<PAGE>
     
     As filed with the Securities and Exchange Commission on January 15, 1999

                           Registration No. 333-32099

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                        POST-EFFECTIVE AMENDMENT NO. 4 TO
                                    FORM S-11
                             REGISTRATION STATEMENT
                                      Under
                           The Securities Act of 1933

                                   ----------

                    WELLS REAL ESTATE INVESTMENT TRUST, INC.
      (Exact Name of Registrant as Specified in Its Governing Instruments)


                            3885 Holcomb Bridge Road
                             Norcross, Georgia 30092
                                 (770) 449-7800
   (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                    Registrant's Principal executive offices)

                    Brian M. Conlon, Executive Vice President
                    Wells Real Estate Investment Trust, Inc.
                            3885 Holcomb Bridge Road
                             Norcross, Georgia 30092
                                 (770) 449-7800
 (Name, Address, Including Zip Code and Telephone Number, Including Area Code,
                             of Agent for Service)

                                   Copies to:

                             Donald Kennicott, Esq.
                             Michael K. Rafter, Esq.
                              Holland & Knight LLP
                         One Atlantic Center, Suite 2000
                        1201 West Peachtree Street, N.E.
                           Atlanta, Georgia 30309-3400

                 -------------------------------------------

                 Maryland                                 58-2328421
      (State or Other Jurisdiction                     (I.R.S. Employer
             of Incorporation)                      Identification Number)

                 -------------------------------------------

      If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|______________________

      If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|______________________

      If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|______________________

      If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|     

<PAGE>
 
[The following is text to a sticker to be attached to the front cover page of
the Prospectus in a manner that will not obscure the Risk Factors:]
    
      SUPPLEMENTAL INFORMATION - The Prospectus of Wells Real Estate Investment
Trust, Inc. consists of this sticker, the Prospectus dated January 30, 1998,
Supplement No. 1 dated April 20, 1998, Supplement No. 2 dated June 30, 1998,
Supplement No. 3 dated August 12, 1998 and Supplement No. 6 dated January 12,
1999, which supersedes Supplement No. 4 dated November 1, 1998 and Supplement
No. 5 dated December 14, 1998 (the Supplements are contained inside the back
cover page of the Prospectus). Supplement No. 1 includes updated Prior
Performance Tables and certain revisions to the Prospectus. Supplement No. 2
includes descriptions of the acquisition of ownership interests in certain real
properties and revisions to the Prospectus to reflect the increase in the size
of the Board of Directors. Supplement No. 3 includes descriptions of
transactions involving joint ventures with Affiliates and acquisitions of
certain real properties. Supplement No. 6 includes descriptions of certain 
co-tenancy arrangements with Affiliates, acquisitions of certain real properties
and revisions to the Prospectus to decrease the minimum purchase requirements
for participants in other real estate programs.     

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.
                             SHARES OF COMMON STOCK
                              $1,250,000  MINIMUM

     Wells Real Estate Investment Trust, Inc. (the "Company") is a newly
organized Maryland corporation which intends to qualify as a real estate
investment trust ("REIT").  The Company has been formed to acquire and operate
commercial properties, including properties which are under development or
construction, are newly constructed or have been constructed and have operating
histories and some of which may have tenants subject to "triple net" leases
(individually, a "property," collectively, "properties").  The Company's
operations will be managed by Wells Capital, Inc., a Georgia corporation (the
"Advisor"), an Affiliate (as defined herein) of the Company.

     The Company hereby offers, pursuant to this Prospectus (the "Prospectus"),
for sale to the public up to a maximum of 16,500,000 shares and a minimum of
125,000 shares of its common stock, $.01 par value per share (the "Shares").
All of the Shares offered hereby are being offered by the Company.  The minimum
purchase is 100 Shares ($1,000) (except in certain states as described herein).

An investment in Shares involves significant risks (See Risk Factors at page 8),
including the following:

 . The Company's Articles of Incorporation impose restrictions on ownership and
  transfers of Shares, and no public market for the Shares currently exists, and
  there is no assurance that one will develop.

 . The Company may purchase properties from its Affiliates (generally without
  profit to such selling Affiliates), and enter into joint venture agreements
  with its Affiliates and with the Prior Wells Public Programs (as defined
  herein) for the acquisition and development of properties.  Accordingly,
  because such transactions will not be on an arm's-length basis, the Company
  will face inherent conflicts of interest based on such relationships.

 . The Advisor and other Affiliates of the Company are involved in
  partnerships with investment objectives similar to the Company's, and
  therefore will face conflicts of interest in managing the Company's operations
  and those of such other activities. Accordingly, such conflicts may affect
  negatively the Company's financial performance and Cash Available for
  Distribution to Investors (as defined herein).

 . If the Company sells only the minimum amount of Shares required to close the
  Offering, the Company may be able to acquire only an estimated three or fewer
  properties, and thus the Company would have very limited asset diversification
  and possibly no geographic diversification.
  
 . Certain real estate investment programs previously sponsored by the Advisor
  and distributions to investors therein have experienced fluctuating financial
  performance based on varying occupancy levels, amounts of capital improvements
  and other necessary expenses for each property owned by such other programs.

 . The Company does not own any real property, and the Advisor has not identified
  any properties in which there is a reasonable probability that the Company
  will invest.  Accordingly, investors in the Company ("Investors") will not
  have the opportunity to evaluate the properties that the Company will acquire
  and must rely totally upon the ability of the Advisor with respect to the
  acquisition of properties.

 . Failure by the Company to qualify as a REIT for federal income tax purposes
  will cause it to be taxed as a regular corporation under federal income tax
  laws, which would materially reduce the Company's Cash Available for
  Distribution to Investors.

 . The Company may incur indebtedness of up to 50% of the properties' aggregate
  value, though such debt limitation does not apply to individual properties.
  Accordingly, the Company and its properties may be moderately leveraged, which
  could have adverse consequences to the Company.

 . Of the proceeds from the sale of the Shares, approximately 84% will be used to
  acquire properties, and the balance will be paid as commissions and fees to
  certain Affiliates of the Company for their services and as reimbursement for
  certain organizational and offering expenses, though some of such amounts will
  be reallowed or paid directly to participating broker-dealers.

  The Company has registered an offering of 16,500,000 Shares, with 1,500,000 of
such Shares available only to shareholders purchasing Shares in this initial
public offering who receive a copy of this Prospectus and who elect to
Any than By participating in this Offering must be made pursuant to a separate
prospectus.  See "Summary of Reinvestment Plan" and Exhibit C hereto.

  The Company's Affiliates include Wells Capital, Inc.--the Advisor, Wells
Investment Securities, Inc.--the Dealer Manager (the "Dealer Manager"), Wells
Management Company, Inc.--the property manager (the "Management Company"), Wells
Operating Partnership, L.P.--the partnership that will own the properties (the
"Operating Partnership"), and Wells Development Corporation--a property
development company (the "Development Company") .  The Shares are being placed
for the Company by the Dealer Manager on a "best efforts" basis.  See "Plan of
Distribution."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS ANY SUCH
AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.  THE ATTORNEY GENERAL OF
THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

     =====================================================================

<TABLE>
<CAPTION>
                                                                                                  Proceeds to
                                                   Price to                                         Company
                                                  Public (1)              Selling Commissions        (2)(3)
                                               -------------              -------------------     ------------
<S>                                       <C>                          <C>                        <C>
Per Share.................................           $10.00                     $      0.70        $       9.30
Total Minimum.............................       $1,250,000                     $    87,500        $  1,162,500
Total Maximum (4).........................     $165,000,000                     $11,550,000        $153,450,000
</TABLE>

     =====================================================================

(See footnotes on following page)
                       WELLS INVESTMENT SECURITIES, INC.

                The date of this Prospectus is January 30, 1998.


<PAGE>
 
                   (Cover Page Continued From Previous Page)
Footnotes:
(1)  Price to Public and Selling Commissions may be reduced in connection with
     certain large volume purchases and under other circumstances described
     herein; however, in no event will the proceeds to the Company be reduced
     thereby.  In addition to Selling Commissions in the amount of up to 7% of
     the Gross Offering Proceeds, the Company will reimburse the Dealer Manager
     and nonaffiliated broker-dealers participating in this Offering for actual
     expenses paid for marketing support and due diligence purposes, up to a
     maximum of 2.5% of the Gross Offering Proceeds (the "Marketing and Due
     Diligence Fee").  The Company also will issue to participating dealers a
     warrant to purchase one Share at a price of $12.00 per Share for every 25
     Shares sold (the "Soliciting Dealer Warrants").  See "Plan of
     Distribution."

(2)  These figures are before deducting other expenses of the Offering to be
     paid by the Company in an estimated amount equal to 3% of Gross Offering
     Proceeds -- $4,500,000 if the maximum amount under the Offering is sold and
     $37,500 if the minimum amount is sold -- which amount does not include
     Selling Commissions or amounts reimbursed for due diligence expenses.
     Includes Selling Commissions equal to 7% of the aggregate Gross Offering
     Proceeds (which commissions may be reduced under certain circumstances),
     but excludes the Marketing and Due Diligence Fee of up to 2.5% of Gross
     Offering Proceeds, both of which are payable to the Dealer Manager, an
     Affiliate of the Company.  The Dealer Manager, in its sole discretion, may
     reallow Selling Commissions of up to 7% of Gross Offering Proceeds to other
     broker-dealers participating in this Offering attributable to shares sold
     by them, and may reallow the Marketing and Due Diligence Fee (up to 2.5% of
     Gross Offering Proceeds) as reimbursements to the Dealer Manager and
     broker-dealers participating in this Offering based on such factors as the
     volume of shares sold by such participating broker-dealers, marketing
     support provided by such participating broker-dealers and bona fide
     conference fees incurred.  See "Estimated Use of Proceeds" and "Plan of
     Distribution."

(3)  In addition, assuming all 600,000 Soliciting Dealer Warrants are issued to
     the Dealer Manager, $480 of additional proceeds will be raised, based on a
     purchase price of $.0008 per share.  Assuming all such warrants are
     exercised at the exercise price of $12.00, an additional $1,200,000 will be
     raised.  No Selling Commission will be paid in connection with the issuance
     of the Soliciting Dealer Warrants or the Shares issuable upon the exercise
     thereof.

(4)  The maximum number of Shares to be sold hereunder is 16,500,000, which
     includes 1,500,000 Shares that may be issued pursuant to the Company's
     Dividend Reinvestment Plan (the "Reinvestment Plan"), and 600,000 shares
     that may be issued upon exercise of the Soliciting Dealer Warrants.  Those
     shareholders who elect to participate in the Reinvestment Plan will have
     their dividends reinvested in additional Shares.  The Soliciting Dealer
     Warrants may not be exercised for one year from the date of issuance, and
     are subject to restrictions on transfer.  See "Description of Capital
     Stock-Soliciting Dealer Warrants."

     The Offering will commence upon the effective date of this Prospectus and
will continue until and terminate upon the earlier of (i) January 30, 2000 (two
years after the initial date of this Prospectus), or (ii) the date on which an
aggregate of 15,000,000 Shares (excluding any Shares sold pursuant to the
Reinvestment Plan) (the "Maximum Offering") have been sold.  Subscription
proceeds will be placed in an interest-bearing escrow account with NationsBank,
N.A., Atlanta, Georgia (the "Escrow Agent"), until subscriptions for at least
125,000 Shares (the "Minimum Offering") have been received and accepted by the
Company, at which time the proceeds will be released to the Company to be held
in trust for the benefit of investors.  If the Minimum Offering is not met by
January 30, 1999 (one year after the date of this Prospectus), the Offering will
be terminated and subscriber's funds (plus interest and without deducting for
escrow expenses) will be promptly refunded.

     THE USE OF PROJECTIONS OR FORECASTS IN THIS OFFERING IS PROHIBITED.  ANY
REPRESENTATIONS TO THE CONTRARY AND ANY PREDICTIONS, WRITTEN OR ORAL, AS TO THE
AMOUNT OR CERTAINTY OF ANY PRESENT OR FUTURE CASH BENEFIT OR TAX CONSEQUENCE
WHICH MAY FLOW FROM AN INVESTMENT IN THE COMPANY ARE NOT PERMITTED.


<PAGE>
 
                               TABLE OF CONTENTS
                                                                         Page
                                                                         ----

SUMMARY OF THE OFFERING..................................................  1
RISK FACTORS.............................................................  9
   Investment Risks......................................................  9
      Lack of Liquidity of Shares........................................  9
      Total Reliance on the Advisor......................................  9
      Conflicts of Interest Related to the Company's Affiliates..........  9
      Possible Lack of Diversification Resulting from
        Subscriptions for Less than the Maximum Number of Shares......... 10
        Substantial Management Compensation.............................. 10
      No Identified Sources for Funding of Future
        Capital Needs.................................................... 10
      Joint Ventures May Negatively Affect the
        Company.......................................................... 10
      Anti-Takeover Effects of Governing Documents
        and Maryland Law................................................. 11
      Reinvestment Plan Proceeds May Not be Used
        to Acquire Properties............................................ 11
   Real Estate Risks..................................................... 11
      Fluctuating Financial Performance of
        Previously Sponsored Programs.................................... 11
      Potential Adverse Economic and Regulatory
        Changes.......................................................... 11
      Blind Pool Offering; Lack of Properties Requires
        Total Reliance on Abilities of Advisor........................... 11
      Indebtedness on Properties Brings Risks............................ 12
      Potential Increased Costs and Delays
        Related to Property Development.................................. 12
      Competition for Investments........................................ 12
      Potential Adverse Effects of Delays in
        Investments...................................................... 12
      Failure to List and Resulting Liquidation May
        Adversely Affect Returns to Stockholders......................... 12
      Potential Liabilities Related to Environmental
        Matters.......................................................... 13
      Uninsured Losses................................................... 13
   Tax Risks............................................................. 13
      Failure to Qualify as a REIT....................................... 13
      REIT Minimum Distribution Requirements;
        Possible Incurrence of Additional Debt........................... 13
      Failure of the Operating Partnership to be
        Classified as a Partnership for Federal
        Income Tax Purposes; Impact on REIT
      Status............................................................. 14
      ERISA Risks........................................................ 14
INVESTOR SUITABILITY STANDARDS........................................... 15
ESTIMATED USE OF PROCEEDS................................................ 17
MANAGEMENT COMPENSATION.................................................. 19
CONFLICTS OF INTEREST.................................................... 21
   Interests in Other Companies.......................................... 21
   Other Activities of the Advisor and its Affiliates.................... 22
   Competition........................................................... 22
   Affiliated Dealer Manager............................................. 23
   Affiliated Property Manager........................................... 23
   Affiliated Developer.................................................. 23
   Lack of Separate Representation....................................... 23
   Joint Ventures with Affiliates of the Advisor......................... 23
   Receipt of Fees and Other Compensation by Advisor
     and Affiliates...................................................... 23
   Certain Conflict Resolution Procedures................................ 23
SUMMARY OF REINVESTMENT PLAN............................................. 25
   General............................................................... 25
   Investment of Distributions........................................... 25
   Participant Accounts, Fee, and Allocation of Shares................... 25
   Reports to Participants............................................... 26
   Election to Participate or Terminate Participation.................... 26
   Federal Income Tax Considerations..................................... 27
   Amendments and Termination............................................ 27
SHARE REPURCHASE PROGRAM................................................. 27
PRIOR PERFORMANCE SUMMARY................................................ 28
   Prior Wells Public Programs........................................... 28
MANAGEMENT............................................................... 32
   General............................................................... 32
   Fiduciary Responsibility of the Board of Directors.................... 32
   Directors and Executive Officers...................................... 33
   Committees............................................................ 35
   Compensation of Directors and Officers................................ 35
THE ADVISOR AND THE ADVISORY AGREEMENT................................... 36
   The Advisor........................................................... 36
   The Advisory Agreement................................................ 37
WELLS MANAGEMENT......................................................... 39
INVESTMENT OBJECTIVES AND CRITERIA....................................... 40
   General............................................................... 40
   Acquisition and Investment Policies................................... 40
   Development and Construction of Properties............................ 42
   Terms of Leases and Lessee Creditworthiness........................... 42
   Borrowing Policies.................................................... 43
   Joint Venture Investments............................................. 43
   Other Policies........................................................ 44
REAL PROPERTY INVESTMENTS................................................ 45
DISTRIBUTION POLICY...................................................... 45
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
   FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................... 46
DESCRIPTION OF CAPITAL STOCK............................................. 46
   Common Stock.......................................................... 46
   Preferred Stock....................................................... 47
   Soliciting Dealer Warrants............................................ 47
   Articles of Incorporation and Bylaw Provisions........................ 47
   Limitation of Liability and Indemnification........................... 50
   Business Combinations................................................. 51
   Control Share Acquisition Statute..................................... 51
   Amendment to the Articles of Incorporation............................ 52
   Dissolution of the Company............................................ 52
   Advance Notice of Director Nominations and New
     Business............................................................ 53

                                      (i)



<PAGE>
 
   Meeting of Stockholders.............................................. 53
   Operations........................................................... 53
   Inspection of Books and Records...................................... 53
   Restrictions on "Roll-Up" Transactions............................... 53
FEDERAL INCOME TAX CONSIDERATIONS....................................... 55
   Taxation of the Company.............................................. 55
   Requirements for Qualification....................................... 56
   Failure to Qualify................................................... 61
   Taxation of Taxable U.S. Shareholders................................ 62
   Taxation of Shareholders on the Disposition of the
     Shares............................................................. 63
   Capital Gains and Losses............................................. 63
   Information Reporting Requirements and Backup Withholding............ 63
   Taxation of Tax-Exempt Shareholders.................................. 63
   Taxation of Non-U.S. Shareholders.................................... 64
   Other Tax Consequences............................................... 65
   Tax Aspects of the Operating Partnership............................. 65
   Sale of the Operating Partnership's Property......................... 68
ERISA CONSIDERATIONS.................................................... 68
   Employee Benefit Plans, Tax-Qualified Retirement
     Plans, and IRAs.................................................... 69
   Status of the Company and the Operating Partnership
     under ERISA........................................................ 69
PARTNERSHIP AGREEMENT................................................... 71
   Management........................................................... 71
   Transferability of Interests in the Operating Partnership............ 71
   Capital Contribution................................................. 71
   Redemption Rights.................................................... 71
   Operations........................................................... 72
   Distributions and Allocations........................................ 72
   Term................................................................. 73
   Tax Matters.......................................................... 73
PLAN OF DISTRIBUTION.................................................... 73
SUPPLEMENTAL SALES MATERIAL............................................. 77
LEGAL MATTERS........................................................... 77
EXPERTS................................................................. 78
ADDITIONAL INFORMATION.................................................. 78
GLOSSARY................................................................ 78


FINANCIAL STATEMENTS............................................ APPENDIX I
PRIOR PERFORMANCE TABLES........................................  EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT AND
 SUBSCRIPTION AGREEMENT SIGNATURE
 PAGE...........................................................  EXHIBIT B
DIVIDEND REINVESTMENT PLAN......................................  EXHIBIT C

                                      (ii)



<PAGE>
 
                            SUMMARY OF THE OFFERING

     The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context requires otherwise, the term "Company" includes Wells
Operating Partnership, L.P., a Delaware limited partnership (the "Operating
Partnership").  See "Glossary" for the definitions of certain terms used in this
Prospectus.  Investors should carefully consider the information set forth under
the heading "Risk Factors."

THE COMPANY:            Wells Real Estate Investment Trust, Inc. was
                        incorporated in July 1997 as a Maryland corporation, and
                        intends to qualify as a REIT. The Company's principal
                        place of business and registered office is located at
                        the office of the Advisor: 3885 Holcomb Bridge Road,
                        Norcross, Georgia 30092, and its telephone number at
                        that office is 800-448-1010. The Company intends to
                        operate as an "Up-REIT" through the use of the Operating
                        Partnership for acquisitions of properties.

ADVISOR:                Wells Capital, Inc., incorporated in Georgia in April
                        1984, is the Advisor and will make all investment
                        decisions for the Company, subject to approval by the
                        Board of Directors in certain circumstances. See "The
                        Advisor and the Advisory Agreement." The Advisor is an
                        affiliate of the Company. See "Conflicts of Interest."
                        For information regarding the previous experience of the
                        Advisor and its Affiliates in the management of real
                        estate limited partnerships, see "Prior Performance
                        Summary."

SECURITIES OFFERED:     A Minimum Offering of 125,000 Shares and a Maximum
                        Offering of 16,500,000 Shares (the "Maximum Offering").
                        The Maximum Offering includes up to 1,500,000 Shares to
                        be issued pursuant to the Reinvestment Plan and up to
                        600,000 shares to be issued pursuant to the Soliciting
                        Dealer Warrants. The Shares issued in this Offering and
                        under the Reinvestment Plan are offered at a price of
                        $10 per share.

RISK FACTORS:           An investment in the Shares involves various risks
                        including the following:

                        .  To ensure that the Company will not fail to qualify
                           as a REIT, the Articles of Incorporation, subject to
                           certain exceptions, will limit any person from
                           owning, directly or indirectly, more than 9.8% of the
                           outstanding Shares or more than 9.8% of the number of
                           outstanding shares of any class of the Company's
                           preferred stock.

                        .  Initially, the Shares will not be listed (and
                           therefore not traded) on a securities exchange or any
                           over-the-counter market. However, the Board of
                           Directors may elect to so list the Shares in the
                           future (the "Listing") though there can be no
                           assurances that the Company will ever qualify for
                           such a Listing. Listing does not assure liquidity.
                           There can be no assurance that a market for the
                           Shares will develop. In the event that Listing does
                           not occur by January 30, 2008 (ten years after the
                           initial date of this Prospectus), the Company will be
                           dissolved. See "Description of Capital Stock--
                           Articles of Incorporation and Bylaw Provisions."

                        .  Shareholders must rely on the Advisor and the Board
                           of Directors, who will have full responsibility for
                           the day-to-day management of the Company.

                        .  The number of properties that the Company will
                           acquire and the diversification of its investments
                           will be reduced to the extent that less than the
                           maximum number of Shares are sold. Lack of
                           diversification of 

                                       1

<PAGE>
 
                           the Company's investments will increase the risks
                           associated with an investment in the Shares.

                        .  This Offering involves payment of substantial fees to
                           the Advisor and other Affiliates, some of which will
                           be payable regardless of the success or failure of
                           the Company.

                        . Distributions to investors in certain real estate
                           programs previously sponsored by the Advisor and its
                           Affiliates have fluctuated with real estate business
                           cycles and other external market conditions, as well
                           as varying occupancy levels, amounts of capital
                           improvements and other necessary expenses for each
                           property owned by such other programs. Accordingly,
                           there are no assurances that properties acquired by
                           the Company will be profitable. See "Prior
                           Performance Summary."

                        . The Company will be subject to market and economic
                           risks associated with investments in real estate,
                           which means that both the amount of cash the Company
                           will receive from the lessees of its properties and
                           the future value of its properties cannot be
                           predicted. Accordingly, Cash Available for
                           Distribution and the value of the Company's real
                           estate investments will be dependent upon fluctuating
                           market and economic conditions.

                        . The Company does not own any real property, and the
                           Advisor has not identified any properties in which
                           there is a reasonable probability that the Company
                           will invest. Accordingly, investors will not have the
                           opportunity to evaluate the properties that the
                           Company will acquire and must rely totally upon the
                           ability of the Advisor and the Board of Directors
                           with respect to the acquisition of properties.

                        .  A portion of the proceeds available for Investment in
                           properties may be invested in the acquisition and
                           construction of undeveloped properties, which involve
                           risks relating to the builder's ability to control
                           construction costs, failure to perform, or failure to
                           build in conformity with plan specifications and
                           timetables, thus potentially subjecting the Company
                           to cost overruns and time delays for properties under
                           construction. Increased costs of newly constructed
                           properties may have the effect of reducing Cash
                           Available for Distribution, while construction delays
                           may have the effect of delaying cash flow from the
                           operation of such properties.

                        .  As a result of the fact that the Advisor and its
                           Affiliates serve as general partners of real estate
                           limited partnerships with investment objectives
                           similar to the Company's and will continue to engage
                           in other business activities, the Advisor will have
                           conflicts of interest in allocating its time between
                           the Company and such partnerships and activities. The
                           Advisor also will have conflicts of interest when
                           evaluating potential investments for the Company in
                           deciding which entity will acquire a particular
                           property, and in leasing properties in the event that
                           the Company and another program managed by the
                           Advisor or its Affiliates were to compete for the
                           same tenants in negotiating leases.

                        .  The Company intends to borrow money in connection
                           with the construction and development of properties.
                           Accordingly, the Company will be subject to risks
                           normally associated with debt financing, including

                                       2

<PAGE>
 
                           the risk that the Company will not be able to meet
                           its debt service obligations, and, to the extent that
                           it cannot, the risk that the Company may lose its
                           investment in any properties encumbered by debt.
                           
                        .  The Company intends to elect to be taxed as a REIT
                           for federal income tax purposes. In order to qualify
                           to be taxed as a REIT, the Company must meet numerous
                           organizational and operating requirements. While the
                           Company has received an opinion of counsel that it
                           will qualify to be taxed as a REIT, this opinion is
                           not binding on the Service or any court. In the event
                           that the Company fails to qualify as a REIT, it will
                           be taxed as a corporation, which could have a
                           material adverse effect on the Company's Cash
                           Available for Distribution.

                           See "Risk Factors" for a discussion of the risk
                           factors relating to an investment in the Shares.

TERMS OF THE OFFERING:     The Offering will commence upon the date of this
                           Prospectus and will continue until and terminate upon
                           the earlier of (i) two years after the date of this
                           Prospectus, or (ii) the date on which an aggregate of
                           15,000,000 Shares (excluding Shares sold pursuant to
                           the Dividend Reinvestment Plan) have been sold,
                           provided, that if the Minimum Offering is not sold
                           within one year of the date of this Prospectus, the
                           Offering will be terminated and investors' funds,
                           with interest and not net of escrow expenses, will be
                           returned promptly. Subscription proceeds will be held
                           in escrow until investors are admitted as
                           shareholders, which will occur no less often than
                           quarterly.

PROPERTIES:                The Company will seek to acquire and operate
                           commercial properties, including without limitation,
                           office buildings, shopping centers, business and
                           industrial parks and other commercial and industrial
                           properties, including properties which are under
                           construction or development, are newly constructed,
                           or have been constructed and have operating
                           histories. All such properties may be acquired,
                           developed and operated by the Company alone or
                           jointly with another party. The Company is likely to
                           enter into one or more joint ventures with certain of
                           its Affiliates and the present and future real estate
                           limited partnership sponsored by the Advisor for the
                           acquisition of properties. As of the date of this
                           Prospectus, the Company has neither purchased nor
                           contracted to purchase any properties, nor has the
                           Advisor identified any properties in which there is a
                           reasonable probability that the Company will invest.
                           The Company may incur indebtedness of up to 50% of
                           its properties' aggregate value. Such limitation,
                           however, does not apply to individual properties. The
                           Company intends to use the straight-line depreciation
                           method for its properties. See "Real Property
                           Investments," "Investment Objectives and Criteria,"
                           "Conflicts of Interest," and "Glossary."

ESTIMATED USE OF
 PROCEEDS OF OFFERING:     It is anticipated that approximately 84% of the
                           proceeds of this Offering will actually be invested
                           in properties, and the remainder will be used to pay
                           selling commissions and fees and expenses relating to
                           the selection and acquisition of properties and the
                           costs of organizing the Company and the Offering. See
                           "Estimated Use of Proceeds" for a more detailed
                           discussion of the Company's estimated use of the
                           proceeds of the Offering, which includes proceeds
                           from shares
                          

                                       3

<PAGE>
 
                           sold pursuant to the Reinvestment Plan, but excludes
                           proceeds from shares sold pursuant to the Soliciting
                           Dealer Warrants. See also "Management Compensation"
                           regarding the compensation and fees to be paid to the
                           Advisor and other Affiliates.

INVESTMENT OBJECTIVES:     The Company's objectives are: (i) to preserve,
                           protect and return the Invested Capital (as defined
                           herein) of the shareholders; (ii) to maximize Cash
                           Available for Distribution; (iii) to realize capital
                           appreciation upon the ultimate sale of Company's
                           properties; and (iv) to provide shareholders with
                           liquidity of their investment within ten years after
                           the commencement of the Offering through either (a)
                           the Listing of the Shares, or (b) if Listing does not
                           occur within ten years following the commencement of
                           the Offering, the dissolution of the Company and
                           orderly liquidation of its assets. Distributions to
                           investors in certain real estate investment programs
                           previously sponsored by the Advisor, as shown in the
                           Prior Performance Tables included as Exhibit A
                           hereto, have fluctuated with real estate business
                           cycles and other external market conditions, as well
                           as varying occupancy levels, amounts of capital
                           improvements and other necessary expenses for each
                           property owned by such other programs. Many of the
                           real properties in which such prior programs have
                           invested have experienced the same economic problems
                           as other real estate investments in recent years,
                           including without limitation, general over-building
                           and an excess of supply in many markets, along with
                           increased operating costs and a general downturn in
                           the real estate industry. These prior Funds have not
                           yet sold any real property investments and thus no
                           evaluation can be made as to whether these prior
                           programs will achieve their objectives of returning
                           capital contributions or realizing capital
                           appreciation upon the sale of such properties. See
                           "Investment Objectives and Criteria" and "Prior
                           Performance Summary."

CONFLICTS OF INTEREST:     The Advisor and other Affiliates will experience
                           conflicts of interest in connection
                           with the management of the Company,
                           including the following:

                           .    The Advisor and certain of its Affiliates serve
                                as general partners of real estate limited
                                partnerships that have objectives similar to the
                                Company's and expect that they will organize
                                additional real estate partnerships in the
                                future. As a result, investors should be aware
                                that the Advisor will have to allocate its time
                                between the Company and such partnerships and
                                activities and may have conflicts of interest in
                                deciding which entity will acquire a particular
                                property.
                                
                           .    The Company may acquire properties in the same
                                geographic areas where other properties owned or
                                managed by the Advisor or other Affiliates are
                                located, resulting in potential conflicts in the
                                leasing or resale of the Company's properties in
                                the event that the Company and another program
                                managed by the Advisor were to attempt to
                                compete for the same tenants in negotiating
                                leases or to sell similar properties at the same
                                time.

                           .    Since it is anticipated that the Company's
                                properties will be managed by the Management
                                Company, an Affiliate of the Advisor, the
                                Company will not have the benefit of independent
                                property management, and investors must rely on
                                the Advisor and the Management Company, for
                                management of the Company's properties.

                            .   The Company is likely to enter into one or more
                                joint ventures for the acquisition and operation
                                of specific properties with one or more real
                                estate limited partnerships sponsored by the
                                Advisor and other Affiliates,

                                       4

<PAGE>
 
                                resulting in potential conflicts of interest in
                                determining which program should enter into a
                                particular joint venture, in structuring the
                                terms of the relationship and in managing the
                                joint venture. In addition, the Company may
                                purchase properties from the Advisor and other
                                Affiliates (with no profit to the Advisor or
                                such selling Affiliate), resulting in conflicts
                                of the Advisor based on its relationship with
                                both parties to such transactions. See
                                "Conflicts of Interest."

                            .   Fees payable to the Advisor and other Affiliates
                                in connection with Company transactions
                                involving the purchase, management and sale of
                                Company properties are not the result of arm's-
                                length negotiations and will be payable
                                regardless of the quality of the property
                                acquired or the services provided to the
                                Company.

                            .   The conflicts of interest created at the time of
                                a sale of a property by: (a) the loss of
                                management fees by the Management Company
                                conflicting with the brokerage fee which may be
                                received by the Advisor, and (b) the receipt of
                                brokerage fees by the Advisor conflicting with
                                the advisability of such a sale.

                            .   The Company's Affiliates include Wells Capital,
                                Inc.--the Advisor, Wells Investment Securities,
                                Inc.--the Dealer Manager, Wells Management
                                Company, Inc.--the Management Company, Wells
                                Operating Partnership, L.P.--the Operating
                                Partnership, and Wells Development Corporation--
                                the Development Company.

                            See "Conflicts of Interest" for a discussion of the
                            various conflicts of interest relating to an
                            investment in the Shares.

PRIOR OFFERING SUMMARY:     The Advisor and its Affiliates have previously
                            sponsored eleven publicly offered real estate
                            limited partnerships on an unspecified property or
                            "blind pool" basis (the "Prior Wells Public
                            Programs"). The total amount of funds raised from
                            the approximately 24,000 investors in the Prior
                            Wells Public Programs as of August 31, 1997 was
                            approximately $257,000,000, and the amount of such
                            funds invested in properties as of August 31, 1997,
                            was approximately $200,000,000. Distributions to
                            investors in certain real estate investment programs
                            previously sponsored by the Advisor have fluctuated
                            with real estate business cycles and other external
                            market conditions, as well as varying occupancy
                            levels, amounts of capital improvements and other
                            necessary expenses for each property owned by such
                            other programs. The "Prior Performance Summary"
                            section of this Prospectus contains a discussion of
                            the Prior Wells Public Programs. Certain statistical
                            data relating to the Prior Wells Public Programs are
                            contained in the Prior Performance Tables included
                            as Exhibit A to this Prospectus.

COMPENSATION TO ADVISOR     The Advisor and other Affiliates will receive 
 AND OTHER AFFILIATES:      compensation and fees for services relating to this
                            Offering and in connection with the investment and
                            management of the Company's assets, which are not
                            the result of arm's-length negotiations and will be
                            paid regardless of the quality of the property
                            acquired or the services provided to the Company.
                            The most significant items of compensation are:
                            
                            Offering Stage: Selling Commissions of 7%
                            ($10,500,000 at the Maximum Offering and $87,500 at
                            the Minimum Offering) payable to the Dealer Manager;
                            one Soliciting Dealer Warrant for every 25 Shares
                            sold, issuable to the Dealer

                                       5

<PAGE>
 
                            Manager, all or a part of which may be reallowed to
                            unaffiliated participating broker-dealers; a
                            Marketing and Due Diligence Fee for marketing
                            support and due diligence reimbursements of up to
                            2.5%, comprised of .5% for due diligence
                            reimbursements and 2% for marketing support
                            ($3,750,000 at the Maximum Offering and $31,250 at
                            the Minimum Offering); and up to 3% ($4,500,000 at
                            the Maximum Offering and $37,500 at the Minimum
                            Offering) of Gross Offering Proceeds as a
                            reimbursement of costs and expenses of organizing
                            the Company, including legal, accounting, printing,
                            marketing and other offering expenses (the
                            "Organization and Offering Expense Fee"), a majority
                            of which will be paid to third parties unaffiliated
                            with the Advisor.

                            Acquisition Stage: A fee of up to 3% ($4,500,000) of
                            Gross Offering Proceeds in connection with the
                            selection, valuation and acquisition of properties
                            (subject to certain overall limitations) (the
                            "Acquisition and Advisory Fees"), which is payable
                            to the Advisor (an Affiliate of the Company)
                            regardless of the quality of the properties acquired
                            by the Company; and reimbursement of costs and
                            expenses for the acquisition of properties.
                                
                            Operational Stage: Property management fee (the
                            "Management Fee") payable to the Management Company
                            in an amount equal to 4.5% of the gross rental
                            income from each property, approximately 2% to 3% of
                            which is expected to be generated from direct tenant
                            chargebacks, resulting in a net amount payable by
                            each property of approximately 1.5% to 2.5%; and in
                            the case of leases to new tenants, an initial
                            leasing fee equal to the lesser of (i) the first
                            month's rent under the applicable lease or (ii) the
                            amounts charged by unaffiliated persons rendering
                            comparable services in the same geographic area. A
                            real estate brokerage commission of up to 3% of the
                            sale price of properties sold by the Company will be
                            payable to the Advisor.
                                
                            Also, a Listing Fee shall be payable to the Advisor
                            generally equal to 10% of the amount by which the
                            adjusted market value of the Company exceeds the
                            adjusted amount of capital invested in the Company.
                                
                            Liquidation Stage: After all shareholders have
                            received a return of their Invested Capital and an
                            8% per annum cumulative, noncompounded return on
                            their Invested Capital from inception until the date
                            of the property sale (the "Common Return"), then the
                            Advisor is entitled to receive (a) a return of
                            contributed capital in Liquidating Distributions,
                            and (b) 10% of remaining amounts of Nonliquidating
                            Net Sale Proceeds and Liquidating Distributions
                            available for distribution. Payment of certain fees
                            is subject to conditions and restrictions or to
                            change under certain specified circumstances. The
                            Advisor and other Affiliates also may receive
                            reimbursement for out-of-pocket expenses that they
                            incur on behalf of the Company, subject to certain
                            expense limitations, and a subordinated incentive
                            fee if Listing occurs.

SHARE REDEMPTION:           The Company may use proceeds received from sales of
                            Shares pursuant to the Reinvestment Plan to redeem
                            Shares at its sole discretion. Shareholders will
                            have no right to request that the Company redeem
                            their Shares after Listing.

DIVIDEND REINVESTMENT PLAN: The Company will establish the Reinvestment Plan
                            pursuant to which shareholders who elect to
                            participate may have their dividends from the
                            Company automatically invested in Shares.
                            Shareholders who participate in the Reinvestment
                            Plan will be

                                       6

<PAGE>
 
                            allocated their share of the Company's taxable
                            income even though such shareholders will receive no
                            cash distributions from the Company, which may
                            result in tax liability for such participants even
                            though they would receive no cash distributions with
                            which to pay such tax liability. The Company may
                            terminate the Reinvestment Plan for any reason at
                            any time with ten days' prior notice to
                            participants. See "Dividend Reinvestment Plan" and
                            "Risk Factors--Fed eral Income Tax Risks."

DISTRIBUTION POLICY:        As a REIT, the Company will be required to
                            distribute to its shareholders at least 95% of its
                            annual net taxable income. Because the Company has
                            not identified any probable acquisitions, there can
                            be no assurances as to when the Company will begin
                            to generate net taxable income and to make 
                            distributions.

TAX STATUS:                 The Company intends to qualify and will elect to be
                            taxed as a REIT under sections 856 through 860 of
                            the Code, commencing with the taxable year ending
                            December 31 of the year in which the Offering is
                            closed. If the Company qualifies for taxation as a
                            REIT, the Company generally will not be subject to
                            federal corporate income tax on its taxable income
                            that is distributed to its shareholders. A REIT is
                            subject to a number of organizational and
                            operational requirements, including a requirement
                            that it currently distribute at least 95% of its
                            annual taxable income. Although the Company does not
                            intend to request a ruling from the Internal Revenue
                            Service (the "Service) as to its REIT status, the
                            Company has received an opinion of Hunton &
                            Williams, its legal counsel, that the Company will
                            qualify as a REIT for its taxable year ending
                            December 31 of the year in which the Offering is
                            closed, and the Company's organization and proposed
                            method of operation will enable it to continue to
                            qualify as a REIT, which opinion is based on certain
                            assumptions and representations about the Company's
                            ongoing businesses and investment activities and
                            other matters. No complete assurance can be given
                            that the Company will be able to comply with such
                            assumptions and representations in the future.
                            Furthermore, such opinion is not binding on the
                            Service or on any court. Even if the Company
                            qualifies for taxation as a REIT, the Company may be
                            subject to certain federal state and local taxes on
                            its income and property. Failure to qualify as a
                            REIT would render the Company subject to federal
                            income tax (including any applicable alternative
                            minimum tax) on its taxable income at regular
                            corporate rates and distributions to the Company's
                            shareholders in any such year would not be
                            deductible. See "Risk Factors--Legal Risks--Tax
                            Risks" and "Federal Income Tax Considerations --
                            Taxation of the Company."

OPERATING PARTNERSHIP:      The Company intends to own its properties through
                            the Operating Partnership. Initially, the Company
                            will be the sole general partner of the Operating
                            Partnership, and the Advisor will contribute
                            $200,000 to the Operating Partnership and will be
                            the sole limited partner thereof. This "UPREIT"
                            structure will allow the Company to acquire
                            properties by exchanging units of limited
                            partnership interest in the Operating Partnership
                            ("OP Units") for interests in properties, which
                            generally will allow sellers of properties to defer
                            gain recognition with respect to such properties.
                            Holders may redeem OP Units for cash equal to the
                            value of one Share or, at the option of the Company,
                            holders may receive one Share for each tendered OP
                            Unit.

                                       7

<PAGE>
 
LISTING:                    Initially, the Company's Shares will not be listed,
                            but the Board of Directors may elect to effect the
                            Listing of the Shares at any time following the
                            completion of the Offering, though there can be no
                            assurances that the Board of Directors will make
                            such election or that the Company will ever qualify
                            for Listing. In the event that the Listing does not
                            occur on or before January 30, 2008 (ten years after
                            the date of the Prospectus), the Company will
                            automatically terminate and dissolve, unless the
                            shareholders holding a majority of the Common Shares
                            vote to extend the duration of the Company.

                                       8

<PAGE>
 
                                  RISK FACTORS

     The purchase of Shares involves a number of risks.  In addition to the
factors set forth elsewhere in this Prospectus, prospective investors should
consider specifically the following:

INVESTMENT RISKS

     LACK OF LIQUIDITY OF SHARES.  Shareholders may not be able to sell their
Shares promptly at a desired price; therefore, the Shares should be considered
as a long-term investment only.  Currently there is no public market for the
Shares.  The Board of Directors, with or without the consent of the
shareholders, may apply for Listing of the Shares if the Board of Directors
(including a majority of Independent Directors) determines Listing to be in the
best interests of the shareholders.  There can be no assurance, however, that
the Company will apply for Listing, that any such application will be made
before the passage of a significant period of time, that any application will be
accepted or, even if accepted, that a public trading market will develop,  In
any event, the Articles of Incorporation provide that the Company will not apply
for Listing before the completion or termination of the Offering.  See
"Description of Capital Stock."

     TOTAL RELIANCE ON THE ADVISOR.  All decisions with respect to the
management of the Company will be made by the Advisor, with oversight from the
Board of Directors.  The shareholders will have no right or power to take part
in the management of the Company except through the exercise of their voting
rights, which are limited.  The Advisor may be removed under certain conditions,
as set forth in the Advisory Agreement, subject to payment and release from all
obligations incurred by the Advisor in connection with its role as advisor.
Further, the Advisor has the ability to assign the Advisory Agreement to an
affiliate, subject to approval by the Company's Independent Directors.  In such
case, the shareholders will not be able to vote on such new Advisor, and there
can be no assurances that such new Advisor will perform satisfactorily.  See
"Management," "Management Compensation" and "The Advisor and the Advisory
Agreement."


     CONFLICTS OF INTEREST RELATED TO THE COMPANY'S AFFILIATES. In connection
with its relationship with the Advisor and other Affiliates, the Company has
several conflicts of interest, including the following: (a) The Advisor and
certain of its Affiliates serve as general partners of real estate limited
partnerships that have objectives similar to the Company's and expect that they
will organize additional real estate partnerships in the future. As a result,
investors should be aware that the Advisor will have to allocate its time
between the Company and such partnerships and activities and may have conflicts
of interest in deciding which entity will acquire a particular property; (b) The
Company may acquire properties in the same geographic areas where other
properties owned or managed by the Advisor or other Affiliates are located,
resulting in potential conflicts in the leasing or resale of the Company's
properties in the event that the Company and another program managed by the
Advisor were to attempt to compete for the same tenants in negotiating leases or
to sell similar properties at the same time; (c) Since it is anticipated that
the Company's properties will be managed by the Management Company, an Affiliate
of the Advisor, the Company will not have the benefit of independent property
management, and investors must rely on the Advisor and the Management Company,
for management of the Company's properties; (d) The Company is likely to enter
into one or more joint ventures for the acquisition and operation of specific
properties with one or more real estate limited partnerships sponsored by the
Advisor and other Affiliates, resulting in potential conflicts of interest in
determining which program should enter into a particular joint venture, in
structuring the terms of the relationship and in managing the joint venture. In
addition, the Company may purchase properties from the Advisor and other
Affiliates (without profit to such selling Affiliates) resulting in conflicts of
the Advisor based on its relationship with both parties to such transactions;
(e) Fees payable to the Advisor and other Affiliates in connection with Company
transactions involving the purchase, management and sale of Company properties
are not the result of arm's-length negotiations and will be payable regardless
of the quality of the property acquired or the services provided to the Company;
(f) The conflicts of interest created at the time of a sale of a property by:
(i) the loss of management fees by the Management Company conflicting with the
brokerage fee which may be received by the Advisor, and (ii) the receipt of
brokerage fees by the Advisor conflicting with the advisability of such a sale.
The Company's Affiliates include Wells Capital, Inc.--the Advisor, Wells
Investment Securities, Inc.--the Dealer Manager, Wells Management Company, Inc.
- --the Management Company, Wells Operating Partnership, L.P.--the Operating
Partnership, and Wells Development Corporation--the Development Company.
Collectively, these several

                                       9

<PAGE>
 
relationships among the Company and the Affiliates reduce substantially the
presence of independent, arm's length managerial and advisory influence on the
operations of the Company. Consequently, such affiliated relationships and
conflicts of interest have the potential to reduce the Company's financial
performance and return to investors. See "Conflicts of Interest" and "The
Advisor and Advisory Agreement."

     POSSIBLE LACK OF DIVERSIFICATION RESULTING FROM SUBSCRIPTIONS FOR LESS THAN
THE MAXIMUM NUMBER OF SHARES.  To the extent that less than the Maximum Offering
is sold, the diversification of the Company's investments will be decreased and
the extent to which the Company's profitability will be affected by any one of
its investments will increase.  Specifically, the various types of real estate
assets in which the Company invests and the geographic diversity of such assets
will be reduced proportionally.  Consequently, the effects of the financial
performance of such fewer assets will be concentrated and thus the risks of poor
financial performance will be increased.  Further, reduced geographic diversity
of the Company's properties will increase the Company's reliance on (and
therefore risks) related to regional economic conditions.  Accordingly, lack of
diversification of the Company's investments will have the effect of increasing
the risks associated with an investment in the Shares.  See "Estimated Use of
Proceeds" and "Investment Objectives and Criteria."

     SUBSTANTIAL MANAGEMENT COMPENSATION; PROCEEDS TO BENEFIT AFFILIATED
PARTIES.  The Advisor and the other Affiliates will perform services for the
Company in connection with the offer and sale of Shares, the selection and
acquisition of the Company's properties, and the management and leasing of the
Company's properties, and will receive substantial compensation from the Company
in consideration for these services.  In connection with the Offering, the
Dealer Manager will receive 7% ($10,500,000 at the Maximum Offering) of the
Gross Offering Proceeds as a Selling Commission and a Marketing and Due
Diligence Fee equal to 2.5% ($3,750,000 at the Maximum Offering) for marketing
and due diligence reimbursements, substantially all of which is expected to be
reallowed to participating broker-dealers.  In connection with the review and
evaluation of potential acquisitions, the Advisor will receive Acquisition and
Advisory Fees equal to 3% ($4,500,000 at the Maximum Offering) of the Gross
Offering Proceeds.  In connection with the management and leasing of properties,
the Management Company will receive a fee equal to 4.5% of the gross rental
income from each property as well as certain leasing fees, though approximately
2% to 3% of such 4.5% fee is expected to be generated from direct chargebacks to
tenants of such properties, resulting in a net fee payable by the properties of
1.5% to 2.5%.  The amount of such compensation has not been determined in arm's-
length negotiations, and such amounts will be payable regardless of the quality
of services provided to the Company.  Further, the Selling Commission, Marketing
and Due Diligence Fee, Organization and Offering Expense Fee and the initial
Acquisition and Advisory Fees will be paid to Affiliates prior to any
distributions to shareholders.  See "Management Compensation" and "Conflicts of
Interest."

     NO IDENTIFIED SOURCES FOR FUNDING OF FUTURE CAPITAL NEEDS.  As the Company
raises capital from investors, substantially all of the Gross Proceeds of the
Offering will be used for investment in properties and for payment of various
fees and expenses.  See "Estimated Use Of Proceeds."  In order to qualify as a
REIT, the Company must distribute to its shareholders at least 95% of its annual
taxable income.  Therefore, it is not anticipated that the Company will maintain
any meaningful permanent working capital reserves.  Accordingly, in the event
that the Company develops a need for additional capital in the future for the
improvement of its properties or for any other reason, no sources for such
funding have been identified, and no assurance can be made that such sources of
funding will be available to the Company for potential capital needs in the
future or, if available, that such funds can be obtained on economically
feasible terms.  See "Estimated Use of Proceeds" and "Investment Objectives and
Criteria."

     JOINT VENTURES MAY NEGATIVELY AFFECT THE COMPANY.  The Company is likely to
enter into one or more joint ventures with Affiliates for the acquisition,
development or improvement of properties.  In this regard, the Company may enter
into joint ventures with future programs sponsored by the Advisors or other
Affiliates or with one or more Prior Wells Public Programs.  The Company may
purchase and develop properties in joint ventures or in partnerships, co-
tenancies or other co-ownership arrangements with the Advisor or other
Affiliates, the sellers of the properties, affiliates of the sellers, developers
or other persons.  Such investments may, under certain circumstances, involve
risks not otherwise present, including, for example, the possibility that the
Company's co-venturer, co-tenant or partner in an investment might become
bankrupt, that such co-venturer, co-tenant or partner may at any time have
economic or business interests or goals which are inconsistent with the business
interests or goals of the Company, or that such co-venturer, co-tenant or
partner may be in a position to take action contrary to the instructions or the
requests of the Company or contrary to the Company's policies or objectives.
Actions by such a co-venturer, co-tenant or partner might

                                       10

<PAGE>
 
have the result of subjecting the applicable property to liabilities in excess
of those otherwise contemplated and may have the effect of reducing Cash
Available for Distribution. In the event a co-venturer has a right of first
refusal to buy out the other co-venturer, it may be unable to finance such buy-
out at that time. It may also be difficult for the Company to sell its interest
in any such joint venture or partnership or as a co-tenant in such property. In
addition, to the extent that the Company's co-venturer or partner is the Advisor
or one of its Affiliates, certain conflicts of interest will exist. See
"Conflicts of Interest--Joint Ventures with the Advisor and other Affiliates."

     ANTI-TAKEOVER EFFECTS OF GOVERNING DOCUMENTS AND MARYLAND LAW.  Certain
provisions of the Company's Articles of Incorporation, including the ownership
limitations, transfer restrictions and ability to issue preferential preferred
stock, may have the effect of preventing, delaying or discouraging takeovers of
the Company by third parties.  In addition, certain provisions of the Maryland
General Corporation Law ("MGCL"), including the restrictions on certain business
combinations and control share acquisitions, may have a similar effect.  See
"Description of Capital Stock."

     REINVESTMENT PLAN PROCEEDS MAY NOT BE USED TO ACQUIRE PROPERTIES.  Proceeds
from sale of Shares in the Reinvestment Plan may, in the Advisor's discretion,
be used to fund the Share Repurchase Program rather than for the funding of real
estate investment.  In such case, the Company's real estate investments, and
therefore the underlying value of the Shares and potential distributions to
shareholders, will not be increased by the amount of net proceeds so directed
into the Share Repurchase Program.  See "Summary of Reinvestment Plan."

REAL ESTATE RISKS


     FLUCTUATING FINANCIAL PERFORMANCE OF PREVIOUSLY SPONSORED PROGRAMS.
Distributions to investors in certain real estate investment programs previously
sponsored by the Advisor have fluctuated with real estate business cycles and
other external market conditions, as well as varying occupancy levels, amounts
of capital improvements and other necessary expenses for each property owned by
such other programs. The real properties in which the Prior Wells Public
Programs have invested have experienced the same economic problems as other real
estate investments in recent years, including, without limitation, general over-
building and an excess of supply in many markets, along with increased operating
costs and a general downturn in the real estate industry. The historical
fluctuations in net income of the Prior Wells Public Programs were primarily due
to tenant turnover, resulting in increased vacancies and the requirement to
expend funds for tenant refurbishments, and increases in administrative and
other operating expenses. Specifically, certain of the Prior Wells Public
Programs suffered decreases in net income during the real estate recession of
the late 1980s and early 1990s, which decreases were generally attributable to
the overall downturn in the economy and in the real estate market in particular.
Because of the cyclical nature of the real estate market, such downturns in the
performance of a real estate program could occur at any time in the future when
economic conditions decline. None of the Prior Wells Public Programs has
liquidated or sold any of its real properties to date and, accordingly, no
assurance can be made that such programs will ultimately be successful in
meeting their investment objectives. There are no assurances that properties
acquired by the Company will not also experience fluctuating financial
performance. See "Prior Performance Summary" and the Prior Performance Tables
included as Exhibit A hereto.


     POTENTIAL ADVERSE ECONOMIC AND REGULATORY CHANGES.  The Company will be
subject to risks generally incident to the ownership of real estate, including
changes in general economic or local conditions, changes in supply of or demand
for similar or competing properties in an area, changes in interest rates and
availability of permanent mortgage funds which may render the sale of a property
difficult or unattractive, and changes in tax, real estate, environmental and
zoning laws.  Periods of high interest rates and tight money supply may make the
sale of properties more difficult.  For these and other reasons, no assurance of
profitable operation or realization of gains from the sales of the Company's
properties can be given.  See "Investment Objectives and Criteria."

     "BLIND POOL" OFFERING; LACK OF PROPERTIES REQUIRES TOTAL RELIANCE ON
ABILITIES OF ADVISOR.  This Offering is commonly referred to as a "blind pool"
offering in that the Advisor has not identified any properties in which there is
a reasonable probability that the Company will invest.  Investors must rely upon
the ability of the Advisor and the Board of Directors with respect to the
investment of the proceeds of this Offering and the management of the
unspecified properties and will not have an opportunity to evaluate for
themselves the relevant economic, financial and other information regarding the
specific properties in which the proceeds of this Offering will be invested.
Accordingly, the

                                       11

<PAGE>
 
risk of investing in the Shares may be increased. No assurance can be given that
the Company will be successful in obtaining suitable investments or that, if
investments are made, the objectives of the Company will be achieved. See
"Estimated Use of Proceeds," "The Advisor and Advisory Agreement" and
"Investment Objectives and Criteria."

     INDEBTEDNESS ON PROPERTIES BRINGS RISKS.  The Company intends to borrow
money in connection with the construction and development of properties.
Accordingly, the Company will be subject to risks normally associated with debt
financing, including the risk that the Company will not be able to meet its debt
service obligations, and, to the extent that it cannot, the risk that the
Company may lose its investment in any properties encumbered by debt.  The
Company may incur indebtedness of up to 50% of the properties' aggregate value,
though such debt limitation does not apply to individual properties.  However,
the Company expects that its aggregate indebtedness generally will not exceed
such 50% limit.  Accordingly, the Company and its properties may be moderately
leveraged, which could have adverse consequences to the Company, including the
potential for loss of one or more properties if any such secured debt is
defaulted upon and imposition of operating restrictions on the Company by such
lenders.  See "Investment Objectives and Criteria--Borrowing Policies."

     POTENTIAL INCREASED COSTS AND DELAYS RELATED TO PROPERTY DEVELOPMENT.  The
Company may invest some or all of the net proceeds of this Offering in the
acquisition and development of properties upon which it will develop and
construct improvements at a fixed contract price, provided that the Company may
not invest more than 10% of is total assets in properties which are not expected
to produce income within two years of their acquisition.  In this regard, the
Company will be subject to risks relating to the builder's ability to control
construction costs or to build in conformity with plans, specifications and
timetables.  The builder's failure to perform may necessitate legal action by
the Company to rescind its purchase or the construction contract or to compel
performance.  Performance also may be affected or delayed by conditions beyond
the builder's control.  Delays in completion of construction could also give
lessees the right to terminate preconstruction leases for space at a newly
developed project.  Additional risks may be incurred where the Company makes
periodic progress payments or other advances to such builders prior to
completion of construction.  However, the Company will make such payments only
after having received a certification from an independent architect or an
independent engineer, or both, as to the percentage of the project which has
been completed and as to the dollar amount of the construction then completed.
Factors such as those discussed above can result in increased costs of a project
and a corresponding depletion of the Company's working capital reserves or loss
of the Company's investment.  In addition, the Company will be subject to normal
lease-up risks relating to newly constructed projects.  Furthermore, the price
to be paid for a property upon which improvements are to be constructed or
completed, which price is normally agreed upon at the time of acquisition, of
necessity must be based upon projections of rental income and expenses or fair
market value of the property upon completion of construction, which are not
certain until after a number of months of actual operation.  See "Investment
Objectives and Criteria--Development and Construction of Properties."

     COMPETITION FOR INVESTMENTS.  The Company will experience competition for
real property investments from individuals, corporations and bank and insurance
company investment accounts, as well as other real estate investment
partnerships, including the Prior Wells Public Programs, real estate investment
trusts and other entities engaged in real estate investment activities.  For
example, one Prior Wells Public Program has approximately $11,000,000 available
for real estate investments, and another will be seeking up to $35,000,000 in
investments, both of which will compete with the Company for real estate
investment opportunities and both of which are managed by the Advisor.
Competition for investments may have the effect of increasing costs and reducing
Cash Available for Distribution.  See "Conflicts of Interest."

     POTENTIAL ADVERSE EFFECTS OF DELAYS IN INVESTMENTS.  Delays which may take
place in the selection, acquisition and development of properties could
adversely affect the per Share Cash Available for Distribution as a result of
the lower returns that will be received by the Company if it is required to
invest in short-term investments.  Also, where properties are acquired prior to
the commencement of construction or during the early stages of construction, it
will typically take several months to complete construction and rent available
space.  See "Investment Objectives and Criteria."

     FAILURE TO LIST AND RESULTING LIQUIDATION MAY ADVERSELY AFFECT RETURNS TO
STOCKHOLDERS.  The Company intends, to the extent consistent with its objective
of qualifying as a REIT, to reinvest Net Sales Proceeds from the sale of its
properties in additional properties for at least the first five to ten years
after commencement of the Offering.

                                       12

<PAGE>
 
Unless Listing occurs within ten years after commencement of the Offering, the
Company will undertake, to the extent consistent with the Company's objective of
qualifying as a REIT, the orderly sale of the Company's assets, the distribution
of the Net Sales Proceeds of such sales to stockholders, and will engage only in
activities related to its orderly liquidation unless the stockholders elect
otherwise. If Listing occurs, the Company will become a perpetual life entity,
and Net Sales Proceeds may be reinvested in other properties for an indefinite
period of time. Neither the Advisor nor the Board of Directors may be able to
control the timing of sales due to market conditions, and there can be no
assurance that the Company will be able to sell its assets so as to return
stockholders' aggregate Invested Capital, or to generate a profit for the
stockholders. Invested Capital, in the aggregate, will be returned to
shareholders upon disposition of the Company's properties only if the properties
are sold for more than their original purchase price, although return of
capital, for federal income tax purposes, is not necessarily limited to
stockholder distributions following sales of properties. See "Federal Income Tax
Considerations." In the event that a purchase money obligation is taken in
partial payment of the sales price of a property, the proceeds of the sale will
be realized over a period of years.

     POTENTIAL LIABILITIES RELATED TO ENVIRONMENTAL MATTERS.  Under various
federal, state and local environmental laws, ordinances and regulations, a
current or previous owner or operator of real property may be liable for the
cost of removal or remediation of hazardous or toxic substances on, under or in
such property.  Such laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances.  Environmental laws also may impose restrictions on the manner
in which property may be used or businesses may be operated.  Environmental laws
provide for sanctions in the event of noncompliance and may be enforced by
governmental agencies or, in certain circumstances, by private parties.  In
connection with the acquisition and ownership of its properties, the Company may
be potentially liable for such costs.  The cost of defending against claims of
liability, of compliance with environmental regulatory requirements or of
remediating any contaminated property could materially adversely affect the
business, assets or results of operations of the Company and, consequently, Cash
Available for Distribution.  See "Real Property Investments."

