UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, ~~2007~~2009 or

¨or ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

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 0-16518

WELLS REAL ESTATE FUND II

(Exact name of registrant as specified in its charter)


Georgia		58-1678709
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

6200 The Corners Pkwy., Norcross, Georgia		30092-3365
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code		(770) 449-7800

N/A

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

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

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer~~posted on its corporate Web site, ~~an accelerated~~if ~~filer~~any, orevery aInteractive ~~non-accelerated~~Data ~~filer~~File ~~(as~~required ~~defined~~to inbe submitted and posted pursuant to Rule ~~12b~~405 of Regulation S-2T (§232.405 of this chapter) during the ~~Exchange~~preceding ~~Act~~12 months (or for such shorter period that the registrant was required to submit and post such files). [Not yet applicable to registrant.] Yes ¨ No ¨

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer ~~¨ Accelerated~~, an accelerated filer ~~¨ Non~~, a non-accelerated filer x, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

~~Indicate~~Large byaccelerated ~~check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~filer ¨ No Accelerated filer x¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Any such forward-looking statements are subject to unknown risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual results, our ability to meet such forward-looking statements, including our ability to generate positive cash flow from operations, provide distributions to partners, and maintain the value of our real estate properties, may be significantly hindered. See Item 1A. in the Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008 for a discussion of some of the risks and uncertainties, although not all risks and uncertainties, which could cause actual results to differ materially from those presented in our forward-looking statements.

Page 2

WELLS REAL ESTATE FUND II

TABLE OF CONTENTS

			Page No.
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Balance Sheets – March 31, 2007 (unaudited) and December 31, 2006	5
		Balance Sheets – March 31, 2009 (unaudited) and December 31, 2008	5
		Statements of Operations for the Three Months Ended March 31, 2007 (unaudited) and 2006 (unaudited)	6
		Statements of Operations for the Three Months Ended March 31, 2009 (unaudited) and 2008 (unaudited)	6
		Statements of Partners’ Capital for the Year Ended December 31, 2006 and the Three Months Ended March 31, 2007 (unaudited)	7
		Statements of Partners’ Capital for the Year Ended December 31, 2008 and the Three Months Ended March 31, 2009 (unaudited)	7
		Statements of Cash Flows for the Three Months Ended March 31, 2007 (unaudited) and 2006 (unaudited)	8
		Statements of Cash Flows for the Three Months Ended March 31, 2009 (unaudited) and 2008 (unaudited)	8
		Condensed Notes to Financial Statements (unaudited)	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2021
	Item 4.	Controls and Procedures	21
	Item 4T.	Controls and Procedures	21
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	21
	Item 1A.	Risk Factors	2122
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2122
	Item 3.	Defaults Upon Senior Securities	2122
	Item 4.	Submission of Matters to a Vote of Security Holders	2122
	Item 5.	Other Information	22
	Item 6.	Exhibits	22

Page 3

PART I.

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

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

The accompanying financial statements should be read in conjunction with the notes to the Partnership’s financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included both in this report on Form 10-Q and in the Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008. The Partnership’s results of operations for the three months ended March 31, ~~2007~~2009 are not necessarily indicative of the operating results expected for the full year.

Page 4

WELLS REAL ESTATE FUND II

BALANCE SHEETS

ASSETS

	(Unaudited) March 31,2007		December 31,2006
	(Unaudited) March 31,		December 31,
Investment in Fund II and Fund II-OW	$	7,742,495	$	7,881,412
	2009		2008
Due from Fund II and Fund II-OW		3,222,448		3,137,437
Investment in Fund II and Fund II-OW	$	7,270,376	$	7,889,286
Cash and cash equivalents		~~116~~27,~~840~~832		~~116~~27,~~840~~832
Total assets	$	117,~~081~~298,~~783~~208	$	117,~~135~~917,~~689~~118
PARTNERS’ CAPITAL
Limited partners:
Class A – 108,572 units issued and outstanding	$	7,298,208	$	7,917,118
Class B – 30,220 units issued and outstanding		0		0
General partners		0		0
Total partners’ capital	$	7,298,208	$	7,917,118

LIABILITIES AND PARTNERS’ CAPITAL

PARTNERS’ CAPITAL:
Limited partners:
Class A – 108,572 units issued and outstanding	$	11,081,783	$	11,135,689
Class B – 30,221 units issued and outstanding		0		0
General partners		0		0
Total partners’ capital		11,081,783		11,135,689
Total liabilities and partners’ capital	$	11,081,783	$	11,135,689

See accompanying notes.

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WELLS REAL ESTATE FUND II

STATEMENTS OF OPERATIONS

	(Unaudited) Three Months Ended March 31,
	(Unaudited)Three Months EndedMarch 31,
	2007			2006
	2009			2008
EQUITY IN LOSS OF FUND II AND FUND II-OW	$	(53618,~~906~~910	)	$	(~~411~~153,~~928~~500	)
NET LOSS	$	(53618,~~906~~910	)	$	(~~411~~153,~~928~~500	)
NET LOSS ALLOCATED TO LIMITED PARTNERS:
CLASS A	$	(53618,~~906~~910	)	$	(~~411~~153,~~928~~500	)
CLASS B	$	0		$	0
NET LOSS PER LIMITED PARTNER UNIT:
CLASS A		$(05.5070	)		$(31.7941	)
CLASS B		$ 0.00			$ 0.00

See accompanying notes.

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WELLS REAL ESTATE FUND II

STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEAR ENDED DECEMBER 31, ~~2006~~2008

AND THE THREE MONTHS ENDED MARCH 31, ~~2007~~2009 (UNAUDITED)

	Limited Partners									GeneralPartners	~~GeneralPartners~~	TotalPartners’Capital		~~TotalPartners’Capital~~
	Class A				Class B
	Units	Amount			Units		~~Amount~~	Amount
BALANCE, December 31, 2005	108,572	$	17,677,311		30,221		$	0			$	0		$	17,677,311
BALANCE, December 31, 2007	108,572	$	10,750,631		30,221			$0		$0		$	10,750,631
Net income (loss)	0		(6,538,481	)	0			5,996,859				0			(541,622	)
Class B limited partner rescission	0		0		(1	)		0		0			0
Distributions of net sale proceeds ($0.03 and $198.43 per Class A and Class B Unit, respectively)	0		(3,141	)	0			(5,996,859	)			0			(6,000,000	)
Net loss	0		(2,833,513	)	0			0		0			(2,833,513	)
BALANCE, December 31, 2006	108,572		11,135,689		30,221			0				0			11,135,689
BALANCE, December 31, 2008	108,572		7,917,118		30,220			0		0			7,917,118
Net loss	0		(53618,~~906~~910	)	0			0		0		0	(618,910	)	~~(53,906~~	)
BALANCE, March 31, 2007	108,572	$	11,081,783		30,221		$	0			$	0		$	11,081,783
BALANCE, March 31, 2009	108,572	$	7,298,208		30,220			$0		$0		$	7,298,208

See accompanying notes.

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WELLS REAL ESTATE FUND II

STATEMENTS OF CASH FLOWS

	(Unaudited) Three Months EndedMarch 31,
	(Unaudited)Three Months EndedMarch 31,
	2007			2006
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(53618,~~906~~910	)	$	(~~411~~153,~~928~~500	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in loss of Fund II and Fund II-OW		53618,~~906~~910			~~411~~153,~~928~~500
Net cash provided by operating activities		0			0
CHANGE IN CASH AND CASH EQUIVALENTS		0			0
CASH AND CASH EQUIVALENTS, beginning of period		~~116~~27,~~840~~832			116,840
CASH AND CASH EQUIVALENTS, end of period	$	~~116~~27,~~840~~832		$	116,840

See accompanying notes.

