  |  Wells Real Estate Fund I  Fund II-IIOW Associates                                          |  | 1.  Heritage Place A retail shopping and commercial office complex located in Tucker, Georgia
|                                                                         
|Fund II and Fund II-OW (Fund II-IIOW Associates or the Joint
Venture) |  |  Wells Real Estate Fund II  Wells Real Estate Fund IIOW                                     |  | 2.  Louis Rose Building A two story office building located in Charlotte, North Carolina     
|                                                                         
|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 Fulton County, 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              
|                                                                         



On
October 1, 2001, Fund I-II-IIOW-VI-VII Associates, a joint venture among Wells Real Estate Fund I, Fund II-IIOW Associates, Wells Real Estate Fund VI, L.P. and Wells Real Estate Fund VII, L.P., sold the Cherokee Commons property to an unrelated
third party. The Cherokee Commons property is a retail shopping center located in Cherokee County, Georgia.



Each of the above properties was acquired on an all cash basis. For 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, 2002.



(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. The quarterly statements included herein have not been examined by independent auditors. However, in the opinion of the General Partners, the statements for the unaudited interim
periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly present the results for 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, 2002.



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



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



(d) Distributions of Net Cash From Operations



Cash available for distribution is
distributed on a cumulative noncompounded basis to limited partners quarterly. In accordance with the partnership agreement, distributions are paid first to limited partners holding Class A units until they have received an 8% per annum return on
their adjusted capital contributions, as defined. Cash available for distribution is then distributed to limited partners holding Class B units until they have received an 8% per annum return on their 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 limited partners for the year. Thereafter, cash available for distribution is distributed 90% to the 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 described above; however, it does exercise significant
influence. Accordingly, the Partnerships investment in its joint ventures are recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions and net
income (loss) attributable to the Partnership. For further information, refer to the report filed for the Partnership on Form 10-K for the year ended December 31, 2002.



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(b) Summary
of Operations



The following information
summarizes the operations of the Joint Venture, in which the Partnership holds a direct ownership interest, for the three months ended March 31, 2003 and 2002, respectively:



|                        |  | Total Revenues     |         |                | Net Income         |          |                | Partnerships Share of Income |  
|----------------------- |  | ------------------ | ------- | -------------- | ------------------ | -------- | -------------- | ----------------------------- | -
|                        |  | Three Months Ended |         |                | Three Months Ended |          |                | Three Months Ended            |  
|                        |  | March 31, 2003     |         | March 31, 2002 |                    |          | March 31, 2003 |                               |  
|Fund II-IIOW Associates |  | $                  | 102,164 |                | $                  | (114,654 | )*             |                               | $
|                        |  |                    |         |                |                    |          |                |                               |  

| | * |  | The Partnerships share of income earned from its investments in the joint ventures presented in section (c) is recorded by Fund II-IIOW Associates as equity
in (loss) income of joint ventures, which is classified as revenue.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(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, 2003 and 2002, respectively:



|                                 |  | Total Revenues     |         |    | Net Income         |   |         | Fund II-IIOW Associates Share of Net Income* | 
|-------------------------------- |  | ------------------ | ------- | -- | ------------------ | - | ------- | --------------------------------------------- | 
|                                 |  | Three Months Ended |         |    | Three Months Ended |   |         | Three Months Ended                            | 
|                                 |  | March 31, 2003     |         |    | March 31, 2002     |   |         | March 31, 2003                                | 
|Fund I-II Tucker Associates      |  | $                  | 320,626 |    |                    | $ | 364,160 |                                               | 
|Fund I-II-IIOW-VI-VII Associates |  |                    | 0       |    |                    |   | 43,326  |                                               | 
|Fund II-III Associates           |  |                    | 520,988 | ** |                    |   | 166,501 | **                                            | 
|                                 |  |                    |         |    |                    |   |         |                                               | 
|                                 |  | $                  | 841,614 |    |                    | $ | 573,987 |                                               | 
|                                 |  |                    |         |    |                    |   |         |                                               | 

| | * |  | The Partnerships share of income earned from its investments in the joint ventures presented is recorded by Fund II-IIOW Associates as equity in (loss)
income of joint ventures, which is classified as revenue.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ** |  | 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.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(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, 2003 and March 31, 2002, respectively:



|                              |  | Total Revenues     |         | Net Income         |   | Fund II-IIOW Associates Share of Net Income*
|----------------------------- |  | ------------------ | ------- | ------------------ | - | ---------------------------------------------
|                              |  | Three Months Ended |         | Three Months Ended |   | Three Months Ended                           
|                              |  | March 31, 2003     |         | March 31, 2002     |   | March 31, 2003                               
|Fund II-III-VI-VII Associates |  | $                  | 135,573 |                    | $ | 186,082                                      
|                              |  |                    |         |                    |   |                                              