     UNINSURED LOSSES.  Material damages at one or more of its Properties that
are not covered, or not adequately covered, by insurance could have a material
adverse effect on the Company.  Although the Company believes it is adequately
insured, there can be no assurances that material uninsured losses will not
occur in the future.

TAX RISKS

     FAILURE TO QUALIFY AS A REIT.  The Company intends to operate so as to
qualify as a REIT for federal income tax purposes.  Although the Company has not
requested, and does not expect to request, a ruling from the Service that it
qualifies as a REIT, it has received an opinion of its counsel that, based on
certain assumptions and representations, it so qualifies.  Investors should be
aware, however, that opinions of counsel are not binding on the Service or any
court.  The REIT qualification opinion only represents the view of counsel to
the Company based on counsel's review and analysis of existing law, which
includes no controlling precedent.  Furthermore, both the validity of the
opinion and the qualification of the Company as a REIT will depend on the
Company's continuing ability to meet various requirements concerning, among
other things, the ownership of its outstanding stock, the nature of its assets,
the sources of its income, and the amount of its distributions to its
shareholders.  See "Federal Income Tax Considerations--Taxation of the Company."

     If the Company were to fail to qualify as a REIT for any taxable year, the
Company would not be allowed a deduction for distributions to its shareholders
in computing its taxable income and would be subject to federal income tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates.  Unless entitled to relief under certain Code
provisions, the Company also would be disqualified from treatment as a REIT for
the four taxable years following the year during which qualification was lost.
As a result, Cash Available for Distribution would be reduced for each of the
years involved.  Although the Company intends to operate in a manner intended to
allow it to qualify as a REIT, it is possible that future economic, market,
legal, tax or other considerations may cause the Board of Directors to revoke
the Company's REIT election.  See "Federal Income Tax Considerations."

     REIT MINIMUM DISTRIBUTION REQUIREMENTS; POSSIBLE INCURRENCE OF ADDITIONAL
DEBT.  In order to qualify as a REIT, the Company generally will be required
each year to distribute to its shareholders at least 95% of its net taxable

                                       13

<PAGE>
 
income (excluding any net capital gain).  In addition, the Company will be
subject to a 4% nondeductible excise tax on the amount, if any, by which certain
distributions paid by it with respect to any calendar year are less than the sum
of (i) 85% of its ordinary income for that year, (ii) 95% of its capital gain
net income for that year, and (iii) 100% of its undistributed taxable income
from prior years.

     The Company intends to make distributions to its shareholders to comply
with the 95% distribution requirement and to avoid the nondeductible excise tax.
The Company's income will consist primarily of its share of the income of the
Operating Partnership, and the Cash Available for Distribution by the Company to
its shareholders will consist of its share of cash distributions from the
Operating Partnership.  Differences in timing between (i) the actual receipt of
income and actual payment of deductible expenses and (ii) the inclusion of such
income and deduction of such expenses in arriving at taxable income of the
Company could require the Company, through the Operating Partnership, to borrow
funds on a short-term basis to meet the 95% distribution requirement and to
avoid the nondeductible excise tax.  The requirement to distribute a substantial
portion of the Company's net taxable income could cause the Company to
distribute amounts that otherwise would be spent on future acquisitions,
unanticipated capital expenditures or repayment of debt, which would require the
Company to borrow funds or to sell assets to fund the costs of such items. See
"Federal Income Tax Considerations --Taxation of the Company."

     FAILURE OF THE OPERATING PARTNERSHIP TO BE CLASSIFIED AS A PARTNERSHIP FOR
FEDERAL INCOME TAX PURPOSES; IMPACT ON REIT STATUS.  Although the Company has
not requested, and does not expect to request, a ruling from the Service that
the Operating Partnership will be classified as a partnership for federal income
tax purposes, the Company has received an opinion of its counsel stating that
the Operating Partnership will be classified as a partnership, and not as a
corporation or association taxable as a corporation for federal income tax
purposes.  If the Service were to challenge successfully the tax status of the
Operating Partnership as a partnership for federal income tax purposes, the
Operating Partnership would be taxable as a corporation.  In such event, the
Company likely would cease to qualify as a REIT for a variety of reasons.
Furthermore, the imposition of a corporate income tax on the Operating
Partnership would reduce substantially the amount of Cash Available for
Distribution.  See "Federal Income Tax Considerations --Tax Aspects of the
Operating Partnership."

     ERISA RISKS.  The Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and section 4975 of the Code prohibit certain transactions
that involve (i) certain pension, profit-sharing, employee benefit, or
retirement plans or individual retirement accounts (each, a "Plan") and (ii) the
assets of a Plan.  A "party in interest" or "disqualified person" with respect
to a Plan will be subject to (x) an initial 5% excise tax on the amount involved
in any prohibited transaction involving the assets of the Plan and (y) an excise
tax equal to 100% of the amount involved if any prohibited transaction is not
corrected.  Consequently, the fiduciary of a Plan contemplating an investment in
the Shares should consider whether the Company, any other person associated with
the issuance of the Shares, or any affiliate of the foregoing is or might become
a "party in interest" or "disqualified person" with respect to the Plan.  In
such a case, the acquisition or holding of Shares by or on behalf of the Plan
could be considered to give rise to a prohibited transaction under ERISA and the
Code.  See "ERISA Considerations--Employee Benefit Plans, Tax-Qualified
Retirement Plans, and IRAs" herein.

     Regulations of the Department of Labor that define "plan assets" (the "Plan
Asset Regulations") provide that in some situations, when a Plan acquires an
equity interest in an entity, the Plan's assets include both the equity interest
and an undivided interest in each of the underlying assets of the entity, unless
one or more exceptions specified in the Plan Asset Regulations are satisfied.
In such a case, certain transactions that the Company might enter into in the
ordinary course of its business and operations might constitute "prohibited
transactions" under ERISA and the Code.  The assets of the Company should not be
deemed to be "plan assets" of any Plan that invests in the Shares.  See "ERISA
Considerations --Status of the Company and the Operating Partnership under
ERISA."

                                       14

<PAGE>
 
                         INVESTOR SUITABILITY STANDARDS

     An investment in the Company involves significant risk.  An investment in
the Shares is suitable only for persons who have adequate financial means and
desire a relatively long-term investment with respect to which they do not
anticipate any need for immediate liquidity.

     If the investor is an individual (including an individual beneficiary of a
purchasing IRA), or if the investor is a fiduciary (such as a trustee of a trust
or corporate pension or profit sharing plan, or other tax-exempt organization,
or a custodian under a Uniform Gifts to Minors Act), such individual or
fiduciary, as the case may be, must represent that he meets certain
requirements, as set forth in the Subscription Agreement attached as Exhibit B
to this Prospectus, including the following:

     (i) that such individual (or, in the case of a fiduciary, that the
fiduciary account or the donor who directly or indirectly supplies the funds to
purchase the Shares) has a minimum annual gross income of $45,000 and a net
worth (excluding home, furnishings and automobiles) of not less than $45,000; or

     (ii) that such individual (or, in the case of a fiduciary, that the
fiduciary account or the donor who directly or indirectly supplies the funds to
purchase the Shares) has a net worth (excluding home, furnishings and
automobiles) of not less than $150,000.

     Under the laws of certain states, transferees will also be required to
comply with applicable standards, except for intra-family transfers and
transfers made by gift, inheritance or family dissolution.

     The minimum purchase is 100 Shares ($1,000) (except in certain states as
described below).  No transfers will be permitted of less than the minimum
required purchase, nor (except in very limited circumstances) may an investor
transfer, fractionalize or subdivide such Shares so as to retain less than such
minimum number thereof.  For purposes of satisfying the minimum investment
requirement for Retirement Plans, unless otherwise prohibited by state law, a
husband and wife may jointly contribute funds from their separate Individual
Retirement Accounts ("IRAs"), provided that each such contribution is made in
increments of at least $100.  It should be noted, however, that an investment in
the Company will not, in itself, create a Retirement Plan for any investor and
that, in order to create a Retirement Plan, an investor must comply with all
applicable provisions of the Code.  Except in Maine, Minnesota and Washington,
investors who have satisfied the minimum purchase requirements and have
purchased units in Prior Wells Public Programs may purchase less than the
minimum number of Shares set forth above, but in no event less than 10 Shares
($100).  The minimum purchase for New York investors is 250 Shares ($2,500),
however, the minimum investment for New York IRAs is 100 Shares ($1,000).  After
an investor has purchased the minimum investment, any additional investments
must be made in increments of at least 10 Shares ($100), except for (i) those
made by investors in Maine, who must still meet the minimum investment
requirement for Maine residents of $1,000 for IRAs and $2,500 for non-IRAs, (ii)
purchases of Shares pursuant to the Reinvestment Plan, which may be in lesser
amounts, and (iii) minimum purchase for Minnesota investors is 250 Shares
($2,500), however, the minimum investment for Minnesota IRAs and qualified plans
may be 200 Shares ($2,000).

     Various states have established suitability standards for individual
investors and subsequent transferees different from those set by the Company.
Those requirements are set forth below.

     ARIZONA, IOWA, MASSACHUSETTS, MISSOURI, NORTH CAROLINA AND TENNESSEE -- The
investor has either (i) a net worth (exclusive of home, furnishings, and
personal automobiles) of at least $60,000 and an annual gross income of at least
$60,000, or (ii) a net worth (exclusive of home, furnishings, and personal
automobiles) of at least $225,000.

     MAINE -- The investor has either (i) a net worth (exclusive of home,
furnishings, and personal automobiles) of at least $50,000 and an annual gross
income of at least $50,000, or (ii) a net worth (exclusive of home, furnishings,
and personal automobiles) of at least $200,000.

                                       15

<PAGE>
 
     MASSACHUSETTS -- The investor has either (i) a net worth (exclusive of
home, furnishings, and personal automobiles) of at least $100,000 and an annual
gross income of at least $100,000, or (ii) a net worth (exclusive of home,
furnishings, and personal automobiles) of at least $250,000.

     NEW HAMPSHIRE -- The investor has either (i) a net worth (exclusive of
home, furnishings, and personal automobiles) of at least $125,000 and an annual
gross income of at least $50,000, or (ii) a net worth (exclusive of home,
furnishings, and personal automobiles) of at least $250,000.

     NEW YORK -- The investor has either (i) a net worth (exclusive of home,
furnishings, and personal automobiles) of at least $35,000 and an annual gross
income of at least $35,000, or (ii) a net worth (exclusive of home, furnishings,
and personal automobiles) of at least $100,000.

     OHIO -- The investor's investment in the Shares shall not exceed 10% of the
investor's net worth (exclusive of home, furnishings, and personal automobiles.)

     PENNSYLVANIA AND OREGON -- The investor has (i) a net worth (exclusive of
home, furnishings, and personal automobiles) of at least ten times the
investor's investment in the Company, and (ii) either (a) a net worth (exclusive
of home, furnishings, and personal automobiles) of at least $45,000 and an
annual gross income of at least $45,000, or (b) a net worth (exclusive of home,
furnishings, and personal automobiles) of at least $150,000.  Because the
minimum offering of Shares of the Company is less than $16,500,000, Pennsylvania
investors are cautioned to evaluate carefully the Company's ability to fully
accomplish its stated objectives and to inquire as to the current dollar volume
of the Company's subscription proceeds.

     NET WORTH IN ALL CASES EXCLUDES HOME, FURNISHINGS AND AUTOMOBILES.

     In order to assure adherence to the suitability standards described above,
requisite suitability standards must be met as set forth in the Subscription
Agreement and Subscription Agreement Signature Page (collectively, the
"Subscription Agreement"), which is attached as Exhibit B to this Prospectus.
The Company and each person selling Shares on behalf of the Company are required
to (i) make reasonable efforts to assure that each person purchasing Shares in
the Company is suitable in light of such person's age, educational level,
knowledge of investments, financial means and other pertinent factors and (ii)
maintain records for at least six years of the information used to determine
that an investment in Shares is suitable and appropriate for each investor.  The
agreements with the selling broker-dealers require such broker-dealers to (i)
make inquiries diligently as required by law of all prospective investors in
order to ascertain whether a purchase of the Shares is suitable for the
investor, and (ii) transmit promptly to the Company all fully completed and duly
executed Subscription Agreements.

                                       16

<PAGE>
 
                           ESTIMATED USE OF PROCEEDS

     The following table sets forth information concerning the estimated use of
the Gross Proceeds of the Offering of Shares made hereby.  Many of the figures
set forth below represent the best estimate of the Company since they cannot be
precisely calculated at this time.  The percentage of the Gross Proceeds of the
Offering of Shares to be invested in Company properties is estimated to be
approximately 84%.


<TABLE>
<CAPTION>
                                                     MINIMUM OFFERING       MAXIMUM OFFERING(1)
                                                   ---------------------  -----------------------
                                                     Amount     Percent      Amount      Percent
                                                   -----------  --------  -------------  --------
<S>                                                <C>          <C>       <C>            <C>
Gross Offering Proceeds (2)                        $1,250,000       100%  $151,200,000       100%
Less Public Offering Expenses:
  Selling Commissions (3)                              87,500         7%    10,080,000       6.7%
  Organization and Offering Expenses (4)               37,500         3%     4,500,000         3%
  Marketing support and due diligence                  31,250       2.5%     3,750,000       2.5%
   reimbursement fee(5)                            ----------      ----   ------------      ----
Amount Available for Investment (6)                $1,093,750      87.5%  $132,870,000      87.8%
                                                   ==========      ====   ============      ====
Acquisition and Development:
Acquisition and Advisory Fees (7)                  $   37,500         3%  $  4,500,000         3%
Acquisition Expenses (8)                                6,250       0.5%       750,000       0.5%
Initial Working Capital Reserve (9)                        (9)        -             (9)        -
Amount Invested in Properties (6)(10)              $1,050,000        84%  $127,620,000      84.4%
                                                   ==========      ====   ============      ====
</TABLE>
 
- ---------------
(1) Excludes 1,500,000 Shares that may be sold pursuant to the Reinvestment
    Plan, but includes 600,000 Shares which may be issued pursuant to the
    Soliciting Dealer Warrants.

(2) The amounts shown for Gross Offering Proceeds do not reflect the possible
    discounts in commissions and other fees as described in "Plan Of
    Distribution."

(3) Includes Selling Commissions equal to 7% of aggregate Gross Offering
    Proceeds (which commissions may be reduced under certain circumstances)
    which are payable to the Dealer Manager, an Affiliate.  The Company also
    will issue to the Dealer Manager one Soliciting Dealer Warrant for every 25
    Shares sold.  The Dealer Manager, in its sole discretion, may reallow
    Selling Commissions of up to 7% of Gross Offering Proceeds and Soliciting
    Dealer Warrants to other broker-dealers participating in this Offering
    attributable to the Shares sold by them.  In no event shall the total
    underwriting compensation, including Selling Commissions, and expense
    reimbursements, exceed 7% of Gross Offering Proceeds, except for an
    additional Marketing and Due Diligence Fee equal to 2.5% of Gross Offering
    Proceeds which may be paid as a reimbursement of expenses incurred for
    marketing support (2%) and due diligence (.5%) purposes.  See "Plan of
    Distribution."

(4) These amounts represent the Advisor's best estimates of the Organization and
    Offering Expenses to be incurred in connection with the Offering.
    Organization and Offering Expenses consist of estimated legal, accounting,
    printing and other accountable offering expenses (other than Selling
    Commissions and the Marketing and Due Diligence Fee).  The Advisor and other
    Affiliates will be responsible for the payment of Organization and Offering
    Expenses (other than Selling Commissions and the marketing support and due
    diligence reimbursement fee) to the extent they exceed 3% of Gross Offering
    Proceeds, without recourse against or reimbursement by the Company.

(5) All or a portion of the Marketing and Due Diligence Fee may be reallowed to
    the non-affiliated Dealers which will assist the Dealer Manager in the
    distribution of Shares (the "Soliciting Dealers") for bona fide due
    diligence expenses.  Up to .5% of the Marketing and Due Diligence Fee may be
    paid as a reimbursement of due diligence expenses and up to 2% of the
    Marketing and Due Diligence Fee may be paid as a reimbursement of marketing
    support expenses in connection with the Offering.

(6) Until required in connection with the acquisition and development of
    properties, substantially all of the net proceeds of the Offering and,
    thereafter, the working capital reserves of the Company, may be invested in
    short-
     

                                       17

<PAGE>
 
     term, highly-liquid investments including government obligations, bank
     certificates of deposit, short-term debt obligations and interest-bearing
     accounts.

(7)  The Company will pay Acquisition and Advisory Fees to the Advisor or other
     Affiliates in connection with the acquisition of properties up to a maximum
     amount of 3% of Gross Offering Proceeds.  Acquisition and Advisory Fees do
     not include Acquisition Expenses.

(8)  Includes legal fees and expenses, travel and communication expenses, costs
     of appraisals, nonrefundable option payments, accounting fees and expenses,
     title insurance premiums and other closing costs and miscellaneous expenses
     relating to the selection, acquisition and development of properties that
     ultimately are not acquired by the Company. With respect to successful
     acquisitions, such costs generally will be included in the purchase price
     of the applicable property. It is anticipated that substantially all of
     such items will be directly related to the acquisition of specific
     properties and will be capitalized rather than currently deducted by the
     Company.

(9)  Because the vast majority of leases for the properties acquired by the
     Company will provide for tenant reimbursement of operating expenses, it is
     not anticipated that a permanent reserve for maintenance and repairs of the
     Company's properties will be established.  However, to the extent that the
     Company has insufficient funds for such purposes, the Company may apply an
     aggregate amount of up to 1% of Gross Offering Proceeds for maintenance and
     repairs of the Company's properties.  The Company also may, but is not
     required to, establish reserves from Gross Offering Proceeds, out of cash
     flow generated by operations properties or out of Nonliquidating Net Sale
     Proceeds.

(10) Includes amounts anticipated to be invested in properties net of fees and
     expenses.  It is estimated that approximately 84% of the proceeds of this
     Offering will be used to acquire properties.

                                       18

<PAGE>
 
                            MANAGEMENT COMPENSATION

     The following table summarizes and discloses all of the compensation and
fees (including reimbursement of expenses) to be paid by the Company to the
Dealer Manager, the Soliciting Dealers, the Advisor and the Management Company
during the various phases of the organization and operation of the Company.


<TABLE>
<CAPTION>

FORM OF COMPENSATION                               DETERMINATION                                           ESTIMATED MAXIMUM
AND ENTITY RECEIVING                                OF AMOUNT                                             DOLLAR AMOUNT (1)(2)
- --------------------                               -------------                                          --------------------

                                                 ORGANIZATIONAL AND OFFERING STAGE
                                                 ---------------------------------
<C>                               <S>                                                                <C> 
Selling Commissions - The         Up to 7% of Gross Offering Proceeds before                         $10,500,000 at the Maximum 
 Dealer Manager                   reallowance of commissions earned by participating                 Offering and $87,500 at    
                                  broker-dealers. The Dealer Manager intends to                      the Minimum Offering        
                                  reallow 100% of commissions earned by participating 
                                  broker-dealers.                                      

Reimbursement of Organization     Up to 3% of Gross Offering Proceeds. All                           $4,500,000 at the Maximum  
and Offering Expenses - The       Organization and Offering Expenses (excluding                      Offering and $37,500 at    
Advisor and its Affiliates        Selling Commissions) will be advanced by the Advisor               the Minimum Offering.      
                                  and its Affiliates and reimbursed by the Company.    

Marketing support and due         Up to 2.5% of Gross Offering Proceeds for                          $3,750,000 at the Maximum 
diligence expense - Dealer        reimbursement of bona fide marketing and due                       Offering and $31,250 at   
Manager and Soliciting            diligence expenses.                                                the Minimum Offering.      
Dealers

                                                 ACQUISITION AND DEVELOPMENT STAGE
                                                 ---------------------------------
Acquisition and Advisory Fees     For the review and evaluation of potential real                    $4,500,000 at the Maximum 
- - The Advisor or its              property acquisitions, a fee of up to 3% of Gross                  Offering and $43,750 at   
Affiliates                        Offering Proceeds, plus reimbursement of costs and                 the Minimum Offering.     
                                  expenses for the acquisition of properties.         

Reimbursement of Acquisition      Up to .5% of the Gross Offering Proceeds for                       $750,000 at the Maximum    
 Expenses - The Advisor           reimbursement of expenses related to real property                 Offering and $6,250 at the 
                                  acquisitions, such as legal fees, travel and                       Minimum Offering.          
                                  communication expenses, title insurance premiums   
                                  expenses.                                           

                                                         OPERATIONAL STAGE
                                                         -----------------

Property Management and           For supervising the management of the Company's                    Actual amounts are        
Leasing Fees - The                properties, a fee equal to 4.5% of the gross rental                dependent upon results of 
Management Company                incomes (approximately 2% - 3% of which is expected                operations and therefore  
                                  to come from direct tenant chargebacks resulting in                cannot be determined at   
                                  a net fee payable by each property of 1.5% to 2.5%),               the present time.          
                                  and in the case of leases to new tenants, an initial 
                                  leasing fee equal to the lesser of (i) the first     
                                  month's rent under the applicable lease or (ii) the  
                                  amounts charged by unaffiliated persons rendering    
                                  comparable services in the same geographic area.      

Real Estate Commissions - The     In connection with the sale of any Company property,               Actual amounts are        
Advisor or Its Affiliates         an amount not exceeding the lesser of: (A) 50% of                  dependent upon results of 
                                  the reasonable, customary and Competitive Real                     operations and therefore  
                                  Estate Brokerage Commissions customarily paid for                  cannot be determined at   
                                  the sale of a comparable property in light of the                  the present time.         
                                  size, type and location of the property, or (B) 3%   
                                  of the gross sales price of each property (subject   
                                  to limitationslimitations), subordinated to          
                                  distributions toshareholders from Sale Proceeds of   
                                  an amount which,together with prior distributions    
                                  to the shareholders, will equal (i) 100% of their    
                                  InvestedCapital plus (ii) an 8% per annum cumulative 
                                  (noncompounded) return on their Invested Capital     
                                  (their "Common Return").                              
</TABLE>
 
                                       19


<PAGE>
 

<TABLE> 
<CAPTION> 
<C>                               <S>                                                                <C> 
Subordinated Incentive fee        Upon Listing, a fee equal to 10% of the amount by which (i)        Actual amounts are 
upon Listing - The Advisor        the market value of the Company plus the total distributions       dependent upon results of
                                  made to shareholders from the Company's inception until the        operations and therefore
                                  date of Listing exceeds (ii) the sum of (A) 100% of Invested       cannot be determined at 
                                  Capital and (B) the total distributions required to pay the        the present time.       
                                  Common Return to the shareholders from inception through the 
                                  date on which the market value is determined.                 

                                                   LIQUIDATION/TERMINATION STAGE
                                                   -----------------------------

Subordinated Participation in     After all shareholders have received a return of                   Actual amounts are         
Nonliquidating Net Sale           their Invested Capital and their Common Return, then               dependent upon results of  
Proceeds and Liquidating          the Advisor is entitled to receive the following                   operations and therefore   
Distributions - The Advisor       amounts: (a) an amount equal to the capital                        cannot be determined at     
                                  contributed by the Advisor to the Operating                        the present time.           
                                  Partnership, (b) then, 10% of remaining Residual        
                                  Proceeds available for distribution.                     

                                  The Company may not make reimbursements to any
                                  entity for operating expenses in excess of 2%
                                  of Average Invested Assets or 25% of Net
                                  Income for such year.
</TABLE>

_________________________
(1)  Assumes that the maximum number of 15,000,000 Shares is sold (excluding any
     Shares sold pursuant to the Reinvestment Plan).

(2)  The Company may not make reimbursements to any entity for operating
     expenses in excess of 2% of Average Invested Assets or 25% of Net Income
     for such year.

     In addition, the Advisor and its Affiliates will be reimbursed only for the
actual cost of goods, services and materials used for or by the Company as set
forth in Section 10 of the Advisory Agreement.  The Advisor may be reimbursed
for the administrative services, including personnel costs, necessary to the
prudent operation of the Company, provided that the reimbursement shall be at
the lower of the Advisor's actual cost or the amount the Company would be
required to pay to independent parties for comparable administrative services in
the same geographic location.  No payment or reimbursement will be made for
services or personnel costs for which the Advisor is entitled to compensation by
way of a separate fee.  If the Subordinated Incentive Fee is paid to the
Advisor, no other performance fee will be paid to the Advisor; if the
Subordinated Participation Fee is paid to the Advisor, no Net Sales Proceeds
will be paid to the Advisor.

     Since the Advisor and its Affiliates are entitled to differing levels of
compensation for undertaking different transactions on behalf of the Company,
such as the property management fees for operating the Company's properties and
the subordinated participation in proceeds from the sale of the Company's
properties, the Advisor has the ability to affect the nature of the compensation
it receives by undertaking different transactions.  However, the Advisor is
obligated to exercise good faith and integrity in all its dealings with respect
to Company affairs pursuant to its fiduciary duties to the shareholders.  See
"The Advisor and the Advisory Agreement."  As noted above, there are ceilings on
certain categories of fees or expenses payable to the Advisor and its
Affiliates.  Because these fees or expenses are payable only with respect to
certain transactions or services, they may not be recovered by the Advisor or
their Affiliates by reclassifying them under a different category.  The Company
may not make reimbursements to any entity for operating expenses in excess of 2%
of Average Invested Assets or 25% of Net Income for such year.

                                       20

<PAGE>
 
                             CONFLICTS OF INTEREST

     The Company is subject to various conflicts of interest arising out of its
relationship with the Advisor and its Affiliates, including conflicts related to
the arrangements pursuant to which the Advisor and its Affiliates will be
compensated by the Company.  See "Management."

     The following chart indicates the relationship between Wells Real Estate
Funds, Inc., the parent corporation of the Advisor and the Affiliates of the
Advisor which will be providing services to the Company.

================================================================================
|                        WELLS REAL ESTATE FUNDS, INC.                         |
================================================================================
          |                             |                           |
          | 100%                        | 100%                      | 100%
          |                             |                           |
=======================   ==============================  ===================
|  WELLS CAPITAL, INC.|   |WELLS INVESTMENT SECURITIES,|  |WELLS MANAGEMENT  |
|                     |   |   INC. (DEALER MANAGER)    |  |   COMPANY, INC.  |
|                     |   |                            |  |(PROPERTY MANAGER)|
=======================   ==============================  ===================
          |                                                         |
          |                                                         |
          |  Advisory Agreement                                     | 100%
          |                                                         |
=======================                                   ====================
|     WELLS REIT      |                                   |WELLS DEVELOPMENT |
|                     |                                   |   CORPORATION    |
=======================                                   ====================
                                        

INTERESTS IN OTHER COMPANIES

     The Advisor and its Affiliates are also general partners of other real
estate limited partnerships, including partnerships which have investment
objectives substantially identical to those of the Company, and it is expected
that they will organize other such partnerships in the future.

     As described in the "Prior Performance Summary," the Advisor and its
Affiliates have sponsored the following twelve public partnerships with
substantially identical investment objectives as those of the Company: (i) Wells
Real Estate Fund I ("Wells Fund I"), (ii) Wells Real Estate Fund II ("Wells Fund
II"), (iii) Wells Real Estate Fund II-OW ("Wells Fund II-OW"), (iv) Wells Real
Estate Fund III, L.P. ("Wells Fund III"), (v) Wells Real Estate Fund IV, L.P.
("Wells Fund IV"), (vi) Wells Real Estate Fund V, L.P. ("Wells Fund V"), (vii)
Wells Real Estate Fund VI, L.P. ("Wells Fund VI"), (viii) Wells Real Estate Fund
VII, L.P. ("Wells Fund VII"), (ix) Wells Real Estate Fund VIII, L.P. ("Wells
Fund VIII"), (x) Wells Real Estate Fund IX, L.P. ("Wells Fund IX"), (xi) Wells
Real Estate Fund X, L.P. ("Wells Fund X") and Wells Real Estate Fund XI, L.P.
("Wells Fund XI").  All of the proceeds of the offerings of Wells Fund I, Wells
Fund II, Wells Fund II-OW, Wells Fund III, Wells Fund IV, Wells Fund V and Wells
Fund VI available for investment in real properties have been invested.  In
addition, all of the proceeds of the offering of Wells Fund VII available for
investment in real properties have been invested in properties.  In addition,
all of the proceeds of the offering of Wells Fund VIII available for investment
in real properties have been either invested or are committed for investment in
properties.  As of August 31, 1997, approximately 74% and 50% of the proceeds of
the offerings of Wells Fund IX and Wells Fund X, respectively, available for
investment in real properties had either been invested in properties or were
committed for investment in properties.  Wells Fund XI began to offer its
securities in January 1998.

     The Advisor also may be subject to potential conflicts of interest at such
time as the Company wishes to acquire a property that also would be suitable for
acquisition by an Affiliate of the Advisor.  Affiliates of the Advisor serve as
Directors of the Company, and, in this capacity, have a fiduciary obligation to
act in the best interest of the

                                       21

<PAGE>
 
stockholders of the Company and, as general partners or directors of the Prior
Wells Public Programs, to act in the best interests of the partners in other
programs with investments that may be similar to those of the Company and will
use their best efforts to assure that the Company will be treated as favorably
as any such other program. See "Management-- Fiduciary Responsibility of the
Board of Directors." In addition, the Company has developed procedures to
resolve potential conflicts of interest in the allocation of properties between
the Company and certain of its Affiliates. See "Certain Conflict Resolution
Procedures" below. The Company will supplement this Prospectus during the
Offering period to disclose the acquisition of a material property at such time
as the Advisor believes that a reasonable probability exists that the Company
will acquire a property, including an acquisition from the Advisor or its
Affiliates.

OTHER ACTIVITIES OF THE ADVISOR AND ITS AFFILIATES

     The Company will rely on the Advisor for the day-to-day operation of the
Company and the management of its assets.  As a result of its interests in other
partnerships and the fact that it has also engaged and will continue to engage
in other business activities, the Advisor and its Affiliates and certain of the
Directors will have conflicts of interest in allocating their time between the
Company and other partnerships and activities in which they are involved.
However, the Advisor believes that it and its Affiliates have sufficient
personnel to discharge fully their responsibilities to all partnerships and
ventures in which they are involved.

     The Company may (i) purchase or lease any property in which the Advisor or
any of its Affiliates have an interest, (ii) temporarily enter into contracts
relating to investment in properties to be assigned to the Company prior to
closing or may purchase property in their own name and temporarily hold title
for the Company, and (iii) enter into joint ventures with Affiliates of the
Advisor to acquire properties held by such Affiliates, provided that in any case
such transaction shall be made upon a finding by a majority of Directors
(including a majority of Independent Directors) not otherwise interested in the
transaction that such transaction is competitive and commercially reasonable to
the Company and at a price to the Company no greater than the cost of the asset
to the Advisor or such Affiliate (including acquisition and carrying costs), or,
if the price to the Company is in excess of such cost, that substantial
justification for such excess exists and such excess is reasonable and only if
the possibility of such acquisition(s) is disclosed, and there is appropriate
disclosure of the material facts concerning each such investment.  In no event
shall the cost of such asset to the Company exceed its current appraised value.
The Advisor or such Affiliate may not hold title to any such property on behalf
of the Company or an Affiliated joint venture for more than 12 months, and
further the Advisor or its Affiliates shall not sell property to the Company or
an Affiliated joint venture if the cost of the property exceeds the funds
reasonably anticipated to be available for the Company to purchase any such
property, and that all profits and losses during the period any such property is
held by the Advisor or the Affiliate will accrue to the Company or the
Affiliated joint venture, as applicable.  In no event may the Company (i) sell
or lease real property to the Advisor or any of its Affiliates (unless a
majority of the Independent Directors determine that the transaction is fair and
reasonable to the Company); (ii) loan Company funds to the Advisor or any of its
Affiliates; (iii) obtain appraisals of real properties from the Advisor or any
of their Affiliates; or (iv) enter into agreements with the Advisor or its
Affiliates for the provision of insurance covering the Company or any property
owned by the Company.

COMPETITION

     Conflicts of interest will exist to the extent that the Company may acquire
properties in the same geographic areas where other properties owned by the
Advisor and its Affiliates are located.  In such a case, a conflict could arise
in the leasing of the Company's properties in the event that the Company and
another program managed by the Advisor or its Affiliates were to compete for the
same tenants in negotiating leases, or a conflict could arise in connection with
the resale of the Company's properties in the event that the Company and another
program managed by the Advisor or its Affiliates were to attempt to sell similar
properties at the same time.  Conflicts of interest may also exist at such time
as the Company or Affiliates of the Advisor managing property on behalf of the
Company seek to employ developers, contractors or building managers as well as
under other circumstances.  The Advisor will seek to reduce conflicts relating
to the employment of developers, contractors or building managers by making
prospective employees aware of all such properties seeking to employ such
persons.  In addition, the Advisor will seek to reduce conflicts which may arise
with respect to properties available for sale or rent by making prospective
purchasers or lessees aware of all such properties.  However, these conflicts
cannot be fully avoided in that the Advisor may establish differing compensation
arrangements for employees at different properties or differing terms for
resales or leasing of the various properties.

                                       22

<PAGE>
 
AFFILIATED DEALER MANAGER

     Because the Dealer Manager is an Affiliate of the Advisor, the Company will
not have the benefit of an independent due diligence review and investigation of
the type normally performed by an unaffiliated, independent underwriter in
connection with the offering of securities.  See "Plan of Distribution."

AFFILIATED PROPERTY MANAGER

     Since it is anticipated that the Company's properties will be managed and
leased by the Management Company, an Affiliate of the Advisor, the Company will
not have the benefit of independent property management.  See "Management
Compensation."

AFFILIATED DEVELOPER

     It is expected that Wells Development, an Affiliate of the Advisor, will
serve as the developer of certain unimproved properties acquired by the Company,
but will not receive any profit from the development of such properties.

LACK OF SEPARATE REPRESENTATION

     Hunton & Williams is counsel to the Company, the Advisor, the Dealer
Manager and their Affiliates in connection with this Offering and may in the
future act as counsel to the Company, 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 will cause the Company to retain separate counsel for such matters as
and when appropriate.

JOINT VENTURES WITH AFFILIATES OF THE ADVISOR

     The Company is likely to enter into one or more joint venture agreements
with Affiliates of the Advisor for the acquisition, development or improvement
of properties.  See "Investment Objectives and Criteria--Joint Venture
Investments."  The Advisor and its Affiliates may have conflicts of interest in
determining which partnerships should enter into any joint venture agreement.
Should any such joint venture be consummated, the Advisor may face a conflict in
structuring the terms of the relationship between the interest of the Company
and the interest of the affiliated co-venturer.  Since the Advisor and its
Affiliates will control both the Company and the affiliated co-venturer,
agreements and transactions between the co-venturers with respect to any such
joint venture will not have the benefit of arm's-length negotiation of the type
normally conducted between unrelated co-venturers.

RECEIPT OF FEES AND OTHER COMPENSATION BY ADVISOR AND AFFILIATES

     Company transactions involving the purchase and sale of the Company's
properties may result in the receipt of commissions, fees and other compensation
by the Advisor and its Affiliates, including Acquisition and Advisory Fees,
property management and leasing fees, real estate brokerage commissions, and
participation in distributions of Nonliquidating Net Sale Proceeds and
Liquidating Distributions.  However, the fees and compensation payable to the
Advisor and its Affiliates relating to sale of the Company's properties are
subordinated to the return to the shareholders of their Invested Capital plus
cumulative returns thereon.  Subject to the oversight of the Board of Directors,
the Advisor has considerable discretion with respect to all decisions relating
to the terms and timing of all Company transactions.  Therefore, the Advisor may
have conflicts of interest concerning certain actions taken on behalf of the
Company, particularly due to the fact that such fees will generally be payable
to the Advisor and its Affiliates regardless of the quality of the properties
acquired or the services provided to the Company.  See "Management
Compensation."

CERTAIN CONFLICT RESOLUTION PROCEDURES

     In order to reduce or eliminate certain potential conflicts of interest,
the Articles of Incorporation contain a number of restrictions relating to (i)
transactions between the Company and the Advisor or its Affiliates, (ii) certain

                                       23

<PAGE>
 
future offerings, and (iii) allocation of properties among certain affiliated
entities.  These restrictions include, among others, the following:

     1.  No goods or services will be provided by the Advisor or its Affiliates
to the Company except for transactions in which the Advisor or its Affiliates
provide goods or services to the Company in accordance with the Articles of
Incorporation which provides that a majority of the Directors (including a
majority of the Independent Directors) not otherwise interested in such
transactions must approve such transactions as fair and reasonable to the
Company and on terms and conditions not less favorable to the Company than those
available from unaffiliated third parties and not less favorable than those
available from the Advisor or its Affiliates in transactions with unaffiliated
third parties.

     2.  The Company will not purchase or lease properties in which the Advisor
or its Affiliates has an interest without the determination, by a majority of
the Directors (including a majority of the Independent Directors) not otherwise
interested in such transaction, that such transaction is competitive and
commercially reasonable to the Company and at a price to the Company no greater
than the cost of the asset to the Advisor or its Affiliate unless there is
substantial justification for any amount that exceeds such cost and such excess
amount is determined to be reasonable.  In no event shall the Company acquire
any such asset at an amount in excess of its appraised value.  The Company will
not sell or lease properties to the Advisor, Directors, or any Affiliates unless
a majority of the Directors (including a majority of the Independent Directors)
not interested in the transaction determine the transaction is fair and
reasonable to the Company.  The Company will not purchase or lease properties
from the Advisor, Directors, or any Affiliate without the approval of a majority
of the Directors (including the Independent Directors).

     3.  The Company will not make any loans to the Advisor, Directors or any
Affiliates.  The Advisor and its Affiliates will not make loans to the Company,
or to joint ventures in which the Company is a co-venturer, for the purpose of
acquiring properties.  Any loans to the Company by the Advisor, Directors, or
any Affiliates for other purposes must be approved by a majority of the
Directors (including a majority of the Independent Directors) not otherwise
interested in such transaction as fair, competitive, and commercially
reasonable, and no less favorable to the Company than comparable loans between
unaffiliated parties.  It is anticipated that the Advisor or its Affiliates
shall be entitled to reimbursement, at cost, for actual expenses incurred by
them on behalf of the Company or joint ventures in which the Company is a co-
venturer, subject to the 2%/25% Guidelines (2% of Average Invested Assets or 25%
of Net Income) described under "The Advisor and the Advisory Agreement--The
Advisory Agreement."

     4.  The Board of Directors and the Advisor have agreed that, in the event
than an investment opportunity becomes available which is suitable for both the
Company and a public or private entity with which the Advisor or its Affiliates
are affiliated, for which both entities have sufficient uninvested funds, then
the entity which has had the longest period of time elapse since it was offered
an investment opportunity will first be offered the investment opportunity.  An
investment opportunity will not be considered suitable for a program if the
requirements of Item 3 above could not be satisfied if the program were to make
the investment.  In determining whether or not an investment opportunity is
suitable for more than one program, the Board of Directors and the Advisor will
examine such factors, among others, as the cash requirements of each program,
the effect of the acquisition both on diversification of each program's
investments by types of commercial office properties and geographic area, and on
diversification of the tenants of its properties (which also may affect the need
for one of the programs to prepare or produce audited financial statements for a
property or a tenant), the anticipated cash flow of each program, the size of
the investment, the amount of funds available to each program, and the length of
time such funds have been available for investment.  If a subsequent
development, such as a delay in the closing of a property or a delay in the
construction of a property, causes any such investment, in the opinion of the
Board of Directors and the Advisor, to be more appropriate for an entity other
than the entity which committed to make the investment, however, the Advisor has
the right to agree that the other entity affiliated with the Advisor or its
Affiliates may make the investment.  It shall be the duty of the Directors
(including the Independent Directors) to insure that the method for the
allocation of the acquisition of properties by two or more programs of the same
Advisor seeking to acquire similar types of assets shall be reasonable.  The
Advisor and certain other Affiliates of the Company are affiliated with Wells
Fund X, a prior public program which terminated its offering in December 1997.
In addition, the Advisor and its Affiliates are affiliated with Wells Fund XI, a
publicly registered partnership that has not offered any securities to date.  As
of August 31, 1997, Wells Fund X had approximately $ 10,979,538 available for
investment.

                                       24

<PAGE>
 
                          SUMMARY OF REINVESTMENT PLAN

     The Company has adopted the Reinvestment Plan pursuant to which
stockholders may elect to have the full amount of their cash distributions from
the Company reinvested in additional Shares of the Company.  The following
discussion summarizes the principal terms of the Reinvestment Plan.  The
Reinvestment Plan and the Prospectus to be used in connection with certain sales
of the Company's stock are attached hereto as Exhibit C.

GENERAL

     Shareholders who have received a copy of this Prospectus and participate in
this Offering can elect to participate in and purchase Shares through the
Reinvestment Plan at any time and will not need to receive a separate prospectus
relating solely to the Reinvestment Plan.  A person who becomes a stockholder
otherwise than by participating in this Offering may purchase Shares through the
Reinvestment Plan only after receipt of a separate prospectus relating solely to
the Reinvestment Plan.

     The price per Share purchased pursuant to the Reinvestment Plan shall be
the Offering price, which is $10.00 per Share, until all of the Shares in this
Offering that are reserved for the Reinvestment Plan have been sold thereunder.
After such time, Shares for the Reinvestment Plan may be acquired by the Company
either through purchases on the open market and/or additional registrations
relating to the Reinvestment Plan, in either case at a per Share price equal to
the then-prevailing market price on the securities exchange or over-the-counter
market on which the Shares are listed at the date of purchase.  The Company is
unable to predict the effect which such a Listing would have on the price of the
Shares acquired through the Reinvestment Plan.

INVESTMENT OF DISTRIBUTIONS

     Distributions will be used to purchase Shares on behalf of the Participants
from the Company.  All such distributions shall be invested in Shares within 30
days after such payment date.  Any distributions not so invested will be
returned to Participants.

     At this time, Participants will not have the option to make voluntary
contributions to the Reinvestment Plan to purchase Shares in excess of the
amount of Shares that can be purchased with their distributions.  The Board of
Directors reserves the right, however, to amend the Reinvestment Plan in the
future to permit voluntary contributions to the Reinvestment Plan by
Participants, to the extent consistent with the Company's objective of
qualifying as a REIT.

PARTICIPANT ACCOUNTS, FEE, AND ALLOCATION OF SHARES

     For each Participant, the Company will maintain a record which shall
reflect for each fiscal quarter the distributions received by the Company on
behalf of such Participant.  Any interest earned on such Distributions will be
paid to the Company to defray certain costs relating to the Reinvestment Plan.

     The Company will use the aggregate amount of distributions to all
Participants for each fiscal quarter to purchase Shares for the Participants.
If the aggregate amount of distributions to Participants exceeds the amount
required to purchase all Shares then available for purchase, the Company will
purchase all available Shares and will return all remaining distributions to the
Participants within 30 days after the date such distributions are made.  The
purchased Shares will be allocated among the Participants based on the portion
of the aggregate distributions received on behalf of each Participant, as
reflected in the records maintained by the Company.  The ownership of the Shares
purchased pursuant to the Reinvestment Plan shall be reflected on the books of
the Company.

     Shares acquired pursuant to the Reinvestment Plan will entitle the
Participant to the same rights and to be treated in the same manner as those
purchased by the Participants in the Offering.  Accordingly, the Company will
pay the following commissions and fees in connection with Shares sold under the
Reinvestment Plan (until all such Shares are sold):  the Selling Commissions of
7% (subject to reduction under the circumstances provided under "The Offering--
Plan of Distribution"), the Marketing and Due Diligence Fee of 2.5%, and the
Acquisition and Advisory Fees of 3% of the purchase price of the Shares sold
pursuant to the Reinvestment Plan.  In connection with investments by

                                       25

<PAGE>
 
Ohio investors, the Company will pay only Acquisition and Advisory Fees of 3% of
the purchase price of the Shares sold pursuant to the Reinvestment Plan.
Thereafter, Acquisition and Advisory Fees will be paid by the Company only in
the event that proceeds of the sale of Shares are used to acquire properties. As
a result, aggregate fees payable to Affiliates of the Company will total between
9% and 12.5% of the proceeds of reinvested distributions, up to 7% of which may
be reallowed to Soliciting Dealers.

     The allocation of Shares among Participants may result in the ownership of
fractional Shares, computed to four decimal places.

REPORTS TO PARTICIPANTS

     Within 60 days after the end of each fiscal quarter, the Company will mail
to each Participant a statement of account describing, as to such Participant,
the distributions reinvested during the quarter, the number of Shares purchased
during the quarter, the per Share purchase price for such Shares, the total
administrative charge paid by the Company on behalf of each Participant (see "--
Participant Accounts, Fees and Allocation of Shares" above), and the total
number of Shares purchased on behalf of the Participant pursuant to the
Reinvestment Plan.  See "--General" above.

     Tax information with respect to income earned on Shares under the
Reinvestment Plan for the calendar year will be sent to each participant by the
Company.

ELECTION TO PARTICIPATE OR TERMINATE PARTICIPATION

     Stockholders of the Company who purchase Shares in this Offering may become
Participants in the Reinvestment Plan by making a written election to
participate on their Subscription Agreements at the time they subscribe for
Shares.  Any other stockholder who receives a copy of this Prospectus or a
separate prospectus relating solely to the Reinvestment Plan and who has not
previously elected to participate in the Reinvestment Plan may so elect at any
time by completing the enrollment form attached to such prospectus or by other
appropriate written notice to the Plan Administrator or Company of such
stockholder's desire to participate in the Reinvestment Plan.  Participation in
the Reinvestment Plan will commence with the next distribution made after
receipt of the Participant's notice, provided it is received at least ten days
prior to the record date for such distribution.  Subject to the preceding
sentence, the election to participate in the Reinvestment Plan will apply to all
distributions attributable to the fiscal quarter in which the stockholder made
such written election to participate in the Reinvestment Plan and to all fiscal
quarters thereafter, whether made (i) upon subscription or subsequently for
stockholders who participate in this offering, or (ii) upon receipt of a
separate prospectus relating solely to the Reinvestment Plan for stockholders
who do not participate in this offering.  Participants will be able to terminate
their participation in the Reinvestment Plan at any time without penalty by
delivering written notice to the Plan Administrator or Company no less than ten
days prior to the next record date.  The Company may also terminate the
Reinvestment Plan for any reason at any time, upon 10 days' prior written notice
to all Participants.

     A Participant who chooses to terminate participation in the Reinvestment
Plan must terminate his or her entire participation in the Reinvestment Plan and
will not be allowed to terminate in part.  If the Reinvestment Plan is
terminated, the Company will update its stock records to account for all whole
shares purchased by the participant(s) in the Plan, and if any fractional shares
exist, the Company may either (a) send you a check in payment for any fractional
shares in your account based in the then-current market price for the shares, or
(b) credit your stock ownership account with any such fractional shares. There
are no fees associated with a Participant's terminating his interest in the
Reinvestment Plan or the Company's termination of the plan.  A Participant in
the Reinvestment Plan who terminates his interest in the Reinvestment Plan will
be allowed to participate in the Reinvestment Plan again by notifying the
Company and completing any required forms.

     The Board of Directors reserves the right to prohibit Qualified Plans from
participating in the Reinvestment Plan if such participation would cause the
underlying assets of the Company to constitute "plan assets" of Qualified Plans.
See "Federal Income Tax Considerations --Taxation of Tax-Exempt Shareholders."

                                       26

<PAGE>
 
FEDERAL INCOME TAX CONSIDERATIONS

     Stockholders subject to federal income taxation who elect to participate in
the Reinvestment Plan will incur a tax liability for distributions allocated to
them even though they have elected not to receive their distributions in cash
but rather to have their distributions held pursuant to the Reinvestment Plan.
Specifically, stockholders will be treated as if they have received the
distribution from the Company and then applied such Distribution to purchase
Shares in the Reinvestment Plan.  A stockholder designating a distribution for
reinvestment will be taxed on the amount of such distribution as ordinary income
to the extent such distribution is from current or accumulated earnings and
profits, unless the Company has designated all or a portion of the distribution
as a capital gain dividend.  In such case, such designated portion of the
distribution will be taxed as long-term capital gain.

AMENDMENTS AND TERMINATION

     The Company reserves the right to amend any aspect of the Reinvestment Plan
without the consent of stockholders, provided that notice of the amendment is
sent to Participants at least 30 days prior to the effective date thereof.  The
Company also reserves the right to terminate the Reinvestment Plan for any
reason at any time by ten days' prior written notice of termination to all
Participants.  The Company may terminate a Participant's participation in the
Plan immediately if in the Company's judgment such Participant's participation
jeopardizes in any way the Company's status as a real estate investment trust.

                            SHARE REPURCHASE PROGRAM

     The Share Repurchase Program ("SRP") may, subject to certain restrictions,
provide eligible stockholders with limited, interim liquidity by enabling them
to sell Shares back to the Company at a price during the period of this Offering
equal to $8.40 per Share.  After the Offering, the price per Share pursuant to
the SRP will be set from time to time by the Board of Directors in its sole
discretion.  In such cases, the Board of Directors will consider the Company's
net asset value, recent comparable offerings and other factors which the Board
of Directors, in its sole discretion, deems relevant.  Repurchase prices are
expected to be available on the Company's Internet/World Wide Web site
(www.wellsref.com), and will be given by telephone upon request.

     Repurchases under the SRP, when done, will be made quarterly by the Company
in its sole discretion on a first-come, first-served basis, and will be limited
in the following ways:  (i) not more than $500,000 worth of the outstanding
Shares will be repurchased in any given year; and (ii) the funds available for
repurchase will be limited to available proceeds received by the Company from
the sale of Shares under the Reinvestment Plan.  The determination of available
funds from sales under the Reinvestment Plan and the decision to repurchase
Shares will be at the sole discretion of the Board.  In making this
determination, the Board will consider the need to use proceeds from the Share
sales under the Reinvestment Plan for investment in additional properties, or
for maintenance or repair of existing properties.  Such property-related uses
will have priority over the need to allocate funds to the SRP.  To be eligible
to offer Shares for purchase to the SRP, the stockholder must have beneficially
held the Shares for at least one year.

     The Company cannot guarantee that funds will be available for repurchase.
If no funds are available for the SRP at the time when repurchase is requested,
the stockholder could: (i) withdraw his request for repurchase; or (ii) ask that
the Company honor the request at such time, if any, when funds are available.
Such pending requests will be honored on a first-come, first-served basis.
There is no requirement that stockholders sell their Shares to the Company.  The
SRP is only intended to provide interim liquidity for stockholders until a
secondary market develops for the Shares.  No such market presently exists and
no assurance can be given that one will develop.  The SRP will exist during the
Offering period and will be terminated following the close of the Offering
period upon the Listing.

     Shares purchased by the Company under the SRP will be canceled, and will
have the status of authorized but unissued Shares.  Shares acquired by the
Company through the SRP will not be reissued unless they are first registered
with the Commission under the Act and under appropriate state securities laws or
otherwise issued in compliance with such laws.

                                       27

<PAGE>
 
                           PRIOR PERFORMANCE SUMMARY

     THE INFORMATION PRESENTED IN THIS SECTION REPRESENTS THE HISTORICAL
EXPERIENCE OF REAL ESTATE PROGRAMS MANAGED BY THE ADVISOR AND ITS AFFILIATES.
INVESTORS IN THE COMPANY SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE RETURNS, IF
ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN SUCH PRIOR REAL ESTATE
PROGRAMS.

     The Advisor serves as a general partner of a total of twelve real estate
limited partnerships, eleven of which have completed offerings and one of which
has commenced but not completed its public offering.  A twelfth partnership is
in registration with the Commission and thus has not commenced.  These limited
partnerships and the year in which their offerings were completed are as
follows:

     1.   Wells Real Estate Fund I (1986)
     2.   Wells Real Estate Fund II (1988)
     3.   Wells Real Estate Fund II-OW (1988)
     4.   Wells Real Estate Fund III, L.P. (1990)
     5.   Wells Real Estate Fund IV, L.P. (1992)
     6.   Wells Real Estate Fund V, L.P. (1993)
     7.   Wells Real Estate Fund VI, L.P. (1994)
     8.   Wells Real Estate Fund VII, L.P. (1995)
     9.   Wells Real Estate Fund VIII, L.P. (1996)
     10.  Wells Real Estate Fund IX, L.P. (1996)
     11.  Wells Real Estate Fund X, L.P. (1997)
     12.  Wells Real Estate Fund XI, L.P. (offering commenced 12-31-97)

     The tables included in Exhibit A attached hereto set forth information as
of the dates indicated regarding certain of these prior programs as to (i)
experience in raising and investing funds (Table I); (ii) compensation to
sponsor (Table II); and (iii) annual operating results of prior programs (Table
III).  No information is given as to results of completed programs or sales or
disposals of property because, to date, none of the prior programs have sold any
of their properties.

PRIOR WELLS PUBLIC PROGRAMS

     The Advisor and its Affiliates sponsored the Prior Wells Public Programs,
all of which were offered on an unspecified property or "blind pool" basis.  The
total amount of funds raised from investors in the offerings of the Prior Wells
Public Programs, as of August 31, 1997, was approximately $257,000,000, and the
total number of investors in such partnerships was approximately 24,000.

     The investment objectives of the Prior Wells Public Programs are
substantially identical to the investment objectives of the Company.  All of the
proceeds of the offerings of Wells Fund I, Wells Fund II, Wells Fund II-OW,
Wells Fund III, Wells Fund IV, Wells Fund V, Wells Fund VI and Wells Fund VII
available for investment in real properties have been invested in properties.
In addition, all of the proceeds of the offering of Wells Fund VIII available
for investment in real properties have either been invested or are committed for
investment in properties.  As of August 31, 1997, approximately 74% and 50% of
the proceeds of the offerings of Wells Fund IX and Wells Fund X, respectively,
available for investment in real properties had either been invested in
properties or were committed for investment in properties.  Wells Fund XI
commenced its offering in January 1998 and thus has no funds available for
investment as of the date of this Prospectus.  For the fiscal year ended
December 31, 1996, approximately two-thirds of the aggregate gross rental income
of ten of these eleven publicly offered partnerships was derived from tenants
which are U.S. corporations, each of which the Company believes has net worth of
at least $100,000,000 or whose lease obligations are guaranteed by another
corporation with a net worth of at least $100,000,000.

                                       28

<PAGE>
 
     The Prior Wells Public Programs have acquired a total of 31 properties in
the following U.S. regions:  24 in the Southeast, one in the Northeast, two in
Southcentral, one in Northcentral and two in the West.  Each Prior Wells Public
Program has used only proceeds from its respective offering to finance its
acquisitions of properties.

     The real properties in which the Prior Wells Public Programs have invested
have experienced the same economic problems as other real estate investments in
recent years, including without limitation, general over-building and an excess
supply in many markets, along with increased operating costs and a general
downturn in the real estate industry.  As a result, certain of these public
partnerships have experienced increases in expenses and decreases in net income.
These fluctuations were primarily due to tenant turnover, resulting in increased
vacancies and the requirement to expend funds for tenant refurbishments, and
increases in administrative and other operating expenses.  See the Prior
Performance Tables included as Exhibit A hereto.  Additionally, while overall
occupancy rates have not decreased significantly at the properties owned by the
Prior Wells Public Programs, some of these properties have experienced high
tenant turnover, and the partnerships owning these properties have generally
been unable to raise rental rates and have been required to make expenditures
for tenant improvements and to grant free rent and other concessions in order to
attract new tenants.  Specifically, certain of the Prior Wells Public Programs
suffered decreases in net income during the real estate recession of the late
1980s and early 1990s, which decreases were generally attributable to the
overall downturn in the economy and in the real estate market in particular.
Because of the cyclical nature of the real estate market, such decreases in net
income of the public partnerships could occur at any time in the future when
economic conditions decline.  None of these prior programs has liquidated or
sold any of its real properties to date and, accordingly, no assurance can be
made that prior programs will ultimately be successful in meeting their
investment objectives.  See "Risk Factors."

     The aggregate dollar amount of the acquisition and development costs of the
properties purchased by the Prior Wells Public Programs, as of August 31, 1997,
was approximately $196,419,519, of which $4,254,000 (or approximately 2.2%) had
not yet been expended on the development of certain of the projects which are
still under construction.  Of the aggregate amount, approximately 65.0% was or
will be spent on acquiring or developing office buildings, and approximately
35.0% was or will be spent on acquiring or developing shopping centers.  Of the
aggregate amount, approximately 4% was or will be spent on new properties, 38%
on existing or used properties and 58% on construction properties.  Following is
a table showing a breakdown of the aggregate amount of the acquisition and
development costs of the properties purchased by the eleven Prior Wells Public
Programs as of October 31, 1997:

Type of Property              New          Existing    Construction
- ----------------             -----         --------    ------------ 
Office Buildings             4%             26%           35%
Shopping Centers             ---            11%           24%

     Wells Fund I terminated its offering on September 5, 1986, and received
gross proceeds of $35,321,000 representing subscriptions from 4,895 limited
partners.  $24,679,000 of the gross proceeds were attributable to sales of Class
A Limited Partnership Units ("Class A Units"), and $10,642,000 of the gross
proceeds were attributable to sales of Class B Limited Partnership Units ("Class
B Units" and, collectively with the Class A Units, "Units").  Limited partners
in Wells Fund I have no right to change the status of their Units from Class A
to Class B or vice versa.  Wells Fund I owns interests in the following
properties: (i) a medical office building in Atlanta, Georgia; (ii) two
commercial office buildings in Atlanta, Georgia; (iii) a shopping center in
DeKalb County, Georgia; (iv) a shopping center in Knoxville, Tennessee; (v) a
shopping center in Cherokee County, Georgia; and (vi) a project consisting of
seven office buildings and a shopping center in Tucker, Georgia.  The prospectus
of Wells Fund I provided that the properties purchased by Wells Fund I would
typically be held for a period of eight to twelve years, but that the general
partners may exercise their discretion as to whether and when to sell the
properties owned by Wells Fund I and the partnership will have no obligation to
sell properties at any particular time.  Wells Fund I acquired its properties
between 1985 and 1987, and has not yet liquidated or sold any of its properties.

     Wells Fund II and Wells Fund II-OW terminated their offerings on September
7, 1988, and received aggregate gross proceeds of $36,870,250 representing
subscriptions from 4,659 limited partners.  $28,829,000 of the gross proceeds
were attributable to sales of Class A Units, and $8,041,250 of the gross
proceeds were attributable to sales of

                                       29

<PAGE>
 
Class B Units. Limited partners in Wells Fund II and Wells Fund II-OW have no
right to change the status of their Units from Class A to Class B or vice versa.
Wells Fund II and Wells Fund II-OW own all of their properties through a joint
venture, which owns interests in the following properties: (i) a shopping center
in Cherokee County, Georgia; (ii) a project consisting of seven office buildings
and a shopping center in Tucker, Georgia; (iii) a two story office building in
Charlotte, North Carolina; (iv) a four story office building in Houston, Texas;
(v) a restaurant in Roswell, Georgia; and (vi) a combined retail and office
development in Roswell, Georgia.