Page 8

WELLS REAL ESTATE FUND II

CONDENSED NOTES TO FINANCIAL STATEMENTS

MARCH 31, ~~2007~~2009 (unaudited)

1.	ORGANIZATION AND BUSINESS

Wells Real Estate Fund II (the “Partnership”) is a public limited partnership organized on June 23, 1986 under the laws of the state of Georgia with Leo F. Wells, III and Wells Capital, Inc. (“Wells Capital”), a Georgia corporation, serving as its general partners (collectively, the “General Partners”). Wells Capital is a wholly owned subsidiary of Wells Real Estate Funds, Inc. (“WREF”). Leo F. Wells, III is the president and sole director of Wells Capital and the president, sole director, and sole owner of ~~Wells Real Estate Funds, Inc~~WREF. The Partnership has two classes of limited partnership interests, Class A and Class B Units. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations; (b) change the business purpose or investment objectives of the Partnership; and (c) remove a general partner. A majority vote on any of the above-described matters will bind the Partnership, without the concurrence of the General Partners. Each limited partnership unit has equal voting rights, regardless of class.

On September 8, 1986, the Partnership commenced an offering of up to $50,000,000 of Class A or Class B limited partnership units ($250.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The offering was terminated on on September 7, 1988, at which time the Partnership had sold approximately 139,793 Class A and Class B Units representing total limited partner capital contributions of $34,948,250. Following the termination of the offering, the Partnership repurchased 1,000 limited partnership units. Since the termination of the offering in 1988, the total number of outstanding Class B Units has decreased to 30,220 due to the rescission of one Class B unit.

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

Joint Venture	Joint Venture Partners	Properties
Fund II and Fund II-OW	• Wells Real Estate Fund II • Wells Real Estate Fund II-OW	1. Louis Rose Building(1) A two-story office building located in Charlotte, North Carolina
Fund I and Fund II Tucker	• Wells Real Estate Fund I • Fund II and Fund II-OW	2. Heritage Place(1) A commercial office complex located in Tucker, Georgia
Fund I and Fund II Tucker(2)	• Wells Real Estate Fund I • Fund II and Fund II-OW	No properties were owned by this joint venture during the periods presented.
Fund II and Fund III Associates (“Fund II-III Associates”)	• Fund II and Fund II-OW • Wells Real Estate Fund III, L.P.	32. ~~Boeing~~2100 atSpace ~~the~~Park ~~Atrium~~Drive(3) A four-story office building located in Houston, Texas

(1) ~~The~~This ~~retail portion of this~~ property ~~(approximately 30%)~~ was sold in April ~~2003 and the remaining office component of this property was sold in May 2006~~2009.

~~Wells~~(2) ~~Real~~This ~~Estate~~joint ~~Fund~~venture ~~I, Wells Real Estate Fund II-OW, and Wells Real Estate Fund III, L.P. are affiliated with the Partnership through one or more common general partners. Each of the properties described above~~ was ~~acquired~~liquidated ~~on an all-cash basis. For further information regarding the Joint Ventures~~ and ~~foregoing properties,~~dissolved ~~refer~~in toFebruary ~~the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2006~~2008.

On(3) ~~May 10,~~This ~~2006,~~property ~~Fund~~was ~~I and Fund II Tucker~~ sold ~~the~~in ~~office~~April ~~component of Heritage Place to an unrelated third party for a gross sale price of $4,215,000~~2009. ~~As a result of the sale, Fund I and Fund II Tucker received net sale~~

Page 9

~~proceeds~~Wells ofReal ~~approximately~~Estate ~~$4,028,000,~~Fund ofII-OW ~~which~~and ~~approximately~~Wells ~~$1,834,000~~Real ~~was~~Estate ~~distributed~~Fund III, ~~to the Partnership~~L.P. Asare ofaffiliated ~~March 31,~~with ~~2006,~~the ~~Fund~~Partnership Ithrough ~~and Fund II~~common ~~Tucker~~general ~~recognized~~partners. anWells ~~impairment~~Real ~~loss~~Estate ofFund ~~approximately~~I ~~$795,000~~was inaffiliated ~~order~~with ~~to reduce~~ the ~~carrying~~Partnership ~~value~~through ofcommon ~~Heritage~~general ~~Place~~partners prior to its ~~estimated~~dissolution. ~~fair~~Each ~~value,~~of ~~less~~the ~~costs~~properties todescribed ~~sell,~~above ~~and~~was ~~recognized~~acquired on an ~~additional~~all-cash ~~loss~~basis. onFor ~~sale~~further ofinformation ~~approximately~~regarding ~~$10,000. Approximately~~the ~~$362,000~~Joint Ventures and $5foregoing properties,~~000~~ ofrefer to the ~~impairment~~Partnership’s ~~loss~~Annual ~~and~~Report ~~loss~~ on ~~sale~~Form ~~were~~10-K ~~allocable~~for to the ~~Partnership~~year ended December 31, ~~respectively~~2008.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Partnership have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and in accordance with such rules and regulations, do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of the General Partners, the statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary to fairly and consistently present the results for such periods. Results for interim periods are not necessarily indicative of full-year results. For further information, refer to the financial statements and footnotes included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008.

Investment in Fund II and Fund II-OW

The Partnership has evaluated the Joint Ventures and concluded that none are variable interest entities ~~under the provisions of Financial Accounting Standards Board Interpretation (“FIN”) No~~. ~~46(R),~~ ~~Consolidation of Variable Interest Entities, which supersedes FIN No. 46 and is an interpretation of Accounting Research Bulletin (“ARB”) No. 51, Consolidated Financial Statements.~~ The Partnership does not have control over the operations of Fund II and Fund II-OW; however, it does exercise significant influence. Approval by the Partnership as well as the other joint venture partners is required for any major decision or any action that would materially affect the Joint Ventures, or their real property investments. Accordingly, ~~upon applying~~ the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 94, Consolidation of All Majority-Owned Subsidiaries, ARB No. 51, and Statement of Position No. 78-9, Accounting for Investments In Real Estate Ventures, the Partnership accounts for its investments in Fund II and Fund II-OW using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions, and net income (loss) attributable to the Partnership. Pursuant to the terms of the joint venture agreements, all income (loss) and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net cash from operations, if available, are generally distributed to the joint venture partners on a quarterly basis.

~~Impairment~~Evaluating the Recoverability of Real Estate Assets

The Partnership continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets owned through the Partnership’s investment in the Joint Ventures may not be recoverable. ~~pursuant~~When toindicators ~~Accounting~~of ~~Principles~~potential ~~Board~~impairment ~~Opinion~~are ~~No. 18,~~present ~~The~~which ~~Equity~~suggest that ~~Method~~the ofcarrying ~~Accounting~~amounts ~~for~~of ~~Investments~~real inestate ~~Common~~assets ~~Stock,~~may ~~and~~not ~~SFAS~~be ~~No. 144~~recoverable, ~~Accounting~~management ~~for~~assesses the ~~Impairment~~recoverability ~~or Disposal~~ of ~~Long-Lived~~the ~~Assets. When~~real ~~indicators~~estate ofassets ~~potential~~by ~~impairment~~determining ~~are present, management assesses~~ whether the respective carrying values will be recovered ~~with~~through the ~~undiscounted~~estimated undiscounted future operating cash flows expected from the use of the ~~asset~~assets and ~~its~~their eventual disposition for assets held for use, or with the estimated fair values, less costs to sell, for assets held for sale. In the event that the expected undiscounted future cash flows for assets held for use, or the estimated fair value, less costs to sell, for assets held for sale do not exceed the respective asset carrying value, management adjusts ~~such~~the real estate assets to the respective estimated fair values, aspursuant ~~defined~~to bythe provisions of Statement of Financial Accounting Standard (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”), and recognizes an impairment loss. Estimated fair values are calculated based on the following information, ~~dependent upon availability,~~ in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of ~~undiscounted~~future cash flows, including estimated salvage value.