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|3. |  | RECENT ACCOUNTING PRONOUNCEMENTS
|-- |  | --------------------------------



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



In August 2001, SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (effective beginning January 1, 2002) was issued. SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of and
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. Among other factors, SFAS No. 144 establishes criteria beyond that previously specified in SFAS No. 121 to determine
when a long-lived asset is to be considered held for sale. We believe that the adoption of SFAS No. 144 will not have a significant impact on the Partnerships financial statements.



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



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. For the three months ended March 31, 2003 and 2002, the properties in which the Partnerships owns
interest paid management and leasing fees to Wells Management of $45,254 and $49,601, respectively.



Administration Reimbursements

Wells Capital, Inc. and its affiliates perform certain administrative services for the Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such
expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel. For the quarters ended March 31, 2003 and 2002, the Partnership reimbursed $22,195 and $11,205, respectively,
to Wells Capital, Inc. and its affiliates for these services.



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Conflicts of Interests

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



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



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



(a) Forward Looking Statements



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



(b) Results of Operations



Gross Revenues

Gross revenues of the Partnership were $(5,960)
and $(16,171) for the three months ended March 31, 2003 and 2002, respectively. The 2003 increase from 2002 resulted primarily from the corresponding change in equity in loss of Joint Venture, which is further described below.



Equity In Loss of Joint Venture



Gross Revenues of Joint Ventures

Gross revenues of the joint ventures in which the Joint Venture holds an interest increased in 2003, as compared to 2002, primarily due to
an increase in occupancy of Boeing at the Atrium from 0% as of March 31, 2002 to approximately 80% as of March 31, 2003. As a result of these increased revenues, equity in loss of joint venture decreased from $(16,171) in the first quarter of 2002
to $(5,960) in the first quarter of 2003



Expenses of Joint Ventures

The expenses of the joint ventures in which the Joint Venture holds
an interest increased in 2003, as compared to 2002, primarily due to an increase in administrative salaries and legal and accounting fees as a result of changing independent auditors in 2002 and evaluating various liquidation alternatives for the
Partnerships portfolio of properties.



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Expenses

Expenses of the Partnership were $0 and $5,972 for the three months ended March 31, 2003 and 2002, respectively. The
2003 decrease from 2002 resulted from a change in the methodology for allocating certain legal and accounting costs and administration expenses related to the Partnership. As all of the Partnerships operations are generated from investments
held through its interest in Fund II-IIOW Associates, all such costs have been allocated and paid at the Fund II-IIOW Associates level during 2003.



As a result, net loss of the Partnership was $(5,960) and $(22,143) for the three months ended March 31, 2003 and 2002, respectively.



(c) Liquidity and Capital Resources



Cash Flows From Operating Activities

Net cash flows from operating activities was $(1,166) for the three months ended March 31, 2003 and $(4,236) for the
three months ended March 31, 2002. The 2003 decrease in operating cash flows used from 2002 resulted primarily from a change in the timing of payments of partnership withholding taxes in the first quarter of 2003, as compared to 2002.



Cash Flows From Investing Activities

Net cash flows from investing activities was $0 and $2,808 for the three months ended March 31, 2003 and 2002,
respectively. The 2003 decrease in investing cash flows used from 2002 resulted primarily from investing funds in Fund II-IIOW Associates in 2002 in order to fund administrative salary costs and accounting and legal fees at the joint venture level.
Fund II-IIOW Associates continues to reserve operating cash flows in 2003 in order to fund the remaining tenant improvements for Boeing at the Atrium and future anticipated capital expenditures and leasing costs anticipated in connection with the
re-leasing of Louis Rose Building during the second half of 2003.