     Wells Fund III terminated its offering on October 23, 1990, and received
gross proceeds of $22,206,310 representing subscriptions from 2,700 limited
partners.  $19,661,770 of the gross proceeds were attributable to sales of Class
A Units, and $2,544,540 of the gross proceeds were attributable to sales of
Class B Units.  Limited partners in Wells Fund III have no right to change the
status of their Units from Class A to Class B or vice versa.  Wells Fund III
owns interests in the following properties: (i) a four story office building in
Houston, Texas; (ii) a restaurant in Roswell, Georgia; (iii) a combined retail
and office development in Roswell, Georgia; (iv) a two story office building in
Greenville, North Carolina; (v) a shopping center in Stockbridge, Georgia; and
(vi) a two story office building in Richmond, Virginia.

     Wells Fund IV terminated its offering on February 29, 1992, and received
gross proceeds of $13,614,655 representing subscriptions from 1,286 limited
partners.  $13,229,150 of the gross proceeds were attributable to sales of Class
A Units, and $385,505 of the gross proceeds were attributable to sales of Class
B Units.  Limited partners in Wells Fund IV have no right to change the status
of their Units from Class A to Class B or vice versa.  Wells Fund IV owns
interests in the following properties: (i) a shopping center in Stockbridge,
Georgia; (ii) a four story office building in Jacksonville, Florida; (iii) a two
story office building in Richmond, Virginia; and (iv) two two-story office
buildings in Stockbridge, Georgia.


     Wells Fund V terminated its offering on March 3, 1993, and received gross
proceeds of $17,006,020 representing subscriptions from 1,667 limited partners.
$15,209,666 of the gross proceeds were attributable to sales of Class A Units,
and $1,796,354 of the gross proceeds were attributable to sales of Class B
Units.  Limited partners in Wells Fund V who purchased Class B Units are
entitled to change the status of their Units to Class A, but limited partners
who purchased Class A Units are not entitled to change the status of their Units
to Class B.  After taking into effect conversion elections made by limited
partners subsequent to their subscription for Units, as of October 31, 1997,
$15,514,160 of Units of Wells Fund V were treated as Class A Units, and
$1,491,860 of Units were treated as Class B Units.  Wells Fund V owns interests
in the following properties: (i) a four story office building in Jacksonville,
Florida; (ii) two two-story office buildings in Stockbridge, Georgia; (iii) a
four story office building in Hartford, Connecticut; (iv) two restaurants in
Stockbridge, Georgia; and (v) a three story office building in Appleton,
Wisconsin.   Since its inception in 1992, Wells Fund V reported a net loss of
$18,089 in 1992, and net income of $354,999, $561,721, $689,639 and $505,650 in
years 1993 through 1996, respectively.  In such years, Wells Fund V distributed
a total of $151,336, $643,334, $969,011 and $1,007,107, respectively, to
investors (excluding returns of capital and distributions from prior year
operations).  See "Exhibit A--Prior Performance Tables" attached to this
Prospectus for further detail on the performance of Wells Fund V.


     Wells Fund VI terminated its offering on April 4, 1994, and received gross
proceeds of $25,000,000 representing subscriptions from 1,793 limited partners.
$19,332,176 of the gross proceeds were attributable to sales of Class A Units,
and $5,667,824 of the gross proceeds were attributable to sales of Class B
Units.  Limited partners in Wells Fund VI are entitled to change the status of
their Units from Class A to Class B and vice versa.  After taking into effect
conversion elections made by limited partners subsequent to their subscription
for Units, as of October 31, 1997, $21,538,950 of Units of Wells Fund VI were
treated as Class A Units, and $3,461,050 of Units were treated as Class B Units.
Wells Fund VI owns interests in the following properties: (i) a four story
office building in Hartford, Connecticut; (ii) two restaurants in Stockbridge,
Georgia; (iii) another restaurant and a retail building in Stockbridge, Georgia;
(iv) a shopping center in Stockbridge, Georgia; (v) a three story office
building in Appleton, Wisconsin; (vi) a shopping center in Cherokee County,
Georgia; (vii) a combined retail and office development in Roswell, Georgia;
(viii) a four story office building in Jacksonville, Florida; and (ix) a
shopping center in Clemmons, North Carolina.  Since its inception in 1993, Wells
Fund VI reported net income of $31,428, $700,896, $901,828 and $589,053 in years
1993 through 1996, respectively.  In such years, Wells Fund VI distributed a
total of $0, $245,800, $1,044,940 and $1,042,175, respectively, to investors
(excluding returns of capital and distributions from prior year operations).
See "Exhibit A--Prior Performance Tables" attached hereto for further detail on
the performance of Wells Fund VI.

                                       30

<PAGE>
 
     Wells Fund VII terminated its offering on January 5, 1995, and received
gross proceeds of $24,180,174 representing subscriptions from 1,910 limited
partners.  $16,788,095 of the gross proceeds were attributable to sales of Class
A Units, and $7,392,079 of the gross proceeds were attributable to sales of
Class B Units.  Limited partners in Wells Fund VII are entitled to change the
status of their Units from Class A to Class B and vice versa.  After taking into
effect conversion elections made by limited partners subsequent to their
subscriptions for Units, as of October 31, 1997, $18,656,280 of Units in Wells
Fund VII were treated as Class A Units, and $5,523,890 of Units were treated as
Class B Units.  Wells Fund VII owns interests in the following properties: (i) a
three story office building in Appleton, Wisconsin; (ii) a restaurant and a
retail building in Stockbridge, Georgia; (iii) a shopping center in Stockbridge,
Georgia; (iv) a shopping center in Cherokee County, Georgia; (v) a combined
retail and office development in Roswell, Georgia; (vi) a two story office
building in Alachua County, Florida near Gainesville; (vii) a four story office
building in Jacksonville, Florida; (viii) a shopping center in Clemmons, North
Carolina; and (ix) a retail development in Clayton County, Georgia.  Since its
inception in 1994, Wells Fund VII has reported net income of $203,263, $804,043
and $452,776 in years 1994 through 1996, respectively.  In such years, Wells
Fund VII distributed a total of $52,195, $856,032 and $781,511, respectively, to
investors (excluding returns of capital and distributions from prior year
operations).  See "Exhibit A--Prior Performance Tables" attached to this
Prospectus for further detail on the performance of Wells Fund VII.


     Wells Fund VIII terminated its offering on January 4, 1996, and received
gross proceeds of $32,042,689 representing subscriptions from 2,241 limited
partners.  $26,135,339 of the gross proceeds were attributable to sales of Class
A Status Units, and $5,907,350 were attributable to sales of Class B Status
Units.  Limited partners in Wells Fund VIII are entitled to change the status of
their Units from Class A to Class B and vice versa.  After taking into effect
conversion elections made by limited partners subsequent to their subscriptions
for Units, as of October 31, 1997, $26,353,280 of Units in Wells Fund VIII were
treated as Class A Status Units, and $5,679,410 of Units were treated as Class B
Status Units.  Wells Fund VIII owns interests in the following properties: (i) a
two story office building in Alachua County, Florida near Gainesville; (ii) a
four story office building in Jacksonville, Florida; (iii) a shopping center in
Clemmons, North Carolina; (iv) a retail development in Clayton County, Georgia;
(v) a four story office building in Madison, Wisconsin; and (vi) a one-story
office building in Farmers Branch, Texas; (vii) a two story office building in
Orange County, California; and (viii) a two story office building in Boulder
County, Colorado.  Since its inception in 1995, Wells Fund VIII has reported net
income of $273,914 and $936,590 in years 1995 and 1996, respectively.  In such
years, Wells Fund VIII distributed a total of $0 and $903,252, respectively
(excluding returns of capital and distributions from prior year operations).
See "Exhibit A--Prior Performance Tables" attached to this Prospectus for
further detail on the performance of Wells Fund VIII.


     Wells Fund IX terminated its offering on December 30, 1996, and received
gross proceeds of $35,000,000 representing subscriptions from 2,095 limited
partners.  $29,359,270 of the gross proceeds were attributable to sales of Class
A Units and $5,640,730 were attributable to sales of Class B Units.  Wells Fund
IX owns interests in (i) a four story office building in Madison, Wisconsin;
(ii) a one story office building in Farmers Branch, Texas; (iii) a two story
office building in Orange County, California; (iv) a two story office building
in Boulder County, Colorado; and (v) an interest in a joint venture (in which
Wells Fund X is a partner), which owns a tract of land in Knox County, Tennessee
in the Knoxville metropolitan area, upon which a three story office building is
being developed (the "Knoxville Joint Venture").  Wells Fund IX, which commenced
operations in 1996, reported net income of $298,756 and distributed a total of
$149,425 to investors in that year.  See "Exhibit A--Prior Performance Tables"
attached to this Prospectus for further detail on the performance of Wells Fund
IX.


     Wells Fund X commenced a public offering of up to $35,000,000 of limited
partnership units on December 31, 1996, and terminated its offering on December
30, 1997.  As of November 30, 1997, Wells Fund X had received gross proceeds of
$23,058,019 representing subscriptions from 1,632 limited partners.  $18,589,699
of the gross proceeds were attributable to sales of Class A Status Units, and
$4,468,320 were attributable to sales of Class B Status Units.  Wells Fund X
owns an interest in the Knoxville Joint Venture.

     THE INFORMATION SET FORTH ABOVE SHOULD NOT BE CONSIDERED INDICATIVE OF
RESULTS TO BE EXPECTED FROM THE COMPANY.

     The foregoing properties in which the Prior Wells Public Programs have
invested have all been acquired and developed on an all cash basis.

                                       31

<PAGE>
 
     The Advisor is the general partner of Wells Partners L.P., which is a
general partner of the Operating Partnership, which is a general partner of
Wells Fund IV, Wells Fund V, Wells Fund VI, Wells Fund VII, Wells Fund VIII,
Wells Fund IX, Wells Fund X and Wells Fund XI.  The Advisor is a general partner
of Wells Fund I, Wells Fund II, Wells Fund II-OW and Wells Fund III.  Leo F.
Wells, III, the President and a Director of the Company, is a general partner in
each of the Prior Wells Public Programs and the sole shareholder and Director of
Wells Real Estate Funds, Inc., the parent corporation of the Advisor.

     Potential investors are encouraged to examine the Prior Performance Tables
attached as Exhibit A hereto for more detailed information regarding the prior
experience of the Advisor.  In addition, upon request, prospective investors may
obtain from the Advisor without charge copies of offering materials and any
reports prepared in connection with any of the Prior Wells Public Programs,
including a copy of the most recent Annual Report on Form 10-K filed with the
Commission.  For a reasonable fee, the Company will also furnish upon request
copies of the exhibits to any such Form 10-K.  Any such request should be
directed to the Advisor.  Additionally, Table VI contained in Part II of the
Registration Statement (which is not part of this Prospectus) gives certain
additional information relating to properties acquired by the Prior Wells Public
Programs.  The Company will furnish, without charge, copies of such table upon
request.

                                   MANAGEMENT

GENERAL

     The Company will operate under the direction of the Board of Directors, the
members of which are accountable to the Company as fiduciaries.  As required by
applicable regulations, a majority of the Independent Directors and a majority
of the Directors have reviewed and ratified the Articles of Incorporation and
have adopted the Bylaws.

     The Company currently has five Directors; it may have no fewer than three
Directors and no more than fifteen.  Directors will be elected annually, and
each Director will hold office until the next annual meeting of stockholders or
until his successor has been duly elected and qualified.  There is no limit on
the number of times that a Director may be elected to office.  Although the
number of Directors may be increased or decreased as discussed above, a decrease
shall not have the effect of shortening the term of any incumbent Director.

     Any Director may resign at any time and may be removed with or without
cause by the stockholders upon the affirmative vote of at least a majority of
all the Shares outstanding and entitled to vote at a meeting called for this
purpose.  The notice of such meeting shall indicate that the purpose, or one of
the purposes, of such meeting is to determine if a Director shall be removed.

FIDUCIARY RESPONSIBILITY OF THE BOARD OF DIRECTORS

     The Board of Directors will be responsible for the management and control
of the affairs of the Company; however, the Board of Directors will retain the
Advisor to manage the Company's day-to-day affairs and the acquisition and
disposition of investments, subject to the supervision of the Board of
Directors.

     The Directors are not required to devote all of their time to the Company
and are only required to devote such of their time to the affairs of the Company
as their duties require.  The Board of Directors will meet quarterly in person
or by telephone, or more frequently if necessary.  It is not expected that the
Directors will be required to devote a substantial portion of their time to
discharge their duties as directors.  Consequently, in the exercise of their
fiduciary responsibilities, the Directors will rely heavily on the Advisor.  In
this regard, the Advisor, in addition to the Directors, will have a fiduciary
duty to the Company.

     The Directors will monitor the administrative procedures, investment
operations, and performance of the Company and the Advisor to assure that such
policies are in the best interest of the stockholders and are fulfilled.  Until

                                       32

<PAGE>
 
modified by the Directors, the Company will follow the policies on investments
set forth in this Prospectus.  See "Investment Objectives and Policies."

     The Independent Directors are responsible for reviewing the fees and
expenses of the Company at least annually or with sufficient frequency to
determine that the total fees and expenses of the Company are reasonable in
light of the Company's investment performance, Net Assets, Net Income, and the
fees and expenses of other comparable unaffiliated real estate investment
trusts.  This determination shall be reflected in the minutes of the meetings of
the Board of Directors.  For purposes of this determination, Net Assets are the
Company's total assets (other than intangibles), calculated at cost before
deducting depreciation or other non-cash reserves, less total liabilities, and
computed at least quarterly on a basis consistently applied.  Such determination
will be reflected in the minutes of the meetings of the Board of Directors.  In
addition, a majority of the Independent Directors and a majority of Directors
not otherwise interested in the transaction must approve each transaction with
the Advisor or its Affiliates.  The Board of Directors also will be responsible
for reviewing and evaluating the performance of the Advisor before entering into
or renewing an advisory agreement.  The Independent Directors shall determine
from time to time and at least annually that compensation to be paid to the
Advisor is reasonable in relation to the nature and quality of services to be
performed and shall supervise the performance of the Advisor and the
compensation paid to it by the Company to determine that the provisions of the
Advisory Agreement are being carried out.  Specifically, the Independent
Directors will consider factors such as the capital, Net Assets and Net Income
of the Company, amount of the fee paid to the Advisor in relation to the size,
composition and performance of the Company's investments, the success of the
Advisor in generating appropriate investment opportunities, rates charged to
other comparable REITs and other investors by advisors performing similar
services, additional revenues realized by the Advisor and its Affiliates through
their relationship with the Company, whether paid by the Company or by others
with whom the Company does business, the quality and extent of service and
advice furnished by the Advisor, the performance of the investment portfolio of
the Company and the quality of the portfolio of the Company relative to the
investments generated by the Advisor for its own account.  Such review and
evaluation will be reflected in the minutes of the meetings of the Board of
Directors.  The Board of Directors shall determine that any successor Advisor
possesses sufficient qualifications to (i) perform the advisory function for the
Company and (ii) justify the compensation provided for in its contract with the
Company.

     The liability of the officers and Directors while serving in such capacity
is limited in accordance with the Articles of Incorporation, Bylaws and
applicable law.  See "Description of Capital Stock -- Limitation of Liability
and Indemnification."

DIRECTORS AND EXECUTIVE OFFICERS

     The Directors and executive officers of the Company are listed below:

        Name                   Age     Positions
        ----                   ---     ---------
        Leo F. Wells, III      53      President and Director
        Brian M. Conlon        39      Executive Vice President, Treasurer,
                                       Secretary and Director
        John L. Bell           57      Independent Director
        Richard W. Carpenter   60      Independent Director
        Walter W. Sessoms      63      Independent Director

     LEO F. WELLS, III is the President and a Director of the Company and the
President and sole Director of the Advisor.  He is also the sole shareholder and
Director of Wells Real Estate Funds, Inc., the parent corporation of the
Advisor.  In addition, he is President of Wells & Associates, Inc., a real
estate brokerage and investment company formed in 1976 and incorporated in 1978,
for which he serves as principal broker.  He is also the sole Director and
President of Wells Management Company, Inc., a property management company he
founded in 1983; the Dealer Manager, a registered securities broker-dealer he
formed in 1984; and Wells Advisors, Inc., a company he organized in 1991 to act
as a non-bank custodian for IRAs.  Mr. Wells was a real estate salesman and
property manager from 1970 to 1973 for Roy D. Warren & Company, an Atlanta real
estate company, and he was associated from 1973 to 1976 with

                                       33

<PAGE>
 
Sax Gaskin Real Estate Company, during which time he became a Life Member of the
Atlanta Board of Realtors Million Dollar Club. From 1980 to February 1985, he
served as Vice President of Hill-Johnson, Inc., a Georgia corporation engaged in
the construction business. Mr. Wells holds a Bachelor of Business Administration
degree in Economics from the University of Georgia. Mr. Wells is a member of the
International Association for Financial Planning and a registered NASD
principal.

     Mr. Wells has over 25 years of experience in real estate sales, management
and brokerage services.  He is currently a co-general partner in a total of 26
real estate limited partnerships formed for the purpose of acquiring, developing
and operating office buildings and other commercial properties, a majority of
which are located in suburban areas of metropolitan Atlanta, Georgia.  As of
March 31, 1997, these 23 real estate limited partnerships represented
investments totaling $255,433,723 from 23,741 investors.  See "Prior Performance
Summary."

     BRIAN M. CONLON is the Executive Vice President and a Director of the
Company.  He also serves in the same capacity for the Advisor.  Mr. Conlon
joined the Advisor in 1985 as a Regional Vice President, and served as Vice
President and National Marketing Director from 1991 until April 1996 when he
assumed his current position.  Previously, Mr. Conlon was Director of Business
Development for Tishman Midwest Management & Leasing Services Corp. where he was
responsible for marketing the firm's property management and leasing services to
institutions.  Mr. Conlon also spent two years as an Investment Property
Specialist with Carter & Associates where he specialized in acquisitions and
dispositions of office and retail properties for institutional clients.  Mr.
Conlon received a Bachelor of Business Administration degree from Georgia State
University and a Master of Business Administration degree from the University of
Dallas.  Mr. Conlon is a member of the International Association for Financial
Planning (IAFP), a general securities principal and a Georgia real estate
broker.  Mr. Conlon also holds the certified commercial investment member (CCIM)
designation of the Commercial Investment Real Estate Institute and the certified
financial planner (CFP) designation of the Certified Financial Planner Board of
Standards, Inc.

     JOHN L. BELL.  From February 1971 to February 1996 Mr. Bell was the owner
and Chairman of Bell-Mann, Inc., the largest commercial flooring contractor in
the Southeast ("Bell-Mann").  Mr. Bell also served on the board of directors of
Realty South Investors, a REIT on the American Stock Exchange and was the
founder and served as a director of both the Chattahoochee Bank and the Buckhead
Bank.  In 1997 Mr. Bell initiated and implemented Shaw Industries' Dealer
Acquisition Plan which included the acquisition of Bell-Mann.

     Mr. Bell currently serves on the advisory boards of Windsor Capital,
Mountain Top Boys Home and the Eagle Ranch Boys Home.  Mr. Bell is also
extensively involved in buying and selling real estate individually and in
partnership with others.  Mr. Bell graduated from Florida State University
majoring in Accounting and Marketing.

     RICHARD W. CARPENTER served as General Vice President, Real Estate Finance,
of the Citizens and Southern National Bank from 1975 to 1979, during which time
his duties included the supervision and establishment of the co-mingled United
Kingdom Pension Fund, U.K.-American Properties, Inc. established for the purpose
of investment primarily in United States commercial real estate.

     Mr. Carpenter is presently President and director of Realmark Holdings
Corp., a residential and commercial developer, and has served in that position
since October 1983.  He is also President and director of Leisure Technology,
Inc., a retirement community developer, a position which he has held since March
1993, Managing Partner of Carpenter Properties, L.P., a real estate limited
partnership and President and director of the oil refining companies Wyatt
Energy, Inc. and Commonwealth Oil Refining Company, Inc., positions which he has
held since 1995 and 1984 respectively.

     Mr. Carpenter is a director of both Tara Corp., a steel manufacturing
company, and Environmental Compliance Corp., an environmental firm.  Mr.
Carpenter also serves as Vice Chairman and director of both First Liberty
Financial Corp. and Liberty Savings Bank, F.S.B.  He has been a member of The
National Association of Real Estate Investment Trusts and served as President
and Chairman of the Board of Southmark Properties, an Atlanta based real estate
investment trust investing in commercial properties, until 1981.  Mr. Carpenter
is a past Chairman of the American Bankers Association Housing and Real Estate
Finance Division Executive Committee.  Mr. Carpenter holds a Bachelor of Science
degree from Florida State University, where he was named the outstanding alumni
of the School of Business in 1973.

                                       34

<PAGE>
 
     WALTER W. SESSOMS was employed by BellSouth Telecommunications, Inc.
("BellSouth") from 1971 until his retirement in June 1997.  While at BellSouth
Mr. Sessoms served in a number of key positions including Vice President-
Residence for the State of Georgia from June 1979 to July 1981, Vice President-
Transitional Planning Officer from July 1981 to February 1982, Vice President-
Georgia from February 1982 until June 1989, Senior Vice President-Regulatory and
External Affairs from June 1989 until November 1991 and Group President-Services
from December 1991 until his retirement on June 30, 1997.

     Mr. Sessoms currently serves as a director of the Georgia Chamber of
Commerce for which he is a past Chairman of the Board, the Atlanta Civic
Enterprises and the Salvation Army's Board of Visitors of the Southeast Region.
Mr. Sessoms is also a past executive advisory council member for the University
of Georgia College of Business Administration and past member of the executive
committee of the Atlanta Chamber of Commerce.  Mr. Sessoms is a graduate of
Wofford College where he earned a degree in economics and business
administration and is currently a practitioner/lecturer at the University of
Georgia.

COMMITTEES

     The Audit Committee will consist of a majority of Independent Directors.
If the Listing occurs, the Audit Committee will consist entirely of Independent
Directors.  The Audit Committee will make recommendations concerning the
engagement of independent public accountants, review with the independent public
accountants the plans and results of the audit engagement, approve professional
services provided by the independent public accountants, review the independence
of the independent public accountants, consider the range of audit and non-audit
fees and review the adequacy of the Company's internal accounting controls.

     In the event that the Listing occurs, the Board of Directors will establish
a Compensation Committee, which will oversee the compensation of the Company's
executive officers and which will consist of three Independent Directors.

     The Company may from time to time form other committees as circumstances
warrant.  Such committees will have authority and responsibility as delegated by
the Board of Directors.  At least a majority of the members of each committee of
the Board of Directors will be Independent Directors.

COMPENSATION OF DIRECTORS AND OFFICERS

     The Board of Directors shall determine the amount of compensation to be
received by each non-employee director for serving on the Board of Directors.
Such compensation, including fees for attending meetings, will not exceed $7,500
annually.  The Company will not pay any compensation to officers and directors
of the Company who also serve as officers and directors of the Advisor.

                                       35

<PAGE>
 
                     THE ADVISOR AND THE ADVISORY AGREEMENT

THE ADVISOR

     The Advisor is a Georgia corporation organized in 1984.  The Company has
entered into the Advisory Agreement effective as of the date hereof.  The
Advisor has a fiduciary responsibility to the Company and its stockholders.

     The directors and officers of the Advisor are as follows:

        Leo F. Wells, III             President and sole Director
        Brian M. Conlon               Executive Vice President
        Louis A. Trahant              Vice President of Sales and Operations
        Kim R. Comer                  National Vice President of Marketing
        Edna B. King                  Vice President of Investor Services
        Linda L. Carson               Vice President of Accounting

     The backgrounds of Messrs. Wells and Conlon are described above under
"Management--Directors and Executive Officers."

     LOUIS A. TRAHANT (age 51) is Vice President of Sales and Operations for the
Advisor.  He is responsible for the internal sales support provided to regional
vice presidents and to registered representatives of broker-dealers
participating in other public offerings by the Wells Prior Public Program.  Mr.
Trahant is also responsible for statistical analysis of sales-related
activities, development of office and communication systems, and hiring of
administrative personnel.  Mr. Trahant joined the Advisor in 1993 as Vice
President for Marketing of the Southern Region and assumed his current position
in 1995.  Prior to joining the Advisor, Mr. Trahant had extensive sales and
marketing experience in the commercial lighting industry.  He is a graduate of
Southeastern Louisiana University, a member of the International Association for
Financial Planning (IAFP) and the American Management Association, and holds a
Series 22 license.

     KIM R. COMER (age 43) rejoined the Advisor as National Vice President of
Marketing in April 1997, after working for the Company in similar capacities
from January 1992 through September 1995.  He is responsible for all investor,
financial advisor, and broker-dealer communications and broker-dealer relations.
In prior positions with the Advisor, Mr. Comer served as Vice President of
Marketing for the southeast and northeast regions at the Advisor's' home office.
He has ten years of experience in the securities industry and is a licensed
registered representative and financial principal with the NASD.  Additionally,
he brings strong financial experience to his marketing position with the
Advisor, including experience as controller and Chief Financial Officer of two
regional broker-dealers.  In 1976, Mr. Comer graduated with honors from Georgia
State University with a BBA degree in accounting.

     EDNA B. KING (age 60) is the Vice President of Investor Services for the
Advisor.  She is responsible for processing new investments, sales reporting,
and investor communications.  Prior to joining the Advisor in 1985, Ms. King
served as the Southeast Service Coordinator for Beckman Instruments and as
office manager for a regional office of Commerce Clearing House.  Ms. King holds
an Associate Degree in Business Administration from DeKalb Community College in
Atlanta, Georgia, and has completed various courses at the University of North
Carolina at Wilmington.

     LINDA L. CARSON (age 54) is Vice President of Accounting for the Advisor.
She is responsible for fund, property, and corporate accounting, SEC reporting
and coordination of the audit with its independent auditors.  Ms. Carson joined
The Advisor in 1989 as Staff Accountant, became Controller in 1991, and assumed
her current position in

                                       36

<PAGE>
 
1996. Prior to joining the Advisor, Ms. Carson was an accountant with an
electrical distributor. She is a graduate of City College of New York and has
completed additional accounting courses at Kennesaw State. She is a member of
the National Society of Accountants.

     The Advisor employs personnel, in addition to the directors and executive
officers listed above, who have extensive experience in selecting and managing
commercial properties similar to the properties sought to be acquired by the
Company.

     The Advisor currently owns 20,000 OP Units, for which it contributed
$200,000 to the capital of the Operating Partnership.  The Advisor may not sell
these OP Units while the Advisory Agreement is in effect, although the Advisor
may transfer such OP Units to Affiliates.  Neither the Advisor, a Director, nor
any Affiliate may vote or consent on matters submitted to the stockholders
regarding removal of the Advisor, or any transaction between the Company and the
Advisor, Directors, or an Affiliate.  In determining the requisite percentage in
interest of Shares necessary to approve a matter on which the Advisor,
Directors, and any Affiliate may not vote or consent, any Shares owned by any of
them will not be included.

THE ADVISORY AGREEMENT

     Under the terms of the Advisory Agreement, the Advisor (acting in the
capacity of Sponsor) has responsibility for the day-to-day operations of the
Company, administers the Company's bookkeeping and accounting functions, serves
as the Company's consultant in connection with policy decisions to be made by
the Board of Directors, manages the Company's properties and renders other
services as the Board of Directors deems appropriate.  The Advisor is subject to
the supervision of the Company's Board of Directors and has only such functions
as are delegated to it.

     The Company will reimburse the Advisor for all of the costs it incurs in
connection with the services it provides to the Company, including, but not
limited to:  (i) Organizational and Offering Expenses, which are defined to
include expenses attributable to preparing the documents relating to this
Offering, the formation and organization of the Company, qualification of the
Shares for sale in the states, escrow arrangements, filing fees and expenses
attributable to the sale of the Shares, (ii) Selling Commissions, advertising
expenses, expense reimbursements, and legal and accounting fees, (iii) the
actual cost of goods and materials used by the Company and obtained from
entities not affiliated with the Advisor, including brokerage fees paid in
connection with the purchase and sale of securities, (iv) administrative
services (including personnel costs; provided, however that no reimbursement
shall be made for costs of personnel to the extent that such personnel perform
services in transactions for which the Advisor receives a separate fee), and (v)
Acquisition Expenses, which are defined to include expenses related to the
selection and acquisition of properties, at the lesser of actual cost or 90% of
the competitive rate charged by unaffiliated persons providing similar goods and
services in the same geographic location.

     The Company shall not reimburse the Advisor at the end of any fiscal
quarter for operating expenses that, in the four consecutive fiscal quarters
then ended (the "Expense Year") exceed (the "Excess Amount") the greater of 2%
of Average Invested Assets or 25% of Net Income (the "2%/25% Guidelines") for
such year.  If the Advisor receives an incentive fee, Net Income, for purposes
of calculating operating expenses, shall exclude any gain from the sale of the
Company's assets.  Any Excess Amount paid to the Advisor during a fiscal quarter
shall be repaid to the Company within sixty (60) days after the end of the
fiscal year.

     The Company will not reimburse the Advisor or its Affiliates for services
for which the Advisor or its Affiliates are entitled to compensation in the form
of a separate fee.

     Pursuant to the Advisory Agreement, the Advisor is entitled to receive
certain fees and reimbursements, as listed in "Management Compensation."  The
Subordinated Incentive Fee, which is payable to the Advisor under certain
circumstances if Listing occurs, may be paid, at the option of the Company, in
cash, in Shares, by delivery of a promissory note payable to the Advisor, or by
any combination thereof.  In the event the Subordinated Incentive Fee is paid to
the Advisor following Listing, no other performance fee will be paid to the
Advisor; and in the event the Subordinated Participation Fee is paid to the
Advisor, no Net Sales Proceeds will be paid to the Advisor.  The Acquisition
Fees payable to the Advisor in connection with the selection or acquisition of
any property shall be reduced 

                                       37

<PAGE>
 
to the extent that, and if necessary to limit, the total compensation paid to
all persons involved in the acquisition of such property to the amount
customarily charged in arm's-length transactions by other persons or entities
rendering similar services as an ongoing public activity in the same
geographical location and for comparable types of properties, and to the extent
that other acquisition fees, finder's fees, real estate commissions, or other
similar fees or commissions are paid by any person in connection with the
transaction.

     If the Advisor or an Affiliate performs services that are outside of the
scope of the Advisory Agreement, compensation will be at such rates and in such
amounts as are agreed to by the Advisor and the Independent Directors of the
Company.

     Further, if Listing occurs, the Company automatically will become a
perpetual life entity.  At such time, the Company and the Advisor will negotiate
in good faith a fee structure appropriate for an entity with a perpetual life,
subject to approval by a majority of the Independent Directors.  In negotiating
a new fee structure, the Independent Directors shall consider all of the factors
they deem relevant.  These are expected to include, but will not necessarily be
limited to:  (i) the amount of the advisory fee in relation to the asset value,
composition, and profitability of the Company's portfolio; (ii) the success of
the Advisor in generating opportunities that meet the investment objectives of
the Company; (iii) the rates charged to other REITs and to investors other than
REITs by advisors that perform the same or similar services; (iv) additional
revenues realized by the Advisor and its Affiliates through their relationship
with the Company, including loan administration, underwriting or broker
commissions, servicing, engineering, inspection and other fees, whether paid by
the Company or by others with whom the Company does business; (v) the quality
and extent of service and advice furnished by the Advisor; (vi) the performance
of the investment portfolio of the Company, including income, conservation or
appreciation of capital, and number and frequency of problem investments; and
(vii) the quality of the portfolio of the Company in relationship to the
investments generated by the Advisor for its own account.  The Board of
Directors, including a majority of the Independent Directors, may not approve a
new fee structure that, in its judgment, is more favorable to the Advisor than
the current fee structure.

       The Company also shall pay the Advisor a deferred, subordinated real
estate disposition fee upon sale of one or more Properties, in an amount equal
to the lesser of (i) one-half (1/2) of a Competitive Real Estate Brokerage
Commission, or (ii) three percent (3%) of the sales price of such Property or
Properties.  In addition, the amount paid when added to the sums paid to
unaffiliated parties in such a capacity shall not exceed the lesser of the
Competitive Real Estate Brokerage Commission or an amount equal to 6% of the
sales price of such Property or Properties.  Payment of such fee shall be made
only if the Advisor provides a substantial amount of services in connection with
the Sale of a Property or Properties and shall be subordinated to receipt by the
stockholders of distributions equal to the sum of (i) their aggregate Common
Return and (ii) their aggregate invested capital.  If, at the time of a sale of
one or more Properties, payment of such disposition fee is deferred because the
subordination conditions have not been satisfied, then the disposition fee shall
be paid at such later time as the subordination conditions are satisfied.  Upon
Listing, if the Advisor has accrued but not been paid such real estate
disposition fee, then for purposes of determining whether the subordination
conditions have been satisfied, Stockholders will be deemed to have received a
Distribution in the amount equal to the product of the total number of Shares
outstanding and the average closing price of the Shares over a period, beginning
180 days after Listing, of 30 days during which the Shares are traded.

     The Advisory Agreement, which was entered into by the Company with the
unanimous approval of the Board of Directors, including the Independent
Directors, expires one year after the date hereof on January 30, 1999, subject
to successive one-year renewals upon mutual consent of the parties.  In the
event that a new Advisor is retained, the previous Advisor has agreed to
cooperate with the Company and the Directors in effecting an orderly transition
of the advisory functions.  The Board of Directors (including a majority of the
Independent Directors) shall approve a successor Advisor only upon a
determination that such successor Advisor possesses sufficient qualifications to
perform the advisory functions for the Company and that the compensation to be
received by the new Advisor pursuant to the new Advisory Agreement is justified.

     The Advisory Agreement may be terminated without cause or penalty by either
party, or by the mutual consent of the parties (by a majority of the Independent
Directors of the Company or a majority of the directors of the Advisor, as the
case may be), upon 60 days' prior written notice.  The Advisor shall be entitled
to receive all accrued but unpaid compensation and expense reimbursements in
cash within 30 days of the effective date of termination of the Advisory

                                       38

<PAGE>
 
Agreement.  All other amounts payable to the Advisor in the event of a
termination shall be evidenced by a promissory note and shall be payable from
time to time.

     The Advisor has the right to assign the Advisory Agreement to an Affiliate
subject to approval by the Independent Directors of the Company.  The Company
has the right to assign the Advisory Agreement to any successor to all of its
assets, rights, and obligations.

     The Advisor will not be liable to the Company or its stockholders or
others, except by reason of acts constituting bad faith, fraud, misconduct, or
negligence, and will not be responsible for any action of the Board of Directors
in following or declining to follow any advice or recommendation given by it.
The Company has agreed to indemnify the Advisor with respect to acts or
omissions of the Advisor undertaken in good faith, in accordance with the
foregoing standards and pursuant to the authority set forth in the Advisory
Agreement.  Any indemnification made to the Advisor may be made only out of the
net assets of the Company and not from stockholders.

                                WELLS MANAGEMENT

     It is expected that substantially all of the Company's properties will be
managed by the Management Company. The officers of the Management Company are as
follows:

        Leo F. Wells, III     President
        Brian M. Conlon       Executive Vice President
        Michael C. Berndt     Vice President and Chief Financial Officer
        M. Scott Meadows      Vice President - Property Management
        Michael L. Watson     Vice President - Construction
        Robert H. Stroud      Vice President - Leasing

     The backgrounds of Messrs. Wells and Conlon are described above under
"Management--Directors and Executive Officers."

     MICHAEL C. BERNDT (50), Vice President and Chief Financial Officer of the
Management Company, joined in 1996.  He is responsible for asset management of
the Prior Wells Public Program portfolios.  Mr. Berndt is an attorney and a
Certified Public Accountant.  From 1990 to 1995, Mr. Berndt was with the
Investigations Unit of the Resolution Trust Corporation.  From 1985 to 1989, Mr.
Berndt was an independent real estate syndicator.  From 1982 to 1985, he was
President of Phoenix Financial Corporation, an NASD broker-dealer.  Previously,
he served as an accountant, attorney and securities analyst for various firms.
Mr. Berndt holds a B.S. in Accounting from Samford University, a J.D. from
Cumberland Law School and an L.L.M. in Taxation from New York University School
of Law.

     M. SCOTT MEADOWS (33) is Vice President of Property Management for the
Management Company.  He is responsible for overseeing a 1.8 million square foot
portfolio of office and retail properties.  Prior to joining the Management
Company, Mr. Meadows served as Senior Property Manager for The Griffin Company,
a full-service commercial real estate firm in Atlanta, where he was responsible
for managing a half million square foot office and retail portfolio.  He also
served several years as Property Management for Sea Pines Plantation Company,
managing real estate around Harbour Town.  Mr. Meadows received a Bachelor of
Business Administration degree from the University of Georgia.  He is a Georgia
real estate broker and holds the Real Property Administrator (RPA) designation
of the Building Owners and Managers Institute International.

                                       39

<PAGE>
 
     MICHAEL WATSON (age 52) is Vice President of Construction for the
Management Company.  Mr. Watson is responsible for overseeing construction and
tenant improvement projects for the Prior Wells Public Programs, including
design, engineering, and progress-monitoring functions.  With more than 25 years
of experience in the construction industry, Mr. Watson has supervised projects
ranging from high rises to neighborhood shopping centers.  Prior to joining the
Management Company in 1995, he was senior project management with Abrams
Construction in Atlanta.  Mr. Watson received a Bachelor's degree in civil
engineering from the University of Miami and keeps up with current practices by
periodically enrolling in supplemental college courses.

     ROBERT H. STROUD (age 56), Vice President of Leasing and Associate Broker
for Wells & Associates, Inc., joined the Management Company in 1987.  Mr. Stroud
is responsible for leasing Atlanta office and retail properties on behalf of the
Prior Wells Public Programs.  With more than 20 years in commercial and
investment real estate, Mr. Stroud is experienced in many facets of the real
estate industry, including site selection, tenant and landlord representation,
investment sales, and assemblage and property management.  Prior to joining the
Management Company, Mr. Stroud was investment properties consultant with Royal
LePage Commercial Real Estate Services.  He received a Bachelor's degree in
management from Georgia State University and earned the MCRE Commercial Real
Estate designation from the University of Toronto.

                       INVESTMENT OBJECTIVES AND CRITERIA

GENERAL

     The Company is a corporation that intends to elect to be taxed as a REIT
for federal income tax purposes.  The Company was organized to invest in
commercial real properties, including properties which are under development or
construction, are newly constructed or have been constructed and have operating
histories.  The Company's objectives are: (i) to maximize Cash Available for
Distribution; (ii) to preserve, protect and return the Invested Capital of the
shareholders; (iii) to realize capital appreciation upon the ultimate sale of
the Company's properties; and (iv) to provide shareholders with liquidity of
their investment, within 10 years after commencement of the Offering, through
either (a) the listing of the Shares, or (b) if Listing does not occur within
ten years following the commencement of the Offering, the dissolution of the
Company and the orderly liquidation of its assets.  No assurance can be given
that these objectives will be attained.

     Decisions relating to the purchase or sale of the Company's properties will
be made by the Advisor, subject to the oversight of the Board of Directors.  See
"The Advisor and the Advisory Agreement" for a description of the background and
experience of the Advisor.

ACQUISITION AND INVESTMENT POLICIES

     The Company will seek to invest substantially all of the net Offering
proceeds available for Investment in properties in the acquisition of commercial
real properties, which are under development or construction, are newly
constructed or which have been previously constructed and have operating
histories.  While not limited to such investments, the Advisor will generally
seek to invest in commercial properties such as office buildings, shopping
centers and industrial properties which are less than five years old, the space
in which has been leased or preleased to one or more large corporate tenants who
satisfy the Advisor' standards of creditworthiness.  Based on the Advisor's
prior experience with the Prior Wells Public Programs, the Company anticipates
that a majority of the tenants of the Company's properties will be U.S.
corporations (or other entities) each of which has a net worth in excess of
$100,000,000 or whose lease obligations are guaranteed by another corporation or
entity with a net worth in excess of $100,000,000.  The Company may, however,
invest in office buildings, shopping centers or industrial properties which are
not preleased to such tenants or in other types of commercial or industrial
properties such as hotels, motels, restaurants or business or industrial parks.
Notwithstanding the foregoing, under the REIT qualification rules, the Company
may not be actively engaged in the business of operating hotels, motels or
similar properties.

     While the Company will seek to invest in properties that will satisfy the
primary objective of providing distributions of current cash flow to investors,
due to the fact that a significant factor in the valuation of income-producing
real properties is their potential for future income, the Advisor anticipates
that the majority of properties 

                                       40

<PAGE>
 
acquired by the Company will satisfy both attributes of providing potential for
capital appreciation and providing distributions of current cash flow to
investors. To the extent feasible, the Advisor will strive to invest in a
diversified portfolio of properties that will satisfy the Company's investment
objectives of maximizing Cash Available for Distribution, preserving investors'
capital and realizing capital appreciation upon the ultimate sale of the
Company's properties.

     It is anticipated that approximately 84% of the Gross Proceeds of the
Offering will be used to acquire properties and the balance will be used to pay
various fees and expenses.  See "Estimated Use of Proceeds."

     The Company may not invest more than 10% of its total assets in Unimproved
Real Property.  A property which is expected to produce income within two years
of its acquisition will not be considered a non-income producing property.

     Investment in property generally will take the form of fee title or of a
leasehold estate having a term, including renewal periods, of at least 40 years,
and may be made either directly or indirectly through investments in joint
ventures, general partnerships, co-tenancies or other co-ownership arrangements
with the developers of the properties, Affiliates of the Advisor or other
persons.  See "Joint Venture Investments" below.  In addition, the Company may
purchase properties and lease them back to the sellers of such properties.
While the Advisor will use its best efforts to structure any such sale-leaseback
transaction such that the lease will be characterized as a "true lease" and so
that the Company will be treated as the owner of the property for federal income
tax purposes, no assurance can be given that the Service will not challenge such
characterization.  In the event that any such sale-leaseback transaction is
recharacterized as a financing transaction for federal income tax purposes,
deductions for depreciation and cost recovery relating to such property would be
disallowed or significantly reduced.  See "Federal Income Tax Considerations."

     The Company is not limited as to the geographic area where it may conduct
its operations, but the Advisor intends to cause the Company to invest primarily
in properties located in the United States.

     There are no specific limitations on the number or size of properties to be
acquired by the Company or on the percentage of net proceeds of this Offering
which may be invested in a single property.  The number and mix of properties
acquired will depend upon real estate and market conditions and other
circumstances existing at the time the Company is acquiring its properties and
the amount of the net proceeds of this Offering.

     In making investment decisions for the Company, the Advisor will consider
relevant real property and financial factors, including the location of the
property, its suitability for any development contemplated or in progress, its
income-producing capacity, the prospects for long-range appreciation, its
liquidity and income tax considerations.  In this regard, the Advisor will have
substantial discretion with respect to the selection of specific Company
investments.

     The Company will obtain independent appraisals for each property in which
it invests, and the purchase price of each such property will not exceed its
appraised value.  However, the Advisor and the Board of Directors will rely on
their own independent analysis and not on such appraisals in determining whether
to invest in a particular property.  It should be noted that appraisals are
estimates of value and should not be relied upon as measures of true worth or
realizable value.  Copies of these appraisals will be available for review and
duplication by shareholders at the office of the Company and will be retained
for at least five years.

     The Company's obligation to close the purchase of any investment will
generally be conditioned upon the delivery and verification of certain documents
from the seller or developer, including, where appropriate, plans and
specifications, environmental reports, surveys, evidence of marketable title
(subject only to such liens and encumbrances as are acceptable to the Advisor),
audited financial statements covering recent operations of any properties having
operating histories (unless such statements are not required to be filed with
the Securities and Exchange Commission and delivered to investors), title and
liability insurance policies and opinions of counsel in certain circumstances.
The Company will not close the purchase of any property unless and until it
obtains an environmental assessment (a minimum of a Phase I review) for each
property purchased and the Advisor is generally satisfied with the environmental
status of the property.

                                       41

<PAGE>
 
     The Company may also enter into arrangements with the seller or developer
of a property whereby the seller or developer agrees that if during a stated
period the property does not generate a specified cash flow, the seller or
developer will pay in cash to the Company a sum necessary to reach the specified
cash flow level, subject in some cases to negotiated dollar limitations.

     In determining whether to purchase a particular property, the Company may,
in accordance with customary practices, obtain an option on such property.  The
amount paid for an option, if any, is normally surrendered if the property is
not purchased and is normally credited against the purchase price if the
property is purchased.

     In purchasing, leasing and developing real properties, the Company will be
subject to risks generally incident to the ownership of real estate, including
changes in general economic or local conditions, changes in supply of or demand
for similar or competing properties in an area, changes in interest rates and
availability of permanent mortgage funds which may render the sale of a property
difficult or unattractive, and changes in tax, real estate, environmental and
zoning laws.  Periods of high interest rates and tight money supply may make the
sale of properties more difficult.  The Company may experience difficulty in
keeping the properties fully leased due to tenant turnover, general overbuilding
or excess supply in the market area.  Development of real properties is subject
to risks relating to the builders' ability to control construction costs or to
build in conformity with plans, specifications and timetables.  See "Risk
Factors--Real Estate Risks."

DEVELOPMENT AND CONSTRUCTION OF PROPERTIES

     The Company may invest substantially all of the net proceeds available for
Investment in properties on which improvements are to be constructed or
completed although the Company may not invest in excess of 10% of total assets
in properties which are not expected to produce income within two years of their
acquisition.  To help ensure performance by the builders of properties which are
under construction and completion of properties under construction, the Advisor
may rely upon the substantial net worth of the contractor or developer or a
personal guarantee accompanied by financial statements showing a substantial net
worth provided by an Affiliate of the person entering into the construction or
development contract, or, in certain circumstances, the Advisor may require an
adequate completion bond or performance bond.

     The Company may make periodic progress payments or other cash advances to
developers and builders of its properties prior to completion of construction
only upon receipt of an architect's certification as to the percentage of the
project then completed and as to the dollar amount of the construction then
completed.  The Company intends to use such additional controls on its
disbursements to builders and developers as it deems necessary or prudent.

     The Company may directly employ one or more project managers to plan,
supervise and implement the development of any Unimproved Real Properties which
it may acquire.  Such persons would be compensated directly by the Company and,
other than through such employment, will not be affiliated with the Advisor.

TERMS OF LEASES AND LESSEE CREDITWORTHINESS

     The terms and conditions of any lease entered into by the Company with
regard to a tenant may vary substantially from those described herein.  However,
a majority of leases are expected to be what is generally referred to as "triple
net" leases, which means that the lessee will be required to pay or reimburse
the Company for all real estate taxes, sales and use taxes, special assessments,
utilities, insurance and building repairs as well as lease payments.

     The Advisor has developed specific standards for determining the
creditworthiness of potential lessees of Company Properties.  While authorized
to enter into leases with any type of lessee, the Advisor anticipates that a
majority of the tenants of the Company Properties will be top U.S. corporations
or other entities each of which has a net worth in excess of $100,000,000 or
whose lease obligations are guaranteed by another corporation or entity with a
net worth in excess of $100,000,000.

                                       42

<PAGE>
 
BORROWING POLICIES

     The Company may incur indebtedness in connection with the development or
acquisition of properties, which indebtedness may be secured by one or more of
the Company's properties.  The Company also may borrow funds (a) for Company
operating purposes in the event of unexpected circumstances in which the
Company's working capital reserves and other cash resources available to the
Company become insufficient for the maintenance and repair of its properties or
for the protection or replacement of the Company's assets, and (b) in order to
finance improvement of and improvements to its properties, when the Advisor
deems such improvements to be necessary or appropriate to protect the capital
previously invested in the properties, to protect the value of the Company's
investment in a particular property, or to make a particular property more
attractive for sale or lease.  The aggregate borrowing of the Company, secured
and unsecured, shall be reasonable in relation to Net Assets of the Company and
shall be reviewed by the Board of Directors at least quarterly.  Such
indebtedness may be in the form of secured and unsecured bank borrowings, and
publicly and privately placed debt offerings.  Borrowings may be incurred
through either the Operating Partnership or the Company.  The Board of Directors
anticipates that the aggregate amount of any borrowing will not exceed 50% of
the aggregate value of the Company's aggregate properties, provided, however,
                                                           --------          
that such level may be exceeded on an individual property basis.

JOINT VENTURE INVESTMENTS

     The Company is likely to enter into one or more joint ventures with
Affiliated entities for the acquisition, development or improvement of
properties, under the conditions described below.  The Company may invest some
or all of the proceeds of the Offering in such joint ventures.  In this
connection, the Company may enter into joint ventures with future programs
sponsored by the Advisor or its Affiliates or Prior Wells Public Programs.  The
Advisor also has the authority to enter into joint ventures, general
partnerships, co-tenancies and other participations with real estate developers,
owners and others for the purpose of developing, owning and operating properties
in accordance with the Company's investment policies.  See "Risk Factors" and
"Conflicts of Interest."  In determining whether to invest in a particular joint
venture, the Advisor will evaluate the real property which such joint venture
owns or is being formed to own under the same criteria described herein for the
selection of real property investments of the Company.  The Company shall not
invest in joint ventures with the Advisor, any Directors or any Affiliate
thereof, unless a majority of the Directors (including a majority of the
Independent Directors) not otherwise interested in such transactions, approve
the transaction as being fair and reasonable to the Company and on substantially
the same terms and conditions as those received by other joint venturers.  See
"--Acquisition and Investment Policies," "--Development and Construction of
Properties," "--Terms of Leases and Lessee Creditworthiness," and "--Borrowing
Policies."

     At such time as the Advisor believes that a reasonable probability exists
that the Company will enter into a joint venture with a Prior Wells Public
Program for the acquisition or development of a specific material property, this
Prospectus will be supplemented to disclose the terms of such proposed
investment transaction.  Based upon the Advisor's experience, in connection with
the development of a property which is currently owned by a Prior Wells Public
Program, this would normally occur upon the signing of legally binding leases
with one or more major tenants for commercial space to be developed on such
property, but may occur before or after any such signing, depending upon the
particular circumstances surrounding each potential investment.  It should be
understood that the initial disclosure of any such proposed transaction cannot
be relied upon as an assurance that the Company will ultimately consummate such
proposed transaction nor that the information provided in any such supplement to
this Prospectus concerning any such proposed transaction will not change after
the date of the supplement.

     The Company may enter into a partnership, joint venture or co-tenancy with
unrelated parties if (i) the management of such partnership, joint venture or
co-tenancy is under the control of the Company; (ii) the Company, as a result of
such joint ownership or partnership ownership of a property, is not charged,
directly or indirectly, more than once for the same services; (iii) the joint
ownership, partnership or co-tenancy agreement does not authorize or require the
Company to do anything as a partner, joint venturer or co-tenant with respect to
the property which the Company or the Advisor could not do directly because of
the Company's Articles of Incorporation; and (iv) the Advisor and its Affiliates
are prohibited from receiving any compensation, fees or expenses which are not
permitted to be paid under the Advisory Agreement.  In the event that any such
co-ownership arrangement contains a provision giving each party a right of first
refusal to purchase the other party's interest, the Company may not have
sufficient capital to finance any such buy-out.  See "Risk Factors."

                                       43

<PAGE>
 
     The Company intends to enter into joint ventures with other publicly
registered Affiliated entities for the acquisition of properties, but may only
do so provided that (i) each such co-venturer has substantially identical
investment objectives as those of the Company; (ii) the Company, as a result of
such joint ownership or partnership ownership of a property, is not charged,
directly or indirectly, more than once for the same services; (iii) compensation
payable to the Company by such Affiliate is substantially identical to that
payable to the Advisor by the Company; (iv) the Company will have a right of
first refusal to buy if such co-venturer elects to sell its interest in the
property held by the joint venture; and (v) the investment by the Company and
such Affiliate are on substantially the same terms and conditions, and each such
entity's ownership interest in such joint venture or partnership shall be based
upon the respective proportion of funds invested in such joint venture or
partnership by the Company and such Affiliate.  In the event that the co-
venturer were to elect to sell property held in any such joint venture, however,
the Company may not have sufficient funds to exercise its right of first refusal
to buy the other co-venturer's interest in the property held by the joint
venture.  In the event that any joint venture with an Affiliated entity holds
interests in more than one property, the interest in each such property may be
specially allocated based upon the respective proportion of funds invested by
each co-venturer in each such property.  Entering into such joint ventures with
Affiliated entities will result in certain conflicts of interest.  See "Risk
Factors" and "Conflicts of Interest--Joint Ventures with Affiliates of the
Advisor."

OTHER POLICIES

     The Company will not invest as a limited partner in limited partnerships,
except such investments acquired through the Operating Partnership.  The Company
may in the future issue senior securities.  The Company may, pursuant to the
Reinvestment Plan, repurchase or otherwise reacquire its common stock.

     Except in connection with sales of properties by the Company where purchase
money obligations may be taken by the Company as partial payment, the Company
will not make loans to any person, nor will the Company underwrite securities of
other issuers, in exchange for property, or invest in securities of other
issuers for the purpose of exercising control.  Notwithstanding the foregoing,
the Company may invest in joint ventures or partnerships as described above and
in a corporation where real estate is the principal asset and its acquisition
can best be effected by the acquisition of the stock of such corporation,
subject to the limitations set forth below.

     The Company will not: (i) make or invest in real estate mortgage loans
(except in connection with the sale or other disposition of a property); (ii)
make loans to the Advisor or other Affiliates, or to any director, officer or
principal of the Company or any of its Affiliates; (iii) invest in commodities
or commodity future contracts (does not apply to future contracts, when used
solely for hedging purposes in connection with the Company's ordinary business
of investing in real estate assets and mortgages); (iv) issue redeemable equity
securities; (v) issue debt securities unless the historical debt service
coverage (in the most recently completed fiscal year), as adjusted for known
changes, is sufficient to properly service that higher level of debt; (vi) issue
options or warrants to purchase its Shares to the Advisor, Directors, or any
Affiliate thereof except on the same terms as such options or warrants may be
sold to the general public, any such options or warrants issued to the Advisor,
Directors, or any Affiliate shall not exceed an amount equal to 10% of the
outstanding Shares of the Company on the date of grant; (vii) issue its shares
on a deferred payment basis or other similar arrangement; (viii) invest in or
underwrite the securities of other issuers, including any publicly offered or
traded limited partnership interests, except for investments in joint ventures
as described herein, and except for permitted temporary investments pending
utilization of Company funds, provided that following one year after the
commencement of operations of the Company no more than 45% of the value of the
Company's total assets (exclusive of Government securities and cash items) will
consist of, and no more than 45% of the Company's net income after taxes (for
the last four fiscal quarters combined) will be derived from, securities other
than (A) Government securities, or (B) securities in a corporation where real
estate is the principal asset and the acquisition of such real estate can best
be effected by the acquisition of the stock of such corporation, provided that
any such corporation is either (x) a corporation which is a majority owned
subsidiary of the Company and which is not an investment company as defined by
the Investment Company Act of 1940, as amended, or (y) a corporation which is
controlled primarily by the Company, through which corporation the Company
engages in the business of acquisition and operation of real estate and which is
not an investment company.

                                       44

<PAGE>
 
                           REAL PROPERTY INVESTMENTS

     As of the date of this Prospectus, the Company has not acquired nor
contracted to acquire any specific real properties.  The Advisor is continually
evaluating various potential property investments and engaging in discussions
and negotiations with sellers, developers and potential tenants regarding the
purchase and development of properties for the Company and prior programs.  At
such time during the negotiations for a specific property as the Advisor
believes that a reasonable probability exists that the Company will acquire such
property, this Prospectus will be supplemented to disclose the negotiations and
pending acquisition.  Based upon the Advisor's experience and acquisition
methods, this will normally occur on the signing of a legally binding purchase
agreement for the acquisition of a specific property, but may occur before or
after such signing or upon the satisfaction or expiration of major contingencies
in any such purchase agreement, depending on the particular circumstances
surrounding each potential investment.  A supplement to this Prospectus will
describe any improvements proposed to be constructed thereon and other
information considered appropriate for an understanding of the transaction.
Further data will be made available after any pending acquisition is
consummated, also by means of a supplement to this Prospectus, if appropriate.
IT SHOULD BE UNDERSTOOD THAT THE INITIAL DISCLOSURE OF ANY PROPOSED ACQUISITION
CANNOT BE RELIED UPON AS AN ASSURANCE THAT THE COMPANY WILL ULTIMATELY
CONSUMMATE SUCH PROPOSED ACQUISITION NOR THAT THE INFORMATION PROVIDED
CONCERNING THE PROPOSED ACQUISITION WILL NOT CHANGE BETWEEN THE DATE OF SUCH
SUPPLEMENT AND ACTUAL PURCHASE.

     It is intended that the proceeds of this Offering will be invested in
properties in accordance with the Company's investment policies.  Funds
available for Investment in properties which are not expended or committed to
the acquisition or development of specific real properties on or before the
later of the second anniversary of the effective date of the Registration
Statement or one year after the termination of the Offering and not reserved for
working capital purposes will be returned to the shareholders.

     The Company intends to obtain adequate insurance coverage for all
properties in which it invests.

                              DISTRIBUTION POLICY

REIT STATUS

     In order to qualify as a REIT for federal income tax purposes, among  other
things, the Company must make distributions each taxable year (not including any
return of capital for federal income tax purposes) equal to at least 95% of its
real estate investment trust taxable income, although the Board of Directors, in
its discretion, may increase that percentage as it deems appropriate.  See
"Federal Income Tax Considerations--Requirements for Qualification."  The
declaration of distributions is within the discretion of the Board of Directors
and depends upon the Company's Cash Available for Distribution, current and
projected cash requirements, tax considerations and other factors.

     The Company intends to make regular quarterly distributions to holders of
the Shares.  Distributions will be made to those stockholders who are
stockholders as of the record date selected by the Directors.  Distributions
will be declared monthly and paid on a quarterly basis during the Offering
period and declared and paid quarterly thereafter.  Generally, income
distributed to stockholders will not be taxable to the Company under federal
income tax laws if the Company distributes at least 95% of its annual taxable
income.  If Cash Available for Distribution is insufficient to pay such
distributions, the Company may obtain the necessary funds by borrowing, issuing
new securities, or selling assets.  These methods of obtaining funds could
affect future distributions by increasing operating costs.  To the extent that
distributions to stockholders exceed the Company's current and accumulated
earnings and profits, such amounts will constitute a return of capital for
federal income tax purposes, although such distributions will not reduce
stockholders' aggregate Invested Capital.

     Distributions will be made at the discretion of the Directors, depending
primarily on Cash Available for Distribution and the general financial condition
of the Company, subject to the obligation of the Directors to cause the Company
to qualify and remain qualified as a REIT for federal income tax purposes.  The
Company intends to increase distributions in accordance with increases in Cash
Available for Distribution.

                                       45

<PAGE>
 

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

     As of the date of this Prospectus, the Company had not yet commenced active
operations.  Subscription proceeds may be released to the Company as accepted
and applied to investment in properties and the payment or reimbursement of
Selling Commissions and other Organization and Offering Expenses.  See
"Estimated Use of Proceeds."  The Company will experience a relative increase in
liquidity as additional subscriptions for Shares are received, and a relative
decrease in liquidity as net Offering proceeds are expended in connection with
the acquisition, development and operation of properties.

     As of the initial date of this Prospectus, the Company has not entered into
any arrangements creating a reasonable probability that any specific property
will be acquired by the Company.  The number of Company properties to be
acquired by the Company will depend upon the number of Shares sold and the
resulting amount of the net proceeds available for investment in properties
available to the Company.  See "Risk Factors."

     The Company is not aware of any material trends or uncertainties, favorable
or unfavorable, other than national economic conditions affecting real estate
generally, which may be reasonably anticipated to have a material impact on
either capital resources or the revenues or income to be derived from the
operation of the Company's properties.

