<PAGE>
 
                                                                RULE 424(B)(3)
                                                            FILE NO. 333-32099

                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

           SUPPLEMENT NO. 4 DATED NOVEMBER 1, 1998 TO THE PROSPECTUS
                            DATED JANUARY 30, 1998

  This document supplements, and should be read in conjunction with, the
Prospectus of Wells Real Estate Investment Trust, Inc. dated January 30, 1998,
as supplemented and amended by Supplement No. 1 dated April 20, 1998, Supplement
No. 2 dated June 30, 1998 and Supplement No. 3 dated August 12, 1998
(collectively, the "Prospectus").  Unless we define a term in this Supplement,
you should rely on the Prospectus for the meanings of capitalized terms.

      The purpose of this Supplement is to describe the following:

     (1)  The status of the offering of shares of common stock in Wells Real
          Estate Investment Trust, Inc. (the "Company");
 
     (2)  Revisions to the "LEGAL MATTERS" and "CONFLICTS OF INTEREST - Lack of
          Separate Representation" sections of the Prospectus;

     (3)  Contract for an undivided interest in a 7.25 acre tract of land
          located in Knox County, Tennessee (the "Associates Property") with
          Wells Development Corporation ("Wells Development"), an Affiliate of
          the Advisor, and the proposed construction and development of an
          office building thereon;

     (4)  The status of the ABB Building;

     (5)  The status of the Cort Furniture Building;

     (6)  The status of the Fairchild Building; and

     (7)  Revisions to the "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS" section of the Prospectus.

STATUS OF THE OFFERING

  Pursuant to the Prospectus, the offering of shares in the Company began on
January 30, 1998.  The Company began its operations on June 5, 1998, upon the
acceptance of subscriptions for the minimum offering of $1,250,000 (125,000
shares).  As of October 8, 1998, the Company had raised a total of $19,977,021
in offering proceeds (1,997,702 shares).

LEGAL MATTERS

  The information contained on page 77 in the "LEGAL MATTERS" section of the
Prospectus is revised and amended by insertion of the following paragraph after
the first paragraph in that section:

           Immediately following the effective date of the Prospectus, Hunton &
     Williams ceased acting as counsel to the Company and the Advisor. Holland &
     Knight LLP has, since that time, served as counsel to the Company and the
     Advisor. Holland & Knight LLP has represented the Advisor, as well as
     Affiliates of the Advisor, in other matters in the past and is likely to
     continue to do so in the future. See "CONFLICTS OF INTEREST."

<PAGE>
 
LACK OF SEPARATE REPRESENTATION

  The information contained on page 23 in the "CONFLICTS OF INTEREST" section of
the Prospectus under the heading "Lack of Separate Representation" shall be
amended by inserting the following paragraph:

           The firm of Hunton & Williams ceased acting as counsel to the
     Company, the Advisor and their Affiliates immediately following the
     effective date of the Prospectus. Holland & Knight LLP has served as
     counsel to the Company since the effective date of the Prospectus. Holland
     & Knight LLP also serves as counsel to the Advisor, the Dealer Manager and
     their Affiliates. There is a possibility that in the future the interests
     of the various parties may become adverse. In the event that a dispute were
     to arise between the Company, the Advisor, the Dealer Manager or their
     Affiliates, the Advisor may be required to cause the Company to retain
     separate counsel for such matters.

CONTRACT BETWEEN WELLS DEVELOPMENT AND WELLS OPERATING PARTNERSHIP, L.P.

  Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited partnership
organized to own and operate properties on behalf of the Company, entered into
an Agreement for the Purchase and Sale of Property (the "Purchase Agreement")
with Wells Development dated September 15, 1998 for the purchase of an undivided
interest in the Associates Property.  The purchase price to be paid by Wells OP
for its undivided interest shall be $1,650,000 representing a 55% undivided
interest in the Associates Property.  Simultaneously, Wells Development entered
into another Agreement for the Purchase and Sale of Property for the remaining
undivided interest with Beaver Ruin-ARC Way, Ltd. and Carter Boulevard, Ltd.,
both Georgia limited partnerships affiliated with the Advisor (collectively
referred to as "Beaver/Carter").  The purchase price of the undivided interest
to be acquired by Beaver/Carter shall be $1,350,000 representing a 45% undivided
interest in the Associates Property.  Beaver/Carter has paid $1,350,000 to Wells
Development as an earnest money deposit pursuant to its contract.  Wells
Development will use the earnest money deposit received from Beaver/Carter,
along with a loan in the amount of $4,500,000 from First Capital Bank (as
described below), to partially fund the purchase and development of the
Associates Property.  Wells Development shall not make any profit or incur any
loss in connection with this transaction.

  The closing of the purchase of the undivided interests by Wells OP and
Beaver/Carter shall be held on or before January 19, 1999.  At closing, Wells OP
shall pay the purchase price for its undivided interest or execute a promissory
note for any unfunded portion of such purchase price.  In addition, Wells OP
shall deliver to Wells Development a closing statement, a Tenancy-in-Common
Agreement, and such other documents as may be reasonably required by Wells
Development in order to effectuate the transaction.  Wells OP's obligation to
close on the undivided interest is conditioned upon the following events:

     .    Wells OP shall have available to it at the date of closing
          sufficient proceeds available for investment in properties to fund the
          purchase price;

     .    all the representations and warranties set forth in the Purchase
          Agreement shall be true and correct in all material respects on the
          date of closing;

     .    the receipt by Wells OP of an acceptable appraisal for the property;

     .    the receipt by Wells OP of evidence reasonably satisfactory to it
          that the property is free of any Hazardous Materials;

     .    the receipt of evidence that Associates Housing Finance, LLC has
          executed an acceptable lease in connection with the Associates
          Property;

                                      -2-

<PAGE>
 
     .    the execution of a Tenancy-in-Common Agreement with Beaver/Carter in
          form and substance reasonably satisfactory to Wells OP;

     .    evidence that the transaction contemplated by the Beaver/Carter
          agreement has closed; and

     .    a policy of title insurance insuring Wells OP's undivided interest
          in the Associates Property.