Distribution of Net Cash from Operations

Page 10

~~Distribution~~ has ofreceived an 8% per annum return on his adjusted capital contribution, as defined. Net ~~Cash~~cash from ~~Operations~~operations is then distributed to each limited partner holding Class B Units until he has received an 8% per annum return on his adjusted capital contribution, as defined. Any excess net cash from operations would then be distributed to the General Partners until they have received 10% of the total distributions for the year. Thereafter, net cash from operations is distributed 90% to the limited partners and 10% to the General Partners.

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

Distribution of Net Sale Proceeds

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

•

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

•

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

•

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

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

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

Net loss, depreciation, and amortization deductions for each fiscal year will be allocated as follows: (a) 99% to the limited partners holding Class B Units and 1% to the General Partners until their capital accounts are reduced to zero; (b) then, to any partner having a positive balance in his capital account in an amount not to exceed such positive balance; and (c) thereafter, to the General Partners.

Gains on the sale or exchange of the Partnership’s properties will be allocated as follows: (a) first, to partners having negative capital accounts, if any, until all negative capital accounts have been restored to zero; (b) then, to the limited partners in proportion to and to the extent of the excess of (i) each limited partner’s adjusted capital contribution, plus a cumulative 12% per annum return on his adjusted capital contribution, less the sum of all prior distributions of cash flow from operations previously made to such limited partner, over (ii) such limited partner’s capital account balance as of the sale date, subject to the requirement to initially allocate gain on sale to limited partners holding Class B Units until they have been allocated an amount equal to the net cash from operations previously received by limited partners holding Class A Units on a per unit basis; (c) then, to the General Partners in proportion to and to the extent of the excess of (i) each general partner’s adjusted capital contribution, over (ii) such general partner’s capital account balance as of the sale date; and (d) thereafter, 85% to the limited partners and 15% to the General Partners.

~~Reclassifications~~Recent Accounting Pronouncement

~~Certain~~In ~~prior~~September ~~year~~2006, the ~~amounts~~FASB ~~have been~~issued ~~reclassified~~SFAS toNo. 157, ~~conform~~Fair ~~with~~Value ~~the~~Measurements ~~current~~(“SFAS ~~year~~No. 157”), ~~financial~~which ~~statement~~defines ~~presentation.~~fair value, establishes a framework for measuring fair value, and expands disclosures required for fair

Page 11

~~Recent~~ value ~~Accounting~~measurements ~~Pronouncements~~under GAAP, including amending SFAS No. 144. SFAS No. 157 emphasizes that fair value is a market-based measurement, as opposed to an entity-specific measurement. In February 2008, the FASB issued Staff Position No. SFAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP 157-2 delayed the effective date of SFAS No. 157 for all nonrecurring nonfinancial assets and liabilities until fiscal years beginning after November 15, 2008. Accordingly, FSP 157-2 was effective for the Partnership for the fiscal year beginning January 1, 2009. FSP 157-2 has not had a material impact on the Partnership’s financial statements to date.

~~In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No~~3. ~~157,~~ ~~Fair~~INVESTMENT ~~Value~~IN ~~Measurements,~~FUND ~~which~~II ~~defines~~AND ~~fair~~FUND value, establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP, including amending SFAS No. 144. SFAS No. 157 emphasizes that fair value is a marketII-based measurement, as opposed to an entity-specific measurement. SFAS No. 157 will be effective for the Partnership beginning January 1, 2008. The Partnership is currently assessing provisions and evaluating the financial impact of SFAS No. 157 on its financial statements, however, does not believe the adoption of this pronouncement will have a material impact on its financial statements. OW

InImpairment ~~July 2006, the FASB issued FIN No. 48, Accounting for Uncertainty in Income Taxes, an interpretation~~ of ~~SFAS~~Real ~~No. 109, Accounting for Income Taxes, which clarifies the relevant criteria and approach for the recognition, derecognition, and measurement of uncertain tax positions. FIN No. 48 was effective for~~Estate ~~the~~Assets ~~Partnership beginning January 1, 2007. The adoption of this pronouncement has not had a material impact on the Partnership’s financial statements.~~

3After careful consideration, Fund II-III Associates concluded that pursuing a strategy to sell 2100 Space Park Drive in its current condition would be in the best interests of its joint venture partners. ~~INVESTMENT~~Effective INApril 24, ~~JOINT~~2009, ~~VENTURES~~Fund II-III Associates entered into a contract to sell 2100 Space Park Drive for $8,000,000. As a result, Fund II-III Associates reevaluated the recoverability of the property’s carrying value and recorded an impairment loss of approximately $850,000 (approximately $513,000 of which was allocated to the Partnership) to reduce the carrying value of the property to a revised estimate of its fair value based on the $8,000,000 contract price, less estimated selling costs, as of March 31, 2009.

Summary of Financial Information – ~~Fund II and Fund II-OW~~

Condensed financial information for Fund II and Fund II-OW for the three months ended March 31, ~~2007~~2009 and ~~2006~~2008, respectively, is presented below:

~~Total Revenues~~	Total Revenues	~~Net Loss~~	Loss FromContinuing Operations						Loss FromDiscontinued Operations				Net Loss
~~Three Months EndedMarch 31,~~	Three Months EndedMarch 31,	~~Three Months EndedMarch 31,~~	Three Months EndedMarch 31,						Three Months EndedMarch 31,				Three Months EndedMarch 31,
2007	2006	2007	2006
	2009	2008	2009			2008			2009		2008		2009			2008
$41,665	$78,015	$(56,929)	$(435,028)
Fund II and Fund II-OW	$3,360	$29,720	$	(580,931	)	$	(69,804	)	$(72,686	)	$(92,304	)	$	(653,617	)	$	(162,108	)

~~Fund~~Condensed Ifinancial ~~and~~information ~~Fund II Tucker reevaluated the recoverability of the carrying value of Heritage Place pursuant to the Partnership’s policy~~ for ~~evaluating and accounting for the impairment of real estate assets described above.~~ Fund ~~I and Fund~~ II-III ~~Tucker~~Associates determined that the carrying value of the related real estate assets of Heritage Place was not recoverable as compared to the estimated fair value, primarily as a result of reducing the estimated holding period of such assets. Accordingly, Fund I and Fund II Tucker reduced the carrying value of such real estate assets to the estimated fair value by recognizing an impairment loss of approximately $795,000 in ~~the first quarter of 2006, of~~ which ~~approximately $362,000 is allocable to~~ the Partnership. ~~This~~held ~~impairment~~an ~~loss~~interest isthrough ~~included~~its equity interest in ~~loss from discontinued operations from~~ Fund III and Fund II ~~Tucker~~-OW for the three months ended March 31, ~~2006~~2009 inand ~~the~~2008, ~~table~~respectively, is presented below.:

Effective July 1, 2006, the first day of the quarter following the completion of the sale of all real estate assets, Fund I and Fund II Tucker adopted the liquidation basis of accounting, under which assets and liabilities are stated at their estimated net realizable values and net settlement amounts, respectively, and statements of operations and statements of cash flows are no longer presented. Accordingly, condensed financial information for Fund I and Fund II Tucker for the three months ended March 31, 2006 is presented below:

Total Revenues

Income (Loss) From
Continuing Operations

Income From
Discontinued Operations

Net Income (Loss)

Three Months Ended
March 31,

2009

2008

2009

2008

2009

2008

2009

2008

Fund II-III Associates

507,141

291,724

(763,756

)

$14,540

$857

(763,756

)

15,397

	Total Revenues	Loss From Continuing Operations	Loss FromDiscontinued Operations	Net Loss
	Three Months Ended	Three Months Ended	Three Months Ended	Three Months Ended
	March 31, 2006	March 31, 2006	March 31, 2006	March 31, 2006
Fund I and Fund II Tucker	$929	$(2,267)	$(800,343)	$(802,610)

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


	Three Months Ended March 31, 2009							Three Months Ended March 31, 2008
	Operating Loss			Gain on Sale	Total			Operating Income (Loss)		Gain on Sale	Total
Fund II and Fund II-OW	$	(72,686	)	$0	$	(72,686	)	$(92,304	)	$0	$	(92,304	)
Fund II-III Associates		0		0		0		857		0		857