     Until required for the acquisition, development or operation of properties,
net Offering proceeds will be kept in short-term, liquid investments.  Because
the vast majority of leases for the properties acquired by the Company will
provide for tenant reimbursement of operating expenses, it is not anticipated
that a permanent reserve for maintenance and repairs of Company properties will
be established.  However, to the extent that the Company has insufficient funds
for such purposes, the Advisor may contribute to the Company an aggregate amount
of up to 1% of Gross Offering Proceeds for maintenance and repairs of the
Company's properties.  The Advisor also may, but is not required to, establish
reserves from Gross Offering Proceeds, out of cash flow generated by operating
properties or out of Nonliquidating Net Sale Proceeds.

                          DESCRIPTION OF CAPITAL STOCK

     The following summary of certain provisions of the Company's Articles of
Incorporation and Bylaws and Maryland law is subject to and qualified in its
entirety by reference to such documents, copies of which are Exhibits to the
Registration Statement of which this Prospectus is a part.

     Under its Articles of Incorporation, the Company has authority to issue a
total of 90,000,000 shares of capital stock, of which 40,000,000 shares are
designated as common stock, $.01 par value per share (the "Common Stock"),
5,000,000 shares of which are designated are preferred stock, $.01 par value per
share (the "Preferred Stock"), and 45,000,000 shares are designated as Shares-
in-Trust (as described in "-- Articles of Incorporation and Bylaw Provisions."

COMMON STOCK

     The holders of Shares are entitled to one vote per share on all matters
voted on by shareholders, including elections of directors.  Except as otherwise
required by law or provided in any resolution adopted by the Board of Directors
with respect to any series of Preferred Stock, the holders of such shares
exclusively possess all voting power.  The Articles of Incorporation do not
provide for cumulative voting in the election of directors.  Subject to any
preferential rights of any outstanding series of Preferred Stock, the holders of
Shares are entitled to such dividends as may be declared from time to time by
the Board of Directors from funds available therefor, and upon liquidation are
entitled to receive pro rata all assets of the Company available for
distribution to such holders.  All Shares issued in the Offering will be fully
paid and nonassessable and the holders thereof will not have preemptive rights.

                                       46

<PAGE>
 
PREFERRED STOCK

     The Articles of Incorporation authorize the Board of Directors to designate
and issue from time to time one or more classes or series of Preferred Stock
without stockholder approval.  The Board of Directors may determine the relative
rights, preferences and privileges of each class or series of Preferred Stock so
issued, which may be more beneficial than those of the Common Stock.  However,
the voting rights for each share of Preferred Stock shall not exceed voting
rights of the Common Stock.  The issuance of Preferred Stock could have the
effect of delaying or preventing a change in control of the Company.  The Board
of Directors has no present plans to issue any Preferred Stock, but may
nevertheless do so in the future.

SOLICITING DEALER WARRANTS

     The Company has agreed to issue and sell, and the Dealer Manager has agreed
to purchase for the price of $.0008 per warrant, warrants (the "Soliciting
Dealer Warrants") to purchase one Share per Soliciting Dealer Warrant for each
Share sold by the Dealer Manager (and/or the Soliciting Dealers), up to a
maximum of 600,000 Soliciting Dealer Warrants.  The Soliciting Dealer Warrants
will be issued on a quarterly basis commencing 60 days after the date on which
the Shares are first sold pursuant to this Offering.  The Dealer Manager may
retain or reallow all Soliciting Dealer Warrants to the Soliciting Dealers
(except Soliciting Dealers in Minnesota), unless such issuance of the Soliciting
Dealer Warrants is prohibited by either federal or state securities laws.  The
Shares issuable upon exercise of the Soliciting Dealer Warrants are being
registered as part of this Offering.

     Each Soliciting Dealer will receive from the Dealer Manager one Soliciting
Dealer Warrant for each 25 Shares sold by such Soliciting Dealer during this
Offering.  All Shares sold by the Company other than through the Reinvestment
Plan will be included in the computation of the number of Shares sold to
determine the number of Soliciting Dealer Warrants to be issued.  The holder of
a Soliciting Dealer Warrant will be entitled to purchase one Share from the
Company at a price of $12 (120% of the public offering price per Share) during
the time period beginning one year from the effective date of this Offering and
ending five years after the effective date of this Offering (the "Exercise
Period").  A Soliciting Dealer Warrant may not be exercised unless the Shares to
be issued upon the exercise of the Soliciting Dealer Warrant have been
registered or are exempt from registration in the state of residence of the
holder of the Soliciting Dealer Warrant or if a prospectus required under the
laws of such state cannot be delivered to the buyer on behalf of the Company.
Notwithstanding the foregoing, no Soliciting Dealer Warrants will be exercisable
until one year from the effective date of the Offering.  In addition, holders of
Soliciting Dealer Warrants may not exercise the Soliciting Dealer Warrants to
the extent such exercise would jeopardize the Company's status as a REIT under
the Code.

     The terms of the Soliciting Dealer Warrants, including the exercise price
and the number and type of securities issuable upon exercise of a Soliciting
Dealer Warrant and the number of such warrants may be adjusted in the event of
stock dividends, stock splits, or a merger, consolidation, reclassification,
reorganization, recapitalization, or sale of assets.  Soliciting Dealer Warrants
are not transferable or assignable except by the Dealer Manager, the Soliciting
Dealers, their successors in interest, or to individuals who are officers of
such a person.  Exercise of these Soliciting Dealer Warrants will be under the
terms and conditions detailed in this Prospectus and in the Warrant Purchase
Agreement, which is an exhibit to the Registration Statement.

     Holders of Soliciting Dealer Warrants do not have the rights of
stockholders, may not vote on Company matters and are not entitled to receive
distributions until such time as such warrants are exercised.


ARTICLES OF INCORPORATION AND BYLAW PROVISIONS

  Restrictions on Ownership and Transfer

     For the Company to qualify as a REIT under the Code, it must meet certain
requirements concerning the ownership of its outstanding shares of capital
stock.  Specifically, not more than 50% in value of the Company's outstanding
shares of capital stock may be owned, directly or indirectly, by five or fewer
individuals (as defined in the Code to include certain entities) during the last
half of a taxable year, and the Company must be beneficially owned by

                                       47

<PAGE>
 
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year. See "Federal Income Tax
Considerations -- Requirements for Qualification." In addition, the Company must
meet certain requirements regarding the nature of its gross income in order to
qualify as a REIT. One such requirement is that at least 75% of the Company's
gross income for each year must consist of "rents from real property" and income
from certain other real property investments. No rent that the Company receives
from a tenant in which it owns 10% or more of the ownership interests will
qualify as "rents from real property." See "Federal Income Tax Considerations --
Requirements for Qualification -- Income Tests."

     Because the Board of Directors believes it is essential for the Company to
continue to qualify as a REIT, the Articles of Incorporation, subject to certain
exceptions described below, provide that no person may own, or be deemed to own
by virtue of the attribution provisions of the Code, more than 9.8% (the
"Ownership Limitation") of the number of outstanding shares of Common Stock or
more than 9.8% of the number of outstanding shares of any class of Preferred
Stock.

     Any transfer of Shares that would (i) result in any person owning, directly
or indirectly, Shares in excess of the Ownership Limitation, (ii) result in
Shares being owned by fewer than 100 persons (determined without reference to
any rules of attribution), (iii) result in the Company being "closely held"
within the meaning of section 856(h) of the Code, or (iv) cause the Company to
own, actually or constructively, 10% or more of the ownership interests in a
tenant of the Company's or the Operating Partnership's real property, within the
meaning of section 856(d)(2)(B) of the Code, will be null and void, and the
intended transferee will acquire no rights in such Shares.

     Subject to certain exceptions described below, any purported transfer of
Shares that would (i) result in any person owning, directly or indirectly,
Shares in excess of the Ownership Limitation, (ii) result in the Shares being
owned by fewer than 100 persons (determined without reference to any rules of
attribution), (iii) result in the Company being "closely held" within the
meaning of section 856(h) of the Code, or (iv) cause the Company to own,
actually or constructively, 10% or more of the ownership interests in a tenant
of the Company's or the Operating Partnership's real property, within the
meaning of section 856(d)(2)(B) of the Code, will be designated as "Shares-in-
Trust" and will be transferred automatically to a trust (a "Trust"), effective
on the day before the purported transfer of such Shares.  The record holder of
the Shares that are designated as Shares-in-Trust (the "Prohibited Owner") will
be required to submit such number of Shares to the Company for registration in
the name of the trustee of the Trust (the "Trustee").  The Trustee will be
designated by the Company, but will not be affiliated with the Company.  The
beneficiary of a Trust (the "Beneficiary") will be one or more charitable
organizations named by the Company.

     Shares-in-Trust will remain issued and outstanding Shares and will be
entitled to the same rights and privileges as all other shares of the same class
or series.  The Trustee will receive all dividends and distributions on the
Shares-in-Trust and will hold such dividends or distributions in trust for the
benefit of the Beneficiary.  The Trustee will vote all Shares-in-Trust.  The
Trustee will designate a permitted transferee of the Shares-in-Trust, provided
that the permitted transferee (i) purchases such Shares-in-Trust for valuable
consideration and (ii) acquires such Shares-in-Trust without such acquisition
resulting in another transfer to another Trust.

     The Prohibited Owner with respect to Shares-in-Trust will be required to
repay to the Trustee the amount of any dividends or distributions received by
the Prohibited Owner (i) that are attributable to any Shares-in-Trust and (ii)
the record date of which was on or after the date that such shares became
Shares-in-Trust.  Within 20 days of receiving notice from the Company that
shares of the Company's common stock have been transferred to the Trust, the
Company shall, at its sole option, either (i) repurchase such Shares-in-Trust
from the Prohibited Owner, or (ii) cause the Trustee to sell the Shares-in-Trust
on behalf of the Prohibited Owner to a third party (the "Option").  The
Prohibited Owner shall receive from the Trustee the lesser of (i) the price per
share in the transaction that created such Shares-in-Trust (or, in the case of a
gift or devise, the Market Price (as defined below) per share on the date of
such transfer) or (ii) the Market Price per share on the date that the Company,
or its designee, accepts such offer.  Any amounts received by the Trustee in
excess of the amounts to be paid to the Prohibited Owner will be distributed to
the Beneficiary.  Such purchase price amount shall be sent to the Prohibited
Owner within five business days from the close of such sale transaction.

     In connection with the Option described above, the Shares-in-Trust will be
deemed to have been offered for sale to the Company, or its designee.  The
Company will have the right to accept such offer for a period of 20 days after

                                       48

<PAGE>
 
the later of (i) the date of the purported transfer which resulted in such
Shares-in-Trust or (ii) the date the Company determines in good faith that a
transfer resulting in such Shares-in-Trust occurred.

     "Market Price" on any date shall mean the average of the Closing Price for
the five consecutive Trading Days ending on such date.  The "Closing Price" on
any date shall mean the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NYSE or, if the Shares are not listed or admitted to trading on
the NYSE, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Shares are listed or admitted to trading or, if the Shares are not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if the Shares are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Shares selected by the Board of Directors, or, if no such
market maker exists, as determined in good faith by the Board of Directors.
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Shares are listed or admitted to trading is open for the
transaction of business or, if the Shares are not listed or admitted to trading
on any national securities exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

     Any person who (a) acquires Shares in violation of the foregoing
restrictions or who owned Shares that were transferred to a Trust is required to
give immediately written notice to the Company of such event, and (b) transfers
or receives (or attempts to transfer or receive) Shares subject to such
limitations is required to give the Company at least 15 days written notice
prior to such transaction, and in both cases such persons shall provide to the
Company such other information as the Company may request in order to determine
the effect, if any, of such transfer on the Company's status as a REIT.

     All persons who own, directly or indirectly, more than 5% (or such lower
percentages as required pursuant to regulations under the Code) of the
outstanding Shares must, within 30 days after January 1 of each year, provide to
the Company a written statement or affidavit stating (i) the name and address of
such direct or indirect owner, (ii) the number of Shares owned directly or
indirectly, and (iii) a description of how such shares are held.  In addition,
each direct or indirect shareholder shall provide to the Company such additional
information as the Company may request in order to determine the effect, if any,
of such ownership on the Company's status as a REIT and to ensure compliance
with the Ownership Limitation.

     The Ownership Limitation generally will not apply to the acquisition of
Shares by an underwriter that participates in a public offering of such shares.
In addition, the Board of Directors, upon receipt of a ruling from the Service
or an opinion of counsel and upon such other conditions as the Board of
Directors may direct, may exempt a person from the Ownership Limitation under
certain circumstances.  The foregoing restrictions will continue to apply until
(i) the Board of Directors determines that it is no longer in the best interests
of the Company to attempt to qualify, or to continue to qualify, as a REIT and
(ii) there is an affirmative vote of a majority of the number of Shares entitled
to vote on such matter at a regular or special meeting of the shareholders of
the Company.

     All certificates representing Shares will bear a legend referring to the
restrictions described above.

     The Ownership Limitation could have the effect of discouraging a takeover
or other transaction in which holders of some, or a majority, of the Shares
might receive a premium from their Shares over the then prevailing market price
or which such holders might believe to be otherwise in their best interest.

  Number of Directors; Removal; Filling Vacancies

     The Articles of Incorporation and Bylaws provide that the number of
directors will consist of not less than 3 nor more than 15 persons, subject to
increase or decrease by the affirmative vote of 80% of the members of the entire

                                       49

<PAGE>
 
Board of Directors.  At all times a majority of the directors shall be
Independent Directors, except that upon the death, removal or resignation of an
Independent Director, such requirement shall not be applicable for 90 days.
Upon completion of the Offering, there will be five directors, three of whom
shall be Independent Directors.  The shareholders shall be entitled to vote on
the election or removal of directors, with each share entitled to one vote.  The
Articles of Incorporation provide that, subject to any rights of holders of any
class of preferred stock, and unless the Board of Directors otherwise
determines, any vacancies will be filled by the affirmative vote of a majority
of the remaining directors, though less than a quorum, provided that Independent
Directors shall nominate and approve directors to fill vacancies created by
Independent Directors.  Accordingly, the Board of Directors could temporarily
prevent any shareholder from enlarging the Board of Directors and filling the
new directorships with such shareholder's own nominees.  Any directors so
elected shall hold office until the next annual meeting of shareholders.

     A director may be removed with or without cause by the vote of the holders
of a majority of the outstanding shares of capital stock entitled to vote for
the election of directors at a special meeting of the shareholders called for
the purpose of removing such director.

LIMITATION OF LIABILITY AND INDEMNIFICATION

     The MGCL permits a Maryland corporation to include in its Articles of
Incorporation a provision limiting the liability of its directors and officers
to the corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action.

     Subject to the conditions set forth below, the Articles of Incorporation
provides that the Company shall indemnify and hold harmless a Director, Advisor
or Affiliate against any or all losses or liabilities reasonably incurred by
such Director, Advisor or Affiliate in connection with or by reason of any act
or omission performed or omitted to be performed on behalf of the Company in
such capacity.

     Under the Company's Articles of Incorporation, the Company shall not
indemnify its Directors, Advisor or any Affiliate for any liability or loss
suffered by the Directors, Advisors or Affiliates, nor shall it provide that the
Directors, Advisors or Affiliates be held harmless for any loss or liability
suffered by the Company, unless all of the following conditions are met: (i) the
Directors, Advisor or Affiliates have determined, in good faith, that the course
of conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Directors, Advisor or Affiliates were acting on behalf of or
performing services of the Company; (iii) such liability or loss was not the
result of (A) negligence or misconduct by the Directors, excluding the
Independent Directors, Advisors or Affiliates; or (B) gross negligence or
willful misconduct by the Independent Directors; (iv) such indemnification or
agreement to hold harmless is recoverable only out of the Company's net assets
and not from Shareholders.  Notwithstanding the foregoing, the Directors,
Advisors or Affiliates and any persons acting as a broker-dealer shall not be
indemnified by the Company for any losses, liability or expenses arising from or
out of an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged securities
law violations as to the particular indemnitee; (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee; (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the SEC and of the published position of any state securities
regulatory authority in which securities of the Company were offered or sold as
to indemnification for violations of securities laws.

     The Articles of Incorporation provides that the advancement of Company
funds to the Directors, Advisors or Affiliates for legal expenses and other
costs incurred as a result of any legal action for which indemnification is
being sought is permissible only if all of the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of the Company; (ii) the legal
action is initiated by a third party who is not a Shareholder or the legal
action is initiated by a Shareholder acting in his or her capacity as such and a
court of competent jurisdiction specifically approves such advancement; (iii)
the Directors, Advisor or Affiliates undertake to repay the advanced funds to
the Company together with the applicable legal rate of interest thereon, in
cases in which such Directors, Advisor or Affiliates are found not to be
entitled to indemnification.

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<PAGE>
 
     The MGCL requires a Maryland corporation (unless its Articles of
Incorporation provide otherwise, which the Company's Articles of Incorporation
do not) to indemnify a director or officer who has been successful, on the
merits or otherwise, in the defense of any proceeding to which he is made a
party by reason of his service in that capacity.  The MGCL permits a Maryland
corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful.  However, under the MGCL a Maryland corporation may not indemnify for
an adverse judgment in a suit by or in the right of the corporation or for a
judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only for
expenses.  In addition, the MGCL permits a corporation to advance reasonable
expenses to a director or officer upon the corporation's receipt of (a) a
written affirmation by the director or officer of his good faith belief that he
has met the standard of conduct necessary for indemnification by the Company as
authorized by the Bylaws and (b) a written undertaking by or on his behalf to
repay the amount paid or reimbursed by the Company if it shall ultimately be
determined that the standard of conduct was not met.  Indemnification under the
provisions of the MGCL is not deemed exclusive of any other rights, by
indemnification or otherwise, to which an officer or director may be entitled
under the Company's Articles of Incorporation or Bylaws, or under resolutions of
stockholders or directors, contract or otherwise.  It is the position of the
Commission that indemnification of directors an officers for liabilities arising
under the Securities Act is against public policy and is unenforceable pursuant
to Section 14 of the Securities Act.

     The Company intends to purchased and maintain insurance on behalf of all of
its directors and executive officers against liability asserted against or
incurred by them in their official capacities with the Company, whether or not
the Company is required or has the power to indemnify them against the same
liability.

     Causes of action resulting from violations of federal or state securities
law shall be governed by such law.

BUSINESS COMBINATIONS

     Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns 10% or more of the voting power
of such corporation's shares or an affiliate of such corporation who, at any
time within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then-outstanding
voting shares of such corporation (an "Interested Stockholder") or an affiliate
thereof, are prohibited for five years after the most recent date on which the
Interested Stockholder became an Interested Stockholder.  Thereafter, any such
business combination must be recommended by the board of directors of such
corporation and approved by the affirmative vote of at least (a) 80% of the
votes entitled to be cast by holders of outstanding shares of voting stock of
the corporation and (b) two-thirds of the votes entitled to be cast by holders
of voting shares of such corporation other than shares held by the Interested
Stockholder with whom (or with whose affiliate) the business combination is to
be effected, unless, among other conditions, the corporation's common
stockholders receive a minimum price (as defined in the MGCL) for their shares
and the consideration is received in cash or in the same form as previously paid
by the Interested Stockholder for its shares.  These provisions of the MGCL do
not apply, however, to business combinations that are approved or exempted by
the board of directors of the corporation prior to the time that the Interested
Stockholder becomes an Interested Stockholder.

CONTROL SHARE ACQUISITION STATUTE

     The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares owned by the acquiror, by officers or by directors who are
employees of the corporation.  "Control Shares" are voting shares which, if
aggregated with all other such shares previously acquired by the acquiror, or in
respect of which the acquiror is able to exercise or direct the exercise of
voting power (except solely by virtue of a revocable proxy), would entitle the
acquiror to exercise voting power in electing directors within one of the
following

                                       51

<PAGE>
 
ranges of voting power: (i) one-fifth or more but less than one-third, (ii) one-
third or more but less than a majority, or (iii) a majority or more of all
voting power. Control Shares do not include shares the acquiring person is then
entitled to vote as a result of having previously obtained stockholder approval.
A "control share acquisition" means the acquisition of control shares, subject
to certain exceptions.

     A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions (including an undertaking to pay expenses),
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand to consider the voting
rights of the shares.  If no request for a meeting is made, the corporation may
itself present the question at any stockholders meeting.

     If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares (except those for which voting rights have previously
been approved) for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a stockholders meeting and the acquiror
becomes entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights.  The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquiror in the control share acquisition.

     The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange, if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the Articles of
Incorporation or bylaws of the corporation.

     The Articles of Incorporation and Bylaws of the Company contain a provision
exempting from the control share acquisition statute any and all acquisitions by
any person of the Company's capital stock.  There can be no assurance that such
provision will not be amended or eliminated at any time in the future.

AMENDMENT TO THE ARTICLES OF INCORPORATION

     The Articles of Incorporation of the Company may be amended by the
affirmative vote by holders of a majority of the shares then outstanding and
entitled to vote thereon, without the concurrence of the Board of Directors,
provided, however, (i)  no amendment may be made which would change any rights
with respect to any outstanding class of securities by reducing the amount
payable thereon upon liquidation or by diminishing or eliminating any voting
rights pertaining thereto; (ii) the provisions pertaining to amending the
Articles of Incorporation and reorganizations shall not be amended, (iii) no
term or provision of the Articles of Incorporation may be added, amended or
repealed in any respect that would, in the determination of the Board of
Directors, cause the Company not to qualify as a REIT under the Code, (iv)
certain provisions of the Articles of Incorporation, including provisions
relating to the removal of directors, Independent Directors, preemptive rights
of holders of stock and the indemnification and limitation of liability of
officers and directors may not be amended or repealed and (v) provisions
imposing cumulative voting in the election of directors may not be added to the
Articles of Incorporation, unless, in each such case, such action is approved by
the affirmative vote of the holders of not less than a majority of all the votes
entitled to be cast thereon.  The Board of Directors may amend the Articles of
Incorporation (without the concurrence by the stockholders) only to enable the
Company to qualify as a real estate investment trust under the Code.

DISSOLUTION OF THE COMPANY

     The dissolution of the Company must be approved by the affirmative vote of
the holders of not less than a majority of all of the votes entitled to be cast
on the matter.  Under the Articles of Incorporation, the Company will
automatically terminate and dissolve on January 30, 2008 (ten years after the
initial date of this Prospectus), unless the Listing occurs, in which event the
Company will automatically become a perpetual life entity.

                                       52

<PAGE>
 
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS

     The Bylaws of the Company provide that (a) with respect to an annual
meeting of stockholders, nominations of persons for election to the Board of
Directors and the proposal of business to be considered by stockholders may be
made only (i) pursuant to the Company's notice of the meeting, (ii) by or at the
direction of the Board of Directors or (iii) by a stockholder who is entitled to
vote at the meeting and has complied with the advance notice procedures set
forth in the Bylaws and (b) with respect to special meetings of stockholders,
only the business specified in the Company's notice of meeting may be brought
before the meeting of stockholders and nominations of persons for election to
the Board of Directors may be made only (i) pursuant to the Company's notice of
the meeting, (ii) by or at the direction of the Board of Directors or (iii)
provided that the Board of Directors has determined that directors shall be
elected at such meeting, by a stockholder who is entitled to vote at the meeting
and has complied with the advance notice provisions set forth in the Bylaws.

MEETING OF STOCKHOLDERS

     The Company's Bylaws provide that annual meetings of stockholders shall be
held on a date and at the time set by the Board of Directors.  The Board of
Directors (including the Independent Directors) will take reasonable steps to
ensure that the annual stockholders meeting shall be set within a reasonable
period (not less than 30 days) following delivery of the annual report.  Special
meetings of the stockholders may be called by (i) the President of the Company,
(ii) the Chief Executive Officer or (iii) the Board of Directors.  As permitted
by the MGCL, the Bylaws of the Company provide that special meetings must be
called by the Secretary of the Company upon the written request of the holders
of shares entitled to cast not less than a majority of all votes entitled to be
cast at the meeting.

OPERATIONS

     The Articles of Incorporation require the Board of Directors generally to
use its best efforts to cause the Company to qualify as a REIT.  Although the
Company has opted to not be governed by Maryland's business combination and
control share acquisition statutes, if the Company's Articles of Incorporation
and Bylaws are amended to include them, such provisions of the MGCL could delay,
defer or prevent a transaction or a change in control of the Company that might
involve a premium price for holders of Shares or otherwise be in their best
interests.

INSPECTION OF BOOKS AND RECORDS

     The Advisor will keep, or cause to be kept, on behalf of the Company, full
and true books of account on an accrual basis of accounting, in accordance with
generally accepted accounting principles.  All of such books of account,
together with all other records of the Company, including a copy of the Articles
of Incorporation and any amendments thereto, will at all times be maintained at
the principal office of the Company, and will be open to inspection,
examination, and, for a reasonable charge, duplication upon reasonable notice
and during normal business hours by a stockholder or his agent.

     As a part of its books and records, the Company will maintain at its
principal office an alphabetical list of names of stockholders, along with their
addresses and telephone numbers and the number of Shares held by each
stockholder.  Such list shall be updated at least quarterly and shall be
available for inspection at the Company's home office by a stockholder or his or
her designated agent upon such stockholder's request.  Such list also shall be
mailed to any stockholder requesting the list within 10 days of a request.  The
Company may require the stockholder requesting the stockholder list to represent
that the list is not requested for a commercial purpose unrelated to the
stockholder's interest in the Company and that he or she will not make any
commercial distribution of such list or the information disclosed through such
inspection.  The Company may impose a reasonable charge for expenses incurred in
reproducing such list.  The list may not be sold or used for commercial
purposes.

RESTRICTIONS ON "ROLL-UP" TRANSACTIONS

     In connection with a proposed "Roll-Up Transaction," which, in general
terms, is any transaction involving the acquisition, merger, conversion, or
consolidation, directly or indirectly, of the Company and the issuance of
securities of 

                                       53

<PAGE>
 
an entity that would be created or would survive after the
successful completion of the Roll-Up Transaction (a "Roll-Up Entity"), an
appraisal of all of the Company's properties shall be obtained from an
independent appraiser.  In order to qualify as an independent appraiser for this
purpose(s), the person or entity shall have no material current or prior
business or personal relationship with the Advisor or Directors and shall be
engaged to a substantial extent in the business of rendering opinions regarding
the value of assets of the type held by the Company.  The Company's properties
shall be appraised on a consistent basis, and the appraisal shall be based on
the evaluation of all relevant information and shall indicate the value of the
Company's properties as of a date immediately prior to the announcement of the
proposed Roll-Up Transaction.  The appraisal shall assume an orderly liquidation
of properties over a 12-month period.  The terms of the engagement of such
Independent Expert shall clearly state that the engagement is for the benefit of
the Company and the stockholders.  A summary of the independent appraisal,
indicating all material assumptions underlying the appraisal, shall be included
in a report to stockholders in connection with a proposed Roll-Up Transaction.
In connection with a proposed Roll-Up Transaction, the person sponsoring the
Roll-Up Transaction shall offer to stockholders who vote against the proposal
the choice of:

     (i)  accepting the securities of the Roll-Up Entity offered in the proposed
          Roll-Up Transaction; or

     (ii)  one of the following:

               a.  remaining stockholders of the Company and preserving their
     interests therein on the same terms and conditions as existed previously;
     or

               b.  receiving cash in an amount equal to the stockholder's pro
     rata share of the appraised value of the net assets of the Company.

     The Company is prohibited from participating in any proposed Roll-Up
Transaction:

     (i) which would result in the stockholders having democracy rights in the
Roll-Up Entity that are less than those provided in the Company's Articles of
Incorporation and described elsewhere in this Prospectus, including rights with
respect to the election and removal of Directors, annual reports, annual and
special meetings, amendment of the Articles of Incorporation, and dissolution of
the Company;

     (ii) which includes provisions that would operate as a material impediment
to, or frustration of, the accumulation of shares by any purchaser of the
securities of the Roll-Up Entity (except to the minimum extent necessary to
preserve the tax status of the Roll-Up Entity), or which would limit the ability
of an investor to exercise the voting rights of its securities of the Roll-Up
Entity on the basis of the number of shares held by that investor;

     (iii)  in which investor's rights to access of records of the Roll-Up
Entity will be less than those provided in the Company's Articles of
Incorporation and described in "Inspection of Books and Records," above; or

     (iv) in which any of the costs of the Roll-Up Transaction would be borne by
the Company if the Roll-Up Transaction is not approved by the stockholders.

                                       54

<PAGE>
 
                       FEDERAL INCOME TAX CONSIDERATIONS

     The following is a summary of material federal income tax considerations
that may be relevant to a prospective holder of Shares in the Company.  Hunton &
Williams has acted as counsel to the Company and has reviewed this summary and
is of the opinion that it fairly summarizes the federal income tax
considerations that will be material to a holder of Shares. The discussion
contained herein does not address all aspects of taxation that may be relevant
to particular shareholders in light of their personal investment or tax
circumstances, or to certain types of shareholders (including insurance
companies, tax-exempt organizations, financial institutions or broker-dealers,
foreign corporations, and persons who are not citizens or residents of the
United States) subject to special treatment under the federal income tax laws.

     The statements in this discussion and the opinion of Hunton & Williams are
based on current provisions of the Code, existing, temporary, and currently
proposed Treasury Regulations promulgated under the Code, the legislative
history of the Code, existing administrative rulings and practices of the
Service, and judicial decisions.  No assurance can be given that future
legislative, judicial, or administrative actions or decisions, which may be
retroactive in effect, will not affect the accuracy of any statements in this
Prospectus with respect to the transactions entered into or contemplated prior
to the effective date of such changes.

     EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OF THE PURCHASE, OWNERSHIP, AND
SALE OF SHARES AND OF THE COMPANY'S ELECTION TO BE TAXED AS A REIT, INCLUDING
THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE,
OWNERSHIP, SALE, AND ELECTION, AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY

     The Company currently has in effect an election to be taxed as a pass-
through entity under Subchapter S of the Code, but intends to revoke its S
election on the day prior to the date on which the Offering commences.  The
Company plans to make an election to be taxed as a REIT under sections 856
through 860 of the Code, effective for its short taxable year beginning on the
day prior to the date on which the Offering commences and ending on December 31,
1998.  The Company believes that, commencing with such taxable year, it will be
organized and will operate in such a manner as to qualify for taxation as a REIT
under the Code, and the Company intends to continue to operate in such a manner,
but no assurance can be given that the Company will operate in a manner so as to
qualify or remain qualified as a REIT.

     The sections of the Code relating to qualification and operation as a REIT
are highly technical and complex.  The following discussion sets forth the
material aspects of the Code sections that govern the federal income tax
treatment of a REIT and its shareholders.  The discussion is qualified in its
entirety by the applicable Code provisions, Treasury Regulations promulgated
thereunder, and administrative and judicial interpretations thereof, all of
which are subject to change prospectively or retroactively.

     Hunton & Williams has acted as counsel to the Company in connection with
the Offering and the Company's election to be taxed as a REIT.  In the opinion
of Hunton & Williams, assuming that the elections and other procedural steps
described in this discussion of "Federal Income Tax Considerations" are
completed by the Company in a timely fashion,  the Company's organization and
proposed method of operation will enable it to qualify to be taxed as a REIT
under the Code commencing with the Company's short taxable year beginning the
day prior to the date on which the Offering commences and ending December 31,
1998, and for its future taxable years.  Investors should be aware, however,
that opinions of counsel are not binding upon the Service or any court.  It must
be emphasized that Hunton & Williams' opinion is based on various assumptions
and is conditioned upon certain representations made by the Company as to
factual matters, including representations regarding the nature of the Company's
properties and the future conduct of its business.  Such factual assumptions and
representations are described below in this discussion of "Federal Income Tax
Considerations" and are set out in the federal income tax opinion that has been
delivered by Hunton & Williams.  Moreover, such qualification and taxation as a
REIT depends upon the Company's ability to meet on a 

                                       55

<PAGE>
 
continuing basis, through actual annual operating results, distribution levels,
and share ownership, the various qualification tests imposed under the Code
discussed below. Hunton & Williams will not review the Company's compliance with
those tests on a continuing basis. Accordingly, no assurance can be given that
the actual results of the Company's operations for any particular taxable year
will satisfy such requirements. For a discussion of the tax consequences of
failure to qualify as a REIT, see "Failure to Qualify."

     If the Company qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income tax on its net income that is distributed
currently to its shareholders.  That treatment substantially eliminates the
"double taxation" (i.e., taxation at both the corporate and shareholder levels)
that generally results from investment in a corporation.  However, the Company
will be subject to federal income tax in the following circumstances.  First,
the Company will be taxed at regular corporate rates on any undistributed REIT
taxable income, including undistributed net capital gains.  Second, under
certain circumstances, the Company may be subject to the "alternative minimum
tax" on its undistributed items of tax preference, if any.  Third, if the
Company has (i) net income from the sale or other disposition of "foreclosure
property" that is held primarily for sale to customers in the ordinary course of
business or (ii) other nonqualifying income from foreclosure property, it will
be subject to tax at the highest corporate rate on such income.  Fourth, if the
Company has net income from prohibited transactions (which are, in general,
certain sales or other dispositions of property (other than foreclosure
property) held primarily for sale to customers in the ordinary course of
business), such income will be subject to a 100% tax.  Fifth, if the Company
should fail to satisfy the 75% gross income test or the 95% gross income test
(as discussed below), and nonetheless has maintained its qualification as a REIT
because certain other requirements have been met, it will be subject to a 100%
tax on the net income attributable to the greater of the amount by which the
Company fails the 75% or 95% gross income test. Sixth, if the Company should
fail to distribute during each calendar year at least the sum of (i) 85% of its
REIT ordinary income for such year, (ii) 95% of its REIT capital gain net income
for such year, and (iii) any undistributed taxable income from prior periods,
the Company would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed.  Seventh, the Company may
elect to retain and pay income tax on the net long-term capital gain it receives
in a taxable year.  Finally, if the Company acquires any asset from a C
corporation (i.e., a corporation generally subject to full corporate-level tax)
in a transaction in which the basis of the asset in the Company's hands is
determined by reference to the basis of the asset (or any other asset) in the
hands of the C corporation and the Company recognizes gain on the disposition of
such asset during the 10-year period beginning on the date on which such asset
was acquired by the Company, then to the extent of such asset's "built-in-gain"
(i.e., the excess of the fair market value of such asset at the time of
acquisition by the Company over the adjusted basis in such asset at such time),
such gain will be subject to tax at the highest regular corporate rate
applicable (as provided in Treasury Regulations that have not yet been
promulgated).  The results described above with respect to the recognition of
"built-in-gain" assume that the Company will make an election pursuant to IRS
Notice 88-19 if it were to make any such acquisition.

REQUIREMENTS FOR QUALIFICATION

     The Code defines a REIT as a corporation, trust, or association (i) that is
managed by one or more trustees or directors; (ii) the beneficial ownership of
which is evidenced by transferable shares, or by transferable certificates of
beneficial interest; (iii) that would be taxable as a domestic corporation, but
for sections 856 through 860 of the Code; (iv) that is neither a financial
institution nor an insurance company subject to certain provisions of the Code;
(v) the beneficial ownership of which is held by 100 or more persons; (vi) not
more than 50% in value of the outstanding shares of which is owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of each taxable year (the "5/50 Rule");
(vii) that makes an election to be a REIT (or has made such election for a
previous taxable year) and satisfies all relevant filing and other
administrative requirements established by the Service that must be met in order
to elect and maintain REIT status; (viii) that uses a calendar year for federal
income tax purposes and complies with the recordkeeping requirements of the Code
and Treasury Regulations promulgated thereunder; and (ix) that meets certain
other tests, described below, regarding the nature of its income and assets.
The Code provides that conditions (i) to (iv), inclusive, must be met during the
entire taxable year and that condition (v) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months.  Conditions (v) and (vi) will not apply until after the
first taxable year for which an election is made by the Company to be taxed as a
REIT.  For purposes of determining stock ownership under the 5/50 Rule, a
supplemental unemployment compensation benefits plan, a private foundation, or a
portion of a trust permanently set aside or used exclusively for charitable
purposes generally is considered an individual.  A trust that is a qualified
trust under Code section 401(a), however, generally is not considered an
individual and beneficiaries of such 

                                       56

<PAGE>
 
trust are treated as holding shares of a REIT in proportion to their actuarial
interests in such trust for purposes of the 5/50 Rule.

     The Company anticipates issuing sufficient Shares with sufficient diversity
of ownership pursuant to the Offering to allow it to satisfy requirements (v)
and (vi) after its 1998 taxable year.  In addition, the Company's Articles of
Incorporation provide for restrictions regarding transfer of Shares that are
intended to assist the Company in continuing to satisfy the share ownership
requirements described in clauses (v) and (vi) above.  Such transfer
restrictions are described in "Description of Capital Stock -- Articles of
Incorporation and Bylaw Provisions -- Restrictions on Ownership and Transfer."

     The Company currently does not have any corporate subsidiaries, but may
have corporate subsidiaries in the future.  Code section 856(i) provides that a
corporation that is a "qualified REIT subsidiary" will not be treated as a
separate corporation, and all assets, liabilities, and items of income,
deduction, and credit of a "qualified REIT subsidiary" will be treated as
assets, liabilities, and items of income, deduction, and credit of the REIT.  A
"qualified REIT subsidiary" is a corporation, all of the capital stock of which
is owned by the REIT.  Thus, in applying the requirements described herein, any
qualified REIT subsidiaries of the Company will be ignored and all assets,
liabilities, and items of income, deduction, and credit of such subsidiaries
will be treated as assets, liabilities, and items of income, deduction, and
credit of the Company.

     In the case of a REIT that is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the gross
income of the partnership attributable to such share.  In addition, the assets
and gross income of the partnership will retain the same character in the hands
of the REIT for purposes of section 856 of the Code, including satisfying the
gross income and asset tests described below.  Thus, the Company's proportionate
share of the assets, liabilities and items of income of the Operating
Partnership will be treated as assets, liabilities and items of income of the
Company for purposes of applying the requirements described herein

  Income Tests

     In order for the Company to qualify and to maintain its qualification as a
REIT, two requirements relating to the Company's gross income must be satisfied
annually.  First, at least 75% of the Company's gross income (excluding gross
income from prohibited transactions) for each taxable year must consist of
defined types of income derived directly or indirectly from investments relating
to real property or mortgages on real property (including "rents from real
property" and, in certain circumstances, interest) or temporary investment
income.  Second, at least 95% of the Company's gross income (excluding gross
income from prohibited transactions) for each taxable year must be derived from
such real property or temporary investments, and from dividends, other types of
interest, and gain from the sale or disposition of stock or securities, or from
any combination of the foregoing.   The specific application of these tests to
the Company is discussed below.

     The rent received by the Company from its tenants ("Rent") will qualify as
"rents from real property" in satisfying the gross income requirements for a
REIT described above only if several conditions are met.  First, the amount of
rent must not be based, in whole or in part, on the income or profits of any
person.  However, an amount received or accrued generally will not be excluded
from the term "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales.  Second, the Code provides
that rents received from a tenant will not qualify as "rents from real property"
in satisfying the gross income tests if the Company, or a direct or indirect
owner of 10% or more of the Company, directly or constructively owns 10% or more
of such tenant (a "Related Party Tenant").  Third, if rent attributable to
personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion of
rent attributable to such personal property will not qualify as "rents from real
property."  Finally, for the Rent to qualify as "rents from real property," the
Company generally must not operate or manage its properties or furnish or render
services to the tenants of such properties, other than through an "independent
contractor" who is adequately compensated and from whom the Company derives no
revenue.  The "independent contractor" requirement, however, does not apply to
the extent the services provided by the Company are "usually or customarily
rendered" in connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant."  In addition, The Company may
render a de minimus amount of 

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<PAGE>
 
noncustomary services to its tenants, or manage or operate property, as long as
the amount received with respect to the services or management does not exceed
1% of the Company's income from the property.

     The Company has represented that it will not charge Rent for any portion of
any property that is based, in whole or in part, on the income or profits of any
person to the extent that the receipt of such Rent would jeopardize the
Company's status as a REIT.  In addition, the Company has represented that, to
the extent that it receives Rent from a Related Party Tenant, such Rent will not
cause the Company to fail to satisfy either the 75% or 95% gross income test.
The Company also has represented that it will not allow the Rent attributable to
personal property leased in connection with any lease of real property to exceed
15% of the total Rent received under the lease, if the receipt of such Rent
would cause the Company to fail to satisfy either the 75% or 95% gross income
test.

     The Company may provide certain services to its tenants.  The Company
believes and has represented that all such services will be considered "usually
or customarily rendered" in connection with the rental of space for occupancy
only and will not otherwise be considered "rendered to the occupant," so that
the provision of such services will not jeopardize the qualification of the Rent
as "rents from real property."  In the case of any services that are not "usual
and customary" under the foregoing rules, the Company intends to employ
qualifying independent contractors to provide such services to the extent that
the provision of such services would cause the Company to fail to satisfy either
the 75% or 95% gross income test.

     If any portion of the Rent does not qualify as "rents from real property"
because the Rent attributable to personal property leased in connection with any
lease of real property exceeds 15% of the total Rent received under the lease
for a taxable year, the portion of the Rent that is attributable to personal
property will not be qualifying income for purposes of either the 75% or 95%
gross income test.  Thus, if the Rent attributable to personal property, plus
any other income received by the Company during a taxable year that is not
qualifying income for purposes of the 95% gross income test, exceeds 5% of the
Company's gross income during such year, the Company likely would lose its REIT
status.  If, however, any portion of the Rent received under a lease does not
qualify as "rents from real property" because either (i) the Rent is considered
based on the income or profits of any person or (ii) the tenant is a Related
Party Tenant, none of the Rent received by the Company under such lease would
qualify as "rents from real property."  In that case, if the Rent received by
the Company under such lease, plus any other income received by the Company
during the taxable year that is not qualifying income for purposes of the 95%
gross income test, exceeds 5% of the Company's gross income for such year, the
Company likely would lose its REIT status.  Finally, if any portion of the Rent
does not qualify as "rents from real property" because the Company furnishes
noncustomary services with respect to a property other than through a qualifying
independent contractor, and the amount received with respect to the services
exceeds 1% of the Company's income from the property, none of the Rent received
by the Company with respect to the related property would qualify as "rents from
real property."  In that case, if the Rent received by the Company with respect
to the related property, plus any other income received by the Company during
the taxable year that is not qualifying income for purposes of the 95% gross
income test, exceeds 5% of the Company's gross income for such year, the Company
would lose its REIT status.

     In addition to the Rent, the Company's tenants will be required to pay
additional charges, such as late fees (the "Additional Charges").  To the extent
that the Additional Charges represent either (i) reimbursements of amounts that
a tenant is obligated to pay to third parties or (ii) penalties for nonpayment
or late payment of such amounts, the Additional Charges should qualify as "rents
from real property."  To the extent that Additional Charges represent interest
that is accrued on the late payment of the Rent or Additional Charges, such
Additional Charges should be treated as interest that qualifies for the 95%
gross income test, but not the 75% gross income test.

     The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person.  However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales.  Furthermore, to the extent that interest from a loan that is based on
the residual cash proceeds from sale of the property securing the loan
constitutes a "shared appreciation provision" (as defined in the Code), income
attributable to such participation feature will be treated as gain from the sale
of the secured property.

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<PAGE>
 
     The net income derived from any prohibited transaction is subject to a 100%
tax.  The term "prohibited transaction" generally includes a sale or other
disposition (whether by the Company or the Operating Partnership) of property
(other than foreclosure property) that is held primarily for sale to customers
in the ordinary course of a trade or business.  The Company believes no asset
owned by the Company or the Operating Partnership will be held for sale to
customers and that a sale of any such asset will not be in the ordinary course
of business of the Company or the Operating Partnership.  Whether property is
held "primarily for sale to customers in the ordinary course of a trade or
business" depends, however, on the facts and circumstances in effect from time
to time, including those related to a particular property.  Nevertheless, the
Company will attempt to comply with the terms of safe-harbor provisions in the
Code prescribing when asset sales will not be characterized as prohibited
transactions.  Complete assurance cannot be given, however, that the Company can
comply with the safe-harbor provisions of the Code or avoid owning property that
may be characterized as property held "primarily for sale to customers in the
ordinary course of a trade or business."

     The Company will be subject to tax at the maximum corporate rate on any
income from foreclosure property (other than income that would be qualified
income under the 75% gross income test), less expenses directly connected with
the production of such income.  However, gross income from such foreclosure
property will be qualifying income under the 75% and 95% gross income tests.
"Foreclosure property" is defined as any real property (including interests in
real property) and any personal property incident to such real property (i) that
is acquired by a REIT as the result of such REIT having bid in such property at
foreclosure, or having otherwise reduced such property to ownership or
possession by agreement or process of law, after there was a default (or default
was imminent) on a lease of such property or on an indebtedness that such
property secured and (ii) for which such REIT makes a proper election to treat
such property as foreclosure property.  However, a REIT will not be considered
to have foreclosed on a property where such REIT takes control of the property
as a mortgagee-in-possession and cannot receive any profit or sustain any loss
except as a creditor of the mortgagor.  Under the Code, property generally
ceases to be foreclosure property with respect to a REIT on the date that is two
years after the date such REIT acquired such property (or longer if an extension
is granted by the Secretary of the Treasury).  The foregoing grace period is
terminated and foreclosure property ceases to be foreclosure property on the
first day (i) on which a lease is entered into with respect to such property
that, by its terms, will give rise to income that does not qualify under the 75%
gross income test or any amount is received or accrued, directly or indirectly,
pursuant to a lease entered into on or after such day that will give rise to
income that does not qualify under the 75% gross income test, (ii) on which any
construction takes place on such property (other than completion of a building,
or any other improvement, where more than 10% of the construction of such
building or other improvement was completed before default became imminent) or
(iii) which is more than 90 days after the day on which such property was
acquired by the REIT and the property is used in a trade or business that is
conducted by the REIT (other than through an independent contractor from whom
the REIT itself does not derive or receive any income).

     It is possible that, from time to time, the Company will enter into hedging
transactions with respect to one or more of its assets or liabilities.  Any such
hedging transactions could take a variety of forms, including interest rate swap
contracts, interest rate cap or floor contracts, futures or forward contracts,
and options.  To the extent that the Company enters into an interest rate swap
or cap contract, option, futures contract, forward rate agreement or similar
financial instrument to reduce its interest rate risk with respect to
indebtedness incurred or to be incurred to acquire or carry real estate assets,
any periodic income or gain from the disposition of such contract should be
qualifying income for purposes of the 95% gross income test, but not the 75%
gross income test.  To the extent that the Company hedges with other types of
financial instruments or in other situations, it may not be entirely clear how
the income from those transactions will be treated for purposes of the various
income tests that apply to REITs under the Code.  The Company intends to
structure any hedging transactions in a manner that does not jeopardize its
status as a REIT.

     If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it nevertheless may qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code.  Those relief
provisions generally will be available if the Company's failure to meet such
tests is due to reasonable cause and not due to willful neglect, the Company
attaches a schedule of the sources of its income to its return, and any
incorrect information on the schedule was not due to fraud with intent to evade
tax.  It is not possible, however, to state whether in all circumstances the
Company would be entitled to the benefit of those relief provisions.  As
discussed above in "Federal Income Tax Considerations -- Taxation of the
Company," even if those relief provisions apply, a 100% tax would be imposed on
the net income attributable to the greater of the amount by which the Company
fails the 75% or 95% gross income test.

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<PAGE>
 
  Asset Tests

     The Company, at the close of each quarter of each taxable year, also must
satisfy two tests relating to the nature of its assets. First, at least 75% of
the value of the Company's total assets must be represented by cash or cash
items (including certain receivables), government securities, "real estate
assets," or, in cases where the Company raises new capital through stock or
long-term (at least five-year) debt offerings, temporary investments in stock or
debt instruments during the one-year period following the Company's receipt of
such capital.  The term "real estate assets" includes interests in real
property, interests in mortgages on real property to the extent the principal
balance of a mortgage does not exceed the value of the associated real property,
and shares of other REITs. For purposes of the 75% asset test, the term
"interest in real property" includes an interest in land and improvements
thereon, such as buildings or other inherently permanent structures (including
items that are structural components of such buildings or structures), a
leasehold of real property, and an option to acquire real property (or a
leasehold of real property).  Second, of the investments not included in the 75%
asset class, the value of any one issuer's securities owned by the Company may
not exceed 5% of the value of the Company's total assets and the Company may not
own more than 10% of any one issuer's outstanding voting securities (except for
its interests in the Operating Partnership and any qualified REIT subsidiary).

     The Company has represented that (i) at least 75% of the value of its total
assets will be represented by real estate assets, cash and cash items (including
receivables), and government securities and (ii) it will not own (A) securities
of any one issuer the value of which exceeds 5% of the value of the Company's
total assets or (B) more than 10% of any one issuer's outstanding voting
securities (except for its interests in the Operating Partnership and any
qualified REIT subsidiary).  In addition, the Company has represented that it
will not acquire or dispose, or cause the Operating Partnership to acquire or
dispose, of assets in the future in a way that would cause it to violate either
asset test.

     If the Company should fail to satisfy the asset tests at the end of a
calendar quarter, such a failure would not cause it to lose its REIT status if
(i) it satisfied the asset tests at the close of the preceding calendar quarter
and (ii) the discrepancy between the value of the Company's assets and the asset
test requirements arose from changes in the market values of its assets and was
not wholly or partly caused by an acquisition of one or more nonqualifying
assets.  If the condition described in clause (ii) of the preceding sentence
were not satisfied, the Company still could avoid disqualification by
eliminating any discrepancy within 30 days after the close of the calendar
quarter in which it arose.

  Distribution Requirements

     The Company, in order to avoid corporate income taxation of the earnings it
distributes, is required to distribute with respect to each taxable year
dividends (other than capital gain dividends and retained earnings) to its
shareholders in an aggregate amount at least equal to (i) the sum of (A) 95% of
its "REIT taxable income" (computed without regard to the dividends paid
deduction and its net capital gain) and (B) 95% of the net income (after tax),
if any, from foreclosure property, minus (ii) the sum of certain items of
noncash income.  Such distributions must be paid in the taxable year to which
they relate, or in the following taxable year if declared before the Company
timely files its federal income tax return for such year and if paid on or
before the first regular dividend payment date after such declaration. To the
extent that the Company does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its "REIT taxable income," as
adjusted, it will be subject to tax thereon at regular ordinary and capital
gains corporate tax rates. Furthermore, if the Company should fail to distribute
during each calendar year at least the sum of (i) 85% of its REIT ordinary
income for such year, (ii) 95% of its REIT capital gain income for such year,
and (iii) any undistributed taxable income from prior periods, the Company would
be subject to a 4% nondeductible excise tax on the excess of such required
distribution over the amounts actually distributed.  The Company may elect to
retain and pay income on the net long-term capital gain it receives in a taxable
year.  Any such retained capital gain will be treated as if it had been
distributed to the Company's shareholders for purposes of the 4% excise tax.
The Company intends to make timely distributions sufficient to satisfy the
annual distribution requirements.

     It is possible that, from time to time, the Company may experience timing
differences between (i) the actual receipt of income and actual payment of
deductible expenses and (ii) the inclusion of that income and deduction of such
expenses in arriving at its REIT taxable income.  Further, it is possible that,
from time to time, the Company may be allocated a share of net capital gain
attributable to the sale of depreciated property that exceeds its allocable
share of cash attributable to that sale. Therefore, the Company may have less
cash than is necessary to meet its annual 95% 

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<PAGE>
 
distribution requirement or to avoid corporate income tax or the excise tax
imposed on certain undistributed income. In such a situation, the Company may
find it necessary to arrange for short-term (or possibly long-term) borrowings
or to raise funds through the issuance of additional Shares.

     Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirements for a year by paying "deficiency
dividends" to its shareholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year.  Although the
Company may be able to avoid being taxed on amounts distributed as deficiency
dividends, it will be required to pay to the Service interest based upon the
amount of any deduction taken for deficiency dividends.

  Recordkeeping Requirements

     Pursuant to applicable Treasury Regulations, in order to be able to elect
to be taxed as a REIT, the Company must maintain certain records.  In addition,
in order to avoid a monetary penalty, the Company must request, on an annual
basis, certain information from its shareholders designed to disclose the actual
ownership of its outstanding shares.  The Company intends to comply with such
requirements.

  Partnership Anti-Abuse Rule

     The U.S. Department of the Treasury has issued a final regulation (the
"Anti-Abuse Rule") under the partnership provisions of the Code (the
"Partnership Provisions") that authorizes the Service, in certain abusive
transactions involving partnerships, to disregard the form of the transaction
and recast it for federal tax purposes as the Service deems appropriate. The
Anti-Abuse Rule applies where a partnership is formed or utilized in connection
with a transaction (or series of related transactions) with a principal purpose
of substantially reducing the present value of the partners' aggregate federal
tax liability in a manner inconsistent with the intent of the Partnership
Provisions.  The Anti-Abuse Rule states that the Partnership Provisions are
intended to permit taxpayers to conduct joint business (including investment)
activities though a flexible arrangement that accurately reflects the partners'
economic agreement and clearly reflects the partners' income without incurring
any entity-level tax.  The purposes for structuring a transaction involving a
partnership are determined based on all of the facts and circumstances,
including a comparison of the purported business purpose for a transaction and
the claimed tax benefits resulting from the transaction.  A reduction in the
present value of the partners' aggregate federal tax liability through the use
of a partnership does not, by itself, establish inconsistency with the intent of
the Partnership Provisions.

     The Anti-Abuse Rule contains an example in which a corporation that elects
to be treated as a REIT contributes substantially all of the proceeds from a
public offering to a partnership in exchange for a general partnership interest.
The limited partners of the partnership contribute real property assets to the
partnership, subject to liabilities that exceed their respective aggregate bases
in such property.  In addition, some of the limited partners have the right,
beginning two years after the formation of the partnership, to require the
redemption of their limited partnership interests in exchange for cash or REIT
stock (at the REIT's option) equal to the fair market value of their respective
interests in the partnership at the time of the redemption.  The example
concludes that the use of the partnership is not inconsistent with the intent of
the Partnership Provisions and, thus, cannot be recast by the Service.  However,
the redemption rights associated with the OP Units will not conform in all
respects to the redemption rights contained in the foregoing example.  Moreover,
the Anti-Abuse Rule is extraordinarily broad in scope and is applied based on an
analysis of all of the facts and circumstances.  As a result, there can be no
assurance that the Service will not attempt to apply the Anti-Abuse Rule to the
Company.  If the conditions of the Anti-Abuse Rule are met, the Service is
authorized to take appropriate enforcement action, including disregarding the
Operating Partnership for federal tax purposes or treating one or more of the
partners as nonpartners.  Any such action potentially could jeopardize the
Company's status as a REIT.

FAILURE TO QUALIFY

     If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to the Company's shareholders in any year
in which the Company fails to qualify will not be deductible by the Company nor
will they be required to be made.  In such event, to the extent of current and

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accumulated earnings and profits, all distributions to shareholders will be
taxable as ordinary income and, subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company also
will be disqualified from taxation as a REIT for the four taxable years
following the year during which the Company ceased to qualify as a REIT.  It is
not possible to state whether in all circumstances the Company would be entitled
to such statutory relief.

TAXATION OF TAXABLE U.S. SHAREHOLDERS

     As long as the Company qualifies as a REIT, distributions made to the
Company's taxable U.S. shareholders out of current or accumulated earnings and
profits (and not designated as capital gain dividends or retained capital gains)
will be taken into account by such U.S. shareholders as ordinary income and will
not be eligible for the dividends received deduction generally available to
corporations. As used herein, the term "U.S. shareholder" means a holder of
Shares that for U.S. federal income tax purposes is (i) a citizen or resident of
the U.S., (ii) a corporation, partnership, or other entity created or organized
in or under the laws of the U.S. or of any political subdivision thereof, or
(iii) an estate whose income from sources without the United States is
includible in gross income for U.S. federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United States,
or (iv) any trust with respect to which (A) a U.S. court is able to exercise
primary supervision over the administration of such trust and (B) one or more
U.S. fiduciaries have the authority to control all substantial decisions of the
trust.

     Distributions that are designated as capital gain dividends will be taxed
as long-term capital gains (to the extent they do not exceed the Company's
actual net capital gain for the taxable year) without regard to the period for
which the shareholder has held his Shares.  However, corporate shareholders may
be required to treat up to 20% of certain capital gain dividends as ordinary
income.  The Company may elect to retain and pay income tax on the net long-term
capital gain if received in a taxable year.  In that case, the Company's
shareholders would include in income as long-term capital gain their
proportionate share of the Company's retained long-term capital gain.  In
addition, the shareholders would be deemed to have paid their proportionate
share of the tax paid by the Company, which amount would be credited or refunded
to the shareholders.  Each shareholder's basis in his Shares would be increased
by the amount of the undistributed long-term capital gain included in the
shareholder's income, less the shareholder's share of the tax paid by the
Company.

     Distributions in excess of current and accumulated earnings and profits
will not be taxable to a shareholder to the extent that they do not exceed the
adjusted basis of the shareholder's Shares, but rather will reduce the adjusted
basis of such Shares. To the extent that such distributions in excess of current
and accumulated earnings and profits exceed the adjusted basis of a
shareholder's Shares, such distributions will be included in income as long-term
capital gain (or short-term capital gain if the Shares have been held for one
year or less), assuming the Shares are capital assets in the hands of the
shareholder. In addition, any distribution declared by the Company in October,
November, or December of any year and payable to a shareholder of record on a
specified date in any such month shall be treated as both paid by the Company
and received by the shareholder on December 31 of such year, provided that the
distribution is actually paid by the Company during January of the following
calendar year.

     Shareholders may not include in their individual income tax returns any net
operating losses or capital losses of the Company. Instead, such losses would be
carried over by the Company for potential offset against its future income
(subject to certain limitations).  Taxable distributions from the Company and
gain from the disposition of the Shares will not be treated as passive activity
income and, therefore, shareholders generally will not be able to apply any
"passive activity losses" (such as losses from certain types of limited
partnerships in which a shareholder is a limited partner) against such income.
In addition, taxable distributions from the Company generally will be treated as
investment income for purposes of the investment interest limitations.  Capital
gains from the disposition of Shares (or distributions treated as such),
however, will be treated as investment income only if the shareholder so elects,
in which case such capital gains will be taxed at ordinary income rates.  The
Company will notify shareholders after the close of the Company's taxable year
as to the portions of the distributions attributable to that year that
constitute ordinary income, return of capital, and capital gain.

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<PAGE>
 
TAXATION OF SHAREHOLDERS ON THE DISPOSITION OF THE SHARES

     In general, any gain or loss realized upon a taxable disposition of Shares
by a shareholder who is not a dealer in securities will be treated as long-term
capital gain or loss if such Shares have been held for more than one year and
otherwise as short-term capital gain or loss.  However, any loss upon a sale or
exchange of Shares by a shareholder who has held such shares for six months or
less (after applying certain holding period rules), will be treated as a long-
term capital loss to the extent of distributions from the Company required to be
treated by such shareholder as long-term capital gain.  All or a portion of any
loss realized upon a taxable disposition of Shares may be disallowed if other
Shares are purchased within 30 days before or after the disposition.