TENANCY-IN-COMMON

  Tenancy-in-Common Agreement.  At or near the date that Wells OP closes the
  ---------------------------                                               
acquisition of its undivided interest in the Associates Property, Wells OP will
enter into a Tenancy-in-Common Agreement with Beaver/Carter.  This Tenancy-in-
Common Agreement will set forth the rights of the parties with regard to their
co-ownership of the Associates Property including, but not limited to, the
contribution of funds for the payment of expenses required in connection with
the ownership and management of the property.  While the Tenancy-in-Common
Agreement to be entered into with Beaver/Carter has not yet been prepared, it is
anticipated that such agreement may contain a right of first refusal or buy-sell
provision which would allow either party to require the other party to sell its
interest in the Associates Property upon the happening of certain events.  In
the event that the Tenancy-in-Common Agreement does contain such a right of
first refusal or buy-sell provision, the Company may be unable to finance any
such buy-out right at the required time.  Further, in the event that such
Tenancy-in-Common Agreement fails to grant the Company the power to control
property decisions, an impasse could be reached on matters pertaining to the
ownership or operation of the Associates Property, which may have a detrimental
impact on the success of this property.

  Co-Tenancy Risks.  Due to the nature of a co-tenancy interest, it may be
  ----------------                                                        
difficult for the Company to sell its co-tenancy interest in the Associates
Property.  Further, ownership of properties in co-tenancies involves certain
risks not otherwise present, including the possibility that the co-tenant in the
investment might become bankrupt, that the co-tenant may be in a position to
take action contrary to the Company's policies or objectives, or that the co-
tenant may have economic or business interests or goals which are inconsistent
with the business interests and goals of the Company.  It should be noted in
this regard that Beaver/Carter obtained the proceeds used to invest in the
Associates Property from a sale of another property in a transaction intended to
qualify as a tax free like-kind exchange.  Accordingly, Beaver/Carter has a
relatively low tax basis in its interest in the Associates Property and may not
desire to sell the Associates Property at the same time as the Company desires
to sell the Associates Property.

THE ASSOCIATES PROPERTY

  Purchase of the Associates Property.  Wells Development entered into a Real
  -----------------------------------                                        
Estate Option Agreement for Lot 10 dated June 21, 1998 and a Real Estate Option
Agreement for Lot 11 dated April 22, 1998, (collectively, the "Option
Agreement") with The Development Corporation of Knox County, a Tennessee
nonprofit corporation (the "Seller").  The Option Agreement provided Wells
Development the option to purchase the Associates Property for a purchase price
of $130,000 per acre.  The Seller is not affiliated with the Company or its
Advisor.  Wells Development exercised the options pursuant to the Option
Agreement and acquired the Associates Property on October 7, 1998 for a purchase
price of $812,500 reflecting a site preparation discount of $130,000.  In
connection with the closing of the acquisition of the Associates Property, Wells
Development paid title insurance premiums of $2,400 and other miscellaneous
closing costs of $3,245.

  Wells Development entered into a Development Agreement (as hereinafter
described) for the construction of a one-story office building containing
approximately 71,400 rentable square feet to be erected on the Associates
Property (the "Project").  Wells Development entered into a Lease Agreement (the
"Associates Lease") with Associates Housing Finance, LLC ("Associates") pursuant
to which Associates agreed to lease 50,000 rentable square feet of the Project
upon its completion.

                                      -3-

<PAGE>
 
  An independent appraisal of the Associates Property was prepared by CB Richard
Ellis, Inc., real estate appraisers as of September 14, 1998, pursuant to which
the market value of the land and the leased fee interest in the Associates
Property subject to the Associates Lease (described below) was estimated to be
$7,800,000, in cash or terms equivalent to cash.  This value estimate was based
upon a number of assumptions, including that the Project will be finished in
accordance with plans and specifications and that the building will be operating
following completion at a stabilized level with Associates occupying 50,000
rentable square feet and 94% of the remaining rentable area occupied by other
tenants.  Wells Development also obtained an environmental report prior to
closing evidencing that the environmental condition of the Associates Property
was satisfactory.

  The Associates Loan.  Wells Development has obtained a loan commitment from
  -------------------                                                        
First Capital Bank for a $4,500,000 construction loan, the proceeds of which
will be used to fund the development and construction of the Project (the
"Associates Loan").  The Associates Loan  will mature 12 months from the date of
closing, which is currently scheduled for November 30, 1998, unless Wells
Development exercises its option to extend the Associates Loan maturity date an
additional 12 months.  The interest rate on the Associates Loan is a variable
rate equal to the six month London Inter Bank Offered Rate, plus 200 basis
points, rounded up to the nearest 1/8%.  Wells Development is required to pay to
First Capital Bank monthly installments of interest only with a final payment of
principal, plus all accrued and unpaid interest due on the maturity date.  The
Associates Loan will be secured by a first priority mortgage against the
Project.  In addition, Leo F. Wells, III (an officer and director of the Company
and the Advisor) and Wells Management Company, Inc., an Affiliate of the
Advisor, will be co-guarantors of the Associates Loan.