	$	(72,686	)	$0	$	(72,686	)	$(91,447	)	$0	$	(91,447	)

Page 12

Condensed financial information for Fund II-III Associates for the three months ended March 31, 2007 and 2006, respectively, is presented below:

	Total Revenues				Income FromContinuing Operations				Income FromDiscontinued Operations				Net Income
	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	March 31,				March 31,				March 31,				March 31,
	2007		2006		2007		2006		2007		2006		2007		2006
Fund II-III Associates	$	522,595	$	460,687	$	130,478	$	84,696	$	978	$	1,553	$	131,456	$	86,249

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

	March 31, 2006
	Operatingloss	ImpairmentLoss	Gainon Sale	Total
Fund I and Fund II Tucker	$(5,531)	$(794,812)	$0	$(800,343)

	March 31, 2007			March 31, 2006
	OperatingIncome	Gainon Sale	Total	OperatingIncome	Gainon Sale	Total
Fund II-III Associates	$978	$0	$978	$1,553	$0	$1,553

Due from Fund II and Fund II-OW

As presented in the accompanying balance sheets, due from Fund II and Fund II-OW represents the following cash flows generated by Fund II and Fund II-OW, which are attributable to the Partnership as of March 31, 2007 and December 31, 2006:

	As of March 31, 2007		As of December 31, 2006
Operating cash flows	$	747,409	$	662,398
Net sale proceeds		2,475,039		2,475,039
	$	3,222,448	$	3,137,437

4.	RELATED-PARTY TRANSACTIONS

Management and Leasing Fees

In accordance with the property management and leasing agreement, Wells Management Company, Inc. (“Wells Management”), an affiliate of the General Partners, is entitled to compensation for the management and leasing of the Partnership’s properties owned through the Joint Ventures equal to (a) ~~the gross revenues collected monthly,~~ 3% for management services and 3% for leasing services of the gross revenues collected monthly, plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic ~~area~~ area for similar properties, which is assessed periodically based on market studies, or (b) in the case of commercial properties leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to to 3% of the gross revenues over the first five years of the lease term. Management and leasing fees are paid by the Joint Ventures and, accordingly, are included in equity in loss of Fund II and Fund II-OW in the accompanying statements of operations. The Partnership’s share of management and leasing fees and lease acquisition costs incurred through the Joint Ventures and payable to Wells Management is $1713,~~300~~568 and $217,~~935~~001 for the three months ended March 31, ~~2007~~2009 and ~~2006~~2008, respectively.

~~Page~~Beginning 13in October 2008, Wells Management elected to defer the receipt of management and leasing fees due from the Partnership through its interests in the Joint Ventures. As of March 31, 2009, the Partnership owed aggregate management and leasing fees, through its interests in the Joint Ventures, to Wells Management of approximately $18,000, which is due from Fund II-III Associates and, accordingly, is included in investment in Fund II and Fund II-OW in the accompanying balance sheets.

Administrative Reimbursements

Wells Capital, one of ~~the~~our General Partners, and Wells Management perform certain administrative services for the Partnership and the Joint ~~Venture~~Ventures, relating to accounting and other partnership administration, and incur the related expenses. Such expenses are allocated among various other entities affiliated with the General Partners based on time spent on each fund by individual administrative personnel. In the opinion of the General Partners, this allocation is a reasonable estimation of such expenses. The administrative charges related to the Partnership are recorded by Fund II and Fund II-OW and, therefore, are included in equity in loss of Fund II and Fund II-OW in the accompanying statements of operations. The Partnership’s share of administrative costs incurred ~~reimbursed~~by toFund II ~~Wells Capital~~ and ~~Wells~~Fund ~~Management~~II-OW ~~recorded~~and bypayable to ~~Fund~~Wells IICapital and ~~Fund~~Wells ~~II-OW~~Management is $4143,~~532~~643 and $3746,~~230~~684 for the three months ended March 31, ~~2007~~2009 and ~~2006~~2008, respectively. ~~In addition, Wells Capital pays for certain operating expenses of the Partnership (“bill-backs”) directly and invoices Fund II and Fund II-OW for the reimbursement thereof.~~

Beginning in October 2008, Wells Management and Wells Capital elected to defer the receipt of administrative reimbursements due from the Partnership through its interest in Fund II and Fund II-OW. As of March 31, 2009, the Partnership owed aggregate administrative reimbursements to Wells Management and Wells Capital of approximately $75,000, which is due from Fund II and Fund II-OW and, accordingly, is included in investment in Fund II and Fund II-OW in the accompanying balance sheets.

Economic Dependency

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

Wells Capital and Wells Management are ~~all~~both owned and controlled by ~~Wells Real Estate Funds, Inc. (“~~WREF”). The operations of Wells Capital and Wells Management represent substantially all of the business of WREF. Accordingly, ~~we focus on~~ the ~~financial~~ ~~condition~~Partnership of WREF when assessing the financial condition of Wells Capital and Wells Management. In the event that WREF were to become unable to meet its obligations as they become due, we might be required to find alternative service ~~providers.~~

~~Future~~Page ~~net~~13 income generated by WREF will be largely dependent upon the amount of fees earned by Wells Capital and Wells Management based on, among other things, the level of investor proceeds raised from the sale of common stock for certain WREF-sponsored programs and the volume of future acquisitions and dispositions of real estate assets by WREF-sponsored programs. As of March 31, 2007, the General Partners believe that WREF generates adequate cash flow from operations and has adequate liquidity available in the form of cash on hand and current receivables necessary to meet its current and future obligations as they become due.

focuses on the financial condition of WREF when assessing the financial condition of Wells Capital and Wells Management. In the event that WREF were to become unable to meet its obligations as they become due, the Partnership might be required to find alternative service providers.

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

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

Assertion of Legal Action Against Related-Parties

On March 12, 2007, a stockholder of ~~Wells~~Piedmont REIT, filed a ~~purported~~putative class action and derivative complaint, ~~Washtenaw~~presently ~~County~~styled ~~Employees’~~In ~~Retirement~~re ~~System v.~~ Wells Real Estate Investment Trust, Inc., etSecurities ~~al.~~Litigation, in the United States District Court for the District of Maryland against, among others, ~~Wells~~Piedmont REIT,; Leo F. Wells, III, ~~one~~and ~~of our General Partners,~~ Wells Capital, the ~~corporate~~Partnership’s ~~general~~General ~~partner of Wells~~ Partners,; ~~our other general partner,~~ Wells Management, ~~our~~the Partnership’s property manager,; certain affiliates of WREF,; the directors of ~~Wells~~Piedmont REIT,; and certain individuals who formerly served as officers ~~and~~or directors of ~~Wells~~Piedmont REIT prior to the closing of the internalization transaction on April 16, 2007. The complaint alleges, among other things, violations of the federal proxy rules ~~based on allegations that the proxy statement of Wells REIT filed with the SEC on February 26, 2007 contains false~~ and ~~misleading statements and omits to state material facts and~~ breaches of fiduciary duty arising from the ~~Wells~~Piedmont REIT internalization transaction and the related proxy statement filed with the SEC on February 26, 2007, as amended. The complaint seeks, among other things, unspecified monetary damages and nullification of the Piedmont REIT internalization transaction. On April 9, 2007, the District Court denied the plaintiff’s motion for an order enjoining the internalization transaction. On April 17, 2007, the Court granted the defendants’ motion to transfer venue to the United States District Court for the Northern District of Georgia, and the case was docketed in the Northern District of Georgia on April 24, 2007. MrOn June 7, 2007, the Court granted a motion to designate the class lead plaintiff and class co-lead counsel. On June ~~Wells~~27, ~~Wells~~2007, ~~Capital~~the plaintiff filed an amended complaint, which attempts to assert class action claims on behalf of those persons who received and ~~Wells~~were ~~Management~~entitled ~~intend~~to vote on the Piedmont REIT proxy statement filed with the SEC on February 26, 2007 and derivative claims on behalf of Piedmont REIT. On July 9, 2007, the Court denied the plaintiff’s motion for expedited discovery related to ~~vigorously~~an ~~defend~~anticipated ~~this~~motion ~~action~~for a preliminary injunction. ~~Any~~On ~~financial~~August 13, ~~loss~~2007, ~~incurred~~the bydefendants ~~Wells~~filed ~~Capital~~a motion to dismiss the amended complaint. On March 31, ~~Wells~~2008, ~~Management~~the Court granted in part the defendants’ motion to dismiss the amended complaint. The Court dismissed five of the seven counts of the amended complaint in their entirety. The Court dismissed the remaining two counts with the exception of allegations regarding the failure to disclose in the Piedmont REIT proxy statement details of certain expressions of interest in acquiring Piedmont REIT. On April 21, or2008, ~~its~~the ~~affiliates~~plaintiff ~~could~~filed a second amended complaint, which ~~hinder~~alleges ~~their~~violations ~~ability~~of the federal proxy rules based upon allegations that the proxy statement to ~~successfully~~obtain ~~manage~~approval ~~our~~for ~~operations~~the ~~and~~Piedmont ~~our~~REIT ~~portfolio~~internalization transaction omitted details of ~~investments~~certain expressions of interest in acquiring Piedmont REIT. The second amended complaint seeks, among other things, unspecified monetary damages, to nullify and rescind the internalization transaction, and to cancel and rescind any stock issued to the defendants as consideration for the internalization transaction. On May 12, 2008, the defendants answered and raised certain defenses to the second