CAPITAL GAINS AND LOSSES

     A capital asset generally must be held for more than one year in order for
gain or loss derived from its sale or exchange to be treated as long-term
capital gain or loss.  The highest marginal individual income tax rate is 39.6%.
The maximum tax rate on net capital gains applicable to noncorporate taxpayers
is 28% for sales and exchanges of assets held for more than one year, but not
more than 18 months, and 20% for sales and exchanges of assets held for more
than 18 months.  The maximum tax rate applicable to noncorporate taxpayers on
long-term capital gain from the sale of "Section 1250 property" (depreciable
real property) is 25% to the extent such gain would have been treated as
ordinary income if the property were "Section 1245 property."  With respect to
distributions designated by the Company as capital gain dividends and deemed
distributions of retained capital gains, the Company may designate (subject to
certain limits) whether such a distribution is taxable to shareholders at a 20%,
25% or 28% rate.  Thus, the tax rate differential between capital gain and
ordinary income for individuals may be significant.  In addition, the
characterization of income as capital or ordinary may affect the deductibility
of capital losses.  Capital losses not offset by capital gains may be deducted
against an individual's ordinary income only up to a maximum annual amount of
$3,000.  Unused capital losses may be carried forward.  All net capital gain of
a corporate taxpayer is subject to tax at ordinary corporate rates. A corporate
taxpayer can deduct capital losses only to the extent of capital gains, with
unused losses being carried back three years and forward five years.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

     The Company will report to its U.S. shareholders and to the Service the
amount of distributions paid during each calendar year, and the amount of tax
withheld, if any.  Under the backup withholding rules, a shareholder may be
subject to backup withholding at the rate of 31% with respect to distributions
paid unless such holder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with the applicable requirements of the
backup withholding rules.  A shareholder who does not provide the Company with
his correct taxpayer identification number also may be subject to penalties
imposed by the Service.  Any amount paid as backup withholding will be
creditable against the shareholder's income tax liability.  In addition, the
Company may be required to withhold a portion of capital gain distributions to
any shareholders who fail to certify their nonforeign status to the Company.
The Service has issued final regulations regarding the backup withholding rules
as applied to Non-U.S. shareholders.  Those regulations would alter the current
system of backup withholding compliance and will be effective for distributions
made after December 31, 1998.  See "--Taxation of Non-U.S. shareholders."

TAXATION OF TAX-EXEMPT SHAREHOLDERS

     Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI").  While many
investments in real estate generate UBTI, the Service has issued a published
ruling that dividend distributions from a REIT to an exempt employee pension
trust do not constitute UBTI, provided that the shares of the REIT are not
otherwise used in an unrelated trade or business of the exempt employee pension
trust.  Based on that ruling, amounts distributed by the Company to Exempt
Organizations generally should not constitute UBTI.  However, if an Exempt
Organization finances its acquisition of Shares with debt, a portion of its
income from the Company will constitute UBTI pursuant to the "debt-financed
property" rules.  Furthermore, social clubs, voluntary employee benefit
associations, supplemental unemployment benefit trusts, and qualified group
legal services plans that are exempt from taxation under paragraphs (7), (9),
(17), and (20), respectively, 

                                       63

<PAGE>
 
of Code section 501(c) are subject to different UBTI rules, which generally will
require them to characterize distributions from the Company as UBTI. In
addition, in certain circumstances, a pension trust that owns more than 10% of
the Company's shares is required to treat a percentage of the dividends from the
Company as UBTI (the "UBTI Percentage"). The UBTI Percentage is the gross income
derived by the Company from an unrelated trade or business (determined as if the
Company were a pension trust) divided by the gross income of the Company for the
year in which the dividends are paid. The UBTI rule applies to a pension trust
holding more than 10% of the Company's stock only if (i) the UBTI Percentage is
at least 5%, (ii) the Company qualifies as a REIT by reason of the modification
of the 5/50 Rule that allows the beneficiaries of the pension trust to be
treated as holding shares of the Company in proportion to their actuarial
interests in the pension trust, and (iii) either (A) one pension trust owns more
than 25% of the value of the Company's shares or (B) a group of pension trusts
individually holding more than 10% of the value of the Company's shares
collectively owns more than 50% of the value of the Company's shares. Because
the Ownership Limitation prohibits any shareholder from owning more than 9.8% of
the number of outstanding Shares or more than 9.8% of the number of outstanding
Shares of any class of preferred stock, no pension trust should hold more than
10% of the value of the Company's Shares.

TAXATION OF NON-U.S. SHAREHOLDERS

     The rules governing U.S. federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
shareholders (collectively, "Non-U.S. shareholders") are complex and no attempt
will be made herein to provide more than a summary of such rules.  PROSPECTIVE
NON-U.S. SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS TO DETERMINE
THE IMPACT OF FEDERAL, STATE, AND LOCAL INCOME TAX LAWS WITH REGARD TO AN
INVESTMENT IN THE SHARES, INCLUDING ANY REPORTING REQUIREMENTS.

     Distributions to Non-U.S. shareholders that are not attributable to gain
from sales or exchanges by the Company of U.S. real property interests and are
not designated by the Company as capital gains dividends or retained capital
gains will be treated as dividends of ordinary income to the extent that they
are made out of current or accumulated earnings and profits of the Company.
Such distributions ordinarily will be subject to a withholding tax equal to 30%
of the gross amount of the distribution unless an applicable tax treaty reduces
or eliminates that tax.  However, if income from the investment in the Shares is
treated as effectively connected with the Non-U.S. Shareholder's conduct of a
U.S. trade or business, the Non-U.S. Shareholder generally will be subject to
federal income tax at graduated rates, in the same manner as U.S. shareholders
are taxed with respect to such distributions (and also may be subject to the 30%
branch profits tax in the case of a Non-U.S. Shareholder that is a non-U.S.
corporation).  The Company expects to withhold U.S. income tax at the rate of
30% on the gross amount of any such distributions made to a Non-U.S. Shareholder
unless (i) a lower treaty rate applies and any required form evidencing
eligibility for that reduced rate is filed with the Company or (ii) the Non-U.S.
Shareholder files an IRS Form 4224 with the Company claiming that the
distribution is effectively connected income.  The Service has issued
regulations that modify the manner in which the Company complies with the
withholding requirements.  Those regulations are effective for distributions
made after December 31, 1998.  Distributions in excess of current and
accumulated earnings and profits of the Company will not be taxable to a
shareholder to the extent that such distributions do not exceed the adjusted
basis of the shareholder's Shares, but rather will reduce the adjusted basis of
such shares. To the extent that distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a Non-U.S.
Shareholder's Shares, such distributions will give rise to tax liability if the
Non-U.S. Shareholder would otherwise be subject to tax on any gain from the sale
or disposition of his Shares, as described below.  Because it generally cannot
be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of any distribution normally will be subject to withholding at
the same rate as a dividend.  However, amounts so withheld are refundable to the
extent it is determined subsequently that such distribution was, in fact, in
excess of current and accumulated earnings and profits of the Company.

     The Company is required to withhold 10% of any distribution in excess of
its current and accumulated earnings and profits.  Consequently, although the
Company intends to withhold at a rate of 30% on the entire amount of any
distribution, to the extent that the Company does not do so, any portion of a
distribution not subject to withholding at a rate of 30% will be subject to
withholding at a rate of 10%.

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<PAGE>
 
     For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of U.S. real
property interests will be taxed to a Non-U.S. Shareholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA").  Under
FIRPTA, distributions attributable to gain from sales of U.S. real property
interests are taxed to a Non-U.S. Shareholder as if such gain were effectively
connected with a U.S. business.  Non-U.S. shareholders thus would be taxed at
the normal capital gain rates applicable to U.S. shareholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals).  Distributions subject to FIRPTA also
may be subject to the 30% branch profits tax in the hands of a non-U.S.
corporate shareholder not entitled to treaty relief or exemption. The Company is
required to withhold 35% of any distribution that is or could be designated by
the Company as a capital gains dividend.  The amount withheld is creditable
against the Non-U.S. Shareholder's FIRPTA tax liability.

     Gain recognized by a Non-U.S. Shareholder upon a sale of his Shares
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by non-U.S. persons.  However, no assurance can be given that the
Company will be a "domestically controlled REIT." Furthermore, gain not subject
to FIRPTA will be taxable to a Non-U.S. Shareholder if (i) investment in Shares
is effectively connected with the Non-U.S. Shareholder's U.S. trade or business,
in which case the Non-U.S. Shareholder will be subject to the same treatment as
U.S. shareholders with respect to such gain, or (ii) the Non-U.S. Shareholder is
a nonresident alien individual who was present in the U.S. for 183 days or more
during the taxable year and certain other conditions apply, in which case the
nonresident alien individual will be subject to a 30% tax on the individual's
capital gains.  If the gain on the sale of Shares were to be subject to taxation
under FIRPTA, the Non-U.S. Shareholder would be subject to the same treatment as
U.S. shareholders with respect to such gain (subject to applicable alternative
minimum tax, a special alternative minimum tax in the case of nonresident alien
individuals, and the possible application of the 30% branch profits tax in the
case of non-U.S. corporations).

OTHER TAX CONSEQUENCES

     The Company, the Operating Partnership, or the Company's shareholders may
be subject to state or local taxation in various state or local jurisdictions,
including those in which it or they own property, transact business, or reside.
The state and local tax treatment of the Company and its shareholders may not
conform to the federal income tax consequences discussed above.  CONSEQUENTLY,
PROSPECTIVE SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
EFFECT OF STATE AND LOCAL TAX LAWS ON AN INVESTMENT IN THE COMPANY.

TAX ASPECTS OF THE OPERATING PARTNERSHIP

     The following discussion summarizes certain federal income tax
considerations applicable to the Company's direct or indirect investment in the
Operating Partnership.  The discussion does not cover state or local tax laws or
any federal tax laws other than income tax laws.

  Classification as a Partnership

     The Company will be entitled to include in its income its distributive
share of the Operating Partnership's income and to deduct its distributive share
of the Operating Partnership's losses only if the Operating Partnership is
classified for federal income tax purposes as a partnership rather than as a
corporation or an association taxable as a corporation.  An entity will be
classified as a partnership rather than as a corporation or an association
taxable as a corporation for federal income tax purposes if the entity (i) is
treated as a partnership under Treasury regulations, effective January 1, 1997,
relating to entity classification (the "Check-the-Box Regulations") and (ii) is
not a "publicly traded" partnership.  In general, under the Check-the-Box
Regulations, an unincorporated entity with at least two members may elect to be
classified either as an association taxable as a corporation or as a
partnership.  If such an entity fails to make an election, it generally will be
treated as a partnership for federal income tax purposes.  The Operating
Partnership intends to be classified as a partnership for federal income tax
purposes and will not elect to be treated as an association taxable as a
corporation under the Check-the-Box Regulations.

                                       65

<PAGE>
 
     A publicly traded partnership is a partnership whose interests are traded
on an established securities market or are readily tradable on a secondary
market (or the substantial equivalent thereof).  A publicly traded partnership
will be treated as a corporation for federal income tax purposes unless at least
90% of such partnership's gross income for a taxable year consists of
"qualifying income" under Section 7704(d) of the Code, which generally includes
any income that is qualifying income for purposes of the 95% gross income test
applicable to REITs (the "90% Passive-Type Income Exception").  See "--
Requirements for Qualification -- Income Tests."  The U.S. Treasury Department
has issued regulations (the "PTP Regulations") that provide limited safe harbors
from the definition of a publicly traded partnership.  Pursuant to one of those
safe harbors (the "Private Placement Exclusion"), interests in a partnership
will not be treated as readily tradable on a secondary market or the substantial
equivalent thereof if (i) all interests in the partnership were issued in a
transaction (or transactions) that was not required to be registered under the
Securities Act of 1933, as amended, and (ii) the partnership does not have more
than 100 partners at any time during the partnership's taxable year.  In
determining the number of partners in a partnership, a person owning an interest
in a flow-through entity (i.e., a partnership, grantor trust, or S corporation)
                          - -                                                  
that owns an interest in the partnership is treated as a partner in such
partnership only if (a) substantially all of the value of the owner's interest
in the flow-through entity is attributable to the flow-through entity's interest
(direct or indirect) in the partnership and (b) a principal purpose of the use
of the flow-through entity is to permit the partnership to satisfy the 100-
partner limitation.  The Operating Partnership qualifies for the Private
Placement Exclusion.  If the Operating Partnership is considered a publicly
traded partnership under the PTP Regulations because it is deemed to have more
than 100 partners, the Operating Partnership should not be treated as a
corporation because it should be eligible for the 90% Passive-Type Income
Exception.

     The Company has not requested, and does not intend to request, a ruling
from the Service that the Operating Partnership will be classified as a
partnership for federal income tax purposes.  Instead, Hunton & Williams is of
the opinion that, based on certain factual assumptions and representations, the
Operating Partnership will be treated for federal income tax purposes as a
partnership and not as a corporation or an association taxable as a corporation,
or as a publicly traded partnership.  Unlike a tax ruling, an opinion of counsel
is not binding upon the Service, and no assurance can be given that the Service
will not challenge the status of the Operating Partnership as a partnership for
federal income tax purposes.  If such challenge were sustained by a court, the
Operating Partnership would be treated as a corporation for federal income tax
purposes, as described below.  In addition, the opinion of Hunton & Williams is
based on existing law, which is to a great extent the result of administrative
and judicial interpretation.  No assurance can be given that administrative or
judicial changes would not modify the conclusions expressed in the opinion.

     If for any reason the Operating Partnership were taxable as a corporation,
rather than as a partnership, for federal income tax purposes, the Company would
not be able to qualify as a REIT.  See "Federal Income Tax Considerations --
Requirements for Qualification -- Income Tests" and "-- Requirements for
Qualification -- Asset Tests." In addition, any change in the Operating
Partnership's status for tax purposes might be treated as a taxable event, in
which case the Company might incur a tax liability without any related cash
distribution. See "Federal Income Tax Considerations -- Requirements for
Qualification -- Distribution Requirements." Further, items of income and
deduction of the Operating Partnership would not pass through to its partners,
and its partners would be treated as shareholders for tax purposes.
Consequently, the Operating Partnership would be required to pay income tax at
corporate tax rates on its net income, and distributions to its partners would
constitute dividends that would not be deductible in computing the Operating
Partnership's taxable income.

  Income Taxation of the Operating Partnerships and its Partners

     Partners, Not a Partnership, Subject to Tax.  A partnership is not a
taxable entity for federal income tax purposes.  Rather, the Company will be
required to take into account its allocable share of the Operating Partnership's
income, gains, losses, deductions, and credits for any taxable year of the
Operating Partnership ending within or with the taxable year of the Company,
without regard to whether the Company has received or will receive any
distribution from the Operating Partnership.

     Partnership Allocations.  Although a partnership agreement generally will
determine the allocation of income and losses among partners, such allocations
will be disregarded for tax purposes under section 704(b) of the Code if they do
not comply with the provisions of section 704(b) of the Code and the Treasury
Regulations promulgated thereunder.  If an allocation is not recognized for
federal income tax purposes, the item subject to the allocation will be
reallocated in accordance with the partners' interests in the partnership, which
will be determined by taking into account all of the facts 

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<PAGE>
 
and circumstances relating to the economic arrangement of the partners with
respect to such item. The Operating Partnership's allocations of taxable income
and loss are intended to comply with the requirements of section 704(b) of the
Code and the Treasury Regulations promulgated thereunder.

     Tax Allocations With Respect to Contributed Properties.  Pursuant to
section 704(c) of the Code, income, gain, loss, and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership must be allocated for federal income
tax purposes in a manner such that the contributor is charged with, or benefits
from, the unrealized gain or unrealized loss associated with the property at the
time of the contribution.  The amount of such unrealized gain or unrealized loss
is generally equal to the difference between the fair market value of the
contributed property at the time of contribution and the adjusted tax basis of
such property at the time of contribution.  The Treasury Department has issued
regulations requiring partnerships to use a "reasonable method" for allocating
items affected by section 704(c) of the Code and outlining several reasonable
allocation methods.  The Operating Partnership plans to elect to use the
traditional method for allocating Code section 704(c) items with respect to any
properties it acquires in exchange for OP Units.

     Under the Operating Partnership Agreement, depreciation or amortization
deductions of the Operating Partnership generally will be allocated among the
partners in accordance with their respective interests in the Operating
Partnership, except to the extent that the Operating Partnership is required
under Code section 704(c) to use a method for allocating tax depreciation
deductions attributable to its properties that results in the Company receiving
a disproportionately large share of such deductions.  Depending on the
allocation method elected under Code section 704(c), it is possible that the
Company (i) may be allocated lower amounts of depreciation deductions for tax
purposes with respect to contributed properties than would be allocated to the
Company if such properties were to have a tax basis equal to their fair market
value at the time of contribution and (ii) may be allocated taxable gain in the
event of a sale of such contributed properties in excess of the economic profit
allocated to the Company as a result of such sale.  These allocations may cause
the Company to recognize taxable income in excess of cash proceeds, which might
adversely affect the Company's ability to comply with the REIT distribution
requirements, although the Company does not anticipate that this event will
occur.  The foregoing principles also will affect the calculation of the
Company's earnings and profits for purposes of determining which portion of the
Company's distributions is taxable as a dividend.  The allocations described in
this paragraph may result in a higher portion of the Company's distributions
being taxed as a dividend than would have occurred had the Company purchased
such properties for cash.

     Basis in Operating Partnership Interest.  The Company's adjusted tax basis
in its partnership interest in the Operating Partnership generally is equal to
(i) the amount of cash and the basis of any other property contributed to the
Operating Partnership by the Company, (ii) increased by (A) its allocable share
of the Operating Partnership's income and (B) its allocable share of
indebtedness of the Operating Partnership, and (iii) reduced, but not below
zero, by (A) the Company's allocable share of the Operating Partnership's loss
and (B) the amount of cash distributed to the Company, including constructive
cash distributions resulting from a reduction in the Company's share of
indebtedness of the Operating Partnership.

     If the allocation of the Company's distributive share of the Operating
Partnership's loss would reduce the adjusted tax basis of the Company's
partnership interest in the Operating Partnership below zero, the recognition of
such loss will be deferred until such time as the recognition of such loss would
not reduce the Company's adjusted tax basis below zero.  To the extent that the
Operating Partnership's distributions, or any decrease in the Company's share of
the indebtedness of the Operating Partnership (such decrease being considered a
constructive cash distribution to the partners), would reduce the Company's
adjusted tax basis below zero, such distributions (including such constructive
distributions) will constitute taxable income to the Company.  Such
distributions and constructive distributions normally will be characterized as
capital gain, and, if the Company's partnership interest in the Operating
Partnership has been held for longer than the long-term capital gain holding
period (currently one year), the distributions and constructive distributions
will constitute long-term capital gain.

     Depreciation Deductions Available to the Operating Partnership.  Assuming
that the Minimum Offering is reached, immediately upon accepting a subscription,
the Company will make a cash contribution to the Operating Partnership in
exchange for a general partnership interest in the Operating Partnership.  The
Operating Partnership will use a portion of such contributions to acquire
interests in properties.  To the extent that the Operating Partnership acquires
properties for cash, the Operating Partnership's initial basis in such
properties for federal income tax purposes 

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<PAGE>
 
generally will be equal to the purchase price paid by the Operating Partnership.
The Operating Partnership plans to depreciate such depreciable property for
federal income tax purposes under the alternative depreciation system of
depreciation ("ADS"). Under ADS, the Operating Partnership generally will
depreciate such buildings and improvements over a 40-year recovery period using
a straight line method and a mid-month convention and will depreciate
furnishings and equipment over a 12-year recovery period. To the extent that the
Operating Partnership acquires properties in exchange for OP Units, the
Operating Partnership's initial basis in each such property for federal income
tax purposes should be the same as the transferor's basis in that property on
the date of acquisition by the Operating Partnership. Although the law is not
entirely clear, the Operating Partnership generally intends to depreciate such
depreciable property for federal income tax purposes over the same remaining
useful lives and under the same methods used by the transferors.

SALE OF THE OPERATING PARTNERSHIP'S PROPERTY

     Generally, any gain realized by the Operating Partnership on the sale of
property held for more than one year will be long-term capital gain, except for
any portion of such gain that is treated as depreciation or cost recovery
recapture.  Any gain recognized by the Operating Partnership upon the
disposition of a property acquired by the Operating Partnership for cash will be
allocated among the partners in accordance with their respective percentage
interests in the Operating Partnership.  The Bylaws of the Company provide that
any decision to sell any real estate asset in which a director, or officer of
the Company, or any Affiliate of the foregoing, has a direct or indirect
interest, will be made by a majority of the Directors including a majority of
the Independent Directors.  See "Policies with Respect to Certain Activities --
Conflict of Interest Policies -- Articles of Incorporation and Bylaw
Provisions."

     The Company's share of any gain realized by the Operating Partnership on
the sale of any property held by the Operating Partnership as inventory or other
property held primarily for sale to customers in the ordinary course of the
Operating Partnership's trade or business will be treated as income from a
prohibited transaction that is subject to a 100% penalty tax.  Such prohibited
transaction income also may have an adverse effect upon the Company's ability to
satisfy the income tests for REIT status.  See "Federal Income Tax
Considerations -- Requirements For Qualification -- Income Tests" above.  The
Company, however, does not presently intend to acquire or hold or allow the
Operating Partnership to acquire or hold any property that represents inventory
or other property held primarily for sale to customers in the ordinary course of
the Company's or the Operating Partnership's trade or business.

                              ERISA CONSIDERATIONS

     The following is a summary of material considerations arising under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
prohibited transaction provisions of section 4975 of the Code that may be
relevant to a prospective purchaser of Shares (including, with respect to the
discussion contained in "ERISA Considerations--Status of the Company and the
Operating Partnership under ERISA," to a prospective purchaser that is not an
employee benefit plan, another tax-qualified retirement plan, or an individual
retirement account or an individual retirement annuity ("IRA")).  The discussion
does not purport to deal with all aspects of ERISA or section 4975 of the Code
or, to the extent not preempted, state law that may be relevant to particular
shareholders (including plans subject to Title I of ERISA, other retirement
employee benefit plans and IRAs subject to the prohibited transaction provisions
of section 4975 of the Code, and governmental plans or church plans that are
exempt from ERISA and section 4975 of the Code but that may be subject to state
law requirements) in light of their particular circumstances.

     The discussion is based on current provisions of ERISA and the Code,
existing and currently proposed regulations under ERISA and the Code, the
legislative history of ERISA and the Code, existing administrative rulings of
the Department of Labor ("DOL") and reported judicial decisions.  No assurance
can be given that legislative, judicial, or administrative changes will not
affect the accuracy of any statements herein with respect to transactions
entered into or contemplated prior to the effective date of such changes.

     A FIDUCIARY MAKING THE DECISION TO INVEST IN THE SHARES ON BEHALF OF A
PROSPECTIVE PURCHASER THAT IS AN EMPLOYEE BENEFIT PLAN, A TAX-QUALIFIED
RETIREMENT PLAN, OR AN IRA SHOULD CONSULT ITS OWN LEGAL ADVISOR REGARDING THE
SPECIFIC 

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<PAGE>
 
CONSIDERATIONS ARISING UNDER ERISA, SECTION 4975 OF THE CODE, AND STATE LAW WITH
RESPECT TO THE PURCHASE, OWNERSHIP, OR SALE OF THE SHARES BY SUCH PLAN OR IRA.

EMPLOYEE BENEFIT PLANS, TAX-QUALIFIED RETIREMENT PLANS, AND IRAS

     Each fiduciary of a pension, profit-sharing, or other employee benefit plan
(an "ERISA Plan") subject to Title I of ERISA should consider carefully whether
an investment in the Shares is consistent with his fiduciary responsibilities
under ERISA.  In particular, the fiduciary requirements of Part 4 of Title I of
ERISA require an ERISA Plan's investments to be (i) prudent and in the best
interests of the ERISA Plan, its participants, and its beneficiaries, (ii)
diversified in order to minimize the risk of large losses, unless it is clearly
prudent not to do so, and (iii) authorized under the terms of the ERISA Plan's
governing documents (provided the documents are consistent with ERISA).  In
determining whether an investment in the Shares is prudent for purposes of
ERISA, the appropriate fiduciary of an ERISA Plan should consider all of the
facts and circumstances, including whether the investment is reasonably
designed, as a part of the ERISA Plan's portfolio for which the fiduciary has
investment responsibility, to meet the objectives of the ERISA Plan, taking into
consideration the risk of loss and opportunity for gain (or other return) from
the investment, the diversification, cash flow, and funding requirements of the
ERISA Plan, and the liquidity and current return of the ERISA Plan's portfolio.
A fiduciary also should take into account the nature of the Company's business,
the management of the Company, the Company's lack of operating history, the fact
that investment properties have not been identified yet, the possibility of the
recognition of UBTI, and other matters described under "Risk Factors."

     The fiduciary of an IRA or of a qualified retirement plan not subject to
Title I of ERISA because it is a governmental or church plan or because it does
not cover common law employees (a "Non-ERISA Plan") should consider that such an
IRA or Non-ERISA Plan may only make investments that are authorized by the
appropriate governing documents and under applicable state law.

     Fiduciaries of ERISA Plans and persons making the investment decision for
an IRA or other Non-ERISA Plan should consider the application of the prohibited
transaction provisions of ERISA and the Code in making their investment
decision.  A "party in interest" or "disqualified person" with respect to an
ERISA Plan or with respect to a Non-ERISA Plan or IRA subject to Code section
4975 is subject to (i) an initial 15% excise tax on the amount involved in any
prohibited transaction involving the assets of the plan or IRA and (ii) an
excise tax equal to 100% of the amount involved if any prohibited transaction is
not corrected.  If the disqualified person who engages in the transaction is the
individual on behalf of whom an IRA is maintained (or his beneficiary), the IRA
will lose its tax-exempt status and its assets will be deemed to have been
distributed to such individual in a taxable distribution (and no excise tax will
be imposed) on account of the prohibited transaction.  In addition, a fiduciary
who permits an ERISA Plan to engage in a transaction that the fiduciary knows or
should know is a prohibited transaction may be liable to the ERISA Plan for any
loss the ERISA Plan incurs as a result of the transaction or for any profits
earned by the fiduciary in the transaction.

STATUS OF THE COMPANY AND THE OPERATING PARTNERSHIP UNDER ERISA

     The following section discusses certain principles that apply in
determining whether the fiduciary requirements of ERISA and the prohibited
transaction provisions of ERISA and the Code apply to an entity because one or
more investors in the equity interests in the entity is an ERISA Plan or is a
Non-ERISA Plan or IRA subject to section 4975 of the Code.  An ERISA Plan
fiduciary also should consider the relevance of those principles to ERISA's
prohibition on improper delegation of control over or responsibility for "plan
assets" and ERISA's imposition of co-fiduciary liability on a fiduciary who
participates in, permits (by action or inaction) the occurrence of, or fails to
remedy a known breach by another fiduciary.

     If the assets of the Company are deemed to be "plan assets" under ERISA,
(i) the prudence standards and other provisions of Part 4 of Title I of ERISA
would be applicable to any transactions involving the Company's assets, (ii)
persons who exercise any authority over the Company's assets, or who provide
investment advice to the Company, would (for purposes of the fiduciary
responsibility provisions of ERISA) be fiduciaries of each ERISA Plan that
acquires Shares, and transactions involving the Company's assets undertaken at
their direction or pursuant to their advice might violate their fiduciary
responsibilities under ERISA, especially with regard to conflicts of interest,
(iii) a fiduciary exercising his investment discretion over the assets of an
ERISA Plan to cause it to acquire or hold the Shares could be 

                                       69

<PAGE>
 
liable under Part 4 of Title I of ERISA for transactions entered into by the
Company that do not conform to ERISA standards of prudence and fiduciary
responsibility, and (iv) certain transactions that the Company might enter into
in the ordinary course of its business and operations might constitute
"prohibited transactions" under ERISA and the Code.

     Regulations of the DOL defining "plan assets" (the "Plan Asset
Regulations") generally provide that when an ERISA Plan or Non-ERISA Plan or IRA
acquires a security that is an equity interest in an entity and the security is
neither a "publicly-offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, the ERISA or Non-
ERISA Plan's or IRA's assets include both the equity interest and an undivided
interest in each of the underlying assets of the issuer of such equity interest,
unless one or more exceptions specified in the Plan Asset Regulations are
satisfied.

     The Plan Asset Regulations define a publicly-offered security as a security
that is (i) "widely-held," (ii) "freely transferable," and (iii) either (A) part
of a class of securities registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or (B) sold
pursuant to an effective registration statement under the Securities Act
(provided the securities are registered under the Exchange Act within 120 days
after the end of the fiscal year of the issuer during which the offering
occurred, or such longer period as may be allowed by the Commission).  The
Shares are being sold pursuant to an effective registration statement under the
Securities Act and will be registered under the Exchange Act.  The Plan Asset
Regulations provide that a security is "widely held" only if it is part of a
class of securities that is owned by 100 or more investors independent of the
issuer and of one another.  A security will not fail to be widely held because
the number of independent investors falls below 100 subsequent to the initial
public offering as a result of events beyond the issuer's control.  The Company
anticipates that upon completion of the Offering, the Shares will be "widely
held."

     The Plan Asset Regulations provide that whether a security is "freely
transferable" is a factual question to be determined on the basis of all
relevant facts and circumstances.  The Plan Asset Regulations further provide
that where a security is part of an offering in which the minimum investment is
$10,000 or less (as is the case with this Offering), certain restrictions
ordinarily will not, alone or in combination, affect a finding that such
securities are freely transferable.  The restrictions on transfer enumerated in
the Plan Asset Regulations as not affecting that finding include: (i) any
restriction on or prohibition against any transfer or assignment that would
result in the termination or reclassification of an entity for federal or state
tax purposes, or that otherwise would violate any federal or state law or court
order, (ii) any requirement that advance notice of a transfer or assignment be
given to the issuer, (iii) any administrative procedure that establishes an
effective date, or an event (such as completion of an offering), prior to which
a transfer or assignment will not be effective, and (iv) any limitation or
restriction on transfer or assignment that is not imposed by the issuer or a
person acting on behalf of the issuer.  The Company believes that the
restrictions imposed under the Articles of Incorporation on the transfer of the
Shares will not result in the failure of the Shares to be "freely transferable."
The Company also is not aware of any other facts or circumstances limiting the
transferability of the Shares that are not enumerated in the Plan Asset
Regulations as those not affecting free transferability, and the Company does
not intend to impose in the future (or to permit any person to impose on its
behalf) any limitations or restrictions on transfer that would not be among the
enumerated permissible limitations or restrictions.  The Plan Asset Regulations
only establish a presumption in favor of a finding of free transferability, and
no assurance can be given that the DOL or the Treasury Department will not reach
a contrary conclusion.

     Assuming that the Shares will be "widely held" and that no other facts and
circumstances other than those referred to in the preceding paragraph exist that
restrict transferability of the Shares, the Shares should be publicly offered
securities and the assets of the Company should not be deemed to be "plan
assets" of any ERISA Plan, IRA, or Non-ERISA Plan that invests in the Shares.

     The Plan Asset Regulations also will apply in determining whether the
assets of the Operating Partnership will be deemed to be "plan assets."  The
partnership interests in the Operating Partnership will not be publicly-offered
securities.  Nevertheless, if the Shares constitute publicly-offered securities,
the indirect investment in the Operating Partnership by ERISA Plans, IRAs, or
Non-ERISA Plans subject to section 4975 of the Code through their ownership of
Shares will not cause the assets of the Operating Partnership to be treated as
"plan assets" of such shareholders.

                                       70

<PAGE>
 
                             PARTNERSHIP AGREEMENT

     The following summary of the Partnership Agreement, and the descriptions of
certain provisions thereof set forth elsewhere in this Prospectus, is qualified
in its entirety by reference to the Partnership Agreement, which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

MANAGEMENT

     The Operating Partnership has been organized as a Delaware limited
partnership pursuant to the terms of the Partnership Agreement.  Pursuant to the
Partnership Agreement, the Company, as the sole general partner of the Operating
Partnership (in such capacity, the "General Partner"), will have full, exclusive
and complete responsibility and discretion in the management and control of the
Operating Partnership, and the limited partners of the Operating Partnership
(the "Limited Partners"), in their capacity as such, will have no authority to
transact business for, or participate in the management activities or decisions
of, the Operating Partnership.  However, any amendment to the Partnership
Agreement that would (i) affect the Redemption Rights (as defined below), (ii)
adversely affect the Limited Partners' rights to receive cash distributions,
(iii) alter the Operating Partnership's allocations of income and loss or (iv)
impose on the Limited Partners any obligations to make additional contributions
to the capital of the Operating Partnership, would require the consent of
Limited Partners holding more than two-thirds of the OP Units.

TRANSFERABILITY OF INTERESTS IN THE OPERATING PARTNERSHIP

     The Company may not voluntarily withdraw from the Operating Partnership or
transfer or assign its interest in the Operating Partnership unless the
transaction in which such withdrawal or transfer occurs results in the Limited
Partners' receiving property in an amount equal to the amount they would have
received had they exercised their Redemption Rights immediately prior to such
transaction, or unless the successor to the General Partner contributes
substantially all of its assets to the Operating Partnership in return for an
interest in the Operating Partnership.  A person may not be admitted as a
substitute or successor General Partner unless a majority-in-interest of the
Limited Partners (other than the Advisor) consent in writing to the admission of
such substitute or successor General Partner, which consent may be withheld in
the sole discretion of such Limited Partners.  With certain limited exceptions,
the Limited Partners may not transfer their interests in the Operating
Partnership, in whole or in part, without the written consent of the Company,
which consent may be withheld in the sole discretion of the Company.

CAPITAL CONTRIBUTION

     As the Company accepts subscriptions, it will contribute to the Operating
Partnership substantially all of the net proceeds thereof, in consideration of
which the Company will receive a general partnership interest in the Operating
Partnership.  The Advisor has contributed $200,000 to the Operating Partnership
and is the sole initial Limited Partner.  Although the Operating Partnership
will receive substantially all of the net proceeds of the Offering, the Company
will be deemed to have made capital contributions to the Operating Partnership
in the amount of the gross proceeds of the Offering and the Operating
Partnership will be deemed simultaneously to have paid the selling commissions
and other Organization and Offering Expenses.  The Partnership Agreement
provides that if the Operating Partnership requires additional funds at any time
or from time to time in excess of funds available to the Operating Partnership
from borrowing or capital contributions, the Company may borrow such funds from
a financial institution or other lender and lend such funds to the Operating
Partnership on the same terms and conditions as are applicable to the Company's
borrowing of such funds.  Moreover, the Company is authorized to cause the
Operating Partnership to issue partnership interests for less than fair market
value if the Company has concluded in good faith that such issuance is in the
best interests of the Company and the Operating Partnership.

REDEMPTION RIGHTS

     Pursuant to the Partnership Agreement, the Limited Partners, other than the
Advisor, will receive rights (the "Redemption Rights"), which will enable them
to cause the Operating Partnership to redeem each OP Unit for cash equal to the
value of one Share (or, at the Company's election, the Company may purchase each
OP Unit offered for redemption for one Share).  The Redemption Rights may not be
exercised, however, if and to the extent that the delivery 

                                       71

<PAGE>
 
of Shares upon exercise of such rights (regardless of whether the Company would
exercise its rights to deliver Shares) would (i) result in any person owning,
directly or indirectly, Shares in excess of the Ownership Limitation, (ii)
result in shares of capital stock of the Company being owned by fewer than 100
persons (determined without reference to any rules of attribution), (iii) result
in the Company being "closely held" within the meaning of section 856(h) of the
Code, (iv) cause the Company to own, actually or constructively, 10% or more of
the ownership interests in a tenant of the Company's or the Operating
Partnership's real property, within the meaning of section 856(d)(2)(B) of the
Code, or (v) cause the acquisition of Shares by such redeeming Limited Partner
to be "integrated" with any other distribution of Shares for purposes of
complying with the Securities Act. The Redemption Rights may be exercised, at
any time after one year following the date of issuance of the related OP Units,
provided that not more than two redemptions may occur during each calendar year
and each Limited Partner may not exercise the Redemption Right for less than
1,000 OP Units or, if such Limited Partner holds less than 1,000 OP Units, all
of the OP Units held by such Limited Partner. The number of Shares issuable upon
exercise of the Redemption Rights will be adjusted upon the occurrence of share
splits, mergers, consolidations or similar pro rata share transactions, which
otherwise would have the effect of diluting the ownership interests of the
Limited Partners or the shareholders of the Company. As of the date hereof, the
Company has not issued any OP Units other than to the Advisor and has no current
intentions to issue OP Units.

OPERATIONS

     The Partnership Agreement requires that the Operating Partnership be
operated in a manner that will enable the Company to satisfy the requirements
for being classified as a REIT, to avoid any federal income or excise tax
liability imposed under the Code and to ensure that the Operating Partnership
will not be classified as a "publicly traded partnership" for purposes of
section 7704 of the Code.

     In addition to the administrative and operating costs and expenses incurred
by the Operating Partnership, the Operating Partnership will pay all
administrative costs and expenses of the Company (the "Company Expenses") and
the Company Expenses will be treated as expenses of the Operating Partnership.
The Company Expenses generally will include (i) all expenses relating to the
formation and continuity of existence of the Company, (ii) all expenses relating
to the public offering and registration of securities by the Company, (iii) all
expenses associated with the preparation and filing of any periodic reports by
the Company under federal, state or local laws or regulations, (iv) all expenses
associated with compliance by the Company with laws, rules and regulations
promulgated by any regulatory body and (v) all other operating or administrative
costs of the Company incurred in the ordinary course of its business on behalf
of the Operating Partnership.  The Company Expenses, however, will not include
any administrative and operating costs and expenses incurred by the Company that
are attributable to properties or partnership interests that are owned by the
Company directly.  The Company currently does not anticipate owning any
properties directly.

DISTRIBUTIONS AND ALLOCATIONS

     The Partnership Agreement will provide that the Operating Partnership will
distribute cash from operations (including net sale or refinancing proceeds, but
excluding net proceeds from the sale of the Operating Partnership's property in
connection with the liquidation of the Operating Partnership) on a quarterly
(or, at the election of the Company, more frequent) basis, in amounts determined
by the Company in its sole discretion, to the partners in accordance with their
respective percentage interests in the Operating Partnership.  Upon liquidation
of the Operating Partnership, after payment of, or adequate provision for, debts
and obligations of the Operating Partnership, including any partner loans, any
remaining assets of the Operating Partnership will be distributed to all
partners with positive capital accounts in accordance with their respective
positive capital account balances.  If the Company has a negative balance in its
capital account following a liquidation of the Operating Partnership, it will be
obligated to contribute cash to the Operating Partnership equal to the negative
balance in its capital account.

     Profit and loss of the Operating Partnership for each fiscal year of the
Operating Partnership generally will be allocated among the partners in
accordance with their respective interests in the Operating Partnership.
Taxable income and loss will be allocated in the same manner, subject to
compliance with the provisions of Code sections 704(b) and 704(c) and Treasury
Regulations promulgated thereunder.

                                       72

<PAGE>
 
TERM

     The Operating Partnership will continue until December 31, 2050, or until
sooner dissolved upon the sale or other disposition of all or substantially all
the assets of the Operating Partnership, the redemption of all limited
partnership interests in the Operating Partnership (other than those held by the
Advisor), or by the election by the Company.

TAX MATTERS

     Pursuant to the Partnership Agreement, the Company will be the tax matters
partner of the Operating Partnership and, as such, will have authority to handle
tax audits and to make tax elections under the Code on behalf of the Operating
Partnership.

                              PLAN OF DISTRIBUTION

     Of the total 16,5000,000 shares registered in the Offering, 1,500,000 are
reserved for issuance pursuant to the Reinvestment Plan and 600,000 are reserved
for issuance upon exercise of the Soliciting Dealer Warrants.  Consequently, a
maximum of 14,400,000 Shares are being offered to the public through the Dealer
Manager, a registered broker-dealer affiliated with the Advisor, and certain
unaffiliated broker-dealers.  See "Conflicts of Interest" and "Management
Compensation."  The Shares are being offered at a price of $10.00 per share on a
"best efforts" basis (which means generally that the Dealer Manager will be
required to use only its best efforts to sell the Shares and has no firm
commitment or obligation to purchase any of the Shares).  The Company and the
Dealer Manager have determined the Offering price of the Shares based on their
analysis of other similar offerings and what they believe the investing market
is willing to pay for the Shares.

     Except as provided below, the Dealer Manager will receive commissions of 7%
of the Gross Offering Proceeds.  In addition, the Company may reimburse the
expenses incurred by the Dealer Manager and nonaffiliated dealers for actual
marketing support and due diligence purposes in the maximum amount of 2.5% of
the Gross Offering Proceeds.  The Company will not pay referral or similar fees
to any accountants, attorneys or other persons in connection with the
distribution of the Shares.  Shareholders who elect to participate in the
Reinvestment Plan will be charged Selling Commissions on Shares purchased
pursuant to the Reinvestment Plan on the same basis as shareholders purchasing
Shares other than pursuant to the Reinvestment Plan.   Soliciting Dealers will
also receive one Soliciting Dealer Warrant for each 25 Shares sold by such
Soliciting Dealer during the Offering, subject to federal and state securities
laws.  The holder of a Soliciting Dealer Warrant will be entitled to purchase
one Share from the Company at a price of $12 during the period commencing on the
first anniversary of the effective date of this Offering and ending five years
after the effective date of this Offering.  Subject to certain limitations, the
Soliciting Dealer Warrants may not be transferred, assigned, pledged or
hypothecated for a period of one year following the effective date of this
Offering.  The Shares issuable upon exercise of the Soliciting Dealer Warrants
are being registered as part of this Offering.  For the life of the Soliciting
Dealer Warrants, the holders are given, at nominal cost, the opportunity to
profit from a rise in the market price for the Common Stock without assuming the
risk of ownership, with a resulting dilution in the interest of other security
holders.  Moreover, the holders of the Soliciting Dealer Warrants might be
expected to exercise them at a time when the Company would, in all likelihood,
be able to obtain needed capital by a new offering of its securities on terms
more favorable than those provided by the Soliciting Dealer Warrants.  See
"Description of Capital Stock -- Soliciting Dealer Warrants."

     The Dealer Manager may authorize certain other broker-dealers who are
members of the NASD to sell Shares.  In the event of the sale of Shares by such
other broker-dealers, the Dealer Manager may reallow its commissions in the
amount of up to 7% of the Gross Offering Proceeds to such participating broker-
dealers.

     In no event shall the total underwriting compensation, including Selling
Commissions and expense reimbursements, exceed 7% of Gross Offering Proceeds,
except for the additional Marketing and Due Diligence Fee (2.5% of Gross
Offering Proceeds), which may be paid by the Company in connection with
marketing support and due diligence activities, which is comprised of .5% for
due diligence activities and 2% for marketing support activities.

                                       73

<PAGE>
 
     The Company has agreed to indemnify the participating broker-dealers,
including the Dealer Manager, against certain liabilities arising under the
Securities Act of 1933, as amended.  Causes of action resulting from violations
of federal or state securities laws shall be governed by such law.

     The broker-dealers are not obligated to obtain any subscriptions, and there
is no assurance that any Shares will be sold.

     The Advisor and its Affiliates may at their option purchase Shares offered
hereby at the public offering price, in which case it would expect to hold such
Shares as shareholders for investment and not for distribution.  Shares
purchased by the Advisor or its Affiliates shall not be entitled to vote on any
matter presented to the shareholders for a vote.  No selling commissions will be
payable by the Company in connection with any Shares purchased by the Advisor.

     Payment for Shares should be made by check payable to "NationsBank, N.A.,
as Escrow Agent"  Subscriptions will be effective only upon acceptance by the
Company, and the Company reserves the right to reject any subscription in whole
or in part.  In no event may a subscription for Shares be accepted until at
least five business days after the date the subscriber receives this Prospectus.
Each subscriber will receive a confirmation of his purchase.  Except for
purchase pursuant to the Reinvestment Plan, all accepted subscriptions will be
for whole Shares and for not less than 100 Shares ($1,000).  See "Investor
Suitability Standards."  Except in Maine, Minnesota and Washington, investors
who have satisfied the minimum purchase requirement and have purchased units in
Prior Wells Public Programs may purchase less than the minimum number of Shares
discussed above, provided that such investors purchase a minimum of 2.5 Shares
($25).  After investors have satisfied the minimum purchase requirement, minimum
additional purchases must be in increments of at least 2.5 Shares ($25), except
for purchases pursuant to the Reinvestment Plan.

     Subscription proceeds will be placed in interest-bearing accounts with the
Escrow Agent by noon of the business day after the proceeds are received by the
Company until such subscriptions aggregating at least $1,250,000 (exclusive of
any subscriptions for Shares by the Advisor or its Affiliates) have been
received and accepted by the Advisor (the "Minimum Offering").  Any Shares
purchased by the Advisor or its Affiliates will not be counted in calculating
the Minimum Offering.  Subscription proceeds held in the escrow accounts will be
invested in obligations of, or obligations guaranteed by, the United States
government or bank money-market accounts or certificates of deposit of national
or state banks that have deposits insured by the Federal Deposit Insurance
Corporation (including certificates of deposit of any bank acting as depository
or custodian for any such funds), as directed by the Advisor.  Subscribers may
not withdraw funds from the escrow account.

     Investors who desire to establish an IRA for purposes of investing in
Shares may do so by having Wells Advisors, Inc., a qualified non-bank IRA
custodian affiliated with the Advisor, act as their IRA custodian.  In the event
that an IRA is established having Wells Advisors, Inc. as the IRA custodian, the
authority of Wells Advisors, Inc. will be limited to holding the Shares on
behalf of the beneficiary of the IRA and making distributions or reinvestments
in Shares solely at the discretion of the beneficiary of the IRA.  Wells
Advisors, Inc. will not have the authority to vote any of the Shares held in an
IRA except strictly in accordance with the written instructions of the
beneficiary of the IRA.  See "Management."

     If the Minimum Offering has not been received and accepted by January 30,
1999 (one year after the date of this Prospectus), the Escrow Agent will
promptly so notify the Company and this Offering will be terminated.  In such
event, the Escrow Agent is obligated to use its best efforts to obtain an
executed IRS Form W-9 from each subscriber whose subscription is rejected.  No
later than ten business days after rejection of a subscription, the Escrow Agent
will refund and return all monies to rejected subscribers and any interest
earned thereon without deducting escrow expenses.  In the event that a
subscriber fails to remit an executed IRS Form W-9 to the Escrow Agent prior to
the date the Escrow Agent returns the subscriber's funds, the Escrow Agent will
be required to withhold from such funds 31% of the earnings attributable to such
subscriber in accordance with IRS Regulations.  During any period in which
subscription proceeds are held in escrow, interest earned thereon will be
allocated among subscribers on the basis of the respective amounts of their
subscriptions and the number of days that such amounts were on deposit.  Such
interest net of escrow expenses will be paid to subscribers upon the termination
of the escrow period.

                                       74

<PAGE>
 
     Initial subscribers may be admitted as shareholders of the Company and the
payments transferred from escrow to the Company at any time after the Company
has received and accepted the Minimum Offering, except that subscribers residing
in New York and Pennsylvania may not be admitted to the Company until
subscriptions have been received and accepted for 250,000 Shares ($2,500,000)
from all sources.  The funds representing subscriptions for Shares from New York
and Pennsylvania residents will not be released from the escrow account until
subscriptions for at least $2,500,000 have been received from all sources.
Subscriptions from New York residents may not be included in determining whether
subscriptions for the Minimum Offering have been obtained.  In addition, certain
other states may impose different requirements than those set forth herein.  Any
such additional requirements will be set forth in a supplement to this
Prospectus.

     The proceeds of this Offering will be received and held in trust for the
benefit of purchasers of Shares and will be retained in trust after closing to
be used only for the purposes set forth in the "Estimated Use of Proceeds"
section.  After the close of the Minimum Offering, subscriptions will be
accepted or rejected within 30 days of receipt by the Company, and if rejected,
all funds shall be returned to subscribers within 10 business days.  Investors
whose subscriptions are accepted will be admitted as shareholders of the Company
periodically (but not less often than quarterly).  Escrowed proceeds will be
released to the Company on the date that the applicable Shareholder is admitted
to the Company.  A Shareholder will not receive a Share certificate or other
evidence of his interest in the Company unless the Listing occurs, and then only
if requested by the Shareholder.

     The Advisor may sell Shares to Retirement Plans of broker-dealers
participating in the Offering, to broker-dealers in their individual capacities,
to IRAs and Qualified Plans of their registered representatives or to any one of
their registered representatives in their individual capacities for 93% of the
Share's public offering price in consideration of the services rendered by such
broker-dealers and registered representatives in the distribution.  The net
proceeds to the Company from such sales will be identical to the Company's net
proceeds from other sales of Shares.

     In connection with sales of 25,000 or more Shares ($250,000) to a
"purchaser" (as defined below), investors may agree with their registered
representatives to reduce the amount of selling commissions payable to
participating broker-dealers.  Such reduction will be credited to the purchaser
by reducing the total purchase price payable by such purchaser.  The following
table illustrates the various discount levels:


<TABLE>
<CAPTION>
                                         SELLING COMMISSIONS                                          
                                       -----------------------                            NET PROCEEDS 
           DOLLAR VOLUME                                            PURCHASE PRICE        TO COMPANY  
        OF SHARES PURCHASED            PERCENT       PER SHARE        PER SHARE            PER SHARE     
        -------------------            -------       ---------      --------------       ------------ 
<S>                                    <C>           <C>            <C>                  <C>
          Under $250,000                  7.0%        $  0.70          $ 10.00              $9.30
          $250,000-$649,999               6.0%        $0.5936          $9.8936              $9.30
          $650,000-$999,999               3.0%        $0.2876          $9.5876              $9.30
          $1,000,000-$1,999,999           1.0%        $0.0939          $9.3939              $9.30
          Over $2,000,000                 0.5%        $0.0467          $9.3467              $9.30
</TABLE>


     For example, if an investor purchases 100,000 Shares in the Company, he
could pay as little as $939,390 rather than $1,000,000 for the Shares, in which
event the commission on the sale of such Shares would be $9,390 ($0.0939 per
Share), and the Company would receive net proceeds of $930,000 ($9.30 per
Share).  The net proceeds to the Company will not be affected by volume
discounts.

     Because all investors will be deemed to have contributed the same amount
per Share to the Company for purposes of distributions of Cash Available for
Distribution, an investor qualifying for a volume discount will receive a higher
return on his investment in the Company than investors who do not qualify for
such discount.

     Subscriptions may be combined for the purpose of determining the volume
discounts in the case of subscriptions made by any "purchaser," as that term is
defined below, provided all such Shares are purchased through the same broker-
dealer.  The volume discount shall be prorated among the separate subscribers
considered to be a single "purchaser."  Any request to combine more than one
subscription must be made in writing, and must set forth the basis 

                                       75

<PAGE>
 
for such request. Any such request will be subject to verification by the
Advisor that all of such subscriptions were made by a single "purchaser."

     For the purposes of such volume discounts, the term "purchaser" includes
(i) an individual, his or her spouse and their children under the age of 21 who
purchase the Shares for his, her or their own accounts; (ii) a corporation,
partnership, association, joint-stock company, trust fund or any organized group
of persons, whether incorporated or not; (iii) an employees' trust, pension,
profit sharing or other employee benefit plan qualified under Section 401(a) of
the Code; and (iv) all commingled trust funds maintained by a given bank.

     Notwithstanding the above, in connection with volume sales made to
investors in the Company, the Company may, in its sole discretion, waive the
"purchaser" requirements and aggregate subscriptions (including subscriptions to
Prior Wells Public Programs) as part of a combined order for purposes of
determining the number of Shares purchased, provided that any aggregate group of
subscriptions must be received from the same broker-dealer, including the Dealer
Manager.  Any such reduction in selling commission will be prorated among the
separate subscribers except that, in the case of purchases through the Dealer
Manager, the Dealer Manager may allocate such reduction among separate
subscribers considered to be a single "purchaser" as it deems appropriate.  An
investor may reduce the amount of his purchase price to the net amount shown in
the foregoing table, if applicable.  If such investor does not reduce the
purchase price, the excess amount submitted over the discounted purchase price
shall be returned to the actual separate subscribers for Shares.  Except as
provided in this paragraph, separate subscriptions will not be cumulated,
combined or aggregated.

     In addition, in order to encourage purchases in amounts of 500,000 or more
Shares, a potential purchaser who proposes to purchase at least 500,000 Shares
in the Company may agree with the Advisor and the Dealer Manager to have the
Acquisition and Advisory Fees payable to the Advisor with respect to the sale of
such Shares reduced to 0.5%, and to have the Selling Commissions payable with
respect to the sale of such Shares reduced to 0.5%, in which event the aggregate
fees payable with respect to the sale of such Shares would be reduced by $0.90
per Share, and the purchaser of such Shares would be required to pay a total of

$9.10 per Share purchased, rather than $10.00 per Share.  The net proceeds to
the Company would not be affected by such fee reductions.  Of the $9.10 paid per
Share, it is anticipated that approximately $8.40 per Share (or approximately
92%) will be used to acquire properties and pay required acquisition expenses
relating to the acquisition of properties.  All such sales must be made through
registered broker-dealers.

     California residents should be aware that volume discounts will not be
available in connection with the sale of Shares made to California residents to
the extent such discounts do not comply with the provisions of Rule 260.140.51
adopted pursuant to the California Corporate Securities Law of 1968.  Pursuant
to this Rule, volume discounts can be made available to California residents
only in accordance with the following conditions: (i) there can be no variance
in the net proceeds to the Company from the sale of the Shares to different
purchasers of the same offering, (ii) all purchasers of the Shares must be
informed of the availability of quantity discounts, (iii) the same volume
discounts must be allowed to all purchasers of Shares which are part of the
offering, (iv) the minimum amount of Shares as to which volume discounts are
allowed cannot be less than $10,000, (v) the variance in the price of the Shares
must result solely from a different range of commissions, and all discounts
allowed must be based on a uniform scale of commissions, and (vi) no discounts
are allowed to any group of purchasers.  Accordingly, volume discounts for
California residents will be available in accordance with the foregoing table of
uniform discount levels based on dollar volume of Shares purchased, but no
discounts are allowed to any group of purchasers, and no subscriptions may be
aggregated as part of a combined order for purposes of determining the number of
Shares purchased.

     Investors who, in connection with their purchase of Shares, have engaged
the services of a registered investment advisor with whom the investor has
agreed to pay a fee for investment advisory services in lieu of normal
commissions based on the volume of securities sold may agree with the
participating broker-dealer selling such Shares and the Dealer Manager to reduce
the amount of selling commissions payable with respect to such sale to zero.
The net proceeds to the Company will not be affected by eliminating the
commissions payable in connection with sales to investors purchasing through
such investment advisors.  All such sales must be made through registered
broker-dealers.

                                       76

<PAGE>
 
     Neither the Dealer Manager nor its Affiliates will directly or indirectly
compensate any person engaged as an investment advisor by a potential investor
as an inducement for such investment advisor to advise favorably for investment
in the Company.

     In addition, subscribers for Shares may agree with their participating
broker-dealers and the Dealer Manager to have selling commissions due with
respect to the purchase of their Shares paid over a seven year period pursuant
to a deferred commission arrangement (the "Deferred Commission Option").
Shareholders electing the Deferred Commission Option will be required to pay a
total of $9.40 per Share purchased upon subscription, rather than $10.00 per
Share, with respect to which $0.10 per Share will be payable as commissions due
upon subscription.  For each of the six years following termination of the
Offering, $0.10 per Share will be paid by the Company as deferred commissions
with respect to Shares sold pursuant to the Deferred Commission Option, which
amounts will be deducted from and paid out of distributions of Cash Available
for Distribution otherwise payable to shareholders holding such Shares.  The net
proceeds to the Company will not be affected by the election of the Deferred
Commission Option.  Under this arrangement, a Shareholder electing the Deferred
Commission Option will pay a 1% commission upon subscription, rather than an 7%
commission, and an amount equal to a 1% commission per year thereafter for the
next six years will be deducted from and paid by the Company out of Cash
Available for Distribution otherwise distributable to such Shareholder.

     Taxable participants electing the Deferred Commission Option will incur tax
liability for Company income allocated to them with respect to their Shares even
though distributions of Cash Available for Distribution otherwise distributable
to such shareholders will instead be paid to third parties to satisfy the
deferred commission obligations with respect to such Shares for a period of six
years after the termination of the Offering.  See "Risk Factors - Federal Tax
Risks - Risk of Taxable Income Without Cash Distributions."

     As set forth above, in no event shall the total underwriting compensation,
including sales commissions, the dealer manager fee and expense reimbursements,
exceed 7% of Gross Offering Proceeds, except for the additional .5% of Gross
Offering Proceeds which may be paid by the Company in connection with due
diligence activities and 2% of Gross Offering Proceeds which may be paid by the
Company in connection with marketing support activities.

                          SUPPLEMENTAL SALES MATERIAL

     In addition to this Prospectus, the Company may utilize certain sales
material in connection with the Offering of the Shares, although only when
accompanied by or preceded by the delivery of this Prospectus.  In certain
jurisdictions, some or all of such sales material may not be available.  This
material may include information relating to this Offering, the past performance
of the Advisor and its Affiliates, property brochures and articles and
publications concerning real estate.  In addition, the sales material may
contain certain quotes from various publications without obtaining the consent
of the author or the publication for use of the quoted material in the sales
material.

     The Offering of Shares in the Company is made only by means of this
Prospectus.  Although the information contained in such sales material does not
conflict with any of the information contained in this Prospectus, such material
does not purport to be complete, and should not be considered a part of this
Prospectus or the Registration Statement of which this Prospectus is a part, or
as incorporated by reference in this Prospectus or said Registration Statement
or as forming the basis of the Offering of the Shares.

                                 LEGAL MATTERS

     The legality of the Shares being offered hereby has been passed upon for
the Company by Hunton & Williams, Atlanta, Georgia ("Counsel").  The statements
under the caption "Federal Income Tax Consequences" as they relate to federal
income tax matters have been reviewed by Counsel, and Counsel has opined as to
certain income tax matters relating to an investment in the Company.  Counsel
has represented the Advisor, as well as Affiliates of the Advisor, in other
matters and may continue to do so in the future.  See "Conflicts of Interest."

                                       77

<PAGE>
 
                                    EXPERTS

     The balance sheet of the Company as of December 31, 1997, included in this
Prospectus and elsewhere in the Registration Statement, has been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in giving said report.

                             ADDITIONAL INFORMATION

     The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement on Form S-11 under the
Securities Act of 1933, as amended, with respect to the Shares offered pursuant
to this Prospectus.  This Prospectus does not contain all the information set
forth in the Registration Statement and the exhibits related thereto filed with
the Commission, reference to which is hereby made.  Copies of the Registration
Statement and exhibits related thereto, as well as periodic reports and
information filed by the Company, may be obtained upon payment of the fees
prescribed by the Commission, or may be examined at the offices of the
Commission without charge, at (i) the public reference facilities in Washington,
D.C. at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, (ii) the Northeast Regional Office in New York at 7 World Trade Center,
Suite 1300, New York, New York 10048, and (iii) the Midwest Regional Office in
Chicago, Illinois at 500 West Madison Street, Suite 1400, Chicago, Illinois
66661-2511.  The Commission maintains a Web site that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the Commission (the address of such site is
http://www.sec.gov).

                                    GLOSSARY

     The following are definitions of certain terms used in this Prospectus and
not otherwise defined herein:

     "ACQUISITION EXPENSES" means expenses incurred in connection with the
selection and acquisition of properties, whether or not acquired, including, but
not limited to, legal fees and expenses, travel and communications expenses,
costs of appraisals, nonrefundable option payments on property not acquired,
accounting fees and expenses and title insurance and other miscellaneous costs
and expenses relating to the selection and acquisition of properties.