  A nonrefundable loan fee of $22,500 (.5% of the loan amount) is payable 50% at
the time the loan commitment was accepted and the remainder will be payable at
the closing of the Associates Loan.  An additional nonrefundable loan extension
fee of $11,250 (.25% of the loan amount) will be payable upon acceptance of the
12 month extension option, if exercised.

  Since Wells Development has only received a loan commitment, and has not yet
entered into a loan agreement with First Capital Bank, as of the date of this
Supplement, there is no guarantee that Wells Development will be able to close
and obtain the Associates Loan, or if it does obtain the Associates Loan, that
the terms will be as favorable as described herein.  If, for any reason, Wells
Development is not able to close the Associates Loan, there can be no assurance
that Wells Development will be able to obtain suitable financing for the
Project.

  Location of the Associates Property.  The Associates Property is located in an
  -----------------------------------                                           
office park known as Centerpoint Business Park, on Pellissippi Parkway just
north of the intersection of Interstates 40 and 75, in Knox County, Tennessee.
The site is outside the city limits of Knoxville and approximately 10 miles west
of the Knoxville central business district.  Pellissippi Parkway and the
commercial area along the Interstate 40/75 corridor has evolved recently from a
residential suburb into one of the area's fastest growing commercial and retail
districts.  The area has become competitive with the metropolitan Knoxville area
office market due to its growth in office space.

  Knoxville, the county seat of Knox County, Tennessee, is the third largest
city in the State of Tennessee, after Memphis and Nashville, and the largest
city in eastern Tennessee.  Knoxville is located at the intersection of two
major interstate highways, I-40 which extends east to west, and I-75 which
extends north to south.  The Knoxville economy is largely oriented to trade and
manufacturing, due to its location as the geographic center of the eastern
portion of the United States and the wide range of available transportation
resources.  Knoxville's central location and transportation access has also
caused it to emerge as a convention center.  The Knoxville metropolitan
statistical area population in 1990 was 604,812, compared to the 1980 census of
565,970.

                                      -4-

<PAGE>
 
  The western portion of Knox County, in which the Associates Property is
located, has experienced the most growth and development in the Knoxville
metropolitan area during the past 12 years due primarily to available land and
services.  It is anticipated that the Knoxville metropolitan area will continue
to grow as a major regional center of trade and tourism due to its location at
the intersection of Interstates 40 and 75 and the recent extension of the
Pellissippi Parkway to the Knoxville airport.

  Access to the Associates Property is provided by Pellissippi Parkway, a
limited access thoroughfare traversing southeast to the Knoxville airport, with
an interchange at Interstate 40/75 south of the Associates Property.  Nearby
Kingston Pike also provides east and west traffic flow for the Centerpoint
Business Park, and serves as the major commercial center in the immediate area
with a number of large strip shopping centers, a regional mall, gas stations,
convenience stores, office buildings, restaurants and other various
retail/commercial uses.  The Project will be highly visible from both
Centerpoint Parkway and Pellissippi Parkway, since the building elevation will
be at or above road grade.

  Wells Development will experience competition for tenants from owners and
managers of various other office buildings located in the immediate area of the
Project which would adversely effect Wells Development's ability to attract and
retain tenants.

  Development Agreement.  On September 15, 1998, Wells Development entered into
  ---------------------                                                        
a Development Agreement (the "Development Agreement") with ADEVCO Corporation, a
Georgia corporation (the "Developer"), as the exclusive development manager to
supervise, manage and coordinate the planning, design, construction and
completion of the Project.

  The Developer is an Atlanta based real estate development and management
company formed in 1990 which specializes in the development of office buildings.
The Developer has previously developed or is developing a total of six office
buildings for Affiliates of the Advisor.  In this regard, the Developer entered
into:

     .    a development agreement with Wells Real Estate Fund III, L.P.
          ("Wells Fund III"), a public real estate program previously sponsored
          by the Advisor and its Affiliates, for the development of a two-story
          office building containing approximately 34,300 rentable square feet
          located in Greenville, North Carolina (the "Greenville Project");

     .    a development agreement with Fund IV and Fund V Associates, a joint
          venture between Wells Real Estate Fund IV, L.P., ("Wells Fund IV") and
          Wells Real Estate Fund V, L.P. ("Wells Fund V"), both public real
          estate programs previously sponsored by the Advisor and its
          Affiliates, for the development of a four-story office building
          located in Jacksonville, Florida containing approximately 87,600
          rentable square feet (the "Jacksonville IBM Project");

     .    a development agreement with the Fund VII-VIII Joint Venture, a
          joint venture between Wells Real Estate Fund VII, L.P.("Wells Fund
          VII"), and Wells Real Estate Fund VIII, L.P. ("Wells Fund VIII"), both
          public real estate programs previously sponsored by the Advisor and
          its Affiliates, for the development of a two-story office building
          containing approximately 62,000 rentable square feet located in
          Alachua County, near Gainesville, Florida (the "Gainesville Project");

     .    a development agreement with Fund VI, Fund VII and Fund VIII
          Associates, a joint venture among Wells Real Estate Fund VI, L.P.
          ("Wells Fund VI"), a public real estate program previously sponsored
          by the Advisor and its Affiliates, Wells Fund VII and Wells Fund VIII,
          for the development of a four-story office building containing
          approximately 92,964 rentable square feet located in Jacksonville,
          Florida (the "BellSouth Project");

                                      -5-

<PAGE>
 
     .    a development agreement with Fund VIII and Fund IX Associates, a
          joint venture between Wells Fund VIII and Wells Real Estate Fund IX,
          L.P. ("Wells Fund IX"), a public real estate program sponsored by the
          Advisor and its Affiliates, for the development of a four-story office
          building containing approximately 96,750 rentable square feet located
          in Madison, Wisconsin (the "Madison Project"); and

     .    a Development Agreement with Wells Fund IX for the development of a
          three-story office building containing approximately 83,885 rentable
          square feet located in Knoxville, Tennessee (the "ABB Building").