Cash Flows From Financing Activities

Net cash flows from financing activities was $0
for the three months ended March 31, 2003 and 2002, as the Partnerships has withheld distributions to limited partners holding Class A units in order to fund tenant improvements and leasing costs for Boeing at the Atrium and future lease-up costs
anticipated for Louis Rose Building during the both periods.



Distributions

No distributions were paid to the limited partners in either the first quarter
of 2003 or the first quarter of 2002. The General Partners anticipate that distributions per unit to limited partners holding Class A Units will be reinstated upon releasing Louis Rose Building.



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 is 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, directly and through investments in joint ventures, in
consideration of the best interests of the limited partners.



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Capital
Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning and operating
income-producing real properties and has invested all of its funds available for investment. Accordingly, it is unlikely that the Partnership will acquire interests in any additional properties. The Partnership intends to fund its share of the
remaining tenant improvements and leasing costs for Boeing at the Atrium, which are anticipated to be completed during 2003 and cost approximately $160,000, of which approximately $5,000 is attributable to the Partnership. During the first quarter
of 2003, American Trust Bank entered into a 10-year lease agreement for approximately 13,000 square feet of the Holcomb Bridge Property. In connection therewith, Fund II-III-VI-VII Associates anticipates funding tenant improvements of approximately
$128,000 during the second and third quarters of 2003, of which approximately $1,000 would be attributable to the Partnership.



(d) Related-Party Transactions



The Partnership and its joint ventures have entered into agreements with Wells Capital, Inc. and its affiliates, whereby the Partnership
or its joint ventures pay certain fees or reimbursements to Wells Capital, Inc.. or its affiliates for sales commissions, dealer manager fees, property management and leasing fees, and reimbursement of operating costs. See Note 4 to the
Partnerships financial statements included in this report for a discussion of the various related party transactions, agreements and fees.



(e) Inflation



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



(f) Application of Critical Accounting Policies



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



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



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



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



Valuation of Real Estate Assets

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



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



(g) Subsequent Event



On April 7, 2003, Fund I-II Tucker Associates sold a retail
shopping center containing approximately 29,858 rentable square feet located in Tucker, Dekalb County, Georgia (the Heritage Retail Center Property) for a $3.4 million sales price. The Heritage Retail Center Property, along with a
commercial office building complex divided into seven separate buildings containing approximately 67,465 rentable square feet, is collectively known as Heritage Place. Fund I-II Tucker Associates still owns the commercial office building complex
portion of this property. The Fund II-Fund IIOW Associates is a joint venture in which the Partnership owns approximately a 5% equity interest, and Wells Real Estate Fund II owns approximately a 95% equity interest. Through its interest in Fund
II-Fund IIOW Associates, the Partnership holds approximately a 2.6% equity interest in Fund I-II Tucker Associates. The net proceeds allocable to the Partnership as a result of the sale of the Heritage Retail Center Property were approximately
$80,000. The Partnership recognized a gain of approximately $12,000 from the sale of the Heritage Retail Center Property.



15



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##### Table of Contents



ITEM
3.    
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS



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



ITEM 4.    
CONTROLS AND PROCEDURES



Within the 90 days prior to the date of this report, the Partnership carried out an evaluation, under the supervision and with the participation of management of Wells Capital, Inc., 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 pursuant to Rule 13a  14 under 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 or other factors that could significantly affect such controls subsequent to the date of their evaluation.





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##### Table of Contents



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) |  | 
|--- |  | 



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:                                              
|            |  | (Corporate General
Partners)                     
|           
|May 9, 2003 |  | /s/ LEO F. WELLS, III                            
|            |  | Leo F. Wells, III                                
|            |  | President                                        
|           
|May 9, 2003 |  | /s/ DOUGLAS P. WILLIAMS                          
|            |  | Douglas P. Williams                              
|            |  | Principal Financial Officerof Wells Capital, Inc.



17



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##### Table of Contents



CERTIFICATIONS



I, Leo F. Wells,
III, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of the Partnership;
|-- |  | ----------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared,
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the board of
directors of the corporate General Partner:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|           
|-----------
|May 9, 2003
|           
|           



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##### Table of Contents



CERTIFICATIONS



I, Douglas P.
Williams, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of the Partnership;
|-- |  | ----------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared,
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report
(the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the board of
directors of the corporate General Partner:
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|           
|-----------
|May 9, 2003
|           
|           

|
|



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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                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------
|99.1        |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|           
|99.2        |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002



20