Page 14

amended complaint. On June 23, 2008, the plaintiff filed a motion for class certification. The defendants responded to the plaintiff’s motion for class certification on January 16, 2009. The plaintiff filed its reply in support of its motions for class certification on February 19, 2009. The motion for class certification is currently pending before the court. The parties are presently engaged in discovery. On April 13, 2009, the plaintiff moved for leave to amend the second amended complaint to add additional defendants. The time for the defendants to respond to the motion for leave to amend the complaint has not yet expired. Mr. Wells, Wells Capital, and Wells Management intend to vigorously defend this action. Any financial loss incurred by Wells Capital, Wells Management, or their affiliates could hinder their ability to successfully manage the Partnership’s operations and portfolio of investments.

5.	COMMITMENTS AND CONTINGENCIES

~~The~~From ~~Partnership~~time to time, the Partnership and its General Partners are ~~from time to time a~~ party to legal proceedings, which arise in the ordinary course of ~~its~~our business. The Partnership is not currently involved in any ~~legal~~litigation ~~proceedings~~for of which the outcome iswould, ~~reasonably~~in ~~possible~~the tojudgment of the General Partners based on information currently available, have a ~~material~~ materially adverse ~~effect~~impact on the results of operations or financial condition. ~~The~~of the Partnership, nor is ~~not~~management aware of any ~~legal~~such ~~proceedings~~litigation ~~contemplated~~threatened byagainst ~~governmental authorities~~us.

6.	SUBSEQUENT EVENTS

Louis Rose Building Sale

On April 20, 2009, Fund II and Fund II-OW sold the Louis Rose Building to an unrelated third party for a gross sale price of $2,122,000. In 2008, Fund II and Fund II-OW reduced the carrying value of Louis Rose Building to its estimated fair value, less estimated costs to sell, by recording an impairment loss of approximately $2,136,000. As a result of this sale, net proceeds of approximately $1,871,000 and a gain of approximately $15,300 were allocated to the Partnership in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

2100 Space Park Drive Sale

On April 30, 2009, Fund II-III Associates sold 2100 Space Park Drive to an unrelated third party for a gross sale price of $8,000,000. During the first quarter of 2009, Fund II-III Associates reduced the carrying value of 2100 Space Park Drive to its estimated fair value, less estimated costs to sell, by recording an impairment loss of approximately $850,000. As a result of this sale, net proceeds of approximately $4,652,000 and a gain of approximately $27,000 were allocated to the Partnership in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying financial statements and notes thereto. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as the notes to our financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008.

Overview

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

•

Fundraising phase

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

Page 15

•

Investing phase

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

•

Holding phase

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

•

Positioning-for-sale phase

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

•

Disposition-and-liquidation phase

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

Portfolio Overview

We are currently in the disposition-and-liquidation phase of our life cycle. OfWith the ~~six~~sale ~~assets in which we originally owned interests, we have sold four assets. In the fourth quarter~~ of ~~2006,~~ the Louis ~~majority~~Rose ~~tenant~~Building ofand ~~Boeing~~2100 atSpace ~~the~~Park ~~Atrium,~~Drive ~~the~~in ~~Boeing/Shuttle~~April ~~Division (“Boeing”)~~2009, ~~exercised~~we ~~the~~have ~~option~~sold toall ~~reduce~~of the ~~square~~real ~~footage~~estate ~~leased~~assets ~~by approximately~~in ~~46%~~which ~~effective~~we ~~September 18,~~owned ~~2007~~interests. We ~~continue~~have begun to ~~aggressively~~take ~~pursue leasing opportunities for~~ the ~~Louis~~steps ~~Rose~~necessary ~~Building~~to liquidate and ~~the~~dissolve ~~upcoming vacancy at Boeing at~~ the ~~Atrium that we believe will ultimately result in the best disposition pricing for our limited partners~~Partnership.

~~With~~Having asold ~~number~~all of ~~properties~~the ~~sold~~real estate assets within the portfolio, ~~our~~the General Partners are currently reserving operating ~~distributions~~cash toand ~~limited partners~~a inportion ~~order~~of tonet ~~fund~~sale ~~our~~proceeds ~~pro-rata~~to ~~share of~~ fund anticipated ~~re-leasing~~ costs ~~and~~necessary ~~capital~~to ~~expenditures~~liquidate ~~for the Louis Rose Building~~ and ~~Boeing~~dissolve at the ~~Atrium~~Partnership. ~~Further, the General Partners anticipate continuing to reserve operating~~

Page 15

distributions primarily due to the fact that the Louis Rose Building remains vacant and Boeing exercised its option to reduce the square footage. Once the outcome of the re-leasing efforts is known, the General Partners will evaluate if distributions of net sale proceeds are appropriate.

Property Summary

As weof ~~move~~March 31, ~~further~~2009, ~~into~~we were in the disposition-and-liquidation phase, of our ~~attention~~life ~~will~~cycle. ~~shift~~With tothe ~~locating~~sale ~~suitable~~of ~~buyers~~the Louis Rose Building and ~~negotiating~~2100 ~~purchase-sale~~Space Park Drive in April ~~contracts~~2009, ~~that~~we ~~will~~have ~~attempt~~sold toall ~~maximize~~of the ~~total~~real ~~return~~estate toassets ~~the~~in ~~limited~~which ~~partners~~we ~~and~~owned ~~minimize~~interests. ~~contingencies~~We ~~and~~have ~~our~~begun ~~post-closing~~to ~~involvement~~take ~~with~~steps necessary to liquidate and dissolve the ~~buyer~~Partnership.

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

•

Cherokee Commons was sold on October 1, 2001.

•

Heritage Place originally included both an office component and a retail shopping center. The retail center, which represented approximately 30% of the premises, was sold on April 7, 2003. The remaining office component was sold on May 10, 2006.

•

Brookwood Grill was sold on July 1, 2004.

•

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

• The Louis Rose Building iswas ~~currently~~sold ~~vacant. We are aggressively working~~ on ~~re-leasing~~April ~~this~~20, ~~property~~2009.