  The Greenville Project was completed on schedule, and International Business
Machines Corporation ("IBM"), which leased approximately 23,312 rentable square
feet of the building, took possession under its lease on April 16, 1991.  The
Jacksonville IBM Project was also completed on schedule, and IBM, which leased
approximately 68,100 rentable square feet of the building, took possession under
its lease on June 1, 1993.  The Gainesville Project was completed in advance of
schedule, and CH2M Hill, Inc., which leased approximately 50,000 rentable square
feet of the building, took possession under its lease on December 18, 1995.  The
BellSouth Project was completed in advance of schedule, and BellSouth, which
leased approximately 64,558 rentable square feet of the building, took
possession under its lease on May 20, 1996.  Construction of the Madison
Building was completed on schedule, and Westel-Milwaukee Company, Inc. d/b/a
Cellular One, which leased approximately 75,000 rentable square feet of the
building, took possession under its lease on June 15, 1997.  The ABB Building
was completed on schedule, and ABB Flakt, Inc., which leased approximately
55,000 rentable square feet of the building took possession under its lease on
January 1, 1998.

  The President of the Developer is David M. Kraxberger.  Mr. Kraxberger has
been in the real estate business for over 17 years.  From 1984 to 1990, Mr.
Kraxberger served as Senior Vice President of Office Development for The Oxford
Group, Inc., an Atlanta based real estate company with operations in seven
southeastern states.  Mr. Kraxberger holds a Masters Degree in Business
Administration from Pepperdine University in Los Angeles, California, and is a
member of the Urban Land Institute and the National Association of Industrial
Office Parks.  Mr. Kraxberger also holds a Georgia real estate license.
Pursuant to the terms of a Guaranty Agreement, Mr. Kraxberger has personally
guaranteed the performance of the Developer under the Development Agreement.
Mr. Kraxberger has also personally guaranteed the performance of the contractor,
Integra Construction, Inc., under the Construction Contract (as hereinafter
described) pursuant to the terms of a separate Guaranty Agreement.  Neither the
Developer nor Mr. Kraxberger are affiliated with the Advisor or its Affiliates.

  The primary responsibilities of the Developer under the Development Agreement
include:

     .    the supervision, coordination, administration and management of the
          work, activities and performance of the architect under the
          Architect's Agreement (as described below) and the contractor under
          the Construction Contract (as described below);

     .    the implementation of a development budget setting forth an estimate
          of all expenses and costs to be incurred with respect to the planning,
          design, development and construction of the Project;

     .    the review of all applications for disbursement made by or on behalf
          of Wells Development under the Architect's Agreement and the
          Construction Contract;

     .    the supervision and management of tenant build-out at the Project;
          and

     .    the negotiation of contracts with, supervision of the performance
          of, and review and verification of applications for payment of the
          fees, charges and expenses of such design and engineering

                                      -6-

<PAGE>
 
          professionals, consultants and suppliers as the Developer deems
          necessary for the design and construction of the Project in accordance
          with the development budget.

  The Developer will also perform other services typical of development managers
including, but not limited to, arranging for preliminary site plans, surveys and
engineering plans and drawings, overseeing the selection by the Contractor of
major subcontractors and reviewing all applicable building codes, environmental,
zoning and land use laws and other applicable local, state and federal laws,
regulations and ordinances concerning the development, use and operation of the
Project or any portion thereof.  The Developer is required to advise Wells
Development on a weekly basis as to the status of the Project and submit to
Wells Development monthly reports with respect to the progress of construction,
including a breakdown of all costs and expenses under the development budget.
The Developer is required to obtain prior written approval from Wells
Development before incurring and paying any costs which will result in aggregate
expenditures under any one category or line item in the development budget
exceeding the amount budgeted therefor.  If the Developer determines at any time
that the development budget is not compatible with the then prevailing status of
the Project and will not adequately provide for the completion of the Project,
the Developer will prepare and submit to Wells Development for approval an
appropriate revision of the development budget.

  In discharging its duties and responsibilities under the Development
Agreement, the Developer has full and complete authority and discretion to act
for and on behalf of Wells Development.  The Developer has agreed to indemnify
Wells Development from any and all claims, demands, losses, liabilities,
actions, lawsuits, and other proceedings, judgments and awards, and any costs
and expenses arising out of the negligence, fraud or any willful act or omission
by the Developer.  Wells Development has agreed to indemnify the Developer from
and against any and all claims, demands, losses, liabilities, actions, lawsuits
and other proceedings, judgments and awards, and any costs and expenses arising
out of (1) any actions taken by the Developer within the scope of its duties or
authority, excluding negligence, fraud or willful acts of the Developer, and (2)
the negligence, fraud or any willful act or omission on the part of Wells
Development.