     "ACQUISITION FEES" means the total of all fees and commissions paid by any
party to any person in connection with the purchase, development or construction
of property by the Company, including Acquisition and Advisory Fees payable to
the Advisor or their Affiliates, real estate brokerage commissions, investment
advisory fees, finder's fees, selection fees, Development Fees, Construction
Fees, nonrecurring management fees, or any other fees of a similar nature,
however designated, except Development Fees and Construction Fees paid to a
person not affiliated with the Sponsor in connection with the actual development
or construction of a Company property.

     "AFFILIATE" means (i) any person directly or indirectly controlling,
controlled by or under common control with a person, (ii) any person owning or
controlling 10% or more of the outstanding voting securities of a person, (iii)
any officer, director or partner of a person, and (iv) if such other person is
an officer, director or partner, any company for which such person acts in any
such capacity.

     "AVERAGE INVESTED ASSETS" means, for any period, the average of the
aggregate book value of the assets of the Company invested, directly or
indirectly, in equity interests and in loans secured by real estate, before
reserves for depreciation or bad debts or other similar non-cash reserves,
computed by taking the average of such values at the end of each month during
such period.

     "CASH AVAILABLE FOR DISTRIBUTION"  means Funds from Operations adjusted for
certain non-cash items, less reserves for capital expenditures.

     "CODE" means the Internal Revenue Code of 1986, as amended.

                                       78

<PAGE>
 
     "COMMON RETURN" means an 8% per annum cumulative, noncompounded return on
investor's Invested Capital.

     "COMPANY" means Wells Real Estate Investment Trust, Inc., a Maryland
corporation.

     "COMPETITIVE REAL ESTATE BROKERAGE COMMISSION" means the real estate or
brokerage commission paid for the purchase or sale of a property which is
reasonable, customary and competitive in light of the size, type and location of
such property.

     "CONSTRUCTION FEE" means a fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitation on properties.

     "DEFERRED COMMISSION OPTION" means an agreement among a subscriber for
Shares, such subscriber's participating broker-dealer and the Dealer Manager to
have sales commissions due with respect to the purchase of the subscriber's
Shares paid over a  seven year period, in the manner described in the "Plan of
Distribution" section of the Prospectus.

     "DEVELOPMENT FEE" means a fee for the packaging of a property of the
Company, including negotiating and approving plans, and undertaking to assist in
obtaining zoning and necessary variances and necessary financing for the
specific property, either initially or at a later date.

     "FRONT-END FEES" means fees and expenses paid by any party for any services
rendered during the Company's organizational or acquisition phase including
Organization and Offering Expenses, Acquisition Fees, Acquisition Expenses,
interest on deferred fees and expenses, if applicable, and any other similar
fees, however designated.

     "FUNDS FROM OPERATIONS" means income (loss) before minority interest
(computed in accordance with generally accepted accounting principles),
excluding gains (losses) from debt restructuring and sales of property, plus
real estate related depreciation an amortization (excluding amortization of
financing costs), and after adjustments for consolidated partnerships and joint
ventures.

     "GAIN ON SALE" means the taxable income or gain for federal income tax
purposes in the aggregate for each fiscal year from the sale or exchange of all
or any portion of a Company asset after netting losses from such sales or
exchanges against the gains from such transactions.

     "GROSS OFFERING PROCEEDS" means the total gross proceeds from the sale of
the Shares.

     "INDEPENDENT EXPERT" means a person with no material current or prior
business or personal relationship with the Advisor or Board of Directors of the
Company who is engaged to a substantial extent in the business of rendering
opinions regarding the value of assets of the type held by the Company.

     "INDEPENDENT DIRECTOR" shall mean a member of the Board of Directors of the
Company who is not associated and has not been associated within the last two
years, directly or indirectly, with the Advisor.

     "INVESTED CAPITAL" means the original issue price of the Shares reduced by
prior distributions from the sale or financing of Company fixed assets.

     "INVESTMENT IN PROPERTIES" means the amount of Gross Offering Proceeds
actually paid or allocated to the purchase, development, construction or
improvement of properties acquired by the Company, including the purchase of
properties, working capital reserves allocable thereto (except that working
capital reserves in excess of 5% shall not be included) and other cash payments
such as interest and taxes, but excluding Front-End Fees.

     "IRA" means an Individual Retirement Account established pursuant to
Section 408 of the Code.

                                       79

<PAGE>
 
     "LIQUIDATING DISTRIBUTIONS" means the net cash proceeds received by the
Company from (a) the sale, exchange, condemnation, eminent domain taking,
casualty or other disposition of substantially all of the assets of the Company
or the last remaining assets of the Company or (b) a liquidation of the
Company's assets in connection with a dissolution of the Company, after (i)
payment of all expenses of such sale, exchange, condemnation, eminent domain
taking, casualty, other disposition or liquidation, including real estate
commissions and fees, if applicable, (ii) the payment of any outstanding
indebtedness and other liabilities of the Company, (iii) any amounts used to
restore any such assets of the Company, and (iv) any amounts set aside as
reserves which the Company may deem necessary or desirable.

     "NASAA GUIDELINES" means the Statement of Policy Regarding Real Estate
Investment Trusts of the North American Securities Administrators Association,
Inc. as revised and adopted on September 29, 1993.

     "NET ASSETS" means the total assets (other than intangibles) at cost before
deducting depreciation or other non-cash reserves less total liabilities,
calculated at least quarterly on a basis consistently applied.

     "NET INCOME" or "NET LOSS" means the net income or loss realized or
recognized by the Company for a fiscal year, as determined for federal income
tax purposes, including any income exempt from tax, but excluding all deductions
for depreciation, amortization and cost recovery and Gain on Sale.

     "NET SALE PROCEEDS" means, collectively, Nonliquidating Net Sale Proceeds
and Liquidating Distributions.

     "NONLIQUIDATING NET SALE PROCEEDS" means the net cash proceeds received by
the Company from a sale, exchange, condemnation, eminent domain taking, casualty
or other disposition of assets of the Company, which does not constitute
substantially all of the remaining assets of the Company, after (i) the payment
of all expenses of such sale, exchange, condemnation, eminent domain taking,
casualty, sale or other disposition, including real estate commissions and fees,
if applicable, (ii) the payment of any outstanding indebtedness and other
Company liabilities relating to such assets, (iii) any amounts used to restore
any such assets of the Company, and (iv) any amounts set aside as reserves which
the Company may deem necessary or desirable.

     "OFFERING" means the offering and sale of the Shares pursuant to the terms
and conditions of this Prospectus.

     "OPERATING PARTNERSHIP" means Wells Operating Partnership, L.P., a Delaware
limited partnership.

     "OP UNITS" means units of limited partnership interest in the Operating
Partnership.

     "ORGANIZATION AND OFFERING EXPENSES" means those expenses incurred in
connection with organizing the Company, preparing the Company for registration
and subsequently offering and distributing the Shares to the public, including
without limitation, legal and accounting fees, sales commissions paid to broker-
dealers in connection with the distribution of the Shares and all advertising
expenses.

     "OWNERSHIP LIMITATION" means the ownership of more than 9.8% of any class
of the Company's outstanding capital stock.

     "PARTNERS" means, collectively, the Company and any person who contributes
property to the Company in exchange for OP Units.

     "PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership.

     "PRIOR WELLS PUBLIC PROGRAMS" means the prior public real estate limited
partnership programs sponsored by the Advisor or its Affiliates having
substantially identical investment objectives as the Company, specifically,
Wells Real Estate Fund I, Wells Real Estate Fund II, Wells Real Estate Fund II-
OW, Wells Real Estate Fund III, L.P., Wells Real Estate Fund IV, L.P., Wells
Real Estate Fund V, L.P., Wells Real Estate Fund VI, L.P., Wells Real Estate
Fund VII, L.P., Wells Real Estate Fund VIII, L.P., Wells Real Estate Fund IX,
L.P., Wells Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P.

                                       80

<PAGE>
 
     "QUALIFIED PLAN" means a qualified sole proprietorship, partnership or
corporate pension or profit sharing plan established under Section 401(a) of the
Code.

     "REGISTRATION STATEMENT" means the Registration Statement on Form S-11
filed by the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, in order to register the Shares for sale to
the public.

     "REINVESTMENT PLAN" means the Company's Dividend Reinvestment Plan.

     "RESIDUAL PROCEEDS" means any Sale Proceeds available for distribution to
the shareholders after the shareholders have first received distributions of
Sale Proceeds in an amount equal to 100% of their Invested Capital plus their
Common Return (reduced by all prior distributions of Cash Available for
Distribution) and after the Advisor has received distributions of Sale Proceeds
in an amount equal to 100% of its capital contribution to the Operating
Partnership.

     "RETIREMENT PLANS" means Individual Retirement Accounts ("IRAs")
established under Section 408 of the Code and Qualified Plans.

     "SERVICE" means the U.S. Internal Revenue Service.

     "SHARES-IN-TRUST" means the excess shares exchanged for Shares transferred
or proposed to be transferred in excess of the Ownership Limitation or which
would otherwise jeopardize the Company's status as a REIT under the Code.

     "SPONSOR" means any person directly or indirectly instrumental in
organizing, wholly or in part, a REIT or any person who will control, manage or
participate in the management of a REIT, and any affiliate of such person

     "UNIMPROVED REAL PROPERTY" means the properties of the Company which: (a)
represent an equity interest in real property which was not acquired for the
purpose of producing rental or other operating income, (b) has no development or
construction in process on such land, and (c) no development or construction on
such land is planned in good faith to commence on such land within one year.

     "WELLS CAPITAL" means Wells Capital, Inc., a Georgia corporation which
serves as the Company's Advisor.

                                       81

<PAGE>
 
                                   APPENDIX I

                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

               CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997
                                 TOGETHER WITH

                                AUDITORS' REPORT

                                      F-1

<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholder of
Wells Real Estate Investment Trust, Inc.:

We have audited the accompanying consolidated balance sheet of WELLS REAL ESTATE
INVESTMENT TRUST, INC. as of December 31, 1997.  This consolidated balance sheet
is the responsibility of the Company's management.  Our responsibility is to
express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards required that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated balance sheet is free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated balance sheet.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of Wells Real Estate
Investment Trust, Inc. as of December 31, 1997 in conformity with generally
accepted accounting principles.


                                         ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 13, 1998


                                      F-2

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                           CONSOLIDATED BALANCE SHEET

                               DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                 ASSETS
 
<S>                                                                                <C>
CASH                                                                                             $201,000
 
DEFERRED OFFERING COSTS                                                                           289,073
                                                                                                 --------
            Total assets                                                                         $490,073
                                                                                                 ========
 
                                 LIABILITIES AND SHAREHOLDER'S EQUITY
 
LIABILITIES:
  Due to affiliate                                                                               $289,073
                                                                                                 --------
MINORITY INTEREST OF UNIT HOLDER IN
OPERATING PARTNERSHIP                                                                             200,000
                                                                                                 --------
SHAREHOLDER'S EQUITY:
 
  Common shares, $.01 par value; 5,000 shares authorized, 100 shares issued and                         1
   outstanding

  Additional paid-in capital                                                                          999
                                                                                                 --------
       Total shareholder's equity                                                                   1,000
                                                                                                 --------
       Total liabilities and shareholder's equity                                                $490,073
                                                                                                 ========
</TABLE>


The accompanying notes are an integral part of this consolidated balance sheet.

                                      F-3

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                      NOTES TO CONSOLIDATED BALANCE SHEET

                               DECEMBER 31, 1997

(1)  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Wells Real Estate Investment Trust, Inc. (the "Company"), is a newly formed
     Maryland corporation that intends to qualify as a real estate investment
     trust ("REIT").  The Company intends to offer for sale a maximum of
     15,000,000 (exclusive of 1,500,000 shares available pursuant to the
     Company's dividend reinvestment plan) shares of common stock, $.01 par
     value per share, at a price of $10 per share.  As of December 31, 1997, the
     Company had sold 100 shares to Wells Capital, Inc. (the "Advisor"), at the
     proposed initial public offering price of $10 per share.  The Company will
     seek to acquire and operate commercial properties, including, but not
     limited to, office buildings, shopping centers, business and industrial
     parks, and other commercial and industrial properties, including properties
     which are under construction or development, are newly constructed, or have
     been constructed and have operating histories.  All such properties may be
     acquired, developed and operated by the Company alone or jointly with
     another party.  The Company is likely to enter into one or more joint
     ventures with affiliated entities for the acquisition of properties.  In
     connection with this, the Company may enter into joint ventures for the
     acquisition of properties with prior or future real estate limited
     partnership programs sponsored by the Advisor or its affiliates.

     Substantially all of the Company's business will be conducted through Wells
     Operating Partnership, L.P. (the "Operating Partnership"), a Delaware
     limited partnership.  At December 31, 1997, the Operating Partnership had
     issued 20,000 limited partner units to the Advisor in exchange for
     $200,000.  The Company is the sole general partner in the Operating
     Partnership and possesses full legal control and authority over the
     operations of the Operating Partnership; consequently, the accompanying
     consolidated balance sheet of the Company includes the amounts of the
     Company and the Operating Partnership.

     As of December 31, 1997, the Company has neither purchased nor contracted
     to purchase any properties, nor has the Advisor identified any properties
     in which there is a reasonable probability that the Company will invest.

     USE OF ESTIMATES

     The preparation of the consolidated balance sheet in conformity with
     generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the consolidated balance sheet.  Actual results could differ from those
     estimates.


(2)  INCOME TAXES

     The Company expects to qualify as a REIT under the Internal Revenue Code of
     1986, as amended.  As a REIT, the Company generally will not be subject to
     federal income tax on net income that it distributes to its shareholders.
     The Company intends to make timely distributions sufficient to satisfy the
     annual distribution requirements.

                                      F-4

<PAGE>
 
                                   EXHIBIT A

                            PRIOR PERFORMANCE TABLES

     The following Prior Performance Tables (the "Tables") provide information
relating to real estate investment programs sponsored by the Advisor and its
Affiliates ("Prior Programs") which have investment objectives similar to the
Company.

     Prospective investors should read these Tables carefully together with the
summary information concerning the Prior Programs as set forth in "PRIOR
PERFORMANCE SUMMARY" elsewhere in this Prospectus.

     INVESTORS IN THE COMPANY WILL NOT OWN ANY INTEREST IN THE PRIOR PROGRAMS
AND SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO
THOSE EXPERIENCED BY INVESTORS IN THE PRIOR PROGRAMS.

     These Tables present actual results of Wells Prior Public Programs that
have investment objectives similar to those of the Company.  The Company's
investment objectives are to maximize Net Cash From Operations; to preserve
original Capital Contributions; and to realize capital appreciation over a
period of time.  All of the Wells Prior Public Programs have used a substantial
amount of capital and not acquisition indebtedness to acquire their properties.

     The Advisor is responsible for the acquisition, operation, maintenance and
resale of the Partnership Properties.  The financial results of the Prior
Programs thus provide an indication of the Advisor's performance of its
obligations during the periods covered.  However, general economic conditions
affecting the real estate industry and other factors contribute significantly to
financial results.

     The following tables are included herein:

     TABLE I - Experience in Raising and Investing Funds (As a Percentage of
Investment)

     TABLE II - Compensation to Sponsor (in Dollars)

     TABLE III - Annual Operating Results of Prior Programs

     TABLE IV (Results of completed programs) and TABLE V (sales or disposals of
property) have been omitted since none of the Prior Programs have sold any of
their properties to date.

     Additional information relating to the acquisition of properties by the
Prior Programs is contained in TABLE VI, which is included in the Registration
Statement which the Company has filed with the Securities and Exchange
Commission.  As described above, no Wells Prior Public Program has sold or
disposed of any property held by it.  Copies of any or all information will be
provided to prospective investors at no charge upon request, including copies of
the Form 10-K Annual Report for any or all of the Prior Programs for any
available year.

     The following are definitions of certain terms used in the Tables:

     "ACQUISITION FEES" shall mean fees and commissions paid by a partnership in
connection with its purchase or development of a property, except Development
fees paid to a person not affiliated with the partnership or with a general
partner of the partnership in connection with the actual development of a
project after acquisition of the land by the partnership.

     "ORGANIZATION EXPENSES" shall include legal fees, accounting fees,
securities filing fees, printing and reproduction expenses and fees paid to the
general partners or their affiliates in connection with the planning and
formation of the partnership.

     "UNDERWRITING FEES" shall include selling commissions and wholesaling fees
paid to broker-dealers for services provided by the broker-dealers during the
offering.

                                      A-1

<PAGE>
 
                                    TABLE I

                                  (UNAUDITED)

                   EXPERIENCE IN RAISING AND INVESTING FUNDS

     This Table provides a summary of the experience of the General Partners and
their Affiliates in Prior Programs for which offerings have been completed since
December 31, 1993.  Information is provided with regard to the manner in which
the proceeds of the offerings have been applied.  Also set forth is information
pertaining to the timing and length of these offerings, the time period over
which the proceeds have been invested in the properties, as well as the
percentage of offerings sold and the expenses related to the offerings.


<TABLE>
<CAPTION>
                                                Wells Real         Wells Real         Wells Real         Wells Real
                                                Estate Fund        Estate Fund        Estate Fund        Estate Fund
                                                 VI, L.P.           VII, L.P.         VIII, L.P.          IX, L.P.
                                             -----------------  -----------------  -----------------  -----------------
<S>                                          <C>                <C>                <C>                <C>
Dollar Amount Offered                        $  25,000,000(3)   $  25,000,000(4)   $  35,000,000(5)   $  35,000,000(6)
Dollar Amount Raised                         $  25,000,000(3)     $24,180,174(4)     $32,042,689(5)     $35,000,000(6)
                                             =============      =============      =============      =============
Percentage Amount Raised                             100.0%(3)           96.7%(4)           91.6%(5)          100.0%(6)
Less Offering Expenses
  Underwriting Fees                                   10.0%              10.0%              10.0%              10.0%
  Organizational Expenses                              5.0%               5.0%               5.0%               5.0%
Reserves(1)                                            1.0%               1.0%               0.0%               0.0%
                                             -------------      -------------      -------------      -------------
  Percent Available for Investment                    84.0%              84.0%              85.0%              85.0%
Acquisition and Development Costs
  Prepaid Items and Fees related
    to Purchase of Property                            0.3%               0.0%               0.0%               0.0%
  Cash Down Payment                                   40.4%              16.3%               6.3%               7.0%
  Acquisition Fees(2)                                  3.7%               3.5%               4.0%               4.0%
  Development and Construction Costs                  39.6%              64.2%              50.3%              30.0%
Reserve for Payment of Indebtedness                    0.0%               0.0%               0.0%               0.0%
                                             -------------      -------------      -------------      -------------
Total Acquisition and Development Cost                84.0%              84.0%              60.6%(7)           41.0%(8)
                                             -------------      -------------      -------------      -------------
Percent Leveraged                                      0.0%               0.0%               0.0%               0.0%
                                             =============      =============      =============      =============
Date Offering Began                               04/05/93           04/24/94           01/06/95             1/5/96
Length of Offering                                  12 mo.             12 mo.             12 mo.             12 mo.
Months to Invest 90% of Amount
  Available for Investment                          15 mo.             12 mo.                    (7)                (8)
 (Measured from Beginning of Offering)
Number of Investors                                  1,791              1,865              2,086              2,098
</TABLE>

- ---------------------
(1)  Does not include General Partner contributions held as part of reserves.
(2)  Includes development fees, real estate commissions, general contractor fees
     and/or architectural fees paid to Affiliates of the General Partners.
(3)  Total dollar amount registered and available to be offered was $25,000,000.
     Wells Real Estate Fund VI, L.P. closed its offering on April 4, 1994 and
     the total dollar amount raised was $25,000,000.
(4)  Total dollar amount registered and available to be offered was $25,000,000.
     Wells Real Estate Fund VII, L.P. closed its offering on January 5, 1995 and
     the total dollar amount raised was $24,180,174.
(5)  Total dollar amount registered and available to be offered was $35,000,000.
     Wells Real Estate Fund VIII, L.P. closed its offering on January 4, 1996
     and the total dollar amount raised was $32,042,689.
(6)  Total dollar amount registered and available to be offered was $35,000,000.
     Wells Real Estate Fund IX, L.P. closed its offering on December 30, 1996
     and the total dollar amount raised was $35,000,000.
(7)  As of December 31, 1996, Wells Real Estate Fund VIII, L.P. had not yet
     invested 90% of the amount available for investment.  The amount invested
     in properties (including Acquisition Fees paid but not yet associated with
     a specific property) at December 31, 1996 was 44% of the total dollar
     amount raised.  The amount invested and/or committed to be invested in
     properties (including Acquisition Fees paid but not yet associated with a
     specific property) at December 31, 1996 was 60.6% of the total dollar
     amount raised.
(8)  As of December 31, 1996, Wells Real Estate Fund IX, L.P. had not yet
     invested 90% of the amount available for investment.  The amount invested
     in properties (including Acquisition Fees paid but not yet associated with
     a specific property) at December 31, 1996 was 17% of the total dollar
     amount raised.  The amount invested and/or committed to be invested in
     properties (including Acquisition Fees paid but not yet associated with a
     specific property) at December 31, 1996 was 41.0% of the total dollar
     amount raised.

                                      A-2

<PAGE>
 
                                    TABLE II
                                  (UNAUDITED)

                            COMPENSATION TO SPONSOR

     The following sets forth the compensation received by General Partners or
Affiliates of the General Partners, including compensation paid out of offering
proceeds and compensation paid in connection with the ongoing operations of
Prior Programs having similar or identical investment objectives the offerings
of which have been completed since December 31, 1993.  These partnerships have
not sold or refinanced any of their properties to date.  All figures are as of
December 31, 1996.


<TABLE>
<CAPTION>
                                                          Wells Real    Wells Real    Wells Real    Wells Real       Other
                                                         Estate Fund   Estate Fund   Estate Fund   Estate Fund       Public
                                                           VI, L.P.     VII, L.P.     VIII, L.P.     IX, L.P.     Programs(1)
                                                         ------------  ------------  ------------  ------------  --------------
<S>                                                      <C>           <C>           <C>           <C>           <C>
Date Offering Commenced                                      04/05/93      04/06/94      01/06/95      01/05/96             --
Dollar Amount Raised                                      $25,000,000   $24,180,174   $32,042,689   $35,000,000   $125,018,232
 to Sponsor from Proceeds of Offering:
 Underwriting Fees(2)                                     $   119,936   $   178,122   $   174,295   $   309,556   $    451,803
Acquisition Fees
  Real Estate Commissions(5)                                       --            --            --            --             --
  Acquisition and Advisory Fees(3)                        $   932,216   $   846,306   $ 1,281,708   $ 1,400,000   $  7,099,169
Dollar Amount of Cash Generated from Operations
 Before Deducting Payments to Sponsor(4)                  $ 2,780,262   $ 1,943,504   $ 1,228,747   $   161,427   $ 21,533,226
Amount Paid to Sponsor from Operations:
 Property Management Fee(1)                               $    78,975   $    58,433   $    26,780   $       486   $    791,998
 Partnership Management Fee                                        --            --            --            --             --
 Reimbursements(6)                                        $    92,825   $    90,160   $    48,429   $     8,332   $  1,138,583
 Leasing Commissions(1)                                   $    41,428   $    39,494   $    25,209   $     1,459   $    817,520
General Partner Distributions                                      --            --            --            --         15,205
Other                                                              --            --            --            --             --
Dollar Amount of Property Sales and Refinancing
 Payments to Sponsors:
Cash                                                               --            --            --            --             --
Notes                                                              --            --            --            --             --
Amount Paid to Sponsor from Property Sales
 and Refinancing:
  Real Estate Commissions                                          --            --            --            --             --
  Incentive Fees                                                   --            --            --            --             --
  Other                                                            --            --            --            --             --
</TABLE>

- -----------------
(1) Includes compensation paid to General Partners from Wells Real Estate Fund
    II, Wells Real Estate Fund II-OW, Wells Real Estate Fund III, L.P., Wells
    Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P. during the past
    three years.  General Partners of Wells Real Estate Fund I are entitled to
    certain property management and leasing fees but have elected to defer the
    payment of such fees until a later year on properties owned by Fund I and
    properties owned jointly by Fund I and Fund II.  At December 31, 1996, the
    amount of such fees due the General Partners totaled $1,897,184 and are not
    included in Table II.
(2) Includes net underwriting compensation and commissions paid to Wells
    Investment Securities, Inc. in connection with the offerings of Wells Real
    Estate Funds VI, VII, VIII and IX, which were not reallowed to participating
    broker-dealers.
(3) Fees paid to the General Partners or their Affiliates for acquisition
    advisory services in connection with the review and evaluation of potential
    real property acquisitions.
(4) Includes $125,314 in net cash used by operating activities, $2,692,348 in
    distributions paid to limited partners and $213,228 in payments to sponsors
    for Wells Real Estate Fund VI, L.P.; $32,869 in net cash used by operating
    activities, $1,732,250 in distributions paid to limited partners and
    $188,087 in payments to sponsor for Wells Real Estate Fund VII, L.P.; $2,443
    in net cash used by operating activities, $1,130,772 in distributions paid
    to limited partners and $100,418 in payments to sponsor for Wells Real
    Estate Fund VIII, L.P.; $1,725 in net cash provided by operating activities,
    $149,425 in distributions paid to limited partners and $10,277 in payments
    to sponsor for Wells Real Estate Fund IX, L.P.; and $855,331 in net cash
    provided by operating activities, $19,618,669 in distributions paid to
    limited partners and $2,763,306 in payments to sponsor for other public
    programs.
(5) The sponsor does not receive any real estate commission for the acquisition
    of any property.
(6) Certain salaries and other employee-related expenses, travel and other out-
    of-pocket expenses of personnel (other than controlling persons of the
    General Partner or their Affiliates) may be reimbursed to the extent such
    expenses are directly related to a specific Partnership Property.

                                      A-3

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)

     The tables on the following five (5) pages set forth operating results of
prior programs sponsored by the General Partners the offerings of which have
been completed since December 31, 1991.  The information relates only to public
programs with investment objectives similar to those of the Partnership.  All
figures are as of December 31 of the year indicated.

                                      A-4

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                         WELLS REAL ESTATE FUND V, L.P.


<TABLE>
<CAPTION>
                                                        1996         1995          1994           1993           1992
                                                    ------------  -----------  -------------  -------------  -------------
<S>                                                 <C>           <C>          <C>            <C>            <C>
Gross Revenues(1)                                    $  590,839      764,624    $   656,958    $   458,213    $    58,640
Profit on Sale of Properties                                 --           --             --             --             --
Less: Operating Expenses(2)                              78,939       68,735         88,987         96,964         71,521
Depreciation and Amortization(3)                          6,250        6,250          6,250          6,250          5,208
                                                     ----------   ----------    -----------    -----------    -----------
Net Income (Loss) GAAP Basis(4)                      $  505,650   $  689,639    $   561,721    $   354,999    $   (18,089)
                                                     ==========   ==========    ===========    ===========    ===========
Taxable Income (Loss): Operations                    $  666,780   $  676,367    $   528,025    $   280,000    $   (18,089)
                                                     ==========   ==========    ===========    ===========    ===========
Cash Generated (Used By):                               (65,728)     (46,235)       (10,395)       112,594        (33,006)
 Operations
 Joint Ventures                                       1,072,835    1,020,905        653,729         54,154             --
                                                     ----------   ----------    -----------    -----------    -----------
                                                     $1,007,107   $  974,670    $   643,334    $   166,748    $   (33,006)
Less Cash Distributions to Investors:                 1,007,107   $  969,011        643,334        151,336             --
 Operating Cash Flow
 Return of Capital                                           --           --         44,257             --             --
 Undistributed Cash Flow from Prior
   Year Operations                                        3,672           --          5,412             --             --
                                                     ----------   ----------    -----------
Cash Generated (Deficiency) after
  Cash Distributions                                 $   (3,672)  $    5,659    $   (59,669)   $    15,412    $   (33,006)
Special Items (not including sales
  and financing):
Source of Funds:
General Partner Contributions                                --           --             --             --             --
Limited Partner Contributions                                --           --             --      5,589,786     11,416,234
                                                     ----------   ----------    -----------    -----------    -----------
                                                             --   $    5,659    $   (59,699)   $ 5,605,198    $11,383,228
Use of Funds:
 Sales Commissions and Offering
  Expenses                                                   --           --             --        764,599      1,377,645
 Return of Original Limited Partner's
  Investment                                                 --           --             --             --            100
 Property Acquisitions and Deferred
   Project Costs                                           (225)    (233,501)     2,366,507      7,755,116      4,181,338
                                                     ----------   ----------    -----------    -----------    -----------
Cash Generated (Deficiency) after Cash
  Distributions and                                  $   (3,897)  $ (227,842)   $(2,426,206)   $(2,914,517)   $ 5,824,145
   Special Items                                       ==========   ==========    ===========    ===========    ===========

Net Income and Distributions Data per
  $1,000 Invested:
Net Income on GAAP Basis:
 Ordinary Income (Loss)
 - Operations Class A Units                                  71           73             58             29              0
 - Operations Class B Units                                (378)        (272)          (180)           (54)           (65)
 Capital Gain (Loss)                                          0            0              0              0              0
Tax and Distributions Data per $1,000
 Invested:
 Federal Income Tax Results:
 Ordinary Income (Loss)
 - Operations Class A Units                                  69           69             55             36             --
 - Operations Class B Units                                (260)        (246)          (181)           (58)           (21)
 Capital Gain (Loss)                                         --           --             --             --             --
Cash Distributions to Investors:
Source (on GAAP Basis)
- - Investment Income Class A Units                            65           63             46             10             --
- - Return of Capital Class A Units                            --           --             --             --             --
- - Return of Capital Class B Units                            --           --             --             --             --
Source (on Cash Basis)                                                                                                 --
- - Operations Class A Units                                   65           63             43             10             --
- - Return of Capital Class A Units                            --           --              3             --             --
- - Operations Class B Units                                   --           --             --             --             --
Amount (in Percentage Terms) Remaining
  Invested in Program         100%
Properties at the end of the Last Year
  Reported in the Table
</TABLE>

- -------------------------
(See notes on following page)

                                      A-5

<PAGE>
 
(1) Includes $19,125 in equity in loss of joint ventures and $77,765 from
    investment of reserve funds in 1992; $207,234 in equity in earnings of joint
    ventures and $250,979 from investment of reserve funds in 1993; $592,902 in
    equity in earnings of joint ventures and $64,056 from investment of reserve
    funds in 1994; $745,173 in equity in earnings of joint ventures and $19,451
    from investment of reserve funds in 1995; and $577,128 in equity in earnings
    of joint ventures and $13,711 from investment of reserve funds in 1996.  At
    December 31, 1996, the leasing status of all developed property was 92%.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenue is
    depreciation and amortization of $100,796 for 1993, $324,578 for 1994,
    $440,333 for 1995 and $591,390 for 1996.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated as follows:  $(17,908) to Class
    B Limited Partners and $(181) to General Partners for 1992; $442,135 to
    Class A Limited Partners, $(87,868) to Class B Limited Partners and $732 to
    General Partners for 1993; $879,232 to Class A Limited Partners, $(316,460)
    to Class B Limited Partners and $(1,051) to General Partners for 1994;
    $1,124,203 to Class A Limited Partners and $(434,564) to Class B Limited
    Partners and $0 for 1995; and $1,095,296 to Class A Limited Partners and
    $(589,646) to Class B Limited Partners for 1996.

                                      A-6

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND VI, L.P.

<TABLE>
<CAPTION>
                                                                       1996           1995           1994           1993       1992
                                                                   ------------  --------------  -------------  -------------  ----
<S>                                                                <C>           <C>             <C>            <C>            <C>
Gross Revenues(1)                                                   $  675,782    $  1,002,567    $   819,535    $    82,723   N/A
Profit on Sale of Properties                                                --              --             --             --
Less: Operating Expenses(2)                                             80,479          94,489        112,389         46,608
Depreciation and Amortization(3)                                         6,250           6,250          6,250          4,687
                                                                    ----------    ------------    -----------    -----------
Net Income (Loss) GAAP Basis(4)                                     $  589,053    $    901,828    $   700,896    $    31,428
                                                                    ==========    ============    ===========    ===========
Taxable Income (Loss): Operations                                   $  809,389    $    916,531    $   667,682    $    31,428
                                                                    ==========    ============    ===========    ===========
Cash Generated (Used By):                                               (2,716)       (278,728)      (276,376)        (2,478)
 Operations
 Joint Ventures                                                      1,044,891         766,212        203,543             --
                                                                    ----------    ------------    -----------    -----------
                                                                    $1,042,175    $  1,044,940    $   479,919    $    (2,478)
Less Cash Distributions to Investors:
 Operating Cash Flow                                                 1,042,175    $  1,044,940        245,800             --
 Return of Capital                                                     125,314              --             --             --
 Undistributed Cash Flow from Prior Year Operations                     18,027         216,092             --             --
                                                                    ----------    ------------    -----------    -----------
Cash Generated (Deficiency) after Cash Distributions                $ (143,341)   $   (216,092)   $   234,119    $    (2,478)
Special Items (not including sales and financing):
Source of Funds:
General Partner Contributions                                               --              --             --             --
Limited Partner Contributions                                               --              --     12,163,461     12,836,539
                                                                    ----------    ------------    -----------    -----------
                                                                   $  --         $  --            $12,397,580    $12,834,061
Use of Funds:
 Sales Commissions and Offering Expenses                                    --              --      1,776,909      1,781,724
 Return of Original Limited Partner's Investment                            --              --             --            100
 Property Acquisitions and Deferred Project Costs                      234,924      10,721,376      5,912,454      3,856,239
                                                                    ----------    ------------    -----------    -----------
Cash Generated (Deficiency) after Cash Distributions and            $ (378,265)   $(10,937,468)   $(4,708,217)   $(7,195,998)
 Special Items                                                      ==========    ============    ===========    ===========
 
Net Income and Distributions Data per $1,000 Invested:
Net Income on GAAP Basis:
 Ordinary Income (Loss)
 - Operations Class A Units                                                 59              57             43              9
 - Operations Class B Units                                               (160)            (60)           (12)            (5)
 Capital Gain (Loss)                                                        --              --             --              0
Tax and Distributions Data per $1,000 Invested:
 Federal Income Tax Results:
 Ordinary Income (Loss)
 - Operations Class A Units                                                 56              56             41              1
 - Operations Class B Units                                                (99)            (51)           (22)            --
 Capital Gain (Loss)                                                        --              --             --             --
Cash Distributions to Investors:
Source (on GAAP Basis)
- - Investment Income Class A Units                                           56              57             14             --
- - Return of Capital Class A Units                                           --               4             --             --
- - Return of Capital Class B Units                                           --              --             --             --
Source (on Cash Basis)
- - Operations Class A Units                                                  50              61             14             --
- - Return of Capital Class A Units                                            6              --             --             --
- - Operations Class B Units                                                  --
Amount (in Percentage Terms) Remaining Invested in Program                 100%
Properties at the end of the Last Year Reported in the Table
</TABLE>

- ---------------------------
(See notes on following page)

                                      A-7

<PAGE>
 
(1) Includes $3,436 in equity in loss of joint ventures and $86,159 from
    investment of reserve funds in 1993, $285,711 in equity in earnings of joint
    ventures and $533,824 from investment of reserve funds in 1994, $681,033 in
    equity in earnings of joint ventures and $321,534 from investment of reserve
    funds in 1995 and $607,214 in equity in earnings of joint ventures and
    $68,568 from investment of reserve funds in 1996.  At December 31, 1996, the
    leasing status was 93%.
(2) Includes partnership administrative expenses.
(3) Included in equity in loss of joint ventures in gross revenues is
    depreciation of $3,436 for 1993, $107,807 for 1994, and $264,866 for 1995
    and $648,478 for 1996.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $39,551 to Class A Limited
    Partners, $(8,042) to Class B Limited Partners and $(81) to the General
    Partner for 1993; $762,218 to Class A Limited Partners, $(62,731) to Class B
    Limited Partners and $1,409 to the General Partners for 1994; $1,172,944 to
    Class A Limited Partners, $(269,288) to Class B Limited Partners and
    $(1,828) to the General Partners for 1995; and $1,234,717 to Class A Limited
    Partners, $(645,664) to Class B Limited Partners and $0 to the General
    Partners for 1996.

                                      A-8

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND VII, L.P.

<TABLE>
<CAPTION>
                                                                      1996           1995            1994       1993  1992
                                                                   -----------  --------------  --------------  ----  ----
<S>                                                                <C>          <C>             <C>             <C>   <C>
Gross Revenues(1)                                                   $ 543,291         925,246    $    286,371    N/A   N/A
Profit on Sale of Properties                                               --                              --
Less: Operating Expenses(2)                                            84,265         114,953          78,420
Depreciation and Amortization(3)                                        6,250           6,250           4,688
                                                                    ---------    ------------    ------------
Net Income (Loss) GAAP Basis(4)                                     $ 452,776    $    804,043    $    203,263
                                                                    =========    ============    ============
Taxable Income (Loss): Operations                                   $ 657,443    $    812,402    $    195,067
                                                                    =========    ============    ============
Cash Generated (Used By):                                              20,883         431,728          47,595
 Operations
 Joint Ventures                                                       760,628         424,304          14,243
                                                                    ---------    ------------    ------------
                                                                    $ 781,511    $    856,032    $     61,838
Less Cash Distributions to Investors:                                 781,511    $    856,032          52,195
 Operating Cash Flow
 Return of Capital                                                     10,805          22,064              --
 Undistributed Cash Flow from Prior Year Operations                        --           9,643              --
                                                                    ---------    ------------    ------------
Cash Generated (Deficiency) after Cash Distributions                $ (10,805)   $    (31,707)   $     (9,643)
Special Items (not including sales and financing):
Source of Funds:
General Partner Contributions                                                              --              --
Limited Partner Contributions                                      $                  805,212      23,374,961
                                                                   --            ------------    ------------
                                                                   $  --         $    773,505    $ 23,384,604
Use of Funds:
 Sales Commissions and Offering Expenses                                   --         244,207       3,351,569
 Return of Original Limited Partner's Investment                           --             100              --
 Property Acquisitions and Deferred Project Costs                     736,960      14,971,002       4,477,765
                                                                    ---------    ------------    ------------
Cash Generated (Deficiency) after Cash Distributions and            $(747,765)   $(14,441,804)   $(15,555,270)
 Special Items                                                      =========    ============    ============
 
Net Income and Distributions Data per $1,000 Invested:
Net Income on GAAP Basis:
 Ordinary Income (Loss)
 - Operations Class A Units                                                62              57              29
 - Operations Class B Units                                               (98)            (20)             (9)
 Capital Gain (Loss)                                                       --              --              --
Tax and Distributions Data per $1,000 Invested:
 Federal Income Tax Results:
 Ordinary Income (Loss)
 - Operations Class A Units                                                55              55              28
 - Operations Class B Units                                               (58)            (16)            (17)
 Capital Gain (Loss)                                                       --              --              --
Cash Distributions to Investors:
Source (on GAAP Basis)
- - Investment Income Class A Units                                          43              52               7
- - Return of Capital Class A Units                                          --              --              --
- - Return of Capital Class B Units                                          --              --              --
Source (on Cash Basis)
- - Operations Class A Units                                                 42              51               7
- - Return of Capital Class A Units                                           1               1              --
- - Operations Class B Units                                                 --              --              --
Source (on a Priority Distribution Basis)(5)
- - Investment income Class A Units                                          29              30               4
- - Return of Capital Class A Units                                          14              22               3
- - Return of Capital Class B Units                                          --              --              --
Amount (in Percentage Terms) Remaining Invested in Program                100%
Properties at the end of the Last Year Reported in the Table
</TABLE>

- --------------------------------------------------------------------------------
(See notes on following page)

                                      A-9

<PAGE>
 
(1) Includes $78,799 in equity in earnings of joint ventures and $207,572 from
    investment of reserve funds in 1994, and $403,325 in equity in earnings of
    joint ventures and $521,921 from investment of reserve funds in 1995 and
    $457,144 in equity in earnings of joint ventures and $86,147 from investment
    of reserve funds in 1996.  At December 31, 1996, the leasing status was 90%
    including developed property in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $25,468 for 1994, $140,533 for 1995 and $605,247 for 1996.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $233,337 to Class A Limited
    Partners, $(29,854) to Class B Limited Partners and $(220) to the General
    Partner for 1994; $950,826 to Class A Limited Partners, $(146,503) to Class
    B Limited Partners and $(280) to the General Partners for 1995; and
    $1,062,605 to Class A Limited Partners, $(609,829) to Class B Limited
    Partners and $0 to the General Partners for 1996.
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1996, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totaled $659,487.

                                      A-10

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                       WELLS REAL ESTATE FUND VIII, L.P.


<TABLE>
<CAPTION>
                                                                       1996            1995       1994  1993  1992
                                                                   -------------  --------------  ----  ----  ----
<S>                                                                <C>            <C>             <C>   <C>   <C>
Gross Revenues(1)                                                   $ 1,057,694    $    402,428    N/A   N/A   N/A
Profit on Sale of Properties                                                 --
Less: Operating Expenses(2)                                             114,854         122,264
Depreciation and Amortization(3)                                          6,250           6,250
                                                                    -----------    ------------
Net Income (Loss) GAAP Basis(4)                                     $   936,590    $    273,914
                                                                    ===========    ============
Taxable Income (Loss): Operations                                   $ 1,001,974    $    404,348
                                                                    ===========    ============
Cash Generated (Used By):                                               623,268         204,790
 Operations
 Joint Ventures                                                         279,984          20,287
                                                                    -----------    ------------
                                                                    $   903,252    $    225,077
Less Cash Distributions to Investors:                                   903,252              --
 Operating Cash Flow
 Return of Capital                                                        2,443              --
 Undistributed Cash Flow from Prior Year Operations                 $   222,077   $
                                                                    -----------   --
Cash Generated (Deficiency) after Cash Distributions                $  (227,520)   $    225,077
Special Items (not including sales and financing):
Source of Funds:
General Partner Contributions                                                --              --
Limited Partner Contributions                                         1,898,147      30,144,542
                                                                    -----------    ------------
                                                                    $ 1,670,627    $ 30,369,619
Use of Funds:
 Sales Commissions and Offering Expenses                                464,760       4,310,028
 Return of Original Limited Partner's Investment                             --              --
 Property Acquisitions and Deferred Project Costs                     7,931,566       6,618,273
                                                                    -----------    ------------
Cash Generated (Deficiency) after Cash Distributions and            $(6,725,699)   $(19,441,318)
 Special Items                                                      ===========    ============
 
Net Income and Distributions Data per $1,000 Invested:
Net Income on GAAP Basis:
 Ordinary Income (Loss)
 - Operations Class A Units                                                  46              28
 - Operations Class B Units                                                 (47)             (3)
 Capital Gain (Loss)
Tax and Distributions Data per $1,000 Invested:
 Federal Income Tax Results:
 Ordinary Income (Loss)
 - Operations Class A Units                                                  46              17
 - Operations Class B Units                                                 (33)             (3)
 Capital Gain (Loss)                                                         --              --
Cash Distributions to Investors:
Source (on GAAP Basis)
- - Investment Income Class A Units                                            43              --
- - Return of Capital Class A Units                                            --              --
- - Return of Capital Class B Units                                            --              --
Source (on Cash Basis)
- - Operations Class A Units                                                   32              --
- - Return of Capital Class A Units                                            11              --
- - Operations Class B Units                                                   --              --
Source (on a Priority Distribution Basis)(5)
 - Investment Income Class A Units                                           33              --
 - Return of Capital Class A Units                                           10              --
 - Return of Capital Class B Units                                           --              --
Amount (in Percentage Terms) Remaining Invested in Program                  100%
Properties at the end of the Last Year Reported in the Table
</TABLE>

- ----------------------------------
(See notes on following page)

                                      A-11

<PAGE>
 
(1) Includes $28,377 in equity in earnings of joint ventures and $374,051 from
    investment of reserve funds in 1995 and $241,819 in equity in earnings of
    joint ventures and $815,875 from investment of reserve funds in 1996.  At
    December 31, 1996, the leasing status was 93% including developed property
    in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $14,058 for 1995 and $265,259 for 1996.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $294,221 to Class A Limited
    Partners, $(20,104) to Class B Limited Partners and $(203) to the General
    Partners for 1995; and $1,207,540  to Class A Limited Partners, $(270,653)
    to Class B Limited Partners and $(297) to the General Partners for 1996.
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1996, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totaled $250,776.

                                      A-12

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND IX, L.P.


<TABLE>
<CAPTION>
                                                                       1996       1995  1994  1993  1992
                                                                   -------------  ----  ----  ----  ----
<S>                                                                <C>            <C>   <C>   <C>   <C>
Gross Revenues(1)                                                   $   406,891    N/A   N/A   N/A   N/A
Profit on Sale of Properties                                                 --
Less: Operating Expenses(2)                                             101,885
Depreciation and Amortization(3)                                          6,250
                                                                    -----------
Net Income (Loss) GAAP Basis(4)                                     $   298,756
                                                                    ===========
Taxable Income (Loss): Operations                                   $   304,552
                                                                    ===========
Cash Generated (Used By):
 Operations                                                             151,150
 Joint Ventures                                                              --
                                                                    -----------
                                                                    $   151,150
Less Cash Distributions to Investors:
 Operating Cash Flow                                                    149,425
                                                                    -----------
Cash Generated (Deficiency) after Cash Distributions                $     1,725
Special Items (not including sales and financing):
Source of Funds:
General Partner Contributions                                                --
Limited Partner Contributions                                        35,000,000
                                                                    -----------
                                                                    $35,001,725
Use of Funds:
 Sales Commissions and Offering Expenses                              4,900,321
 Return of Original Limited Partner's Investment                             --
 Property Acquisitions and Deferred Project Costs                     6,544,019
                                                                    -----------
Cash Generated (Deficiency) after Cash Distributions and            $23,557,385
 Special Items                                                      ===========
 
Net Income and Distributions Data per $1,000 Invested:
Net Income on GAAP Basis:
 Ordinary Income (Loss)
 - Operations Class A Units                                                  28
 - Operations Class B Units                                                 (11)
 Capital Gain (Loss)                                                         --
Tax and Distributions Data per $1,000 Invested:
 Federal Income Tax Results:
 Ordinary Income (Loss)
 - Operations Class A Units                                                  26
 - Operations Class B Units                                                 (48)
 Capital Gain (Loss)                                                         --
Cash Distributions to Investors:
Source (on GAAP Basis)
- - Investment Income Class A Units                                            13
- - Return of Capital Class A Units                                            --
- - Return of Capital Class B Units                                            --
Source (on Cash Basis)
- - Operations Class A Units                                                   13
- - Return of Capital Class A Units                                            --
- - Operations Class B Units                                                   --
Source (on a Priority Distribution Basis)(5)
 - Investment Income Class A Units                                           10
 - Return of Capital Class A Units                                            3
 - Return of Capital Class B Units                                           --
Amount (in Percentage Terms) Remaining Invested in Program                  100%
Properties at the end of the Last Year Reported in the Table
</TABLE>

- -----------------
(1) Includes $23,077 in equity in earnings of joint ventures and $383,884 from
    investment of reserve funds in 1996.  At December 31, 1996, the leasing
    status was 100% including developed property in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $25,286 for 1996.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $330,270 to Class A Limited
    Partners, $(31,220) to Class B Limited Partners and $(294) to the General
    Partners for 1996.
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1996, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totaled $36,355.

                                      A-13

<PAGE>
 
                                   EXHIBIT B

                             SUBSCRIPTION AGREEMENT

To:  Wells Real Estate Investment Trust, Inc.
     3885 Holcomb Bridge Road
     Norcross, Georgia  30092

Ladies and Gentlemen:

     The undersigned, by signing and delivering a copy of the attached
Subscription Agreement Signature Page, hereby tenders this subscription and
applies for the purchase of the number of shares of common stock of ("Shares")
in Wells Real Estate Investment Trust, Inc., a Maryland corporation (the
"Company"), set forth on such Subscription Agreement Signature Page.  Payment
for the Shares is hereby made by check payable to "NationsBank, N.A., as Escrow
Agent."

     Payments for Shares will be held in escrow until the Company has received
and accepted subscriptions for 125,000 Shares ($1,250,000), except with respect
to residents of the States of New York and Pennsylvania, whose payments for
Shares will be held in escrow until the Company has received and accepted
subscriptions for 250,000 Shares ($2,500,000) from all investors.

     I hereby acknowledge receipt of the Prospectus for the Company dated
January 30, 1998 (the "Prospectus").

     I agree that if this subscription is accepted, it will be held, together
with the accompanying payment, on the terms described in the Prospectus.
Subscriptions may be rejected in whole or in part by the Company in its sole and
absolute discretion.

     Prospective investors are hereby advised of the following:

     (a) The assignability and transferability of the Shares is restricted and
will be governed by the Company's Articles of Incorporation and Bylaws and all
applicable laws as described in the Prospectus.

     (b) Prospective investors should not invest in Shares unless they have an
adequate means of providing for their current needs and personal contingencies
and have no need for liquidity in this investment.

     (c) There will be no public market for the Shares, and accordingly, it may
not be possible to readily liquidate an investment in the Company.

                                      B-1

<PAGE>
 
                  SPECIAL NOTICE FOR CALIFORNIA RESIDENTS ONLY
                   CONDITIONS RESTRICTING TRANSFER OF SHARES

     260.141.11  Restrictions on Transfer.
                 ------------------------ 

     (a) The issuer of any security upon which a restriction on transfer has
been imposed pursuant to Sections 260.102.6, 260.141.10 or 260.534 of the Rules
(the "Rules") adopted under the California Corporate Securities Law (the "Code")
shall cause a copy of this section to be delivered to each issuee or transferee
of such security at the time the certificate evidencing the security is
delivered to the issuee or transferee.

     (b) It is unlawful for the holder of any such security to consummate a sale
or transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260,141.12 of the Rules), except:

          (1)  to the issuer;

          (2) pursuant to the order or process of any court;

          (3) to any person described in subdivision (i) of Section 25102 of the
Code or Section 260.105.14 of the Rules;

          (4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;

          (5) to holders of securities of the same class of the same issuer;

          (6) by way of gift or donation inter vivos or on death;

          (7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign state, territory or
country who is neither domiciled in this state to the knowledge of the broker-
dealer, nor actually present in this state if the sale of such securities is not
in violation of any securities laws of the foreign state, territory or country
concerned;

          (8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter syndicate or selling group;

          (9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the security for which the
Commissioner's written consent is obtained or under this rule not required;

          (10) by way of a sale qualified under Sections 25111, 25112, 25113 or
25121 of the Code, of the securities to be transferred, provided that no order
under Section 25140 or subdivision (a) of Section 25143 is in effect with
respect to such qualification;

          (11) by a corporation to a wholly owned subsidiary of such corporation
, or by a wholly owned subsidiary of a corporation to such corporation;

          (12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code provided that no order under Section 25140 or subdivision (a)
of Section 25143 is in effect with respect to such qualification;

          (13) between residents of foreign states, territories or countries who
are neither domiciled or actually present in this state;

          (14) to the State Controller pursuant to the Unclaimed Property Law or
to the administrator of the unclaimed property law of another state;

                                      B-2

<PAGE>
 
          (15) by the State Controller pursuant to the Unclaimed Property Law or
by the administrator of the unclaimed property law of another state if, in
either such case, such person (i) discloses to potential purchasers at the sale
that transfer of the securities is restricted under this rule, (ii) delivers to
each purchaser a copy of this rule, and (iii) advises the Commissioner of the
name of each purchaser;

          (16) by a trustee to a successor trustee when such transfer does not
involve a change in the beneficial ownership of the securities;

          (17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102; provided that any such transfer is on the condition that
any certificate evidencing the security issued to such transferee shall contain
the legend required by this section.

     (c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any transfer
thereof, shall bear on their face a legend, prominently stamped or printed
thereon in capital letters of not less than 10-point size, reading as follows:

     "IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
     INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE
     PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
     CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

[Last amended effective January 21, 1988.]

SPECIAL NOTICE FOR MASSACHUSETTS AND MINNESOTA RESIDENTS ONLY

     In no event may a subscription for Shares be accepted until at least five
business days after the date the subscriber received the Prospectus.  Residents
of the State of Massachusetts who first received the Prospectus only at the time
of subscription may receive a refund of the subscription amount upon request to
the Company within five days of the date of subscription.

     SPECIAL NOTICE FOR NEBRASKA RESIDENTS ONLY


  No person or entity selling Shares on behalf of the Company may complete a
sale of the share until at least five business days after the date the
prospective investor receives a Prospectus.

                                      B-3

<PAGE>
 
                       STANDARD REGISTRATION REQUIREMENTS

     The following requirements have been established for the various forms of
registration.  Accordingly, complete Subscription Agreements and such supporting
material as may be necessary must be provided.

TYPE OF OWNERSHIP AND SIGNATURE(S) REQUIRED

(1)  INDIVIDUAL:  One signature required.

(2)  JOINT TENANTS WITH RIGHT OF SURVIVORSHIP:  All parties must sign.

(3)  TENANTS IN COMMON:  All parties must sign.

(4)  COMMUNITY PROPERTY:  Only one investor signature required.

(5)  PENSION OR PROFIT SHARING PLANS:  The trustee signs the Signature Page.

(6)  TRUST:  The trustee signs the Signature Page.  Provide the name of the
     trust, the name of the trustee and the name of the beneficiary.

(7)  COMPANY:  Identify whether the entity is a general or limited partnership.
     The general partners must be identified and their signatures obtained on
     the Signature Page.  In the case of an investment by a general partnership,
     all partners must sign (unless a "managing partner") has been designated
     for the partnership, in which case he may sign on behalf of the partnership
     if a certified copy of the document granting him authority to invest on
     behalf of the partnership is submitted).

(8)  CORPORATION:  The Subscription Agreement must be accompanied by (1) a
     certified copy of the resolution of the Board of Directors designation the
     officer(s) of the corporation authorized to sign on behalf of the
     corporation and (2) a certified copy of the Board's resolution authorizing
     the investment.

(9)  IRA AND IRA ROLLOVERS:  Requires signature of authorized signer (e.g., an
     officer) of the bank, trust company, or other fiduciary.  The address of
     the trustee must be provided in order for the trustee to receive checks and
     other pertinent information regarding the investment.

(10) KEOGH (HR 10):  Same rules as those applicable to IRAs.

(11) UNIFORM GIFT TO MINORS ACT (UGMA) or UNIFORM TRANSFERS TO MINORS ACT
     (UTMA):  The required signature is that of the custodian, not of the parent
     (unless the parent has been designated as the custodian).  Only one child
     is permitted in each investment under UGMA or UTMA.  In addition, designate
     the state under which the gift is being made.

                                      B-4

<PAGE>
 
             INSTRUCTIONS TO SUBSCRIPTION AGREEMENT SIGNATURE PAGE
       TO WELLS REAL ESTATE INVESTMENT TRUST, INC. SUBSCRIPTION AGREEMENT


<TABLE>
<S>                            <C>
- -------------------------------------------------------------------------------------------------------------------------------- 
INVESTMENT INSTRUCTIONS        Please follow these instructions carefully.  Failure to do so may result in the rejection of
                               your subscription.  All information on the Subscription Agreement Signature Page should be
                               completed as follows:
- -------------------------------------------------------------------------------------------------------------------------------- 
1.  INVESTMENT                 A minimum investment of $1,000 (100 Shares) is required, except for certain states which
                               require a higher minimum investment.  A CHECK FOR THE FULL PURCHASE PRICE OF THE SHARES
                               SUBSCRIBED FOR SHOULD BE MADE PAYABLE TO THE ORDER OF "NATIONSBANK, N.A., AS ESCROW AGENT"
                               Shares may be purchased only by persons meeting the standards set forth under the Section of
                               the Prospectus entitled "INVESTOR SUITABILITY STANDARDS."  Please indicate the state in which
                               the sale was made.
- --------------------------------------------------------------------------------------------------------------------------------  
2.  TYPE OF                    Please check the appropriate box to indicate the type of entity or type of individuals
    OWNERSHIP                  subscribing.
- --------------------------------------------------------------------------------------------------------------------------------  
3.  REGISTRATION               Please enter the exact name in which the Shares are to be held.  For joint tenants with right
    NAME AND                   of survivorship or tenants in common, include the names of both investors.  In the case of
    ADDRESS                    partnerships or corporations, include the name of an individual to whom correspondence will
                               be addressed.  Trusts should include the name of the trustee.  All investors must complete
                               the space provided for taxpayer identification number or social security number.  By signing
                               in Section 6, the investor is certifying that this number is correct.  Enter the mailing
                               address and telephone numbers of the registered owner of this investment.  In the case of a
                               Qualified Plan or trust, this will be the address of the trustee.  Indicate the birthday and
                               occupation of the registered owner unless the registered owner is a partnership, corporation
                               or trust.
- --------------------------------------------------------------------------------------------------------------------------------  
4.  INVESTOR NAME              Complete this Section only if the investor's name and address is different from the
    AND ADDRESS                registration name and address provided in Section 4.  If the Shares are registered in the
                               name of a trust, enter the name, address, telephone number, social security number, birthdate
                               and occupation of the beneficial owner of the trust.
- --------------------------------------------------------------------------------------------------------------------------------  
5.  SUBSCRIBER                 Please separately initial each representation made by the investor where indicated.  Except
    SIGNATURE                  in the case of fiduciary accounts, the investor may not grant any person a power of attorney
                               to make such representations on his or her behalf.  Each investor must sign and date this
                               Section.  If title is to be held jointly, all parties must sign.  If the registered owner is
                               a partnership, corporation or trust, a general partner, officer or trustee of the entity must
                               sign.  PLEASE NOTE THAT THESE SIGNATURES DO NOT HAVE TO  BE NOTARIZED.
- --------------------------------------------------------------------------------------------------------------------------------  
6.  ADDITIONAL                 Please check if you plan to make one or more additional investments in the Company.  All
    INVESTMENTS                additional investments must be increments of at least $25.  Additional investments by
                               residents of Maine must be for the minimum amounts stated under "INVESTOR SUITABILITY
                               STANDARDS" in the Prospectus, and residents of Maine must execute a new Subscription
                               Agreement Signature Page to make additional investments in the Company.  If additional
                               investments in the Company are made, the investor agrees to notify the Company and the
                               Broker-Dealer named on the Subscription Agreement Signature Page in writing if at any time he
                               fails to meet the applicable suitability standards or he is unable to make any other
                               representations or warranties set forth in the Prospectus or the Subscription Agreement.  The
                               investor acknowledges that the Broker-Dealer named in the Subscription Agreement Signature
                               Page may receive a commission not to exceed 7% of any such additional investments in the
                               Company.
- --------------------------------------------------------------------------------------------------------------------------------  
7.  DISTRIBUTIONS              a.  DISTRIBUTION REINVESTMENT PLAN:  By electing the Distribution Reinvestment Plan, the
                                   investor elects to reinvest all distributions of Cash Available for Distribution in the
                                   Company.  The investor agrees to notify the Company and the Broker-Dealer named on the
                                   Subscription Agreement Signature Page in writing if at any time he fails to meet the
                                   applicable suitability standards or he is unable to make any other representations and
                                   warranties as set forth in the Prospectus or Subscription 
</TABLE>
 

                                      B-5

<PAGE>
 

<TABLE> 
<C>                            <S> 
- -------------------------------------------------------------------------------------------------------------------------------- 
                                   Agreement. The investor acknowledges that the Broker-Dealer named in the Subscription 
                                   Agreement Signature Page may receive a commission not to exceed 8% of any reinvested 
                                   distributions.