• The ~~Boeing~~2100 atSpace ~~the~~Park ~~Atrium~~Drive property iswas ~~currently~~sold ~~99%~~on ~~occupied~~April ~~by Boeing. The existing Boeing lease extends through March 2008. Boeing exercised the option to reduce the square footage by approximately 46% effective September 18~~30, ~~2007, which consists of the first two floors~~2009. ~~We have begun our marketing efforts for this space.~~

Liquidity and Capital Resources

Overview

Our operating strategy ~~entails~~has entailed funding expenditures related to the recurring operations of the Joint Ventures’ properties and the portfolio with operating cash flows, including current and prior period ~~operating~~ operating distributions received from the Joint Ventures, and assessing the amount of remaining cash flows that will be required to fund known future re-leasing costs and other capital improvements. ~~Any~~Historically, any residual operating cash flows were ~~are~~ generally considered available for distribution to the limited partners and, unless reserved, ~~are~~were generally paid quarterly. AsTo ~~a result,~~ the ~~ongoing~~extent ~~monitoring~~that ofoperating ~~our~~ cash ~~position~~flows iswere ~~critical~~not tosufficient ~~ensuring that adequate liquidity and capital resources are available. Economic downturns in one or more of our core markets could adversely impact the ability of our tenants~~ to ~~honor~~fund ~~lease payments and~~ our ~~ability~~recurring ~~to re-lease space on favorable terms as leases expire or space otherwise becomes vacant. In the event of either situation~~operations, ~~cash~~net ~~flows and, consequently, our ability to provide funding for capital needs would be adversely affected.~~

Short-Term Liquidity

We did not generate cash flow from operating activities during the three months ended March 31, 2007, as Fund II and Fund II-OW has continued to hold operating distributions received from the Joint Ventures and otherwise payable to the Partnership to provide funding for anticipated re-leasing costs and capital expenditures for the Louis Rose Building and Boeing at the Atrium. Accordingly, no operating distributions were paid to limited partners during the three months ended March 31, 2007. Future operating distributions to limited partners will be largely dependent upon the amount of cash generated from the Joint Ventures, our expectations of future cash flows, and determination of near-term cash needs for tenant re-leasing costs and other capital improvements for properties owned by the Joint Ventures.

We believe that the cash on hand and distributions due from the Joint Ventures are sufficient to cover our current working capital needs.

Page 16

sale proceeds would have been utilized. As a result, the ongoing monitoring of our cash position has been critical to ensuring that adequate liquidity and capital resources were available.

Short-Term Liquidity

We did not generate cash flow from operating activities during the three months ended March 31, 2009. Fund II and Fund II-OW continues to hold operating distributions received from the Joint Ventures and otherwise payable to the Partnership. Accordingly, no operating distributions were paid to limited partners during the three months ended March 31, 2009.

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

Long-Term Liquidity

We ~~expect~~have ~~that~~sold ~~our~~all ~~future sources~~ of ~~capital~~the ~~will~~real beestate ~~primarily~~assets ~~derived~~in ~~from~~which ~~net~~we ~~proceeds~~owned ~~generated~~interests ~~from the selective~~ and ~~strategic~~do ~~sale of properties and operating cash flows generated from the Joint Ventures. Our future long-term liquidity requirements will include, but~~ not beanticipate ~~limited~~acquiring ~~to,~~additional ~~funding tenant improvements, renovations, expansions, and other significant capital improvements necessary for~~ properties ~~owned through the Joint Ventures~~. ~~Specifically~~Accordingly, we ~~anticipate~~expect ~~funding~~that our ~~proportionate~~future ~~share~~source of ~~anticipated~~ capital ~~improvements and re-leasing costs at the Louis Rose Building and Boeing at the Atrium. Future cash flows from operating activities~~ will be primarily ~~affected~~include ~~by distributions received from the Joint Ventures, which are dependent upon the~~ net ~~operating~~proceeds ~~income~~that were generated byfrom the ~~Joint~~sale ~~Ventures’~~of our properties, ~~less~~as ~~reserves~~previously ~~for known capital expenditures~~mentioned.

We have encountered difficulties in re-leasing the Louis Rose Building primarily due to the softening of the Charlotte office market and related Northeast submarket of Charlotte during the period following the expiration of the sole tenant’s lease on April 30, 2001. The Northeast submarket of Charlotte continues to present challenges to landlords, primarily due to the increasing availability of office space for lease, and low rental rates and concessions offered to prospective tenants. As of March 31, 2007, the vacancy rate for the Northeast submarket of Charlotte is 20.3%, compared to the vacancy rate for Charlotte as a whole of 12.5%. Accordingly, we are uncertain as to when the Louis Rose Building will be re-leased, the level of rental rates which may be achieved in connection with such re-leasing, or the amount of re-leasing costs we will be required to fund in connection with the potential re-leasing of this property.

Capital Resources

~~The~~Following ~~Partnership is an investment vehicle formed for~~ the ~~purpose~~sale of ~~acquiring,~~the ~~owning,~~remaining ~~and operating income-producing~~ real ~~properties~~estate orassets ~~investing~~ in ~~joint~~which ~~ventures~~the ~~formed~~Partnership ~~for~~held ~~the~~interests ~~same~~in ~~purpose~~April 2009, ~~and~~we ~~has~~have begun ~~invested~~to ~~all~~take of the ~~partners’~~steps ~~original~~necessary ~~net~~to ~~offering~~liquidate ~~proceeds~~and ~~available~~dissolve ~~for~~the ~~investment~~Partnership. ~~Thus,~~ We itare isin ~~unlikely~~the ~~that~~process weof ~~will~~evaluating ~~acquire~~the ~~interests~~amount incash ~~any~~reserves ~~additional~~needed ~~properties~~to orsettle ~~joint~~estimated ~~ventures.~~liabilities ~~Historically,~~of ~~our~~the ~~investment~~Partnership ~~strategy~~and ~~has~~intend ~~generally~~to ~~involved~~distribute ~~acquiring~~the ~~properties~~remaining ~~on an all-~~cash balances ~~basis~~to ~~that~~the ~~are~~limited ~~pre-leased~~partners pursuant to ~~creditworthy~~the ~~tenants through~~provisions ~~joint~~of ~~ventures~~the ~~with~~partnership ~~affiliated partnerships~~agreement.

The Joint Ventures incur capital expenditures primarily in the form of building improvements for the purpose of maintaining the quality of our properties, and tenant improvements for the purpose of readying our properties for re-leasing. As leases expire, we will work with the Joint Ventures to attempt to re-lease space to an existing tenant or market the space to prospective new tenants. Generally, tenant improvements funded in connection with lease renewals require less capital than those funded in connection with new leases. However, external conditions, such as the supply of and demand for comparable space available within a given market, drive capital costs as well as rental rates. Any capital or other expenditures not provided for by the operations of the Joint Ventures will be required to be funded by the Partnership and the respective joint venture partners on a pro-rata basis.

Our cash management policy typically includes first utilizing current period operating cash flow until depleted, at which point operating reserves are utilized to fund capital and other required expenditures. In the event that current and prior period accumulated operating cash flows are insufficient to fund such costs, net property sale proceeds reserves would then be utilized.