  Wells Development may elect to provide funds to the Developer so that the
Developer can pay Wells Development's obligations with respect to the
construction and development of the Project directly.  All such funds of Wells
Development which may be received by the Developer with respect to the
development or construction of the Project will be deposited in a bank account
approved by Wells Development.  If at any time there are in the bank account
funds of Wells Development temporarily exceeding the immediate cash needs of the
Project, the Developer may invest such excess funds in savings accounts,
certificates of deposit, United States Treasury obligations and commercial paper
as the Developer deems appropriate or as Wells Development may direct, provided
that the form of any such investment is consistent with the Developer's need to
be able to liquidate any such investment to meet the cash needs of the Project.
The Developer shall be reimbursed for all advances, costs and expenses paid for
and on behalf of Wells Development.  The Developer will not be reimbursed,
however, for its own administrative costs or for costs relating to travel and
lodging incurred by its employees and agents.  The Developer may be required to
advance its own funds for the payment of any costs or expenses incurred by or on
behalf of Wells Development in connection with the development of the Project if
there are cost overruns in excess of the contingency contained in the
development budget.

  As compensation for the services to be rendered by the Developer under the
Development Agreement, Wells Development will pay a development fee of $112,500.
The fee will be due and payable ratably (on the basis of the percentage of
construction completed) as the construction and development of the Project is
completed.  Wells Development will also pay the Developer an "Associates Work
Fee" of $112,500.  The Associates Work Fee is for services rendered by the
Developer with respect to the supervision and management of tenant build-out of
the premises leased by Associates pursuant to the Associates Lease.  The fee is
due and payable in one lump sum upon the completion of the construction of the
Project and the tenant improvements under the Associates Lease.

                                      -7-

<PAGE>
 
  It is anticipated that the aggregate of all costs and expenses to be incurred
by Wells Development with respect to the acquisition of the Property, the
planning, design, development, construction and completion of the Project and
the build-out of tenant improvements under the Associates Lease and tenant
improvements for the premises not leased initially by Associates will total
approximately $7,428,090 comprised of the following expenditures:

<TABLE>
<CAPTION>
 
<S>                                                    <C>
          Construction Contract                        $2,726,640
          Tenant Improvements - Associates Premises     2,042,000
          Tenant Improvements - Additional Space          380,000
          Land                                            812,500
          Contractor's Bond                                28,000
          Work Fee                                         60,000
          Architectural Fees                              141,300
          Architect's Expenses                             36,000
          Space Planning                                  150,000
          Development Fee                                 112,500
          Associates Work Fee                             112,500
          Additional site work                            130,000
          Survey and Engineering                           47,050
          Landscaping                                     137,500
          Signage                                          12,500
          Marketing                                        25,500
          Contingency                                     199,100
          Construction Interest                           175,000
          Loan Fees                                        25,000
          Legal Fees                                       75,000
 
</TABLE>


The total of all the foregoing expenses anticipated to be incurred by Wells
Development with respect to the Project, exclusive of costs relating to
marketing, closing costs and tenant improvements and leasing commissions for the
premises not leased initially by Associates, will total approximately
$6,205,590.  Under the terms of the Development Agreement, the Developer has
agreed that in the event that the total of all such costs and expenses exceeds
$6,205,590, the amount of fees payable to the Developer shall be reduced by the
amount of any such excess.  Unless the fees otherwise payable to the Developer
are reduced as set forth above, it is estimated that the total sums due and
payable to the Developer under the Development Agreement will be approximately
$225,000.

     In the event the Developer should for any reason cease to manage the
development of the Project, Wells Development would have to locate a suitable
successor development manager.  No assurances can be given as to whether a
suitable successor development manager could be found, or what the contractual
terms or arrangement with any such successor would be.

     Construction Contract.  Wells Development entered into a construction
     ---------------------                                                
contract (the "Construction Contract") on September 10, 1998 with the general
contracting firm of Integra Construction, Inc. (the "Contractor") for the
construction of the Project.  The Contractor is a Georgia corporation based in
Atlanta specializing in commercial, industrial and institutional building.  The
Contractor commenced operations in November 1994.  Its principals were formerly
employed by McDevitt & Street Company, a large general contracting firm which
operates throughout the United States and which has served previously as the
general contractor for properties developed by limited partnerships sponsored by
the Advisor.  The Contractor is presently engaged in the construction of five
projects with a total construction value of in excess of $14,400,000, and since
July 1995, has completed twenty-six projects with a total construction value in
excess of $28,600,000.  The Contractor has served as the general contractor for

                                      -8-

<PAGE>
 
the construction of the Gainesville Project, an office building in Gainesville,
Florida which is owned by a joint venture between Wells Fund VII and Wells Fund
VIII, and the ABB Building, an office building in Knoxville, Tennessee which is
owned by a joint venture among Wells Fund IX, Wells Fund X, Wells Fund XI and
Wells OP.  The Contractor is not affiliated with Wells Development or the
Advisor.

     Under the terms of the Construction Contract, the Contractor is responsible
for the construction of the Project which will consist of a one-story steel
framed office building with reflective insulated glass and brick exterior
containing approximately 71,400 rentable square feet.  The Property is currently
zoned to permit the intended development and operation of the Project as a
commercial office building and has access to all utilities necessary for the
development and operation of the Project, including water, electricity, sanitary
sewer and telephone.

     The Construction Contract provides that Wells Development will pay the
Contractor a fixed sum of $2,726,640 for the construction of the Project,
excluding tenant improvements.  It is anticipated that the Construction Contract
will be amended to provide for the construction of the tenant improvements
required pursuant to the Associates Lease at such time as the plans and
specifications are drawn for such improvements and the budget for such
improvements is firmly established.  The Contractor will be responsible for all
costs of labor, materials, construction equipment and machinery necessary for
completion of the Project.  In addition, the Contractor will be required to
secure and pay for any additional business licenses, tap fees and building
permits which may be necessary for construction of the Project.