                               b.  DISTRIBUTION ADDRESS:  If cash distributions are to be sent to an address other than that
                                   provided in Section 5 (i.e., a bank, brokerage firm or savings and loan, etc.), please
                                   provide the name, account number and address.
- -------------------------------------------------------------------------------------------------------------------------------- 
8.  BROKER-DEALER              This Section is to be completed by the Registered Representative.  Please complete all
                               BROKER-DEALER information contained in Section 9 including suitability certification.
                               SIGNATURE PAGE MUST BE SIGNED BY AN AUTHORIZED REPRESENTATIVE.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>



The Subscription Agreement Signature Page, which has been delivered with this
Prospectus, together with a check for the full purchase price, should be
delivered or mailed to your Broker-Dealer.  Only original, completed copies of
Subscription Agreements can be accepted.  Photocopied or otherwise duplicated
Subscription Agreements cannot be accepted by the Company.

               IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS
                     SUBSCRIPTION AGREEMENT SIGNATURE PAGE,
                           PLEASE CALL 1-800-448-1010

                                      B-6

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                     SUBSCRIPTION AGREEMENT SIGNATURE PAGE

1.__________________INVESTMENT__________________________________________________

- -------------------------------------    Make Investment Check Payable to:
 ____________________________            NationsBank, N.A. as Escrow Agent
 _________________
    # of Shares   Total $ Invested       [_] Initial Investment (Minimum $1,000)
    (#Shares x $10.00=$ Invested)        [_] Additional Investment (Minimum     
Minimum purchase  $1,000 or 100 Shares       $25.00)                            
- --------------------------------------       State in which sale was made______ 

2.__________________ADDITIONAL INVESTMENTS__________________________________

 Please check if you plan to make additional investments in the Company:    [_]

  (If additional investments are made, please include social security number or
other taxpayer identification number on your check).

 (All additional investments must be made in increments of at least $10.)
                                                        
3.__________________TYPE OF                             -------------------
OWNERSHIP__________________________________________________________________


<TABLE>
<CAPTION>
 
<S>                                              <C> 
[_]    IRA (06)                                  [_]    Individual (01)
[_]    Keogh (10)                                [_]    Joint Tenants With Right of Survivorship (02)
[_]    Qualified Pension Plan (11)               [_]    Community Property (03)
[_]    Qualified Profit Sharing Plan (12)        [_]    Tenants in Common (04)
[_]    Other Trust__________________________     [_]    Custodian:  A Custodian for______________________ under
        For the Benefit of_____________________         the Uniform Gift to Minors Act of the State of ________ (08)
[_]    Partnership (15)                          [_]    Other____________________________________________

4.__________________REGISTRATION NAME AND
ADDRESS____________________________________________________
 Please print name(s) in which Shares are to be registered.  Include trust name,
if applicable.
 [_] Mr.  [_] Mrs.  [_] Ms.  [_] MD  [_] Ph.D.  [_] DDS  [_] Other_________               Taxpayer Identification Number
                                                                                           [ ][ ]-[ ][ ][ ][ ][ ][ ][ ] 
_____________________________________________________                                           Social Security Number
                                                                                           [ ][ ][ ]-[ ][ ]-[ ][ ][ ][ ]
_____________________________________________________
 Street Address
 or P.O. Box    ______________________________________________________________________________________________________

 City  ______________________________________________  State __________________  Zip Code  ___________________________
 
 Home                                                  Business
 Telephone No. (_____)____________________             Telephone No. (_____)_____________________

 Birthdate ________________________________            Occupation ____________________________________________________


5.__________________INVESTOR NAME AND ADDRESS_________________________________________________________
 Please print name(s) in which Shares are to be registered.  Include trust name, if applicable.

 (Complete only if different from registration name and address).

  [_] Mr.  [_] Mrs.  [_] Ms.  [_] MD  [_] Ph.D.  [_] DDS  [_] Other___________________________________________________________

 Name___________________________________________________________                               Social Security Number
                                                                                           [ ][ ][ ]-[ ][ ]-[ ][ ][ ][ ]
 Street Address
 or P.O. Box    ______________________________________________________________________________________________________

 City  ______________________________________________  State __________________  Zip Code  ___________________________
 
 Home                                                  Business
 Telephone No. (_____)____________________             Telephone No. (_____)_____________________

 Birthdate ________________________________            Occupation ____________________________________________________
</TABLE>
 


<PAGE>
 
6.__________________SUBSCRIBER SIGNATURE_______________________________________

  Please separately initial each of the representations below.  Except in the
case of fiduciary accounts, you may not grant any person a power of attorney to
make such representations on your behalf.  In order to indicate the Company to
accept this subscription, I hereby represent and warrant to you as follows:

 (a) I have received the Prospectus                       _______    _______ 
                                                         Initials    Initials 

 (b) I accept and agree to be bound by the terms and conditions of the Articles 
     of Incorporation.                                    _______    _______ 
                                                         Initials    Initials 

 (c) I have (i) a net worth (exclusive of home, home furnishings and
     automobiles) of $150,000 or more, or (ii) a net worth (as described above)
     of at least $45,000 and had during the last tax year or estimate that I
     will have during the current tax year a minimum of $45,000 annual gross
     income, or that I meet the higher suitability requirements imposed by my
     state of primary resident as set forth in the Prospectus under "INVESTOR-
     SUITABILITY STANDARDS".                              _______    _______
                                                         Initials    Initials

 (d) If I am a California resident or if the Person to whom I subsequently
     propose to assign or transfer any Shares is a California resident, I may
     not consummate a sale or transfer to my Shares, or any interest therein, or
     receive any consideration therefor, without the prior written consent of
     the Commissioner of the Department of Corporations of the State of
     California, except as permitted in the Commissioner's Rules, and I
     understand that my Shares, or any document evidencing my Shares, will bear
     a legend reflecting the substance of the foregoing understanding.
                                                          _______    _______
                                                         Initials    Initials

 (e) ARKANSAS AND TEXAS RESIDENTS ONLY:  I am purchasing the Shares for my own
     account and acknowledge that the investment is not liquid.
                                                          _______    _______
                                                         Initials    Initials

I declare that the information supplied above is true and correct and may be
relied upon the Company in connection with my investment in the Company.  Under
penalties, perjury, by signing this Signature Page, I hereby certify that (a) I
have provided herein my correct Taxpayer Identification Number, and (b) I am not
subject to back-up withholding as a result of a failure to report all interest
or dividends, or the Internal Revenue Service has notified me that I am no
longer subject to back-up withholding.

_________________________________  _______________________________________
 Signature of Investor or Trustee  Signature of Joint Owner, if applicable

Date________________________________

        (MUST BE SIGNED BY TRUSTEE(S) IF IRA, KEOGH OR QUALIFIED PLAN).



<PAGE>
 
7.__________________DISTRIBUTIONS_______________________________________________

 7(a).  Check the following box to participate in the Distribution Reinvestment
        Plan.  [_]
  7(b). Complete following section only to direct distributions to a party
        other than registered owner:
 
 Name ______________________________________________________________

 Account Number ____________________________________________________

 Street Address
 or P.O. Box _______________________________________________________

 City ___________________________ State ________ Zip Code __________

8. _________________BROKER-DEALER____________________________________

                 (TO BE COMPLETED BY REGISTERED REPRESENTATIVE)

 The Broker-Dealer or authorized representative must sign below to complete
 order. Broker-Dealer warrants that it is a duly licensed Broker-Dealer and may
 lawfully offer Shares in the state designated as the investor's address or the
 state in which the sale was made, if different. The Broker-Dealer or authorized
 representative warrants that he has reasonable grounds to believe this
 investment is suitable for the subscriber as defined in Section 3(b) of
 Appendix F and that he has informed subscriber of all aspects of liquidity and
 marketability of this investment as required by Section 4 of Appendix F
 (Attachment No. 1 to Dealer Agreement).

 Broker-Dealer Name___________________________  Telephone No. (____)____________

 Broker-Dealer Street
 Address or P.O. Box____________________________________________________________

 City ___________________________ State ________________________ Zip Code ______

 Registered
 Representative Name ___________________________ Telephone No. (____)___________

 Reg. Rep. Street
 Address or P.O. Box____________________________________________________________

 City ___________________________ State ________________________ Zip Code ______

______________________________________      ____________________________________
 Broker-Dealer Signature, if required       Registered Representative Signature

Please mail completed Subscription Agreement (with all signatures) and check(s)
                                made payable to

                       NationsBank, N.A., as Escrow Agent
                       WELLS INVESTMENT SECURITIES, INC.
                          800-448-1010 or 770-449-7800

Overnight address:                                              Mailing address:
3885 Holcomb Bridge Road                                         P.O. Box 926040
Norcross, Georgia  30092-9209                      Norcross, Georgia  30092-9209


ACCEPTANCE BY CORPORATION               Amount            Date
                                              ----------      ---------- 

Received and Subscription Accepted:  Check No.          Certificate No.
                                              --------                 -------- 

By:                          Wells Real Estate Investment Trust, Inc.
   ------------------------            

- ------------------------     --------------------------   ----------------------
   Broker-Dealer #               Registered Rep #              Account #

<PAGE>
 
                                   EXHIBIT C

                           DIVIDEND REINVESTMENT PLAN


Wells Real Estate Investment Trust, Inc., a Maryland corporation (the
"Company"), pursuant to its Articles of Incorporation, as amended and restated
to date (the "Articles"), has adopted a Dividend Reinvestment Plan (the "DRP"),
the terms and conditions of which are set forth below.  Capitalized terms shall
have the same meaning as set forth in the Articles unless otherwise defined
herein.

     1.  As agent for stockholders ("Stockholders") of the Company who purchase
shares of the Company's common stock (the "Shares") pursuant to the Company's
public offering which commenced January 30, 1998, which offering is expected to
be completed within one year from the date of such effectiveness (the
"Offering") and who elect to participate in the DRP (the "Participants), the
Company will apply all dividends and other distributions declared and paid in
respect of the Shares held by each Participant (the "Distributions"), including
Distributions paid with respect to any full or fractional Shares acquired under
the DRP, to the purchase of the Shares for such Participants directly, if
permitted under state securities laws and, if not, through the Dealer-Manager
for Participating Dealers registered in the Participant's state of residence.
Neither the Company nor its Affiliates will receive a fee for selling Shares
under the DRP.

     2.  Procedure for Participation.  Any Stockholder who purchased Shares
         ---------------------------                                       
pursuant to the Company's Offering may elect to become a Participant by
completing and executing the Subscription Agreement, enrollment form or other
appropriate authorization form as may be available from the Company, the Dealer-
Manager or Soliciting Dealer.  Participation in the DRP will begin with the next
Distribution payable after receipt of a Participant's subscription or
authorization.  Shares will be purchased under the DRP on the record date for
the Distribution used to purchase the Shares.  Distributions for Shares acquired
under the DRP are currently paid monthly and are calculated with a daily record
and Distribution declaration date.  Each Participant agrees that if, at any time
prior to listing of the Shares on a national stock exchange or inclusion of the
Shares for quotation on the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq"), he or she fails to meet the suitability
requirements for making an investment in the Company or cannot make the other
representations or warranties set forth in the Subscription Agreement, he will
promptly so notify the Company in writing.

     3.  Purchase of Shares.  Participants will acquire Shares from the Company
         ------------------                                                    
at a fixed price of $10 per Share until all 1,500,000 Initial DRP Shares (as
defined) are issued.  Participants in the DRP may also purchase fractional
Shares so that 100% of the Distributions will be used to acquire Shares.
However, a Participant will not be able to acquire Shares under the DRP to the
extent such purchase would cause it to exceed the Ownership Limit.

     Shares to be distributed by the Company in connection with the DRP may (but
are not required to) be supplied from:  (a) 1,500,000 Shares which were
registered for the DRP in the Offering (the "Initial DRP Shares"), (b) shares of
the Company's stock purchased by the Company for the DRP in a secondary market
(if available) or on a stock exchange or Nasdaq (if listed) (collectively, the
"Secondary Market"), or (c) shares registered by the Company with the SEC for
use in the DRP (a "Secondary Registration").

     Shares purchased on the Secondary Market as set forth in (b) above will be
purchased at the then-prevailing market price, which price will be utilized for
purposes of purchases of Shares in the DRP.  Shares acquired by the Company on
the Secondary Market or registered in a Secondary Registration for use in the
DRP may be at prices lower or higher than the $10 per Share price which will be
paid for the Initial DRP Shares.

     If the Company acquires shares in the Secondary Market for use in the DRP,
the Company shall use reasonable efforts to acquire Shares for use in the DRP at
the lowest price then reasonably available.  However, the Company does not in
any respect guarantee or warrant that the Shares so acquired and purchased by
the Participant in the DRP will be at the lowest possible price.  Further,
irrespective of the Company's ability to acquire Shares in the Secondary Market
or to complete a Secondary Registration for shares to be used in the DRP, the
Company is in no way obligated to do either, in its sole discretion.

     It is understood that reinvestment of Distributions does not relieve a
Participant of any income tax liability which may be payable on the
Distributions.

     4.  Share Certificates.  The ownership of the Shares purchased through the
         ------------------                                                    
DRP will be in book-entry form only until the Company begins to issue
certificates for all its outstanding Common Stock.

                                      C-1

<PAGE>
 
     5.  Reports.  Within 90 days after the end of the Company's fiscal year,
         -------                                                             
the Company will provide each Participant with an individualized report on his
or her investment, including the purchase date(s), purchase price and number of
Shares owned, as well as the dates of distribution and amounts of Distributions
received during the prior fiscal year.  The individualized statement to
Stockholders will include receipts and purchases relating to each Participant's
participation in the DRP including the tax consequences relative thereto.

     6.  Termination by Participant.  A Participant may terminate participation
         --------------------------                                            
in the DRP at any time, without penalty, by delivering to the Company a written
notice.  Prior to listing of the Shares on a stock exchange or Nasdaq, any
transfer of Shares by a Participant to a non-Participant will terminate
participation in the DRP with respect to the transferred Shares.  If a
Participant terminates DRP participation, the Company will provide the
terminating Participant with a certificate evidencing the whole shares in his or
her account and a check for the cash value of any fractional share in such
account.  Upon termination of DRP participation, Distributions will be
distributed to the Stockholder in cash.

     7.  Amendment or Termination of DRP by the Company.  The Directors of the
         ----------------------------------------------                       
Company may by majority vote (including a majority of the Independent Directors)
amend or terminate the DRP for any reason upon 30 days' written notice to the
Participants.

     8.  Liability of the Company.  The Company shall not be liable for any act
         ------------------------                                              
done in good faith, or for any good faith omission to act, including, without
limitation, any claims or liability:  (a) arising out of failure to terminate a
Participant's account upon such Participant's death prior to receipt of notice
in writing of such death; and (b) with respect to the time and the prices at
which Shares are purchased or sold for a Participant's account.  To the extent
that indemnification may apply to liabilities arising under the Securities Act
of 1933, as amended or the securities act of a state, the Company has been
advised that, in the opinion of the Securities and Exchange Commission and
certain state securities commissioners, such indemnification is contrary to
public policy and, therefore, unenforceable.

     9.  Governing Law.  This DRP shall be governed by the laws of the State of
         -------------                                                         
Maryland.

                                      C-2

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.
                    ----------------------------------------

                          P  R  O  S  P  E  C  T  U  S
                                        
                                      for
                                        
                           DIVIDEND REINVESTMENT PLAN

     Pursuant to its revised Dividend Reinvestment Plan (the "Plan"), Wells Real
Estate Investment Trust, Inc., a Delaware corporation (the "Company"), hereby
offers to holders of its Common Stock, $.01 par value per share (the "Common
Stock") the opportunity to purchase, through reinvestment of dividends or by
additional cash payments, additional shares of Common Stock, on the terms,
subject to the conditions and at the prices herein stated.

     The Plan was implemented initially in connection with the Company's
registered public offering of 16,500,000 shares of its Common Stock (the
"Initial Offering"), of which amount 1,500,000 shares were registered and
reserved for distribution pursuant to the Plan.

     Dividends reinvested pursuant to the Plan will be applied to the purchase
of shares of Common Stock at a price of $10.00 per share until all 1,500,000
shares reserved initially for the Plan (the "Initial Plan Shares") have been
purchased.  Thereafter, the Company may in its sole discretion acquire
additional shares for purchase under the Plan may either through purchases on
the open market, through the Company's share repurchase program and/or
additional registrations of common stock for use in the Plan.  In any case, the
per share purchase price under the Plan for such additionally acquired shares
will equal the then-prevailing market price of the stock as determined by the
Company's Board of Directors, which if the Company's stock is listed shall equal
the price on the applicable stock exchange, Nasdaq or over-the-counter market.

     This Prospectus relates to 1,500,000 shares of Common Stock that have been
registered for sale under the Plan.  Please retain this Prospectus for future
reference.

     The executive offices of the Company are located at 3885 Holcomb Bridge
Rd., Norcross, Georgia  30092, and its telephone number is (770) 449-7800.

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE SUCH
REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

     THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

             The date of this Prospectus is _______________________

                                      C-3

<PAGE>
 
AUTHORIZATION

     No person has been authorized to give any information or to make
representations not contained in this Prospectus regarding the Company or the
offering made hereby and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company.  This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities other than the securities to which it relates, nor does it
constitute an offer to or solicitation of any person in any jurisdiction in
which such offer or solicitation would be unlawful.  Neither delivery of this
Prospectus nor any sale made hereunder shall create an implication that
information contained herein is correct as of any time subsequent to the date
hereof.

AVAILABLE INFORMATION

     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and files reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission").  Reports, proxy statements, and other information concerning the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its Regional Offices in New York (Suite 1300, 7 World Trade
Center, New York, New York 10048) and Chicago (Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661).  Copies of such material can be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.

INCORPORATION OF DOCUMENTS BY REFERENCE

     The following documents (or applicable portions thereof), filed with the
Commission pursuant to the 1934 Act or the Securities Act of 1933, as amended
(the "1933 Act"), are incorporated by reference in this Prospectus:

1.   The description of the Common Stock contained in the Company's Registration
     Statement on Form S-11, as amended.

2.   The Company's Annual Report on Form l0-K for the year ended ______________.

3.   The Company's Quarterly Reports on Form l0-Q for the quarters ended
     ___________________________.

     All documents filed pursuant to Sections l3(a), l3(c), l4 or l5(d) of the
l934 Act after the date of this Prospectus and before termination of this
offering are incorporated by reference into this Prospectus from the date of
filing of those documents.  Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which is deemed to
be incorporated by reference herein modifies or supersedes such statement.  Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Prospectus.  Anyone
receiving a copy of this Prospectus may obtain, without charge, a copy of any of
the documents incorporated by reference, except for the exhibits, if any, to
those documents.  Telephone or mail your request to:

                    WELLS REAL ESTATE INVESTMENT TRUST, INC.
                            3885 HOLCOMB BRIDGE RD.
                            NORCROSS, GEORGIA  30092
                             ATTENTION:  SECRETARY
                                 (770) 449-7800

                                      C-4

<PAGE>
 
THE COMPANY

     The Company, founded in 1997, is a Maryland corporation that owns and
operates income producing real estate, primarily commercial office buildings.
The Company is structured and operated in a manner intended to enable it to
qualify as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code").

THE PLAN

     The Plan provides you with a simple and convenient way to invest your cash
dividends in additional shares of Common Stock.  As a participant in the Plan,
you may purchase shares at a price of $10.00 per share until all 1,500,000
Initial Plan Shares have been purchased.  Thereafter, additional shares for
purchase within the Plan may (but do not have to), be acquired by the Company in
its sole discretion either through purchases on the open market, purchases
pursuant to the Company's share repurchase program and/or additional
registrations of common stock relating to the Plan.  In any case other than
purchase of the Initial Plan Shares, the per share purchase price under the Plan
will equal the then-prevailing market price of the stock, which if the Company's
stock is listed shall equal the price on the applicable stock exchange, Nasdaq
or over-the-counter market.

     You receive free custodial service for the shares you hold through the
Plan.

     Shares for the Plan will be purchased directly from the Company.  Such
shares will be authorized and may be either previously issued or unissued
shares.  Proceeds from the sale of the Plan Shares provide the Company with
funds for general corporate purposes.

ELIGIBILITY

     Holders of record of Common are eligible to participate in the Plan with
respect to any whole number of their shares.  If your shares are held of record
by a broker or nominee and you want to participate in the Plan, you must make
appropriate arrangements with your broker or nominee.

     The Company may refuse participation in the Plan to shareholders residing
in states where shares offered pursuant to the Plan are neither registered under
applicable securities laws nor exempt from registration.

ADMINISTRATION

     As of the date of this Prospectus, the Plan is administered by the Company
or an affiliate of the Company (the "Plan Administrator"), but a different
entity may act as Plan Administrator in the future.  The Plan Administrator will
keep all records of your Plan account and sends statements of your account to
you.  Shares of Common Stock purchased under the Plan are registered in the name
of each participating shareholder.

ENROLLMENT

     You may join the Plan by signing the enrollment form enclosed with this
Prospectus and returning it to the Company.

     Your participation in the Plan will begin with the first dividend payment
after your signed card is received, provided your card is received on or before
ten days prior to the record date established for that dividend.  Record dates
for dividends are ordinarily on or about the 15th day of March, June, September
and December, but may be changed from time to time in the discretion of the
Company's management.  If your enrollment form is received after the record date
for any dividend and before payment of that dividend, that dividend will be paid
to you in cash and reinvestment of your dividends will not begin until the next
dividend payment date.

COSTS

     Participants in the Plan pay no service charges or other fees for purchases
made under the Plan.  All costs of administration of the Plan are paid by the
Company.  However, any interest earned on dividends on shares within the Plan
will be paid to the Company to defray certain costs relating to the Plan.  If
you terminate participation in the Plan or ask that your Plan shares be sold,
you will pay certain charges as explained in "Termination of Participation"
below.  Except as described below, the Company will pay the following
commissions and fees to certain affiliates of the Company in connection with
shares of Common Stock sold to participants under the Plan (expressed as a
percentage of the purchase price proceeds):  (a) a selling commission of 7% (the
"Selling Commission"), all of which may be reallowed to the brokers and dealers
of such shares; (b) a marketing and due diligence fee (the "Due Diligence Fee")
of 2.5%; and (c) an acquisition and advisory fee ("Acquisition and Advisory
Fee") of 3%, which after sale of the Initial Plan Shares will be paid only in
the 

                                      C-5

<PAGE>
 
event that proceeds of the sale of such shares are used to acquire properties.
In Ohio, only the Acquisition and Advisory Fee may be paid in connection with
sales of stock under the Plan.

PURCHASES AND PRICE OF SHARES

     Common Stock dividends will be invested within 30 days after the date on
which Common Stock dividends are paid each quarter (the "Investment Date").
Payment dates for Common Stock dividends are ordinarily on or about the last
calendar day of March, June, September and December, but may be changed from
time to time in the discretion of the Company.

     You become an owner of shares purchased under the Plan as of the Investment
Date.  No shares will be purchased under the Plan at less than their par value
($.01 per share).  Dividends paid on shares held in the Plan (less any required
withholding tax) will be credited to your Plan account.  Dividends are paid on
both full and fractional shares held in your account and are automatically
reinvested.

     Reinvested Distributions.  You may elect dividend reinvestment with respect
     ------------------------                                                   
to any whole number of shares registered in your name on the records of the
Company.  Specify on the enrollment form the number of shares for which you want
dividends reinvested.  Dividends on all shares purchased pursuant to the Plan
will be automatically reinvested.  The number of shares purchased for you as a
participant in the Plan depends on the amount of your dividends on these shares
(less any required withholding tax) and the purchase price of the Common Stock.
Your account will be credited with the number of shares, including fractions
computed to four decimal places, equal to the total amount invested divided by
the purchase price per share.

     Shares of Common Stock for participants will be purchased from the Company
at a price per share of $10 for all of the Initial Plan Shares, and thereafter
(if available) at prices equal to the then-prevailing market price of the stock
as determined by the Company's Board of Directors, which if the Company's stock
is listed shall equal the closing price on the applicable stock exchange, Nasdaq
or over-the-counter market on the trading day immediately prior to the
Investment Date.

     Optional Cash Purchases.  Until determined otherwise by the Company, Plan
     -----------------------                                                  
participants may not make additional cash payments for the purchase of Common
Stock under the Plan.

DIVIDENDS ON SHARES HELD IN PLAN

     Dividends paid on shares held in the Plan (less any required withholding
tax) will be credited to your Plan account.  Dividends are paid on both full and
fractional shares held in your account and are automatically reinvested.

ACCOUNT STATEMENTS

     You will receive a statement of your account within 60 days after each
Investment Date.  The statements will contain a report of all transactions since
the last statement, including information with respect to the number of shares
allocated to your account, the amount of dividends received which are allocable
to you, the amount of Common Stock purchased therewith and the price paid.
These statements are your continuing record of the cost of your purchase and
should be retained for income tax purposes.

CERTIFICATES FOR SHARES

     As of the date of this Prospectus, the Company is not issuing certificates
for shares purchased under the Plan, and your ownership of such shares will be
evidenced on the books of the Company in your account.  The number of shares
purchased will be shown on your statement of account.  This feature permits
ownership of fractional shares, protects against loss, theft or destruction of
stock certificates, and reduces the costs of the Plan.

     After the date the Company begins issuing certificates for the outstanding
shares of its Common Stock, certificates for any number of whole shares credited
to your account will be issued in your name upon your written request to the
Plan Administrator.  Certificates for fractional shares will not be issued.
Should you want your certificates issued in a different name, you must notify
the Plan Administrator in writing and comply with applicable transfer
requirements.  If you wish to sell any whole shares credited to your account
under the Plan, you will have the option of either (i) receiving a certificate
for such whole number of shares, or (ii) requesting that such shares held in
your account be sold, in which case the shares will be sold on the open market
as soon as practicable.  Brokerage commissions on such sales will not be paid by
the Company, and will be deducted from the sales proceeds.  See "Termination of
Participation."  If you wish to pledge shares credited to your account, you must
first have the certificate for those shares issued in your name.

                                      C-6

<PAGE>
 
TERMINATION OF PARTICIPATION

     You may discontinue reinvestment of dividends under the Plan with respect
to all, but not less than all, of your shares (including shares held for your
account in the Plan) at any time by notifying the Plan Administrator in writing
no less than ten days prior to the next record date.  A notice of termination
received by the Plan Administrator after such cutoff date will not be effective
until the next following Investment Date.  Participants who terminate their
participation in the Plan may thereafter rejoin the Plan by notifying the
Company and completing all necessary forms and otherwise as required by the
Company.

     If you notify the Plan Administrator of your termination of participation
in the Plan or if your participation in the Plan is terminated by the Company,
the Company's stock ownership records will be updated to include the number of
whole shares in your Plan account.  For any fractional shares of stock in your
Plan account, the Plan Administrator may either (i) send you a check in payment
for any fractional shares in your account, or (ii) credit your stock ownership
account with any such fractional shares.

     A participant who changes his or her address must promptly notify the Plan
Administrator.  If a participant moves his residence to a state where shares
offered pursuant to the Plan are neither registered nor exempt from registration
under applicable securities laws, the Company may deem the participant to have
terminated participation in the Plan.

AMENDMENT AND TERMINATION OF PLAN

     The Company may, in its sole discretion, amend any aspect of the Plan
without the consent of participants or other stockholders, provided that notice
of any material amendment is sent to participants at least 30 days prior to the
effective date thereof.  The Company may also, in its sole discretion, terminate
the Plan for any reason at any time with ten days prior written notice of such
termination to all participants.  You will be notified if the Plan is terminated
or materially amended.  The Company may also terminate any participant's
participation in the Plan at any time by notice to such participant if continued
participation will, in the opinion of the Board of Directors, jeopardize the
status of the Company as a real estate investment trust under the Code.

VOTING OF SHARES HELD UNDER THE PLAN

     You will be able to vote all shares of Common Stock (including fractional
shares) credited to your account under the Plan at the same time that you vote
the shares registered in your name on the records of the Company.

STOCK DIVIDENDS, STOCK SPLITS AND RIGHTS OFFERINGS

     Your Plan account will be amended to reflect the effect of any stock
dividends, splits, reverse splits or other combinations or recapitalizations by
the Company on shares held in the Plan for you.  If the Company issues to its
shareholders rights to subscribe to additional shares, such rights will be
issued to you based on your total share holdings, including shares held in your
Plan account.

RESPONSIBILITY OF THE PLAN ADMINISTRATOR AND THE COMPANY UNDER THE PLAN

     The Plan Administrator will not be liable for any claim based on an act
done in good faith or a good faith omission to act.  This includes, without
limitation, any claim of liability arising out of failure to terminate a
participant's account upon a participant's death, the prices at which shares are
purchased, the times when purchases are made, or fluctuations in the market
price of Common Stock.

     All notices from the Plan Administrator to a participant will be mailed to
the participant at his last address of record with the Plan Administrator, which
will satisfy the Plan Administrator's duty to give notice.  Participants must
promptly notify the Plan Administrator of any change in address.

     YOU SHOULD RECOGNIZE THAT NEITHER THE COMPANY NOR THE PLAN ADMINISTRATOR
CAN PROVIDE ANY ASSURANCE OF A PROFIT OR PROTECTION AGAINST LOSS ON ANY SHARES
PURCHASED UNDER THE PLAN.

INTERPRETATION AND REGULATION OF THE PLAN

     The Company reserves the right, without notice to participants, to
interpret and regulate the Plan as it deems necessary or desirable in connection
with its operation.  Any such interpretation and regulation shall be conclusive.

                                      C-7

<PAGE>
 
FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN

     The following discussion summarizes the principal federal income tax
consequences, under current law, of participation in the Plan.  It does not
address all potentially relevant federal income tax matters, including
consequences peculiar to persons subject to special provisions of federal income
tax law (such as tax-exempt organizations, insurance companies, financial
institutions, broker-dealers and foreign persons).  The discussion is based on
various rulings of the Internal Revenue Service regarding several types of
dividend reinvestment plans.  No ruling, however, has been issued or requested
regarding the Plan.  THE FOLLOWING DISCUSSION IS FOR YOUR GENERAL INFORMATION
ONLY, AND YOU MUST CONSULT YOUR OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES (INCLUDING THE EFFECTS OF ANY CHANGES IN LAW) THAT MAY RESULT FROM
YOUR PARTICIPATION IN THE PLAN AND THE DISPOSITION OF ANY SHARES PURCHASED
PURSUANT TO THE PLAN.

     REINVESTED DIVIDENDS.   Stockholders subject to federal income taxation who
elect to participate in the Plan will incur a tax liability for distributions
allocated to them even though they have elected not to receive their dividends
in cash but rather to have their dividends held pursuant to the Plan.
Specifically, participants will be treated as if they received the distribution
from the Company and then applied such distribution to purchase the shares in
the Plan.  A Stockholder designating a distribution for reinvestment will be
taxed on the amount of such distribution as ordinary income to the extent such
distribution is from current or accumulated earnings and profits, unless the
Company has designated all or a portion of the distribution as capital gain
dividend.  In such case, such designated portion of the distribution will be
taxed as a capital gain.  The amount treated as a distribution to you will
constitute a dividend for federal income tax purposes to the same extent as a
cash distribution.

     RECEIPT OF SHARE CERTIFICATES AND CASH.  You will not realize any income if
you receive certificates for whole shares credited to your account under the
Plan.  Any cash received for a fractional share held in your account will be
treated as an amount realized on the sale of the fractional share.  You
therefore will recognize gain or loss equal to any difference between the amount
of cash received for a fractional share and your tax basis in the fractional
share.

INDEMNIFICATION OF DIRECTORS AND OFFICERS OF THE COMPANY

     Directors and officers of the Company shall be indemnified against
liabilities, fines, penalties, and claims imposed upon or asserted against them
for actions in their capacities as directors and/or officers of the Corporation
to the fullest extent permitted under the Delaware General Corporation Law
("DGCL").  This indemnification covers all costs and expenses reasonably
incurred by a director or officer.  In addition, the DGCL and the Company's
Amended and Restated Articles of Incorporation may, under certain circumstances,
eliminate the liability of directors and officers in a shareholder or derivative
proceeding.

     Insofar as indemnification for liabilities arising under the l933 Act may
be permitted to directors, officers, or controlling persons of the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the l933 Act and is therefore
unenforceable.  In the event that a claim for indemnification against such
liabilities is asserted by such director or officer, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the l933 Act and
will be governed by the final adjudication of such issue.

EXPERTS

     The financial statements of the Company incorporated by reference from its
Registration Statement on Form S-11 have been audited by Arthur Andersen LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference.  Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

PLAN ADMINISTRATOR; INQUIRIES REGARDING THE PLAN

     Changes in name or address, notices of termination, requests to participate
in the Plan, questions about the Plan and your participation therein, and all
other matters regarding the Plan should be directed to:

                   Wells Real Estate Investment Trust, Inc.
                          Dividend Reinvestment Plan
                            3885 Holcomb Bridge Rd.
                              Norcross, GA  30092

                                      C-8

<PAGE>
 
                          E N R O L L M E N T  F O R M
                          ----------------------------

                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                           DIVIDEND REINVESTMENT PLAN

TO JOIN THE PLAN:

     (l)  Complete this card.  Be sure to include your social security or tax
          identification number and signature.

     (2)  Staple or tape the card closed so that your signature is enclosed.

     I hereby appoint Wells Real Estate Investment Trust, Inc. (the "Company")
(or any successor), acting as plan administrator, as my agent to receive cash
dividends that may hereafter become payable to me on shares of Common Stock of
the Company registered in my name as set forth below, and authorize the Company
to apply such dividends to the purchase of full shares and fractional interests
in shares of the Company's Common Stock.

     I understand that the purchases will be made under the terms and conditions
of the Dividend Reinvestment Plan as described in the Prospectus and that I may
revoke this authorization at any time by notifying the Plan Administrator, in
writing, of my desire to terminate my participation.

          Please indicate your participation below.  Return this card only if
you wish to participate in the Plan

_____________   Yes, I would like to participate in the Dividend Reinvestment
                Plan for all my shares of Common Stock.

                    Please Print Full Legal Name(s):

                    _______________________________________________________


                    Social Security or Tax Identification Number:

                    _______________________________________________________

Date: __________________________________

IF YOUR SHARES ARE HELD OF RECORD BY A BROKER OR NOMINEE, YOU MUST MAKE
APPROPRIATE ARRANGEMENTS WITH THE BROKER OR NOMINEE TO PARTICIPATE IN THE PLAN.

                                      C-9

<PAGE>
 
- --------------------------------------------------------------------------------

No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Dealer Manager.  This Prospectus
does not constitute an offer of any securities other than those to which it
relates or an offer to sell, or a solicitation of an offer to buy, to any person
in any jurisdiction where such an offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that the information contained herein
is correct as of any time subsequent to the date hereof.  In the event of
material changes, this Prospectus will be amended to reflect such changes.

                           SUMMARY TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                   Page
                                                   ----
<S>                                                <C>
Summary of the Offering..........................     1
Risk Factors.....................................     9
Investor Suitability Standards...................    15
Estimated Use of Proceeds........................    17
Management Compensation..........................    19
Conflicts of Interest............................    21
Summary of Reinvestment Plan.....................    25
Share Repurchase Program.........................    27
Prior Performance Summary........................    28
Management.......................................    32
The Advisor and the Advisory Agreement...........    36
Wells Management.................................    39
Investment Objectives and Criteria...............    40
Real Property Investments........................    45
Distribution Policy..............................    45
Management's Discussion and Analysis of
  Financial Condition and Results of Operations..    46
Description of Capital Stock.....................    46
Federal Income Tax Considerations................    55
ERISA Considerations.............................    68
Partnership Agreement............................    71
Plan of Distribution.............................    73
Supplemental Sales Material......................    77
Legal Matters....................................    77
Experts..........................................    78
Additional Information...........................    78
Glossary.........................................    78
Financial Statements.............................   F-1
</TABLE>


Until April 30, 1998 (90 days after the date of this Prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as Soliciting Dealers.

- --------------------------------------------------------------------------------

                       15,000,000 Shares of Common Stock

<PAGE>
 
                               WELLS REAL ESTATE
                             INVESTMENT TRUST, INC.

                              ___________________

                                   PROSPECTUS

                              ___________________



                       WELLS INVESTMENT SECURITIES, INC.
                                        

                                January 30, 1998

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

            SUPPLEMENT NO. 1 DATED APRIL 20, 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
(the "Prospectus").  Unless otherwise defined herein, capitalized terms used in
this Supplement shall have the same meanings as set forth in the Prospectus.

     The purpose of this Supplement is to describe the following:

        (i)   The status of the offering of shares of common stock (the
"Shares") in Wells Real Estate Investment Trust, Inc. (the "Company");

        (ii)  Updated Prior Performance Tables included as Exhibit A to the
Prospectus; and

        (iii) Revisions to the "INVESTOR SUITABILITY STANDARDS" and "PLAN OF
DISTRIBUTION" sections of the Prospectus.

STATUS OF THE OFFERING

     Pursuant to the Prospectus, the offering of Shares in the Company commenced
on January 30, 1998.  As of April 17, 1998, the Company had raised a total of
$451,700 in offering proceeds (45,170 Shares), which offering proceeds are being
held in escrow until the Company closes the Minimum Offering in accordance with
the terms of the Prospectus.

PRIOR PERFORMANCE TABLES

     Prior Performance Tables dated as of December 31, 1997 are included as
Exhibit A to this Supplement.

INVESTOR SUITABILITY STANDARDS

     The information contained on page 15 in the "INVESTOR SUITABILITY
STANDARDS" section of the Prospectus is revised as of the date of this
Supplement by the deletion of the fourth full paragraph of that section and the
insertion of the following paragraph in lieu thereof:

          The minimum purchase is 100 Shares ($1,000) (except in certain states
     and as otherwise described below).  No transfers will be permitted of less
     than the minimum required purchase, nor (except in very limited
     circumstances) may an investor transfer, fractionalize or subdivide such
     Shares so as to retain less than such minimum number thereof.  For purposes
     of satisfying the minimum investment requirement for Retirement Plans,
     unless otherwise prohibited by state law, a husband and wife may jointly
     contribute funds from their separate Individual Retirement Accounts
     ("IRAs"), provided that each such contribution is made in increments of at
     least $100.  It should be noted, however, that an investment in the Company
     will not, in itself, create a Retirement Plan for any investor and that in
     order to create a Retirement Plan, an investor must comply with all
     applicable provisions of the Code.  Except in Maine, Minnesota and
     Washington, investors who have satisfied the minimum purchase requirements
     and have purchased units in Prior Wells Public Programs may purchase less
     than the minimum number of Shares set forth above, but in no event less
     than 2.5 Shares ($25).  The minimum purchase for New York investors is 250
     Shares ($2,500); however, the minimum investment for New York IRAs is 100
     Shares ($1,000).  After an investor has purchased the minimum investment,
     any additional investments must be made in increments of at least 2.5
     Shares ($25), except for (i) those made by investors in Maine, who must
     still meet the minimum investment requirement for Maine residents of $1,000
     for IRAs and $2,500 for non-IRAs, (ii) purchases of Shares pursuant to the
     Reinvestment Plan, which may be in lesser amounts, and (iii) the minimum
     purchase requirement for Minnesota investors other than IRAs and Qualified
     Plans of 250 Shares ($2,500), and the minimum purchase for Minnesota IRAs
     and Qualified Plans of 200 Shares ($2,000).

<PAGE>
 
PLAN OF DISTRIBUTION

     The information contained on page 77 in the "PLAN OF DISTRIBUTION" section
of the Prospectus is revised as of the date of this Supplement by the deletion
of the second full paragraph on that page and the insertion of the following
paragraph in lieu thereof:

          In addition, subscribers for Shares may agree with their participating
     broker-dealers and the Dealer Manager to have selling commissions due with
     respect to the purchase of their Shares paid over a seven year period
     pursuant to a deferred commission arrangement (the "Deferred Commission
     Option").  Shareholders electing the Deferred Commission Option will be
     required to pay a total of $9.40 per Share purchased upon subscription,
     rather than $10.00 per Share, with respect to which $0.10 per Share will be
     payable as commissions due upon subscription.  For each of the six years
     following the year of subscription, $0.10 per Share will be paid by the
     Company as deferred commissions with respect to Shares sold pursuant to the
     Deferred Commission Option, which amounts will be deducted from and paid
     out of distributions of Cash Available for Distribution otherwise payable
     to Shareholders holding such Shares. The net proceeds to the Company will
     not be affected by the election of the Deferred Commission Option.  Under
     this arrangement, a Shareholder electing the Deferred Commission Option
     will pay a 1% commission upon subscription, rather than a 7% commission,
     and an amount equal to a 1% commission per year thereafter for the next six
     years will be deducted from and paid by the Company out of Cash Available
     for Distribution otherwise distributable to such Shareholder.  In the event
     that Listing of the Shares occurs at any time prior to the end of the sixth
     year following termination of the Offering, however, the obligation of the
     Company and its Shareholders to make any further payments of commissions
     under the Deferred Commission Option shall terminate, and participating
     broker-dealers will not be entitled to receive any further portion of their
     commissions following Listing of the Company's Shares.

                                       2

<PAGE>
 
                                   EXHIBIT A

                           PRIOR PERFORMANCE TABLES


     The following Prior Performance Tables (the "Tables") provide information
relating to real estate investment programs sponsored by the Advisor and its
Affiliates ("Wells Prior Public Programs") which have investment objectives
similar to the Company.

     Prospective investors should read these Tables carefully together with the
summary information concerning the Prior Programs as set forth in "PRIOR
PERFORMANCE SUMMARY" elsewhere in this Prospectus.

     INVESTORS IN THE COMPANY WILL NOT OWN ANY INTEREST IN THE PRIOR PROGRAMS
AND SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO
THOSE EXPERIENCED BY INVESTORS IN THE PRIOR PROGRAMS.

     These Tables present actual results of Wells Prior Public Programs that
have investment objectives similar to those of the Company. The Company's
investment objectives are to maximize Net Cash From Operations; to preserve
original Capital Contributions; and to realize capital appreciation over a
period of time. All of the Wells Prior Public Programs have used a substantial
amount of capital and not acquisition indebtedness to acquire their properties.

     The Advisor is responsible for the acquisition, operation, maintenance and
resale of the Wells Prior Public Programs' Properties.  The financial results of
the Wells Prior Public Programs thus provide an indication of the Advisor's
performance of its obligations during the periods covered.  However, general
economic conditions affecting the real estate industry and other factors
contribute significantly to financial results.

     The following tables are included herein:

     TABLE I - Experience in Raising and Investing Funds (As a Percentage of
     Investment)

     TABLE II - Compensation to Sponsor (in Dollars)

     TABLE III - Annual Operating Results of Prior Programs

     TABLE IV (Results of completed programs) and TABLE V (sales or disposals of
property) have been omitted since none of the Prior Programs have sold any of
their properties to date.

     Additional information relating to the acquisition of properties by the
Wells Prior Public Programs is contained in TABLE VI, which is included in the
Registration Statement which the Company has filed with the Securities and
Exchange Commission.  As described above, no Wells Prior Public Program has sold
or disposed of any property held by it.  Copies of any or all information will
be provided to prospective investors at no charge upon request.

     The following are definitions of certain terms used in the Tables:

     "ACQUISITION FEES" shall mean fees and commissions paid by a partnership in
connection with its purchase or development of a property, except development
fees paid to a person not affiliated with the partnership or with a general
partner of the partnership in connection with the actual development of a
project after acquisition of the land by the partnership.

     "ORGANIZATION EXPENSES" shall include legal fees, accounting fees,
securities filing fees, printing and reproduction expenses and fees paid to the
general partners or their affiliates in connection with the planning and
formation of the partnership.

     "UNDERWRITING FEES" shall include selling commissions and wholesaling fees
paid to broker-dealers for services provided by the broker-dealers during the
offering.

                                      A-1

<PAGE>
 
                                    TABLE I
                                  (UNAUDITED)

                   EXPERIENCE IN RAISING AND INVESTING FUNDS

     This Table provides a summary of the experience of the General Partners and
their Affiliates in Prior Programs for which offerings have been completed since
December 31, 1994.  Information is provided with regard to the manner in which
the proceeds of the offerings have been applied.  Also set forth is information
pertaining to the timing and length of these offerings and the time period over
which the proceeds have been invested in the properties.


<TABLE>
<CAPTION>
                                                               Wells Real         Wells Real         Wells Real         Wells Real
                                                               Estate Fund        Estate Fund        Estate Fund        Estate Fund
                                                                VII, L.P.         VIII, L.P.          IX, L.P.            X, L.P.
                                                           -----------------  -----------------  -----------------  ----------------
<S>                                                        <C>                <C>                <C>                <C>
Dollar Amount Raised                                       $24,180,174/(3)/   $32,042,689/(4)/   $35,000,000/(5)/   $27,128,912/(6)/
                                                           ===========        ===========        ===========        ===========
Percentage Amount Raised                                        100.0%/(3)/        100.0%/(4)/        100.0%/(5)/        100.0%/(6)/

Less Offering Expenses
  Underwriting Fees                                              10.0%              10.0%              10.0%              10.0%
  Organizational Expenses                                         5.0%               5.0%               5.0%               5.0%
Reserves/(1)/                                                     1.0%               0.0%               0.0%               0.0%
                                                                 ----               ----               ----               ----
   Percent Available for Investment                              84.0%              85.0%              85.0%              85.0%

Acquisition and Development Costs
  Prepaid Items and Fees related to Purchase of Property          0.0%               0.2%               0.0%               0.0%
  Cash Down Payment                                              16.3%              29.2%               0.0%               0.0%
  Acquisition Fees/(2)/                                           3.5%               4.5%               4.5%               4.5%
  Development and Construction Costs                             64.2%              48.0%              50.4%              14.4%

Reserve for Payment of Indebtedness                               0.0%               0.0%               0.0%               0.0%
                                                                 ----               ----               ----               ----
Total Acquisition and Development Cost                           84.0%              81.9%              54.9%              18.9%
                                                                 ----               ----               ----               ----
Percent Leveraged                                                 0.0%               0.0%               0.0%              0.00%
                                                                 ====               ====               ====               ====
Date Offering Began                                             04/05/94           01/06/95           01/05/96           12/31/96

Length of Offering                                                12 mo.             12 mo.             12 mo.             12 mo.

Months to Invest 90% of Amount Available for
Investment (Measured from Beginning of Offering)                  12 mo.             17 mo.              /(7)/              /(8)/
 
Number of Investors                                               1,917              2,242              2,115              1,806
</TABLE>


_______________________

(1)  Does not include General Partner contributions held as part of reserves.
(2)  Includes acquisition fees, real estate commissions, general contractor fees
     and/or architectural fees paid to Affiliates of the General Partners.
(3)  Total dollar amount registered and available to be offered was $25,000,000.
     Wells Real Estate Fund VII, L.P. closed its offering on January 5, 1995,
     and the total dollar amount raised was $24,180,174.
(4)  Total dollar amount registered and available to be offered was $35,000,000.
     Wells Real Estate Fund VIII, L.P. closed its offering on January 4, 1996,
     and the total dollar amount raised was $32,042,689.
(5)  Total dollar amount registered and available to be offered was $35,000,000.
     Wells Real Estate Fund IX, L.P. closed its offering on December 30, 1996,
     and the total dollar amount raised was $35,000,000.
(6)  Total dollar amount registered and available to be offered was $35,000,000.
     Wells Real Estate Fund X, L.P. closed its offering on December 30, 1997,
     and the total dollar amount raised was $27,128,912.
(7)  As of December 31, 1997, Wells Real Estate Fund IX, L.P. had not yet
     invested 90% of the amount available for investment.  The amount invested
     in properties (including Acquisition Fees paid but not yet associated with
     a specific property) at December 31, 1997 was 70.3% of the total dollar
     amount raised.  The amount invested and/or committed to be invested in
     properties (including Acquisition Fees paid but not yet associated with a
     specific property) at December 31, 1997 was 83.5% of the total dollar
     amount raised.
(8)  As of December 31, 1997, Wells Real Estate Fund X, L.P. had not yet
     invested 90% of the amount available for investment.  The amount invested
     in properties (including Acquisition Fees paid but not yet associated with
     a specific property) at December 31, 1997 was 17.7% of the total dollar
     amount raised.  The amount invested and/or committed to be invested in
     properties (including Acquisition Fees paid but not yet associated with a
     specific property) at December 31, 1997 was 32.8% of the total dollar
     amount raised.

                                      A-2

<PAGE>
 
                                   TABLE II
                                  (UNAUDITED)

                            COMPENSATION TO SPONSOR

     The following sets forth the compensation received by General Partners or
Affiliates of the General Partners, including compensation paid out of offering
proceeds and compensation paid in connection with the ongoing operations of
Prior Programs having similar or identical investment objectives the offerings
of which have been completed since December 31, 1994.  These partnerships have
not sold or refinanced any of their properties to date.  All figures are as of
December 31, 1997.


<TABLE>
<CAPTION>
                                                    Wells Real    Wells Real    Wells Real    Wells Real       Other
                                                   Estate Fund   Estate Fund   Estate Fund   Estate Fund      Public
                                                    VII, L.P.     VIII, L.P.     IX, L.P.      X, L.P.     Programs/(1)/
                                                   ------------  ------------  ------------  ------------  -------------
<S>                                                <C>           <C>           <C>           <C>           <C>
Date Offering Commenced                                04/05/94      01/06/95      01/05/96      12/31/96             --

Dollar Amount Raised                                $24,180,174   $32,042,689   $35,000,000   $27,128,912   $150,018,232
 to Sponsor from Proceeds of Offering:
  Underwriting Fees/(2)/                            $   178,122   $   174,295   $   309,556   $   260,748   $    571,739
  Acquisition Fees
   Real Estate Commissions                                   --            --            --            --             --
   Acquisition and Advisory Fees/(3)/               $   846,306   $ 1,281,708   $ 1,400,000   $ 1,085,157   $  8,031,385

Dollar Amount of Cash Generated from Operations
 Before Deducting Payments to Sponsor/(4)/          $ 3,850,827   $ 1,630,740   $ 1,305,840   $   438,195   $ 29,081,439

Amount Paid to Sponsor from Operations:
 Property Management Fee/(1)/                       $   124,934   $    85,523   $    19,539   $         0   $    857,695
 Partnership Management Fee                                  --            --            --            --             --
 Reimbursements                                     $   159,036   $   112,773   $    32,349   $    11,137   $  1,187,273
 Leasing Commissions                                $    97,856   $    91,566   $    29,162   $         0   $    800,710
 General Partner Distributions                               --            --            --            --         15,205
 Other                                                       --            --            --            --             --

Dollar Amount of Property Sales and Refinancing
 Payments to Sponsors:
  Cash                                                       --            --            --            --             --
  Notes                                                      --            --            --            --             --

Amount Paid to Sponsor from Property Sales
 and Refinancing:
  Real Estate Commissions                                    --            --            --            --             --
  Incentive Fees                                             --            --            --            --             --
  Other                                                      --            --            --            --             --
</TABLE>


____________________

(1) Includes compensation paid to General Partners from Wells Real Estate Fund
    I, Wells Real Estate Fund II, Wells Real Estate Fund II-OW, Wells Real
    Estate Fund III, L.P., Wells Real Estate Fund IV, L.P., Wells Real Estate
    Fund V, L.P. and Wells Real Estate Fund VI, L.P. during the past three
    years.  In addition to the amounts shown, Affiliates of the General Partners
    of Wells Real Estate Fund I are entitled to certain property management and
    leasing fees but have elected to defer the payment of such fees until a
    later year on properties owned by Wells Real Estate Fund I.  At December 31,
    1997, the amount of such fees due the General Partners totaled $2,088,727.
(2) Includes net underwriting compensation and commissions paid to Wells
    Investment Securities, Inc. in connection with the offerings of Wells Real
    Estate Funds VII, VIII, IX and X, which were not reallowed to participating
    broker-dealers.
(3) Fees paid to the General Partners or their Affiliates for acquisition and
    advisory services in connection with the review and evaluation of potential
    real property acquisitions.
(4) Includes $409,361 in net cash provided by operating activities, $3,059,640
    in distributions to limited partners and $381,826 in payments to sponsor for
    Wells Real Estate Fund VII, L.P.; $464,964 in net cash provided by operating
    activities, $875,914 in distributions to limited partners and $289,862 in
    payments to sponsor for Wells Real Estate Fund VIII, L.P.; $2,540 in net
    cash provided by operating activities, $1,221,764 in distributions to
    limited partners and $81,536 in payments to sponsor for Wells Real Estate
    Fund IX, L.P.; $449,332 in net cash used by operating activities, $0 in
    distributions to limited partners and $11,137 in payments to sponsor for
    Wells Real Estate Fund X, L.P.; and $855,331 in net cash provided by
    operating activities, $19,618,669 in distributions to limited partners and
    $2,748,101 in payments to sponsor for other public programs.

                                      A-3

<PAGE>
 
                                   TABLE III
                                  (UNAUDITED)

     The following six (6) tables set forth operating results of prior programs
sponsored by the General Partners the offerings of which have been completed
since December 31, 1992. The information relates only to public programs with
investment objectives similar to those of the Partnership. All figures are as of
December 31 of the year indicated.

                                      A-4

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND V, L.P.


<TABLE>
<CAPTION>
 
                                                                     1997          1996         1995          1994           1993
                                                                 ------------  ------------  -----------  ------------- -----------
<S>                                                              <C>           <C>           <C>          <C>            <C>
Gross Revenues/(1)/                                              $  633,247    $  590,839   $  764,624    $   656,958   $   458,213
Profit on Sale of Properties                                             --            --           --             --            --
Less: Operating Expenses/(2)/                                        72,404        78,939       68,735         88,987        96,964
  Depreciation and Amortization/(3)/                                  1,042         6,250        6,250          6,250         6,250
                                                                 ----------    ----------   ----------    -----------   -----------
Net Income (Loss) GAAP Basis/(4)/                                $  559,801    $  505,650   $  689,639    $   561,721   $   354,999
Taxable Income (Loss): Operations                                ==========    ==========   ==========    ===========   ===========
Cash Generated (Used By):                                        $  763,486    $  666,780   $  676,367    $   528,025   $   280,000
  Operations                                                     ==========    ==========   ==========    ===========   ===========
  Joint Ventures
                                                                    (66,556)      (65,728)     (46,235)       (10,395)      112,594
                                                                  1,121,000     1,072,835    1,020,905        653,729        54,154
                                                                 ----------    ----------   ----------    -----------   -----------
                                                                 $1,054,444    $1,007,107   $  974,670    $   643,334   $   166,748
Less Cash Distributions to Investors:                                                                     
  Operating Cash Flow                                             1,054,444     1,007,107      969,011        643,334       151,336
  Return of Capital                                                   4,487            --           --         44,257            --
  Undistributed Cash Flow from Prior Year Operations                  1,987         3,672           --         15,412            --
                                                                 ----------    ----------   ----------    -----------   -----------
Cash Generated (Deficiency) after Cash Distributions             $   (6,474)   $   (3,672)  $    5,659    $   (59,669)  $    15,412

Special Items (not including sales and financing):
  Source of Funds:
   General Partner Contributions                                         __            --           --             --            --
   Increase in Limited Partner Contributions                             --            --           --             --     5,589,786
                                                                 ----------    ----------   ----------    -----------   -----------
                                                                $        __    $   (3,672)  $    5,659    $   (59,669)  $ 5,605,198
Use of Funds:
  Sales Commissions and Offering Expenses                                              --           --             --       764,599
  Return of Original Limited Partner's Investment                                      --           --             --            --
  Property Acquisitions and Deferred Project Costs                 (154,131)         (225)    (233,501)     2,366,507     7,755,116
Cash Generated (Deficiency) after Cash Distributions and         ----------    ----------   ----------    -----------   -----------
  Special Items
                                                                $  (160,605)   $   (3,897)  $ (227,842)   $(2,426,176)  $(2,914,517)

                                                                  ==========   ==========   ==========    ===========   ===========
Net Income and Distributions Data per $1,000 Invested:
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
    - Operations Class A Units                                           36            71           73             58            29
    - Operations Class B Units                                            0          (378)        (272)          (180)          (54)

   Capital Gain (Loss)                                                   --            --           --             --            --
Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
    - Operations Class A Units                                           74            69           69             55            36
    - Operations Class B Units                                         (256)         (260)        (246)          (181)          (58)

   Capital Gain (Loss)                                                   --            --           --             --            --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                      36            65           63             46            10
  - Return of Capital Class A Units                                      32            --           --             --            --
  - Return of Capital Class B Units                                      --            --           --             --            --
 Source (on Cash Basis)
  - Operations Class A Units                                             68            65           63             43            10
  - Return of Capital Class A Units                                      --            --           --              3            --
  - Operations Class B Units                                             --            --           --             --            --
Amount (in Percentage Terms) Remaining Invested in Program
 Properties at the end of the Last Year Reported in the Table           100%
</TABLE>


_________________
(1) Includes $207,234 in equity in earnings of joint ventures and $250,979 from
    investment of reserve funds in 1993; $592,902 in equity in earnings of joint
    ventures and $64,056 from investment of reserve funds in 1994; $745,173 in
    equity in earnings of joint ventures and $19,451 from investment of reserve
    funds in 1995; $577,128 in equity in earnings of joint ventures and $13,711
    from investment of reserve funds in 1996; and $623,249 in equity in earnings
    of joint ventures and $9,998 from investment of reserve funds in 1997.  At
    December 31, 1997, the leasing status of all developed property was 95%.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenue is
    depreciation and amortization of $100,796 for 1993, $324,578 for 1994,
    $440,333 for 1995, $592,281 for 1996, and $735,315 for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated as follows:  $442,135 to Class A
    Limited Partners, $(87,868) to Class B Limited Partners and $732 to General
    Partners for 1993; $879,232 to Class A Limited Partners, $(316,460) to Class
    B Limited Partners and $(1,051) to General Partners for 1994; $1,124,203 to
    Class A Limited Partners, $(434,564) to Class B Limited Partners and $0 to
    General Partners for 1995; $1,095,296 to Class A Limited Partners,
    $(589,646) to Class B Limited Partners and $0 to General Partners for 1996;
    and $559,801 to Class A Limited Partners, $0 to Class B Limited Partners and
    $0 to General Partners in 1997.

                                      A-5

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND VI, L.P.