Page 17

As of March 31, ~~2007~~2009, we had received, used, distributed, and held net sale proceeds allocated to the Partnership from the sale of properties as presented below:

	Net Sale Proceeds		Partnership’s Approximate Ownership %		Net SaleProceeds Allocated tothe Partnership			Use of Net Sale Proceeds					Net Sale Proceeds Distributed toPartners as of March 31, 2007			Undistributed Net SaleProceeds BeingReserved as of March 31, 2007
	TotalNet SaleProceeds		Partnership’sApproximateOwnership %			Net SaleProceedsAllocatedto ThePartnership			Use ofNet Sale Proceeds					Net SaleProceedsDistributedto Partnersas ofMarch 31,2009			UndistributedNet SaleProceedsBeingReservedas ofMarch 31,2009
Property Sold								~~Amount~~	Amount		~~Purpose~~	Purpose
Cherokee Commons(sold in 2001)	$	8,414,089	50.8%	%	$	~~4,275,779~~$	4,275,779	$	~~1,380,616~~$	1,380,616	~~• Re-leasing of Boeing at the Atrium (2002 and 2003)~~	• Re-leasing of 2100 Space Park Drive (2002 and 2003) • Funding for Fund I andFund II Tucker operating expenses (2005)	$	~~2,895,163~~$	2,895,163	$	0$	0
											• Funding for Fund I and Fund II Tucker operating expenses (2005)
Heritage Place –retail portion(sold in 2003)	$	3,207,708	45.5	%			1,460,790			23,749		• Funding for Fund I andFund II Tucker operating expenses (2005)			1,437,041			0
Heritage Place retail portion (sold in 2003)	$	3,207,708	45.5%			1,460,790			23,749		• Funding for Fund I and Fund II Tucker operating expenses (2005)			1,437,041			0
Brookwood Grill(sold in 2004)	$	2,318,115	59.0	%			1,368,616			385,388		• Funding for Fund I andFund II Tucker operating expenses (2005) • Capital improvements for 2100 Space Park Drive (2008) • Funding for Fund II andFund II-OW (2008)			983,228			0
Holcomb Bridge Property (sold in 2004)	$	6,889,379	13.8%			952,801			5,278		• Funding for Fund I and Fund II Tucker operating expenses (2005)			684,568			262,955
Holcomb BridgeProperty(sold in 2004)	$	6,889,379	13.8	%			952,801			268,233		• Funding for Fund I andFund II Tucker operating expenses (2005) • Capital improvements for 2100 Space Park Drive (2008) • Funding for Fund II andFund II-OW (2008)			684,568			0
Brookwood Grill (sold in 2004)	$	2,318,115	59.0%			1,368,616			7,675		• Funding for Fund I and Fund II Tucker operating expenses (2005)			983,228			377,713
Heritage Placeoffice portion(sold in 2006)	$	4,028,043	45.5	%			1,834,371			695,748		• Capital improvements for 2100 Space Park Drive (2008 and 2009) • Funding for Fund II andFund II-OW (2008 and 2009)			0			1,138,623
Heritage Place office portion (sold in 2006)	$	4,028,043	45.5%			1,834,371			0					0			1,834,371
Total						$	9,892,357		$	2,753,734				$	6,000,000		$	1,138,623
Total					$	9,892,357		$	1,417,318				$	6,000,000		$	2,475,039

~~The~~After ~~net~~quarter-end, ~~proceeds~~we ~~listed~~were ~~above~~allocated ~~will~~approximately ~~continue~~$1,871,000 ~~to be held in reserve by Fund II~~ and ~~Fund~~$4,652,000 ~~II-OW~~of asnet ~~our~~sale ~~General Partners~~proceeds ~~evaluate~~from the ~~capital~~April 2009 ~~needs~~dispositions of the ~~existing~~Louis ~~property~~Rose inBuilding ~~which~~and we2100 ~~hold~~Space anPark ~~interest~~Drive, respectively. The net sale

Results of Operations

Equity in loss of Fund II and Fund II-OW decreased from $411,928 for the three months ended March 31, 2006 to $53,906 for the three months ended March 31, 2007. The decrease in loss is primarily attributable to (i) an impairment loss recognized by Fund I and Fund II Tucker, of which approximately $362,000 was allocated to the Partnership, in the first quarter of 2006, partially offset by (ii) a decline in interest income due to a decrease in the average net proceeds held during the respective periods as a result of the November 2006 distribution. Absent leasing activity at the Louis Rose Building or Boeing at the Atrium, we expect additional equity in loss of Fund II and Fund II-OW in the future due to a decrease in interest income as a result of distributing net sales proceeds in November 2006.

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~~Inflation~~ proceeds allocated from the April 2009 dispositions of the Louis Rose Building and 2100 Space Park Drive, in addition to the net sale proceeds listed in the table above, are currently being held in reserve by Fund II and Fund II-OW.

WeResults ~~are exposed to inflation risk, as income from long-term leases is the primary source~~ of ~~our~~Operations cash flows from operations. There are provisions in the majority of our tenant leases that would protect us from the impact of inflation. These provisions include rent steps, 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. However, due to the long-term nature of our leases, the leases may not readjust their reimbursement rates frequently enough to cover inflation.

Equity in loss of Fund II and Fund II-OW was $618,910 and $153,500 for the three months ended March 31, 2009 and 2008, respectively. This increase in loss is primarily attributable to (i) an impairment loss recognized by Fund II-III Associates related to 2100 Space Park Drive in the first quarter of 2009, of which approximately $513,000 was allocated to the Partnership (see Note 3 to our financial statements included in this report), partially offset by (ii) an increase in rental income at 2100 Space Park Drive during the first quarter of 2009 as a result of the 2008 leasing activity and (iii) receipt of insurance proceeds in the first quarter of 2009 at 2100 Space Park Drive associated with clean-up costs incurred as a result of Hurricane Ike.

We anticipate that equity in loss of Fund II and Fund II-OW will decline in the near term as a result of the April 2009 sale of the vacant Louis Rose Building as well as incurring an impairment loss on 2100 Space Park Drive, of which approximately $513,000 was allocated to the Partnership in the first quarter of 2009.

Application of Critical Accounting Policies

Summary

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

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

Investment in Real Estate Assets

We ~~will~~were be required to make subjective assessments as to the useful lives of our depreciable assets. We ~~will~~considered ~~consider~~ the period of future benefit of the assets to determine the appropriate useful lives. These assessments ~~have~~had a direct impact on net income. The estimated useful lives of the Joint Ventures’ assets bywere ~~class~~depreciated ~~are~~using asthe ~~follows~~straight-line method over the following useful lives:

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

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

Valuation of Real Estate Assets

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which we have an ownership interest through investments in the 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 assets and their 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, as defined by SFAS No. 144, and recognizes an impairment loss. Estimated fair values are calculated based on the following information, dependent upon availability, in order of preference:

Page 19

~~(i) recently~~Evaluating ~~quoted market prices, (ii) market prices for comparable properties, or (iii)~~ the ~~present~~Recoverability ~~value~~ of ~~undiscounted~~Real ~~cash~~Estate ~~flows, including~~Assets estimated salvage value. In the first quarter of 2006, Fund I and Fund II Tucker recorded an impairment loss for the office component of Heritage Place of approximately $795,000, of which approximately $362,000 was allocated to the Partnership in order to reduce the carrying value of the property to its fair value, less costs to sell, as a result of a change in management’s intended holding period for this asset.

~~Projections~~We ofcontinually ~~expected~~monitored ~~future~~events ~~cash~~and ~~flows~~changes ~~require~~in ~~management~~circumstances tothat ~~estimate~~could ~~future~~indicate ~~market~~that ~~rental~~the ~~income~~carrying amounts ~~subsequent~~of tothe real estate assets in which we had an ownership interest through investments in the ~~expiration~~Joint Ventures may not be recoverable. When indicators of ~~current~~potential ~~lease~~impairment ~~agreements, property~~were ~~operating~~present ~~expenses,~~which ~~discount~~suggested ~~rates,~~that the ~~number~~carrying amounts of ~~months~~real itestate ~~takes~~assets tomay ~~re-lease~~not ~~the~~be ~~property~~recoverable, ~~and~~we assessed the ~~number~~recoverability of ~~years~~ the ~~property~~real isestate ~~held~~assets ~~for~~by ~~investment.~~determining ~~The~~whether ~~use~~the respective ofcarrying ~~inappropriate~~values ~~assumptions~~would inbe recovered through the estimated undiscounted future operating cash ~~flow~~flows ~~analysis~~expected ~~would~~from ~~result~~the inuse of the assets and their eventual disposition for assets held for use, or with the estimated fair values, less costs to ansell, ~~incorrect~~for ~~assessment~~assets ofheld for sale. In the ~~property’s~~event that such expected undiscounted future cash flows ~~and~~for assets held for use, or the estimated fair ~~value~~values, ~~and~~less ~~could~~costs ~~result~~to insell, ~~the~~for ~~overstatement~~assets ofheld for sale, did not exceed the respective assets’ carrying values, ~~value~~we ofadjust the real estate assets ~~held~~to bythe respective estimated fair values, pursuant to the ~~Joint~~provisions ~~Ventures~~of SFAS No. 144, and ~~net~~recognize ~~income~~an impairment loss. Estimated fair values were calculated based on the following information, in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the ~~Partnership~~present value of future cash flows, including estimated salvage value.