     Wells Development will make monthly progress payments to the Contractor in
an amount of 90% of the portion of the contract price properly allocable to
labor, materials and equipment, less the aggregate of any previous payments made
by Wells Development; provided, however, that when a total of $137,732 has been
withheld as retainage, no further retainage will be withheld from the monthly
progress payments.  When construction is substantially complete and the space is
available for occupancy, Wells Development will make a semi-final payment in the
amount of all of the unpaid balance, except that Wells Development may retain an
amount in accordance with the terms of the Construction Contract which is
necessary to protect its remaining interest until final completion of the
Project.  Wells Development will pay the entire unpaid balance when the Project
has been fully completed in accordance with the terms and conditions of the
Construction Contract.  As a condition of final payment, the Contractor will be
required to execute and deliver a release of all claims and liens against Wells
Development.

     The Contractor will be responsible to Wells Development for the acts or
omissions of its subcontractors and suppliers of materials and of persons either
directly or indirectly employed by them.  The Contractor has agreed to indemnify
Wells Development from and against all liability, claims, damages, losses,
expenses and costs of any kind or description arising out of or in connection
with the performance of the Construction Contract, provided that such liability,
claim, damage, loss or expense is caused in whole or in part by any action or
omission of the Contractor, any subcontractor or materialmen, anyone directly or
indirectly employed by any of them or anyone for whose acts any of them may be
liable.  The Construction Contract also requires the Contractor to obtain and
maintain, until completion of the Project, adequate insurance coverage relating
to the Project, including insurance for workers' compensation, personal injury
and property damage.
 
     The Contractor is required to work expeditiously and diligently to maintain
progress in accordance with the construction schedule and to achieve substantial
completion of the Project within the contract time.  The Contractor is required
to employ all such additional labor, services and supervision, including such
extra shifts and overtime, as may be necessary to maintain progress in
accordance with the construction schedule.  It is anticipated that the Project
will be completed on or before January 1, 2000.  As described below, in the
event the Project is not completed by January 1, 2000, Associates' sole remedy
shall be to terminate its lease with Wells Development.  Wells Development shall
obtain a completion and performance bond in the amount of $28,000 in connection
with the development and construction of the Project to reduce the risk of non-
performance and to assure compliance with approved plans and specifications.  In

                                      -9-

<PAGE>
 
addition, performance by the Contractor of the Construction Contract has been
personally guaranteed by David B. Blackmore and Drew S. White, founding
principals of the Contractor, as well as David Kraxberger, a principal of the
Developer.

     Architect's Agreement.  Smallwood, Reynolds, Stewart, Stewart & Associates,
     ---------------------                                                      
Inc. (the "Architect") will be the architect for the Project pursuant to the
Architect's Agreement entered into with Wells Development.  The Architect, which
was founded in 1979, is based in Atlanta, Georgia, has a staff of over 200
persons, and specializes in programming, planning, architecture, interior
design, landscape architecture and construction administration.  The Architect
has its principal office in Atlanta, Georgia and additional offices in Tampa,
Florida and Singapore, Malaysia.  The Architect has designed a wide variety of
projects, with a total construction cost in excess of $2 billion, including
facilities for corporate office space, educational and athletic facilities,
retail space, manufacturing, warehouse and distribution facilities, hotels and
resorts, correctional institutions, and luxury residential units.  The Architect
has performed architectural services with respect to the Gainesville Project and
the Knoxville Project.  The Architect is not affiliated with Wells Development
or the Advisor.

     The Architect's basic services under the Architect's Agreement include the
schematic design phase, the design development phase, the construction documents
phase and the construction phase.  During the schematic design phase, the
Architect will prepare schematic design documents consisting of drawings and
other documents illustrating the scale and relationship of Project components.
The Architect will be paid a fee of $21,195 for such services.  During the
design development phase, the Architect will prepare design development
documents consisting of drawings and other documents to fix and describe the
size and character of the entire Project as to architectural, structural,
mechanical, plumbing and fire protection and electrical systems, materials and
such other elements as may be appropriate.  The Architect will be paid $42,390
for these services.  During the construction documents phase, the Architect will
prepare construction documents consisting of drawings and specifications setting
forth in detail the requirements for the construction of the Project.  The
Architect will be paid $63,585 for these services.  During the construction
phase, the Architect is to provide administration of the Construction Contract
and advise and consult with the Developer and Wells Development concerning
various matters relating to the construction of the Project.  The Architect is
required to visit the Project site at intervals appropriate to the stage of
construction and to become generally familiar with the progress and quality of
the work and to determine if, in general, the work is proceeding in accordance
with the contract schedule.  The Architect is required to keep Wells Development
informed of the progress and quality of the work.  The Architect is also
required to determine the amounts owing to the Contractor based on observations
of the site and evaluations of the Contractor's application for payment and
shall issue certificates for payment in amounts determined in accordance with
the Construction Contract described above.  The Architect will also conduct
inspections to determine the date of completion of the Project and shall issue a
final certificate for payment.  The Architect will be paid $14,130 for its
services performed during the construction phase.

     The total amount of fees payable to the Architect under the Architect's
Agreement is $141,300.  Payments will be paid to the Architect on a monthly
basis in proportion to the services performed within each phase of service.  In
addition, the Architect and its employees and consultants will be reimbursed for
expenses including, but not limited to, transportation in connection with the
Project, living expenses in connection with out-of-town travel, long distance
communications and fees paid for securing approval of authorities having
jurisdiction over the Project.  It is estimated that the reimbursable expenses
in connection with the development of the Project will be approximately $36,000.

     Associates Lease.  On September 10, 1998, Wells Development entered into a
     ----------------                                                          
Lease Agreement (the "Associates Lease") with Associates Housing Finance, LLC
("Associates") pursuant to which Associates agreed to lease 50,000 rentable
square feet of the Project, comprising approximately 70% of the Project.

     Associates is a wholly owned subsidiary of Associates First Capital
Corporation ("First Capital"), a Delaware corporation which was recently spun
off by Ford Motor Company.  First Capital is a leading diversified consumer and

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<PAGE>
 
commercial finance company which provides finance, leasing and related services
to individual consumers and businesses in the United States and internationally.
First Capital reported net income for the year ended December 31, 1997 of over
$1 billion on gross revenues of over $8 billion and a net worth of over $6
billion.  First Capital has guaranteed $6,206,952 of the Associates Lease.  This
guaranteed amount declines on a monthly basis over the lease term provided there
is no continuing default under the Associates Lease.

     First Capital divides its activities into consumer finance and commercial
finance.  First Capital's consumer finance operations provide a variety of
consumer financing products and services, including home equity lending,
personal lending, retail sales finance and credit cards.  The commercial finance
operations provide retail financing, leasing and wholesale financing for heavy-
duty and medium-duty trucks and truck trailers, construction, material handling
and other industrial and communications equipment, manufactured housing,
recreational vehicle, auto fleet leasing and other commercial products and
services.

     Associates is First Capital's subsidiary engaged in the financing of
manufactured housing, and is the third largest provider of such services in the
United States.  Associates purchases manufactured housing retail installment
contracts originated by retail dealers, originates and services direct loans to
purchasers, and provides wholesale financing to approved manufactured housing
dealers.  Associates also provides commercial business loans to certain
manufactured housing dealers to provide capital to build new retail sales
centers, update existing facilities or expand into community park sales.

     The initial term of the Associates Lease will be eighty-four months to
commence (the "Rental Commencement Date") on the earlier of (1) the date which
is thirty (30) days after substantial completion of the building, or (2) the
date upon which tenant takes possession and occupies any portion of the premises
for business purposes.  Associates has the option to extend the initial term of
the Associates Lease for two successive five year periods.  Each extension
option must be exercised no less than nine months prior to the expiration of the
then current lease term.

     The annual base rent payable under the Associates Lease will be $600,000
($12.00 per square foot) payable in equal monthly installments of $50,000 during
the first twenty-eight months of the lease term; $625,000 ($12.50 per square
foot) payable in equal monthly installments of $52,083 during the next twenty-
eight months of the lease term; and $650,000 ($13.00 per square foot) payable in
equal monthly installments of $54,167 during the last twenty-eight months of the
lease term.  The annual base rent for each extended term under the Associates
Lease will be the "market rate" for the period covered by the extended term.
The term "market rate" is defined in the Associates Lease as the annual
effective rental rate per square foot of rentable floor area then being charged
by landlords under new leases of office space in the metropolitan Knoxville,
Tennessee market for similar space in a building of comparable quality and with
comparable parking and other amenities.  The Associates Lease provides that if
the parties cannot agree on the appropriate market rate, the market rate shall
be established by real estate appraisers.

     In addition to the base rent, Associates is required to pay additional rent
equal to its share of all "operating expenses" during the lease term.
"Operating expenses" is defined to include all expenses, costs and disbursements
(excluding specific costs billed to specific tenants of the building) of every
kind and nature, relating to or incurred or paid in connection with the
ownership, management, operation, repair and maintenance of the Project.
"Operating expenses" include compensation of employees engaged in the operation,
management or maintenance of the Project, supplies, equipment and materials,
utilities, repairs and general maintenance, insurance, a management fee in the
amount of 3.5% of the gross rental income from the Project, and all taxes and
governmental charges attributable to the Project or its operation (excluding
taxes imposed or measured on or by the income of Wells Development from the
operation of the Project).

     Under the terms of the Associates Lease, Wells Development is responsible
for a construction allowance of $1,500,000 (calculated at the rate of $30 per

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<PAGE>
 
usable square foot of the premises).  The Associates Lease also provides that so
long as Associates shall occupy 50% or more of the rentable floor area of the
building, Associates shall have the right to design and designate the location
of one monument-type sign naming the building and Wells Development will pay
$7,500 of the cost associated with purchasing and installing such sign.

     The terms of the Associates Lease provide that Associates has a right of
first refusal for the lease of any space in the building not initially leased by
Associates.  In the event that Wells Development has secured a potential tenant
for any of such space, Wells Development has agreed to give Associates 10
business days to exercise its right to add such space to the leased premises.
In the event that Associates exercises its right of first refusal, the lease of
the additional space will be subject to all the terms and conditions of the
Associates Lease, including the base rental which shall be based upon the number
of square feet of rentable area added to the premises.  If Associates does not
so exercise its right of first refusal within such 10 business day period, Wells
Development will have the right to lease the space to the potential tenant and
Associates shall have no further rights relating to the additional space.

     The Associates Lease provides that Wells Development is required to cause
the Project to be substantially completed as soon as practicable under the
circumstances, with a goal of achieving substantial completion on or before
January 1, 2000 (subject to force majeure and any delays caused by Associates).
If substantial completion has not occurred on or before January 1, 2000,
Associates' sole right and remedy shall be to terminate the Associates Lease
upon 10 days written notice to Wells Development; provided substantial
completion does not occur during such 10 day period.

     Property Management Fees.  Following construction and completion of the
     ------------------------                                               
Project, property management and leasing services will be performed by Wells
Management Company, Inc. (the "Property Manager"), an Affiliate of the Advisor.
As compensation for its services, the Property Manager will receive fees equal
to 4.5% of the gross revenues for property management services and leasing
services with respect to the Project.  In addition, the Property Manager will
receive a one-time initial lease-up fee relating to the Associates Lease equal
to the first month's rent plus 5% of the gross revenues over the initial term of
the Associates Lease.  In addition, the Property Manager may also receive
initial lease-up fees relating to the lease-up of space not initially leased by
Associates, as provided in the Prospectus.