In the first quarter of 2009, Fund II-III Associates recorded an impairment loss on 2100 Space Park Drive of approximately $850,000 (approximately $513,000 of which was allocated to the Partnership) to reduce the carrying value of the property to a revised estimate of its fair value estimated based on an executed contract to sell the property for $8,000,000, less estimated selling costs.

In the second quarter of 2008, Fund II and Fund II-OW recorded an impairment loss on the Louis Rose Building of approximately $931,000 (approximately $881,000 of which was allocated to the Partnership) in order to reduce the carrying value of the property to its estimated fair value as a result of management’s decision to refine its strategy for disposing of the building. In the fourth quarter of 2008, Fund II and Fund II-OW recorded an additional impairment loss on the Louis Rose Building of approximately $1,205,000 (approximately $1,141,000 of which was allocated to the Partnership) in order to reduce the carrying value of the property to a revised estimate of its fair value estimated based on an executed contract to sell the property for $2,122,000, less estimated selling costs.

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

Related-Party Transactions

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

~~Potential~~Subsequent ~~Tax~~Events ~~Impact on Limited Partners Holding Class B Units – American Jobs Creation Act of 2004~~

~~The~~Louis ~~American~~Rose ~~Jobs Creation Act of 2004 added Section 470 to the Internal Revenue Code, which provides for certain~~Building ~~limitations~~Sale on the utilization of losses by investors that are attributable to leased property owned by a partnership having both taxable and tax-exempt partners such as the Partnership. If Section 470 were deemed to apply to the Partnership, passive losses allocable to limited partners holding Class B Units could only be utilized to offset passive income generated from the same property or potentially from properties owned by the same partnership. In March 2005, the IRS announced that it would not apply Section 470 to partnerships for the taxable year 2004 based solely on the fact that a partnership had both taxable and tax-exempt partners. In December 2005, the IRS extended the period for transitional relief through the 2005 tax year, and in December 2006, the IRS again extended the period for transitional relief through all tax years beginning prior to January 1, 2007. In addition, pursuant to Section 403(ff) of the Gulf Opportunity Zone Act of 2005, the effective date provisions regarding the applicability of Section 470 were amended to provide that, in the case of leased property treated as tax-exempt use property by reason of its being owned by a partnership having both taxable and tax-exempt partners, Section 470 will apply only to property acquired after March 12, 2004. Since the Partnership acquired all of its properties prior to March 12, 2004, and is not expected to acquire interests in any additional properties in the future, we do not believe that the provisions of Section 470 should apply to limit the utilization of losses attributable to the properties owned by the Partnership; however, due to the uncertainties and lack of guidance relating to this provision, it is unclear as to whether the acquisition of a limited partnership interest in the Partnership after the March 12, 2004 effective date may be deemed to be an acquisition of property within the meaning of the effective date provisions of Section 470.

~~ITEM~~On 3April 20, 2009, Fund II and Fund II-OW sold the Louis Rose Building to an unrelated third party for a gross sale price of $2,122,000. In ~~QUANTITATIVE~~2008, ~~AND~~Fund ~~QUALITATIVE~~II ~~DISCLOSURES~~and ~~ABOUT~~Fund ~~MARKET~~II-OW ~~RISK~~reduced the carrying value of Louis Rose Building to

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

Page 20

~~ITEM~~ its 4estimated fair value, less estimated costs to sell, by recording an impairment loss of approximately $2,136,000. As ~~CONTROLS~~a ~~AND~~result ~~PROCEDURES~~of this sale, net proceeds of approximately $1,871,000 and a gain of approximately $15,300 were allocated to the Partnership in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

We2100 ~~carried~~Space ~~out~~Park anDrive ~~evaluation,~~Sale under the supervision and with the participation of management of Wells Capital, our corporate General Partner, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as defined in rule 13a-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer of Wells Capital concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including the Principal Executive Officer and the Principal Financial Officer of Wells Capital, as appropriate, to allow timely decisions regarding required disclosure.

~~There~~On ~~were~~April 30, no2009, Fund ~~significant~~II-III ~~changes~~Associates insold ~~our~~2100 ~~internal~~Space ~~control~~Park ~~over~~Drive ~~financial~~to ~~reporting~~an ~~during~~unrelated third party for a gross sale price of $8,000,000. During the first quarter ~~ended~~of ~~March 31~~2009, ~~2007~~Fund ~~that~~II-III ~~have~~Associates ~~materially~~reduced ~~affected~~the carrying value of 2100 Space Park Drive to its estimated fair value, orless ~~are~~estimated ~~likely~~costs to ~~materially~~sell, ~~affect~~by recording an impairment loss of approximately $850,000. ~~our~~As ~~internal~~a ~~control~~result ~~over~~of ~~financial~~this ~~reporting~~sale, net proceeds of approximately $4,652,000 and a gain of approximately $27,000 were allocated to the Partnership in the second quarter of 2009. The net proceeds from this sale are currently being held in reserve by Fund II and Fund II-OW.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4T.

CONTROLS AND PROCEDURES

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

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

PART II.

OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

We are from time to time a party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any litigation the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such litigation threatened against us during the quarter ended March 31, ~~2007~~2009, requiring disclosure under Item 103 of Regulation S-K. For a description of pending litigation involving certain related parties, see “Assertion of Legal Action Against Related-Parties” in Note 4 to our financial statements included in this report.

Page 21

ITEM 1A.

RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) We did not sell any equity securities that were not registered under the Securities Act of 1933 during the quarter ended March 31, ~~2007~~2009.

(b)	Not applicable.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

(a) We were not subject to any indebtedness and, therefore, did not default with respect to any indebtedness during the quarter ended March 31, ~~2007~~2009.

(b)	Not applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our limited partners during the quarter ended March 31, ~~2007~~2009.

Page 21

ITEM 5.

OTHER INFORMATION

(a) During the quarter ended March 31, ~~2007~~2009, there was no information required to be disclosed in a report on Form 8-K which was not disclosed in a report on Form 8-K.

(b)	Not applicable.

ITEM 6.

EXHIBITS

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

Page 22

SIGNATURES

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

	WELLS REAL ESTATE FUND II (Registrant)
	By:	WELLS CAPITAL, INC. (Corporate General Partner)
		(Corporate General Partner)
May 13, 2009	/s/ LEO F. WELLS, III
May 11, 2007	/S/ LEO F. WELLS, III
	Leo F. Wells, III President, Principal Executive Officer, and Sole Director of Wells Capital, Inc.
	Leo F. Wells, III President, Principal Executive Officer,and Sole Director of Wells Capital, Inc.
May 13, 2009	/s/ DOUGLAS P. WILLIAMS
May 11, 2007	/S/ DOUGLAS P. WILLIAMS
	Douglas P. Williams Principal Financial Officer of Wells Capital, Inc.

Page 23

EXHIBIT INDEX

TO FIRST QUARTER FORM 10-Q

WELLS REAL ESTATE FUND II

Exhibit No.		Description
ExhibitNumber		Description of Document
*10.1		Purchase and Sale Agreement for the sale of the Louis Rose Building (Exhibit 10(ll) to the Form 10-K of Wells Real Estate Fund II for the fiscal year ended December 31, 2008, Commission File No. 0-16518)
10.2		Purchase and Sale Agreement for the sale of 2100 Space Park Drive
10.3		First Amendment to Purchase and Sale Agreement for the sale of 2100 Space Park Drive
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Previously filed and incorporated herein by reference

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Filing Compare · WELLS REAL ESTATE FUND II