     Lease-Up Risk.  As set forth above, Associates has agreed to lease
     -------------                                                     
approximately 70% of the Project.  However, since Wells Development has not yet
obtained any leases for the remaining approximately 30% of office space at the
Project, Wells Development will be subject to the normal lease-up risks of a new
commercial office building with respect to the unleased portion of the Project.
No assurances can be given that Wells Development will be able to attract or
obtain suitable tenants for the remaining approximately 30% of space at the
Project or that it will be able to attract or obtain suitable tenants for the
space initially leased by Associates upon the expiration of its lease.

THE STATUS OF THE ABB BUILDING

     On September 10, 1998, a joint venture by and among Wells Fund IX, Wells
Fund X, Wells Fund XI and Wells OP (the "Fund IX-X-XI-REIT Joint Venture"),
entered into a Lease Agreement (the "Temporary Lease") with Associates pursuant
to which Associates has agreed to lease 23,490 rentable square feet of the ABB
Building on a temporary basis until substantial completion of the Project (as
defined in the Associates Lease).  The rental commencement date of the Temporary
Lease is September 14, 1998 and the expiration date of the lease term is May 31,
1999 subject to Associates' right to extend the Temporary Lease and subject to
Associates' right to terminate the lease in the event the rental commencement
date of the Associates Lease takes place.  In any event, the Temporary Lease may
not be extended beyond May 31, 2000.

                                      -12-

<PAGE>
 
     The annual base rental rate for the Temporary Lease is $234,900 ($10 per
square foot) payable in equal monthly installments of $19,575 during the term of
the Temporary Lease, subject to an increase to $293,625 ($12.50 per square foot)
payable in equal monthly installments of $24,469 under certain conditions.

     Under the Temporary Lease, Associates is responsible for its share of all
expenses, costs and disbursements (excluding specific costs billed to specific
tenants of the building) of every kind and nature relating to or incurred or
paid in connection with the ownership, management, operation, repair and
maintenance of the ABB Building, including compensation of employees engaged in
the operation and management or maintenance of the ABB Building, supplies,
equipment and materials, utilities, repairs and general maintenance, insurance,
a management fee in the amount of 4% of the gross rental income from the ABB
Building and all taxes and governmental charges attributable to the ABB Building
or its operations (excluding taxes imposed or measured on by the income of the
Fund IX-X-XI-REIT Joint Venture from operation of the ABB Building).

     Under the terms of the Temporary Lease, the Fund IX-X-XI-REIT Joint Venture
is responsible for a construction allowance of $233,155 (calculated at the rate
of $9.50 per square foot of the premises).

THE STATUS OF THE CORT FURNITURE BUILDING

     On September 1, 1998, the Fund X-XI Joint Venture, a Georgia Joint Venture
by and between Wells Fund X and Wells Fund XI, acquired Wells Development's
equity interest in Wells/Orange County Associates, a Georgia joint venture with
Wells OP (the "Cort Joint Venture").  As of September 1, 1998, Wells OP had made
total capital contributions to the Cort Joint Venture of $2,870,982 and held an
equity percentage interest in the Cort Joint Venture of 44%, and the Fund X-XI
Joint Venture made total capital contributions to the Cort Joint Venture of
$3,695,000 and held an equity percentage interest in the Cort Joint Venture of
56%.  Prior to the Fund X-XI Joint Venture's acquisition of an equity interest
in the Cort Joint Venture, the NationsBank Loan previously encumbering the Cort
Furniture Building was paid off and satisfied of record.

THE STATUS OF THE FAIRCHILD BUILDING

     On October 8, 1998, the Fund X-XI Joint Venture acquired Wells
Development's equity interest in Wells/Fremont Associates, a Georgia joint
venture with Wells OP (the "Fremont Joint Venture").  As of October 8, 1998,
Wells OP had made total capital contributions to the Fremont Joint Venture of
$6,983,110 and held an equity percentage interest in the Fremont Joint Venture
of 77.5%, and the Fund X-XI Joint Venture had made total capital contributions
to the Fremont Joint Venture of $2,000,000 and held an equity percentage
interest in the Fremont Joint Venture of 22.5%.  Prior to the Fund X-XI Joint
Venture's acquisition of an equity interest in the Fremont Joint Venture, the
NationsBank Loan previously encumbering the Fairchild Building was paid off and
satisfied of record.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION

     The information contained on page 46 in the "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" section of the
Prospectus is revised as of the date of this Supplement by the deletion of the
first paragraph of that section and the insertion of the following paragraph in
lieu thereof:

          The Company commenced operations on June 5, 1998, upon the acceptance
     of subscriptions for the minimum offering of $1,250,000 (125,000 shares).
     As of October 8, 1998, the Company had raised a total of $19,977,021 in
     offering proceeds (1,997,702 shares).  After the payment of $699,196 in
     acquisition and advisory fees and acquisition expenses, payment of
     $2,497,128 in selling commissions and organizational and offering expenses,
     capital contributions of $1,421,466 to the Fund IX-X-XI-REIT Joint Venture,
     capital contributions of $6,983,110 to the Fremont Joint Venture and
     capital contributions of $2,871,430 to the Cort Joint Venture, as of
     October 8, 1998, the Company was holding net offering proceeds of
     $5,504,691 available for investment in additional properties.

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