<TABLE>
<CAPTION>
                                                                   1997          1996           1995           1994           1993
                                                               ------------  ------------  --------------  -------------  ---------
<S>                                                           <C>           <C>           <C>             <C>            <C>
Gross Revenues/(1)/                                           $  884,802    $  675,782    $  1,002,567    $   819,535    $   82,723
Profit on Sale of Properties                                          --            --              --             --            --
Less: Operating Expenses/(2)/                                     82,898        80,479          94,489        112,389        46,608
  Depreciation and Amortization/(3)/                               6,250         6,250           6,250          6,250         4,687
                                                              ----------    ----------    ------------    -----------    -----------

Net Income GAAP Basis/(4)/                                    $  795,654    $  589,053    $    901,828    $   700,896    $   31,428
Taxable Loss: Operations                                      ==========    ==========    ============    ===========    ===========

Cash Generated (Used By):                                     $1,091,770    $  809,389    $   916, 531    $   667,682    $   31,428
  Operations                                                  ==========    ==========    ============    ===========    ===========

  Joint Ventures                                                                                                         
                                                                 (57,206)       (2,716)        278,728        276,376        (2,478)

                                                               1,500,023     1,044,891         766,212        203,543            --
                                                              ----------    ----------    ------------    -----------    -----------
Less Cash Distributions to Investors:  
  Operating Cash Flow                                         $1,442,817    $1,042,175    $  1,044,940     $  479,919    $   (2,478)

  Return of Capital                                                                                                      
                                                               1,442,817     1,042,175       1,044,940        245,800            --
  Undistributed Cash Flow from Prior Year Operations               9,986       125,314              --             --            --
                                                                      --        18,027    $    216,092             --            --
                                                                            ----------    ------------     ----------   ------------

Cash Generated (Deficiency) after Cash Distributions          $   (9,986)   $ (143,341)       (216,092    $   234,119    $   (2,478)

                                                                              
Special Items (not including sales and financing):                                                                       
  Source of Funds:                                                                                     
   General Partner Contributions                                      --            --              --             --            --
   Increase in Limited Partner Contributions                          --            --              --     12,836,461    12,836,539
                                                              ----------    ----------    ------------    -----------   ------------

                                                              $   (9,986)   $ (143,341)   $   (216,092)   $12,397,580   $12,834,061
Use of Funds:                                                                                                 
  Sales Commissions and Offering Expenses                                           --              --      1,776,909     1,781,724
  Return of Original Limited Partner's Investment                                   --              --             --           100
  Property Acquisitions and Deferred Project Costs               310,759       234,924      10,721,376      5,912,454     3,856,239
Cash Generated (Deficiency) after Cash Distributions and      ----------    ----------    ------------    -----------   ------------

  Special Items                                                                                                 
                                                              $ (320,745)   $ (378,265)   $(10,937,468    $ 4,708,217   $ 7,195,998
                                                              ==========    ==========    ============    ===========   ============

Net Income and Distributions Data per $1,000 Invested:                                                   
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
    - Operations Class A Units                                        78            59              57             43             9
    - Operations Class B Units                                      (247)         (160)            (60)           (12)           (5)

   Capital Gain (Loss)                                                --            --              --             --             0 

Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
    - Operations Class A Units                                        75            56              56             41             1
    - Operations Class B Units                                      (150)          (99)            (51)           (22)           --
   Capital Gain (Loss)                                                --            --              --             --            --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                   67            56              57             14            --
  - Return of Capital Class A Units                                   --            --               4             --            --
  - Return of Capital Class B Units                                   --            --              --             --            --
 Source (on Cash Basis)
  - Operations Class A Units                                          67            50              61             14            --
  - Return of Capital Class A Units                                    0             6              --             --            --
  - Operations Class B Units                                          --            --              --             --            --
Amount (in Percentage Terms) Remaining Invested in
 Program Properties at the end of the Last Year Reported in
 the Table                                                           100%
</TABLE>


(1) Includes $3,436 in equity in loss of joint ventures and $86,159 from
    investment of reserve funds in 1993, $285,711 in equity in earnings of joint
    ventures and $533,824 from investment of reserve funds in 1994, $681,033 in
    equity in earnings of joint ventures and $321,534 from investment of reserve
    funds in 1995, $607,214 in equity in earnings of joint ventures and $68,568
    from investment of reserve funds in 1996, and $856,710 in equity in earnings
    of joint ventures and $28,092 from investment of reserve funds in 1997.  At
    December 31, 1997, the leasing status was 94%.
(2) Includes partnership administrative expenses.
(3) Included in equity in loss of joint ventures in gross revenues is
    depreciation of $3,436 for 1993, $107,807 for 1994, $264,866 for 1995,
    $648,478 for 1996, and $896,753 for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $39,551 to Class A Limited
    Partners, $(8,042) to Class B Limited Partners and $(81) to the General
    Partner for 1993; $762,218 to Class A Limited Partners, $(62,731) to Class B
    Limited Partners and $1,409 to the General Partners for 1994; $1,172,944 to
    Class A Limited Partners, $(269,288) to Class B Limited Partners and
    $(1,828) to the General Partners for 1995; $1,234,717 to Class A Limited
    Partners, $(645,664) to Class B Limited Partners and $0 to the General
    Partners for 1996; and $1,677,826 to Class A Limited Partners, $(882,172) to
    Class B Limited Partners and $0 to the General Partners for 1997.

                                      A-6

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                       WELLS REAL ESTATE FUND VII, L.P.


<TABLE>
<CAPTION>
                                                                   1997         1996           1995           1994       1993
                                                               ------------  -----------  --------------  -------------  ----
<S>                                                            <C>           <C>          <C>             <C>            <C>
Gross Revenues/(1)/                                             $  816,237    $ 543,291    $    925,246    $   286,371   N/A
Profit on Sale of Properties                                            --                                          --
Less: Operating Expenses/(2)/                                       76,838       84,265         114,953         78,420
  Depreciation and Amortization/(3)/                                 6,250        6,250           6,250          4,688
                                                                ----------    ---------    ------------    -----------
Net Income GAAP Basis/(4)/                                      $  733,149    $ 452,776    $    804,043    $   203,263
                                                                ==========    =========    ============    =========== 
Taxable Income: Operations                                      $1,008,368    $ 657,443    $    812,402    $   195,067 
                                                                ==========    =========    ============    =========== 
Cash Generated (Used By):                                       
  Operations                                                       (43,250)      20,883         431,728         47,595   
  Joint Ventures                                                 1,420,126      760,628         424,304         14,243
                                                                ----------    ---------    ------------    ----------- 
                                                                $1,376,876    $ 781,511    $    856,032    $    61,838 

Less Cash Distributions to Investors:                          
  Operating Cash Flow                                            1,376,876      781,511         856,032         52,195
  Return of Capital                                                  2,709       10,805          22,064             --
  Undistributed Cash Flow from Prior Year Operations                    --           --           9,643             -- 
                                                                ----------    ---------    ------------    ----------- 
Cash Generated (Deficiency) after Cash Distributions            $   (2,709)   $ (10,805)   $    (31,707)   $     9,643  
                                                                
Special Items (not including sales and financing):
  Source of Funds:
   General Partner Contributions                                        --           --              --             --
   Increase in Limited Partner Contributions                    $       --    $      --    $    805,212    $23,374,961
                                                                ----------    ---------    ------------    -----------
                                                                $   (2,709)   $ (10,805)   $    773,505    $23,384,604 

Use of Funds:                                                   
  Sales Commissions and Offering Expenses                               --           --         244,207    $ 3,351,569  
  Return of Original Limited Partner's Investment                       --           --             100             --  
  Property Acquisitions and Deferred Project Costs                 169,172      736,960      14,971,002      4,477,765  
                                                                ----------    ---------    ------------    -----------
Cash Generated (Deficiency) after Cash Distributions and          
  Special Items                                                 $ (171,881)   $(747,765)   $(14,441,804)   $15,555,270 
                                                                ==========    =========    ============    ===========   
                                                               
Net Income and Distributions Data per $1,000 Invested:
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
   - Operations Class A Units                                           86           62              57             29
   - Operations Class B Units                                         (168)         (98)            (20)            (9)
   Capital Gain (Loss)                                                  --           --              --             --
Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
   - Operations Class A Units                                           78           55              55             28
   - Operations Class B Units                                         (111)         (58)            (16)            17
   Capital Gain (Loss)                                                  --           --              --             --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                     70           43              52              7
  - Return of Capital Class A Units                                     --           --              --             --
  - Return of Capital Class B Units                                     --           --              --             --
 Source (on Cash Basis)
  - Operations Class A Units                                            70           42              51              7
  - Return of Capital Class A Units                                     --            1               1             --
  - Operations Class B Units                                            --           --              --             --
Source (on a Priority Distribution Basis)/(5)/
 - Investment income Class A Units                                      54           29              30              4
 - Return of Capital Class A Units                                      16           14              22              3
 - Return of Capital Class B Units                                      --           --              --             --

Amount (in Percentage Terms) Remaining Invested in
 Program Properties at the end of the Last Year Reported in
 the Table                                                             100%
 </TABLE>


____________________
(1) Includes $78,799 in equity in earnings of joint ventures and $207,572 from
    investment of reserve funds in 1994, $403,325 in equity in earnings of joint
    ventures and $521,921 from investment of reserve funds in 1995, $457,144 in
    equity in earnings of joint ventures and $86,147 from investment of reserve
    funds in 1996, and $785,398 in equity in earnings of joint ventures and
    $30,839 from investment of reserve funds in 1997.  At December 31, 1997, the
    leasing status was 92% including developed property in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $25,468 for 1994, $140,533 for 1995, $605,247 for 1996, and
    $877,869 for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $233,337 to Class A Limited
    Partners, $(29,854) to Class B Limited Partners and $(220) to the General
    Partner for 1994; $950,826 to Class A Limited Partners, $(146,503) to Class
    B Limited Partners and $(280) to the General Partners for 1995; $1,062,605
    to Class A Limited Partners, $(609,829) to Class B Limited Partners and $0
    to the General Partners for 1996; and $1,615,965 to class A Limited
    Partners, $(882,816) to Class B Limited Partners and $0 to the General
    Partners for 1997.

(footnotes continued on following page)

                                      A-7

<PAGE>
 
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1997, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totalled
    $972,030.

                                      A-8

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                       WELLS REAL ESTATE FUND VIII, L.P.


<TABLE>
<CAPTION>
                                                                      1997           1996           1995      1994  1993
                                                                 --------------  -------------  ------------  ----  ----
<S>                                                              <C>             <C>            <C>           <C>   <C>
Gross Revenues/(1)/                                               $  1,204,018    $ 1,057,694   $   402,428   N/A   N/A
Profit on Sale of Properties                                                --
Less: Operating Expenses/(2)/                                           95,201        114,854       122,264
  Depreciation and Amortization/(3)/                                     6,250          6,250         6,250
                                                                  ------------    -----------   -----------
Net Income GAAP Basis/(4)/                                        $  1,102,567    $   936,590       273,914
                                                                  ============    ===========   ===========
Taxable Income: Operations                                        $  1,213,524    $ 1,001,974       404,348
                                                                  ============    ===========   ===========
Cash Generated (Used By):
  Operations                                                             7,909        623,268       204,790
  Joint Ventures                                                     1,229,282        279,984        20,287
                                                                  ------------    -----------   -----------
                                                                  $  1,237,191    $   903,252       225,077  
Less Cash Distributions to Investors:                             
  Operating Cash Flow                                                1,237,191        903,252            -- 
  Return of Capital                                                    183,315          2,443            -- 
  Undistributed Cash Flow from Prior Year Operations                        --        225,077            -- 
                                                                  ------------    -----------   ----------- 
Cash Generated (Deficiency) after Cash Distributions              $   (183,315)   $  (227,520)      225,077                     
 
Special Items (not including sales and financing):
  Source of Funds:
   General Partner Contributions                                            --             --            --
   Increase in Limited Partner Contributions/(5)/                           --      1,898,147    30,144,542
                                                                  ------------    -----------   -----------
                                                                  $   (183,315)   $ 1,670,627    30,369,619
Use of Funds:
  Sales Commissions and Offering Expenses                                   --        464,760     4,310,028
  Return of Limited Partner's Investment                                 8,600             --            --
  Property Acquisitions and Deferred Project Costs                  10,675,811      7,931,566     6,618,273
                                                                  ------------    -----------   -----------  
Cash Generated (Deficiency) after Cash Distributions and          
  Special Items                                                   $(10,867,726)   $(6,725,699)   19,441,318
                                                                  ============    ===========   =========== 
                                                                  
Net Income and Distributions Data per $1,000 Invested:
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
   - Operations Class A Units                                               73             46            28
   - Operations Class B Units                                             (150)           (47)           (3)
   Capital Gain (Loss)                                                      --             --            --
Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
   - Operations Class A Units                                               65             46            17
   - Operations Class B Units                                              (95)           (33)           (3)
   Capital Gain (Loss)                                                      --             --            --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                         54             43            --
  - Return of Capital Class A Units                                         --             --            --
  - Return of Capital Class B Units                                         --             --            --
 Source (on Cash Basis)
  - Operations Class A Units                                                47             43            --
  - Return of Capital Class A Units                                          7              0            --
  - Operations Class B Units                                                --             --            --
Source (on a Priority Distribution Basis)/(5)/
 - Investment Income Class A Units                                          42             33            --
 - Return of Capital Class A Units                                          12             10            --
 - Return of Capital Class B Units                                          --             --            --
Amount (in Percentage Terms) Remaining Invested in Program
Properties at the end of the Last Year Reported in the Table               100%
</TABLE>


_______________________
(1) Includes $28,377 in equity in earnings of joint ventures and $374,051 from
    investment of reserve funds in 1995, $241,819 in equity in earnings of joint
    ventures and $815,875 from investment of reserve funds in 1996, and
    $1,034,907 in equity in earnings of joint ventures and $169,111 from
    investment of reserve funds in 1997.  At December 31, 1997, the leasing
    status was 96% including developed property in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $14,058 for 1995, $265,259 for 1996, and $841,666  for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $294,221 to Class A Limited
    Partners, $(20,104) to Class B Limited Partners and $(203) to the General
    Partners for 1995; $1,207,540  to Class A Limited Partners, $(270,653) to
    Class B Limited Partners and $(297) to the General Partners for 1996; and
    $1,947,536  to Class A Limited Partners, $(844,969) to Class B Limited
    Partners and $0 to the General Partners for 1997.

(footnotes continued on following page)

                                      A-9

<PAGE>
 
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1997, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totalled
    $551,455.

                                     A-10

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                        WELLS REAL ESTATE FUND IX, L.P.


<TABLE>
<CAPTION>
                                                                    1997           1996       1995  1994  1993
                                                               --------------  -------------  ----  ----  ----
<S>                                                            <C>             <C>            <C>   <C>   <C>
Gross Revenues/(1)/                                             $  1,199,300    $   406,891   N/A   N/A   N/A
Profit on Sale of Properties                                              --             --
Less: Operating Expenses/(2)/                                        101,284        101,885
  Depreciation and Amortization/(3)/                                   6,250          6,250
                                                                ------------    -----------
Net Income GAAP Basis/(4)/                                      $  1,091,766    $   298,756
                                                                ============    =========== 
Taxable Income: Operations                                      $  1,083,824    $   304,552    
                                                                ============    ===========    
Cash Generated (Used By):                                      
                                                               
  Operations                                                    $    501,390    $   151,150  
  Joint Ventures                                                     527,390             -- 
                                                                ------------    -----------
                                                                $  1,028,780    $   151,150     
Less Cash Distributions to Investors:                           
  Operating Cash Flow                                              1,028,780        149,425 
  Return of Capital                                             $     41,834    $        --  
  Undistributed Cash Flow From Prior Year Operations                   1,725             -- 
                                                                ------------    -----------
Cash Generated (Deficiency) after Cash Distributions            $    (43,559)   $     1,725       
                                                                
                                                                
Special Items (not including sales and financing):
  Source of Funds:
   General Partner Contributions                                          --             --
   Increase in Limited Partner Contributions                              --     35,000,000
                                                                ------------    -----------
                                                                $    (43,559)   $35,001,725 
Use of Funds:
  Sales Commissions and Offering Expenses                            323,039      4,900,321
  Return of Original Limited Partner's Investment                        100             --
  Property Acquisitions and Deferred Project Costs                13,427,158      6,544,019
                                                                ------------    ----------- 
Cash Generated (Deficiency) after Cash Distributions and        
  Special Items                                                 $(13,793,856)   $23,557,385 
                                                                ============    ===========

Net Income and Distributions Data per $1,000 Invested:
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
   - Operations Class A Units                                             53             28
   - Operations Class B Units                                            (77)           (11)
   Capital Gain (Loss)                                                    --             --
Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
   - Operations Class A Units                                             46             26
   - Operations Class B Units                                            (47)           (48)
   Capital Gain (Loss)                                                    --             --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                       36             13
  - Return of Capital Class A Units                                       --             --
  - Return of Capital Class B Units                                       --             --
 Source (on Cash Basis)
  - Operations Class A Units                                              35             13
  - Return of Capital Class A Units                                        1             --
  - Operations Class B Units                                              --             --
Source (on a Priority Distribution Basis)/(5)/
 - Investment Income Class A Units                                        29             10
 - Return of Capital Class A Units                                         7              3
 - Return of Capital Class B Units                                        --             --

Amount (in Percentage Terms) Remaining Invested in
 Program Properties at the end of the Last Year Reported in
 the Table                                                               100%
</TABLE>


___________________________
(1) Includes $23,077 in equity in earnings of joint ventures and $383,884 from
    investment of reserve funds in 1996, and $593,914 in equity in earnings of
    joint ventures and $605,386 from investment of reserve funds in 1997.  At
    December 31, 1997, the leasing status was 93% including developed property
    in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $25,286 for 1996, and $469,126 for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $330,270 to Class A Limited
    Partners, $(31,220) to Class B Limited Partners and $(294) to the General
    Partners for 1996; and $1,564,778 to Class A Limited Partners, $(472,806) to
    Class B Limited Partners and $(206) to the General Partners for 1997.

(footnotes continued on following page)

                                     A-11

<PAGE>
 
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1997, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totalled
    $236,379.

                                     A-12

<PAGE>
 
                             TABLE III (UNAUDITED)
                      OPERATING RESULTS OF PRIOR PROGRAMS
                         WELLS REAL ESTATE FUND X, L.P.

<TABLE>
<CAPTION>
                                                                   1997       1996  1995  1994  1993
                                                               -------------  ----  ----  ----  ----
<S>                                                            <C>            <C>   <C>   <C>   <C>
Gross Revenues/(1)/                                             $   372,507   N/A   N/A   N/A   N/A
Profit on Sale of Properties                                             --
Less: Operating Expenses/(2)/                                        88,232
  Depreciation and Amortization/(3)/                                  6,250
                                                                -----------
Net Income GAAP Basis/(4)/                                      $   278,025
                                                                ===========
Taxable Income: Operations                                      $   382,543 
                                                                ===========
Cash Generated (Used By):
  Operations                                                    $   200,668                
                                                                
                                                                ===========
  Joint Ventures                                                $   200,668
                                                                          
                                                                
Less Cash Distributions to Investors:                           
  Operating Cash Flow                                                    --
  Return of Capital                                                      --           
  Undistributed Cash Flow From Prior Year Operations                     --
                                                                -----------
Cash Generated (Deficiency) after Cash Distributions            $   200,668    
                                                                           
                                                                                    
Special Items (not including sales and financing):             
  Source of Funds:                                              
   General Partner Contributions                                         --
   Increase in Limited Partner Contributions                    $27,128,912
                                                                -----------          
                                                                $27,329,580   
Use of Funds:                                                  
  Sales Commissions and Offering Expenses                         3,737,363 
  Return of Original Limited Partner's Investment                       100
  Property Acquisitions and Deferred Project Costs                5,188,485           
                                                                -----------
Cash Generated (Deficiency) after Cash Distributions and          
  Special Items                                                 $18,403,632 
                                                                ===========
                                                                
Net Income and Distributions Data per $1,000 Invested:
  Net Income on GAAP Basis:
   Ordinary Income (Loss)
   - Operations Class A Units                                            28
   - Operations Class B Units                                            (9)
   Capital Gain (Loss)                                                   --
Tax and Distributions Data per $1,000 Invested:
  Federal Income Tax Results:
   Ordinary Income (Loss)
   - Operations Class A Units                                            35
   - Operations Class B Units                                             0
   Capital Gain (Loss)                                                   --
Cash Distributions to Investors:
 Source (on GAAP Basis)
  - Investment Income Class A Units                                      --
  - Return of Capital Class A Units                                      --
  - Return of Capital Class B Units                                      --
 Source (on Cash Basis)
  - Operations Class A Units                                             --
  - Return of Capital Class A Units                                      --
  - Operations Class B Units                                             --
Source (on a Priority Distribution Basis)/(5)/
 - Investment Income Class A Units                                       --
 - Return of Capital Class A Units                                       --
 - Return of Capital Class B Units                                       --

Amount (in Percentage Terms) Remaining Invested in
 Program Properties at the end of the Last Year Reported in
 the Table                                                              100%
</TABLE>


(1) Includes $(10,035) in equity in earnings of joint ventures and $382,542 from
    investment of reserve funds in 1997.  At December 31, 1997, the leasing
    status was 67% including developed property in initial lease up.
(2) Includes partnership administrative expenses.
(3) Included in equity in earnings of joint ventures in gross revenues is
    depreciation of $18,675 for 1997.
(4) In accordance with the partnership agreement, net income or loss,
    depreciation and amortization are allocated $302,862 to Class A Limited
    Partners, $(24,675) to Class B Limited Partners and $(162) to the General
    Partners for 1997.
(5) Pursuant to the terms of the partnership agreement, an amount equal to the
    cash distributions paid to Class A Limited Partners is payable as priority
    distributions out of the first available net proceeds from the sale of
    partnership properties to Class B Limited Partners.  The amount of cash
    distributions paid per Unit to Class A Limited Partners is shown as a return
    of capital to the extent of such priority distributions payable to Class B
    Limited Partners.  As of December 31, 1997, the aggregate amount of such
    priority distributions payable to Class B Limited Partners totalled $0.

                                     A-13

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

            SUPPLEMENT NO. 2 DATED JUNE 30, 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
(collectively, the "Prospectus").  Unless otherwise defined herein, capitalized
terms used in this Supplement shall have the same meanings as set forth in the
Prospectus.

  The purpose of this Supplement is to describe the following:

    (i)  The status of the offering of shares of common stock (the "Shares")
in Wells Real Estate Investment Trust, Inc. (the "Company");

   (ii)  Revisions to the "MANAGEMENT" section of the Prospectus;

  (iii)  Revisions to the "REAL PROPERTY INVESTMENTS" section of the Prospectus;

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

    (v)  Inclusion of Audited and Pro Forma Financial Statements as described in
the "Financial Statements" section of this Supplement.

STATUS OF THE OFFERING

  Pursuant to the Prospectus, the offering of Shares in the Company commenced on
January 30, 1998.  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 June 30, 1998, the Company had raised a total of $2,683,595 in
offering proceeds (268,359 Shares).

MANAGEMENT

  The information contained on page 32 in the "General" subsection of the
"MANAGEMENT" section of the Prospectus is revised as of the date of this
Supplement by the deletion of the second full paragraph in that subsection and
the insertion of the following paragraph in lieu thereof:

        The Company currently has nine Directors; it may have no fewer than
     three Directors and no more than fifteen. Directors will be elected
     annually, and each Director will hold office until the next annual meeting
     of stockholders or until his successor has been duly elected and qualified.
     There is no limit on the number of times that a Director may be elected to
     office. Although the number of Directors may be increased or decreased as
     discussed above, a decrease shall not have the effect of shortening the
     term of any incumbent Director.

  The information beginning on page 33 in the "MANAGEMENT" section of the
Prospectus is revised as of the date of this Supplement by the deletion of the
entire text of the "Directors and Executive Officers" subsection and the
insertion of the following in lieu thereof:

     DIRECTORS AND EXECUTIVE OFFICERS

  The Directors and executive officers of the Company are listed below:
 
     Name                       Age       Positions
     ----                       ---       ---------
     Leo F. Wells, III           53       President and Director
     Brian M. Conlon             40       Executive Vice President, Treasurer,
                                          Secretary and Director
     
     
     
     
     
     
     

<PAGE>
 
John L. Bell                58       Independent Director 
Richard W. Carpenter        61       Independent Director 
Walter W. Sessoms           64       Independent Director 
Bud Carter                  60       Independent Director  
William H. Keogler, Jr.     52       Independent Director 
Donald S. Moss              62       Independent Director 
Neil H. Strickland          62       Independent Director 

     LEO F. WELLS, III is the President and a Director of the Company and the
President and sole Director of the Advisor. He is also the sole shareholder and
Director of Wells Real Estate Funds, Inc., the parent corporation of the
Advisor. Mr. Wells is President of Wells & Associates, Inc., a real estate
brokerage and investment company formed in 1976 and incorporated in 1978, for
which he serves as principal broker. He is also the sole Director and President
of: Wells Management Company, Inc. ("Wells Management"), a property management
company he founded in 1983; Wells Investment Securities, Inc. (the Dealer
Manager), a registered securities broker-dealer he formed in 1984; Wells
Advisors, Inc., a company he organized in 1991 to act as a non-bank custodian
for IRAs; and Wells Development Corporation ("Wells Development"), a company he
organized in 1997 to temporarily own, operate, manage, and/or develop real
properties.

     Mr. Wells was a real estate salesman and property manager from 1970 to 1973
for Roy D. Warren & Company, an Atlanta real estate company, and he was
associated from 1973 to 1976 with Sax Gaskin Real Estate Company, during which
time he became a Life Member of the Atlanta Board of Realtors Million Dollar
Club. From 1980 to February 1985 he served as Vice President of Hill-Johnson,
Inc., a Georgia corporation engaged in the construction business. Mr. Wells
holds a Bachelor of Business Administration degree in economics from the
University of Georgia. Mr. Wells is a member of the International Association
for Financial Planning and a registered NASD principal.

     Mr. Wells has over 25 years of experience in real estate sales, management
and brokerage services. He is currently a co-general partner in a total of 25
real estate limited partnerships formed for the purpose of acquiring, developing
and operating office buildings and other commercial properties. As of June 16,
1998, these 25 real estate limited partnerships represented investments
totalling $282,525,732 from 25,800 investors. See "Prior Performance Tables"
contained in Supplement No. 1 to the Prospectus.

     BRIAN M. CONLON is the Executive Vice President, Secretary, Treasurer and a
Director of the Company.  He also serves as Executive Vice President of
both the Advisor and Wells Development.  Mr. Conlon joined the Advisor in
1985 as a Regional Vice President, and served as Vice President and
National Marketing Director from 1991 until April 1996 when he assumed his
current position.  Previously, Mr. Conlon was Director of Business
Development for Tishman Midwest Management & Leasing Services Corp. where
he was responsible for marketing the firm's property management and leasing
services to institutions.  Mr. Conlon also spent two years as an Investment
Property Specialist with Carter & Associates where he specialized in
acquisitions and dispositions of office and retail properties for
institutional clients.  Mr. Conlon received a Bachelor of Business
Administration degree from Georgia State University and a Master of
Business Administration degree from the University of Dallas.  Mr. Conlon
is a member of the International Association for Financial Planning (IAFP).
He is also a general securities principal and holds a Georgia real estate
brokerage license.  Mr. Conlon also holds the certified commercial
investment member (CCIM) designation of the Commercial Investment Real
Estate Institute and the certified financial planner (CFP) designation of
the Certified Financial Planner Board of Standards, Inc.

     JOHN L. BELL was the owner and Chairman of Bell-Mann, Inc., the largest
commercial flooring contractor in the Southeast ("Bell-Mann") from February
1971 to February 1996.

<PAGE>
 
Mr. Bell also served on the Board of Directors of Realty South Investors, a REIT
traded on the American Stock Exchange, and was the founder and served as a
Director of both the Chattahoochee Bank and the Buckhead Bank. In 1997, Mr. Bell
initiated and implemented a "Dealer Acquisition Plan" for Shaw Industries, Inc.,
a floor covering manufacturer and distributor, which plan included the
acquisition of Bell-Mann.

     Mr. Bell currently serves on the advisory boards of Windsor Capital,
Mountain Top Boys Home and the Eagle Ranch Boys Home. Mr. Bell is also
extensively involved in buying and selling real estate both individually and in
partnership with others. Mr. Bell graduated from Florida State University
majoring in accounting and marketing.

     RICHARD W. CARPENTER served as General Vice President of Real Estate
Finance of the Citizens and Southern National Bank from 1975 to 1979, during
which time his duties included the supervision and establishment of the co-
mingled United Kingdom Pension Fund, U.K.-American Properties, Inc. established
primarily for investment in commercial real estate within the United States.

     Mr. Carpenter is currently President and Director of Realmark Holdings
Corp., a residential and commercial real estate developer, and has served in
that position since October 1983. He is also President and Director of Leisure
Technology, Inc., a retirement community developer, a position which he has held
since March 1993, Managing Partner of Carpenter Properties, L.P., a real estate
limited partnership, and President and Director of the oil refining companies of
Wyatt Energy, Inc. and Commonwealth Oil Refining Company, Inc., positions which
he has held since 1995 and 1984, respectively.

     Mr. Carpenter is a Director of both Tara Corp., a steel manufacturing
company, and Environmental Compliance Corp., an environmental consulting firm.
Mr. Carpenter also serves as Vice Chairman and Director of both First Liberty
Financial Corp. and Liberty Savings Bank, F.S.B. He has been a member of The
National Association of Real Estate Investment Trusts and served as President
and Chairman of the Board of Southmark Properties, an Atlanta based REIT
investing in commercial properties. Mr. Carpenter is a past Chairman of the
American Bankers Association Housing and Real Estate Finance Division Executive
Committee. Mr. Carpenter holds a Bachelor of Science degree from Florida State
University, where he was named the outstanding alumni of the School of Business
in 1973.

     WALTER W. SESSOMS was employed by BellSouth Telecommunications, Inc.
("BellSouth") from 1971 until his retirement in June 1997. While at BellSouth,
Mr. Sessoms served in a number of key positions, including Vice President-
Residence for the State of Georgia from June 1979 to July 1981, Vice President-
Transitional Planning Officer from July 1981 to February 1982, Vice President-
Georgia from February 1982 to June 1989, Senior Vice President-Regulatory and
External Affairs from June 1989 to November 1991, and Group President-Services
from December 1991 until his retirement on June 30, 1997.

     Mr. Sessoms currently serves as a Director of the Georgia Chamber of
Commerce for which he is a past Chairman of the Board, the Atlanta Civic
Enterprises and the Salvation Army's Board of Visitors of the Southeast Region.
Mr. Sessoms is also a past executive advisory council member for the University
of Georgia College of Business Administration and past member of the executive
committee of the Atlanta Chamber of Commerce. Mr. Sessoms is a graduate of
Wofford College where he earned a degree in economics and business
administration and is currently a practitioner/lecturer at the University of
Georgia.

     BUD CARTER was an award-winning broadcast news director and anchorman for
several radio and television stations in the Midwest for over 20 years. From
1975 to 1980, Mr. Carter served as General Manager of WTAZ-FM, a radio station
in Peoria, Illinois and served as editor 

                                       3

<PAGE>
 
and publisher of The Peoria Press, a weekly business and political journal in
Peoria, Illinois. From 1981 until 1989, Mr. Carter was also an owner and General
Manager of Transitions, Inc., a corporate outplacement company in Atlanta,
Georgia.
 
     Mr. Carter currently serves as Senior Vice President for The Executive
Committee, a 42-year old international organization established to aid
presidents and CEOs share ideas on ways to improve the management and
profitability of their respective companies. The Executive Committee operates in
numerous large cities throughout the United States, Canada, Australia, France,
Italy, Malaysia, Brazil, the United Kingdom and Japan. The Executive Committee
has more than 6,000 presidents and CEOs who are members. In addition, Mr. Carter
was the first Chairman of the organization recruited in Atlanta and still serves
as Chairman of the first two groups formed in Atlanta, each comprised of 14
noncompeting CEOs and presidents. Mr. Carter is a graduate of the University of
Missouri where he earned degrees in journalism and social psychology.

     WILLIAM H. KEOGLER, JR. was employed by Brooke Bond Foods, Inc. as a Sales
Manager from June 1965 to September 1968. From July 1968 to December 1974, Mr.
Keogler was employed by Kidder Peabody & Company, Inc. and Dupont, Glore, Forgan
as a corporate bond salesman responsible for managing the industrial corporate
bond desk and the utility bond area. From December 1974 to July 1982, Mr.
Keogler was employed by Robinson-Humphrey, Inc. as the Director of Fixed Income
Trading Departments responsible for all municipal bond trading and municipal
research, corporate and government bond trading, unit trusts and SBA/FHA loans,
as well as the oversight of the publishing of the Robinson-Humphrey Southeast
Unit Trust, a quarterly newsletter. Mr. Keogler was elected to the Board of
Directors of Robinson-Humphrey, Inc. in 1982. From July 1982 to October 1984,
Mr. Keogler was Executive Vice President, Chief Operating Officer, Chairman of
the Executive Investment Committee and member of the Board of Directors and
Chairman of the MFA Advisory Board for the Financial Service Corporation. He was
responsible for the creation of a full service trading department specializing
in general securities with emphasis on municipal bonds and municipal trusts.
Under his leadership, Financial Service Corporation grew to over 1,000
registered representatives and over 650 branch offices. In March 1985, Mr.
Keogler founded Keogler, Morgan & Company, Inc., a full service brokerage
firm, and Keogler Investment Advisory, Inc., in which he served as Chairman of
the Board of Directors, President and Chief Executive Officer. In January 1997,
both companies were sold to Sun America, Inc., a publicly traded New York Stock
Exchange Company. Mr. Keogler continued to serve as President and Chief
Executive Officer of those companies until his retirement in January 1998.

     Mr. Keogler serves on the Board of Trustees of Senior Citizens Services of
Atlanta.  He graduated from Adelphi University in New York where he earned
a degree in psychology.

     DONALD S. MOSS was employed by Avon Products, Inc. ("Avon") from 1957 until
his retirement in 1986. While at Avon, Mr. Moss served in a number of key
positions, including Vice President and Controller from 1973 to 1976, Group Vice
President of Operations-Worldwide from 1976 to 1979, Group Vice President of
Sales-Worldwide from 1979 to 1980, Senior Vice President-International from 1980
to 1983 and Group Vice President-Human Resources and Administration from 1983
until his retirement in 1986. Mr. Moss was also a member of the board of
directors of Avon Canada, Avon Japan, Avon Thailand, and Avon Malaysia from
1980-1983.

     Mr. Moss is currently a Director of the Atlanta Athletic Club. He formerly
was the National Treasurer and a Director of the Girls Clubs of America from
1973 to 1976. Mr. Moss graduated from the University of Illinois where he
received a degree in business.

     NEIL H. STRICKLAND was employed by Loyalty Group Insurance (which
subsequently merged with America Fore Loyalty Group and is now known as The
Continental Group) as an automobile insurance underwriter. From 1957 to 1961,
Mr. Strickland served as Assistant Supervisor of the Casualty Large Lines
Retrospective Rating Department. From 1961 to 1964,

                                       4

<PAGE>
 
Mr. Strickland served as Branch Manager of Wolverine Insurance Company, a full
service property and casualty service company, where he had full responsibility
for underwriting of insurance and office administration in the State of Georgia.
In 1964, Mr. Strickland and a non-active partner started Superior Insurance
Service, Inc., a property and casualty wholesale general insurance agency. Mr.
Strickland served as President and was responsible for the underwriting and all
other operations of the agency. In 1967, Mr. Strickland sold his interest in
Superior Insurance Service, Inc. and started Strickland General Agency, Inc., a
property and casualty general insurance agency concentrating on commercial
customers. Mr. Strickland is currently the Senior Operation Executive of
Strickland General Agency, Inc. and devotes most of his time to long-term
planning, policy development and senior administration.

     Mr. Strickland is a past President of the Norcross Kiwanis Club and served
as both Vice President and President of the Georgia Surplus Lines Association.
He also served as President and a Director of the National Association of
Professional Surplus Lines Offices. Mr. Strickland currently serves as a
Director of First Capital Bank, a community bank located in the State of
Georgia. Mr. Strickland graduated from Georgia State University where he
received a degree in business administration. He also received an L.L.B. degree
from Atlanta Law School.

REAL PROPERTY INVESTMENTS

     The information contained on page 45 in the "REAL PROPERTY INVESTMENTS"
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 paragraphs in lieu thereof:

     JOINT VENTURE AGREEMENT

            The Company, as sole general partner of Wells Operating Partnership,
     L.P. ("Wells OP"), a Georgia limited partnership organized to own and
     operate properties on behalf of the Company, entered into an Amended and
     Restated Joint Venture Agreement (the "Joint Venture Agreement") with Wells
     Real Estate Fund IX, L.P. ("Wells Fund IX"), Wells Real Estate Fund X, L.P.
     ("Wells Fund X") and Wells Real Estate Fund XI, L.P. ("Wells Fund XI")
     known as The Fund IX, Fund X, Fund XI and REIT Joint Venture (the "Joint
     Venture") for the purpose of the acquisition, ownership, development,
     leasing, operation, sale and management of real properties. Wells Fund IX,
     Wells Fund X and Wells Fund XI are all Affiliates of the Company and the
     Advisor. The Joint Venture (formerly known as "Fund IX and X Associates")
     was originally formed on March 20, 1997 between Wells Fund IX and Wells
     Fund X, and on June 11, 1998, Wells Fund XI and Wells OP were admitted as
     joint venturers to the Joint Venture. The investment objectives of Wells
     Fund IX, Wells Fund X and Wells Fund XI are substantially identical to
     those of the Company.

            The Joint Venture Agreement provides that all income, profit, loss,
     cash flow, resale gain, resale loss and sale proceeds of the Joint Venture
     will be allocated and distributed between Wells Fund IX, Wells Fund X,
     Wells Fund XI and Wells OP based on their respective capital contributions
     to the Joint Venture. As of June 30, 1998, Wells OP had made total capital
     contributions to the Joint Venture of $1,421,466 and held an equity
     percentage interest in the Joint Venture of 4.4%; Wells Fund IX had made
     total capital contributions to the Joint Venture of $14,571,686 and held an
     equity percentage interest in the Joint Venture of 45.8%; Wells Fund X had
     made total capital contributions to the Joint Venture of $13,360,540 and
     held an equity percentage interest in the Joint Venture of 42.0%; and Wells
     Fund XI had made total capital contributions to the Joint Venture of
     $2,482,810 and held an equity percentage interest in the Joint Venture of
     7.8%.

            The Joint Venture Agreement allows each joint venturer to make a
     buy/sell election upon receipt by any joint venturer of a bonafide third-
     party offer to purchase all or substantially all of the properties or the
     last remaining property of the Joint Venture. Upon receipt of notice of
     such

                                       5

<PAGE>
 
     third-party offer, each joint venturer must elect within thirty (30) days
     after receipt of the notice to either (i) purchase the entire interest of
     each venturer that wishes to accept the offer on the same terms and
     conditions as the third-party offer to purchase, or (ii) consent to the
     sale of the properties or last remaining property pursuant to such third-
     party offer.

            On June 24, 1998, Wells OP contributed $1,421,466 in cash to the
     Joint Venture. Said $1,421,466 capital contribution by Wells OP was
     aggregated with cash contributions made by Wells Fund IX in the amount of
     $650,000, Wells Fund X in the amount of $950,000 and Wells Fund XI in the
     amount of $2,482,810 to purchase a one-story office building located in
     Oklahoma City, Oklahoma (the "Lucent Building") from Wells Development, an
     Affiliate of the Company and the Advisor.

     THE LUCENT BUILDING

            Purchase of the Oklahoma City Property. On June 24, 1998, the Joint
            -------------------------------------- 
     Venture acquired a one-story office building containing approximately
     57,186 rentable square feet which was developed and constructed on certain
     real property located in Oklahoma City, Oklahoma (the "Oklahoma City
     Property") by Wells Development pursuant to that certain Agreement for the
     Purchase and Sale of Real Property (the "Contract") dated May 30, 1997
     between Wells Development and the Joint Venture, as amended.

            Wells Development had acquired the Oklahoma City Property on May 30,
     1997, for a purchase price of $695,636, plus $20,869 in real estate
     brokerage commissions and $58,000 in legal fees, title insurance premiums
     and other closing costs. Simultaneously with the acquisition of the
     Oklahoma City Property, Wells Development entered into the Contract with
     the Joint Venture for the sale of the Oklahoma City Property following the
     construction and development thereon of the Lucent Building, as described
     below.

            Pursuant to the terms of the Contract, the Joint Venture made an
     earnest money deposit to Wells Development in the amount of $1,600,000
     consisting of a $650,000 contribution funded by Wells Fund IX and a
     $950,000 contribution funded by Wells Fund X. The earnest money deposit
     paid by the Joint Venture under the Contract was used by Wells Development
     to fund the purchase of the Oklahoma City Property, as described below, and
     to fund the initial costs of the construction and development of the Lucent
     Building. Wells Development also used part of the earnest money deposit to
     acquire an additional strip of land along the northern boundary of the
     Oklahoma City Property to expanded the parking area for the property.

            In addition to the earnest money deposit, Wells Development obtained
     a loan in the amount of $3,900,000 from NationsBank, N.A. to fund the
     construction and development of the Lucent Building (the "Construction
     Loan"). As set forth below, the Construction Loan was paid off upon the
     sale of the Lucent Building to the Joint Venture, and Wells Development
     delivered title to the Joint Venture debt-free at closing.

            The purchase price of the Lucent Building was $5,504,276, which was
     equal to the aggregate cost to Wells Development of the acquisition,
     construction and development of the Lucent Building, including interest and
     other carrying costs, and accordingly, Wells Development made no profit
     from the sale of the Lucent Building to the Joint Venture.

            Description of the Building and the Site. The Oklahoma City Property
            ----------------------------------------  
     contains a one-story office building with 57,186 net rentable square feet
     and 55,017 net useable square feet with a high tilt-up concrete panel
     exterior and steel framing. Construction of the Lucent Building was
     completed in January 1998. The parking area contains approximately 385
     paved parking spaces.

            The Lucent Building is located at 14400 Hertz Quail Springs Parkway,
     Oklahoma City, Oklahoma. The site consists of approximately 5.3 acres
     located in the Quail Springs Office Park 

                                       6

<PAGE>
 
     in the northwest sector of Oklahoma City. Oklahoma City is located near the
     center of the state and is the State Capitol of Oklahoma. Oklahoma City is
     currently the 42nd largest metropolitan area in the United States. The
     population of the Oklahoma City metropolitan area, which has been
     increasing steadily over the past two decades, is currently in excess of
     1,000,000.

            The site is located approximately ten miles northwest of the central
     business district of Oklahoma City. Access is available from Memorial Road
     on the south and May Avenue on the east with all access streets being four
     lane concrete boulevards with curbs and gutters.

            The Lucent Lease. On May 30, 1997, Wells Development entered into a
            ----------------
     Lease Agreement (the "Lucent Lease") with Lucent Technologies Inc. ("Lucent
     Technologies"), pursuant to which Lucent Technologies agreed to lease all
     of the Lucent Building upon completion of the improvement thereof. At the
     closing of the sale of the Lucent Building to the Joint Venture, Wells
     Development transferred and assigned its interest in the Lucent Lease to
     the Joint Venture.

            Lucent Technologies is a telecommunications company which was spun
     off by AT&T in April of 1996. The company is in the business of designing,
     developing and marketing communications systems and technologies ranging
     from microchips to whole networks and is one of the world's leading
     designers, developers and manufacturers of telecommunications system
     software and products. For the fiscal year ended September 30, 1997, Lucent
     Technologies, a public company traded on the New York Stock Exchange,
     reported net income of approximately $541 million dollars on revenues in
     excess of $26 billion dollars. As of March 31, 1998, Lucent Technologies
     had total assets of in excess of $24 billion dollars and a net worth of in
     excess of $5 billion dollars.

            The initial term of the Lucent Lease is ten years which commenced on
     January 5, 1998 (the "Rental Commencement Date"). Lucent Technologies has
     the option to extend the initial term of the Lucent Lease for two
     additional five year periods. Each extension option must be exercised by
     giving written notice to the landlord at least twelve months prior to the
     expiration date of the then current lease term.

            The annual base rent payable under the Lucent Lease will be $508,383
     payable in equal monthly installments of $42,365 during the first five
     years of the initial lease term, and $594,152 payable in equal monthly
     installments of $49,513 during the second five years of the initial lease
     term. The annual base rent for each extended term under the lease will be
     based upon the fair market rent then being charged by landlords under new
     leases of office space in the metropolitan Oklahoma City market for similar
     space in a building of comparable quality with comparable amenities. The
     Lucent Lease provides that if the parties cannot agree upon the appropriate
     fair market value rate, the rate will be established by real estate
     appraisers.

            Under the Lucent Lease, the Joint Venture, as landlord, is
     responsible for (a) all maintenance, repairs and replacements to the
     structural components of the Lucent Building, including without limitation,
     the roof, exterior walls, bearing walls, support beams, foundations,
     columns, exterior doors, windows, skylights and lateral support, and (b)
     for the portion of the Lucent Lease term ending on the first anniversary of
     the Rental Commencement Date, all maintenance, repairs and replacements to
     the parking area surrounding the Lucent Building including lighting systems
     for the parking area. Under the Lucent Lease, Lucent Technologies is
     responsible for the payment of all property taxes, operating expenses and
     other repair and maintenance work relating to the Lucent Building. Lucent
     Technologies is also required to reimburse the landlord the cost of
     casualty insurance for the property.

            The landlord is responsible for a construction allowance of $857,790
     (calculated at the rate of $15 per rentable square foot), which was funded
     by Wells Development prior to the sale of the Lucent Building to the Joint
     Venture and is included as a portion of the purchase price paid for the
     Lucent Building.

                                       7

<PAGE>
 
            Under the Lucent Lease, Lucent Technologies also has a one-time
     option to terminate the Lucent Lease on the seventh (7th) anniversary of
     the Rental Commencement Date, which is exercisable by written notice to the
     landlord at least twelve (12) months in advance of such 7th anniversary. If
     Lucent Technologies elects to exercise its option to terminate the Lucent
     Lease, Lucent Technologies would be required to pay a termination payment
     intended to compensate the landlord for the present value of funds expended
     as construction allowance and leasing commissions relating to the Lucent
     Lease, amortized over and attributable to the remaining lease term, and a
     rental payment equal to approximately eighteen (18) months of monthly
     rental payments. It is currently anticipated that the termination payment
     required to be paid by Lucent Technologies, in the event it exercises its
     option to terminate the Lucent Lease on the 7th anniversary would be
     approximately $1,338,903 based upon certain assumptions.

            In addition, Lucent Technologies has a one-time option under the
     Lucent Lease to reduce the size of its leased premises by 15,000 square
     feet of useable area effective the last day of the month which is the
     second (2nd) anniversary of the Rental Commencement Date. Such option to
     reduce the leased premises is exercisable by providing at least 180 days
     prior written notice to the landlord and paying the landlord a reduction
     payment equal to $750,000 on the effective date of such reduction.

            There are no assurances that the Joint Venture will be able to
     attract or obtain suitable replacement tenants for the Lucent Building upon
     the expiration of the Lucent Lease or upon the 7th anniversary of the
     Lucent Lease if Lucent Technologies elects to exercise its option to
     terminate the Lucent Lease or for the unleased portion of the Lucent
     Building in the event that Lucent Technologies exercises its option to
     reduce the size of its leased premises.

            In connection with the execution of the Lucent Lease, Wells
     Development entered into agreements with each of two real estate brokers,
     one of which is a firm affiliated with ADEVCO Corporation, the developer of
     the Oklahoma City Property, for the payment of commissions in connection
     with services rendered in procuring the Lucent Lease. The commission
     agreements require Wells Development to pay a total of $330,764 in leasing
     commissions, $110,255 of which is payable to said affiliate of the
     developer. One-half of the leasing commissions were paid by Wells
     Development simultaneously with the closing of its acquisition of the
     Oklahoma City Property, with the remainder of the leasing commissions
     funded by Wells Development prior to the sale of the Lucent Building to the
     Joint Venture. The leasing commissions relating to the Lucent Lease were
     included as a portion of the purchase price paid for the Lucent Building by
     the Joint Venture. Neither broker is affiliated with Wells Development,
     Wells Fund IX, Wells Fund X, Wells Fund XI, the Company or any affiliates
     thereof.

            As of June 30, 1998, the Company held a 4.4% ownership interest in
     each of the properties described below as a result of its ownership
     interest in the Joint Venture:

     THE ABB BUILDING

            Description of the Building and the Site. The Joint Venture owns
            ----------------------------------------  
     certain real property located in Knoxville, Tennessee (the "Knoxville
     Property"). The Knoxville Property contains a three-story steel framed
     office building with a reflective insulated glass and brick exterior
     containing approximately 87,000 gross square feet and 83,885 rentable
     square feet (the "ABB Building"). The Knoxville Property was originally
     purchased by Wells Fund IX on December 13, 1996, and was later contributed
     by Wells Fund IX to the Joint Venture on March 26, 1997. Construction of
     the ABB Building was completed in December 1997. The project site is
     approximately 5.622 acres and contains approximately 297 paved parking
     spaces.

            The ABB Building is located in an office park known as Center Point
     Business Park on Pellissippi Parkway just north of the intersection of
     Interstates 40 and 75, in Knox County, Tennessee approximately 10 miles
     west of the Knoxville central business district. The Pellissippi 

<PAGE>
 
     Parkway and the commercial area along the Interstate 40 and 75 corridor
     have evolved recently from a residential suburb into one of the area's
     fastest growing commercial and retail districts.

            The western portion of Knox County in which the Knoxville Property
     is located has experienced the most growth and development in the Knoxville
     metropolitan area during the past 10 years due primarily to available land
     and services. It is anticipated that the Knoxville metropolitan area will
     continue to grow into 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.

            The ABB Lease. On December 10, 1996, Wells Fund IX entered into a
            -------------   
     Lease Agreement (the "ABB Lease") with ABB Flakt, Inc. ("ABB") pursuant to
     which ABB agreed to lease 55,000 rentable square feet of the ABB Building,
     comprising approximately 66% of the rentable square feet of the ABB
     Building. Wells Fund IX assigned its interest in the ABB Lease to the Joint
     Venture on March 26, 1997, simultaneously with the contribution of the
     Knoxville Property to the Joint Venture. The Joint Venture is currently
     negotiating lease terms with a major tenant for lease of the remainder of
     the ABB Building.

            ABB is a Delaware corporation which is principally engaged in the
     business of pollution control engineering and consulting. ABB will use the
     leased area as office space for approximately 220 employees. ABB Asea Brown
     Boveri, Ltd., a Swiss corporation based in Zurich, is the holding company
     of the ABB Asea Brown Boveri Group (the "ABB Group") which is comprised of
     approximately 1,000 companies around the world, including ABB. The ABB
     Group revenue is predominately provided by contracts with utilities and
     independent power producers for the design and engineering, construction,
     manufacture and marketing of products, services and systems in connection
     with the generation, transmission and distribution of electricity. In
     addition, the ABB Group generates a significant portion of its revenues
     from the sale of industrial automation products, systems and services to
     pulp and paper, automotive and other manufacturers. For the fiscal year
     ended December 31, 1997, the ABB Group reported net income of approximately
     $572 million dollars and net worth of approximately $5.2 billion dollars.
     ABB, Inc., the United States parent company of ABB, reported gross revenues
     in 1997 in excess of $4 billion dollars. The ABB Group's total number of
     employees for 1997 was approximately 213,000 worldwide and approximately
     21,000 in the United States.

            As security for ABB's obligations under the Lease, ABB has provided
     to Wells Fund IX (and Wells Fund IX has in turn assigned to the Joint
     Venture), and agreed to maintain in full force and effect at all times
     during the 10 year period from the Rental Commencement Date, an irrevocable
     standby letter of credit in accordance with the terms and conditions set
     forth in the ABB Lease. Each letter of credit issued pursuant to the
     provisions of the ABB Lease is required to be in a form of an irrevocable
     credit, to be issued by an "approved issuer," to name the Joint Venture as
     the beneficiary and to specify that the Joint Venture, as beneficiary, may
     draw against the letter of credit upon the occurrence of a "drawing event."
     "Approved issuer" is defined to require that the letter of credit issuer
     shall have and maintain a Moody's Bank Credit Report Service rating of P-1
     or its equivalent. "Drawing event" is defined to include any failure of ABB
     to pay any installment of rent or other charge or assessment pursuant to
     the terms of the ABB Lease within five days of notice thereof, or any other
     event of default with respect to which the Joint Venture has exercised or
     is exercising its remedies. The letter of credit maintained by ABB is
     required to be in the amount of $4,000,000 until the seventh anniversary of
     the Rental Commencement Date; $3,000,000 from the seventh anniversary of
     the Rental Commencement Date to the eighth anniversary of the Rental
     Commencement Date; $2,000,000 from the eighth anniversary of the Rental
     Commencement Date to the ninth anniversary of the Rental Commencement Date;
     and $1,000,000 from the ninth anniversary of the Rental Commencement Date
     to the tenth anniversary of the Rental Commencement Date. The original
     letter of credit which was delivered by ABB to Wells Fund IX simultaneously
     with the execution of the ABB Lease was issued by Svenska Handelsbanken, a
     Parkway Swedish bank which is the largest bank in the    
 
                                       9

<PAGE>
 
     Nordic region with over $90 billion of assets and a credit rating issued by
     Moody's Bank Credit Report Service of P-1/Aa3, and was issued in the amount
     of $4,000,000 for a one year term. If the Joint Venture draws on the letter
     of credit, the Joint Venture shall apply the proceeds first toward the
     performance of the obligations which ABB has failed to perform under the
     ABB Lease, and the remainder, if any, shall be held by the Joint Venture in
     certain permitted investments as additional security for the performance by
     ABB of the ABB Lease.

            The initial term of the lease is nine years and eleven months which
     commenced on January 1, 1998 (the "Rental Commencement Date").

            The annual base rent payable under the ABB Lease is $646,250 payable
     in equal monthly installments of $53,854 during the first five years of the
     initial lease term, and $728,750 payable in equal monthly installments of
     $60,729 during the last four years and eleven months of the initial lease
     term.

            Under the ABB Lease, ABB is responsible for 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 or by the income of the Joint Venture from operation of the
     ABB Building).

            Under the terms of the ABB Lease, the Joint Venture is responsible
     for a construction allowance of $976,600 (calculated at the rate of $19 per
     useable square foot of the premises). In addition, the Joint Venture has
     agreed to provide ABB on the fifth (5th) anniversary of the Rental
     Commencement Date a redecoration allowance of an amount equal to (i) $5.00
     per square foot of useable area of the premises leased as of the 5th
     anniversary of the Rental Commencement Date which has been leased and
     occupied by ABB for at least three consecutive years ending with such 5th
     anniversary reduced by (ii) $177,000.

            The terms of the ABB Lease provide that ABB has the right of first
     refusal for the lease of any space in the ABB Building not initially leased
     by ABB. In the event that the Joint Venture has secured a potential tenant
     for any of such space, the Joint Venture has agreed to give ABB ten (10)
     business days to exercise its right to add such space to the leased
     premises. The base rent payable and other charges and any allowances shall
     be solely as set forth in the notice to ABB of the proposed terms of the
     lease for the potential tenant of such space. If ABB does not so exercise
     its right of first refusal within such 10 business day period, the Joint
     Venture will have the right to lease the space to the potential tenant,
     except that, after the expiration of any such lease to another party, such
     space will again become subject to ABB's right of first refusal. The ABB
     Lease further provides that the Joint Venture agrees that during the term
     of the ABB Lease, no leases of space with other tenants for any space not
     initially leased by ABB pursuant to the ABB Lease shall have a term in
     excess of three years from the last day of the month in which such third-
     party tenant takes possession of such space.

            ABB has a one-time option to terminate the ABB Lease as of the
     seventh (7th) anniversary of the Rental Commencement Date which is
     exercisable by written notice to the Joint Venture at least twelve (12)
     months in advance of such 7th anniversary. If ABB elects to exercise this
     termination option, ABB is required to pay to the Joint Venture, on or
     before ninety (90) days prior to the 7th anniversary of the Rental
     Commencement Date, a termination payment intended to compensate the Joint
     Venture for the present value of certain sums which the Joint Venture has
     expended in connection with the ABB Lease amortized over and attributable
     to the remaining lease term and a rent payment equal to approximately
     fifteen (15) months of monthly base rental

                                       10

<PAGE>
 
     payments. It is currently anticipated that the termination payment required
     to be paid by ABB in the event it exercises its option to terminate the ABB
     Lease on the 7th anniversary would be approximately $1,818,000 based upon
     certain assumptions.

     THE OHMEDA BUILDING

            Description of the Building and the Site. The Joint Venture owns
            ----------------------------------------- 
     certain real property located in Louisville, Boulder County, Colorado (the
     "Louisville Property"). The Louisville Property contains a two-story office
     building with approximately 106,750 rentable square feet (the "Ohmeda
     Building"). Construction of the Ohmeda Building was completed in January
     1988.

            The Joint Venture purchased the Ohmeda Building on February 13,
     1998, for a purchase price of $10,325,000, plus closing costs of
     approximately $6,644.

            The Ohmeda Building was designed to accommodate the needs of a high-
     technology tenant, and to provide the tenant substantial interior
     flexibility in order to accommodate new product developments, changes in
     electronics manufacturing techniques and the introduction of automated
     material handling systems. The Ohmeda Building is modular re-tan brick with
     flush mortar joints and energy efficient insulated solarban glass set in a
     clear aluminum mullion system. The office area represents approximately 47%
     of the building area, and the non-office area represents approximately 53%.
     The lower level has 17 foot high ceilings and is divided into three areas:
     the production area, the materials and finished goods handling area, and
     the support administration, exercise room and cafeteria area. The cafeteria
     and the exercise room contain a glass curtain wall offering panoramic views
     of the mountains to the west. The upper level on the west side contains
     managerial and financial offices, as well as research and employee amenity
     space.

            The site is approximately five miles southeast of Boulder and
     approximately 17 miles northwest of Denver, situated near Highway 36
     (Centennial Parkway), which is the main thoroughfare between Boulder and
     Denver. The site is a 15 acre tract of land in the Centennial Valley
     Business Park in Louisville, Colorado with scenic views both to and from
     the site. The Louisville Property is situated approximately 100 feet above
     Centennial Parkway with access by a "Z" curve roadway east of the site. All
     of the Ohmeda Building access points, including a glass vestibule entry
     court, are turned away from the strong winds from the west. The parking
     area, which contains approximately 500 parking spaces, is concealed from
     the view of Centennial Parkway and is open to the scenic views of the
     mountains.

            The Ohmeda Lease. The entire 106,750 rentable square feet of the
            ---------------- 
     Ohmeda Building is currently under a net Lease Agreement dated February 26,
     1987, as amended by First Amendment to Lease dated December 3, 1987, and as
     amended by Second Amendment to Lease dated October 20, 1997 (the "Ohmeda
     Lease") with Ohmeda, Inc., a Delaware corporation ("Ohmeda"). The Ohmeda
     Lease currently expires in January 2005, subject to (i) Ohmeda's right to
     effectuate an early termination of the Ohmeda Lease under the terms and
     conditions described below, and (ii) Ohmeda's right to extend the Ohmeda
     Lease for two additional five year periods of time.

            Ohmeda is a medical supply firm based in Boulder, Colorado and is a
     worldwide leader in vascular access and hemodynamic monitoring for hospital
     patients. Ohmeda also has a special products division, which produces
     neonatal and other oxygen care products. Ohmeda recently extended an
     agreement with Hewlett-Packard to include co-marketing and promotion of
     combined Ohmeda/H-P neonatal products.

            Ohmeda was a wholly owned subsidiary of the BOC Group, Inc., a
     Nevada corporation ("BOC"), which is a wholly-owned subsidiary of BOC
     Holdings, whose ultimate parent is The BOC Group PLC, an English
     corporation. On April 3, 1998, BOC sold the division of Ohmeda that
     occupies the Ohmeda Building to Instrumentarium Corporation, a Finnish
     company

<PAGE>
 
     ("Instrumentarium"). The obligations of Ohmeda under the Ohmeda Lease are
     currently guaranteed by both BOC and Instrumentarium. BOC, which is in the
     businesses of gases and related products, vacuum technology and health
     care, reported total consolidated sales of in excess of $2 billion for its
     fiscal year ended September 30, 1997, and a net worth of in excess of $462
     million. Instrumentarium is an international healthcare company
     concentrating on selected fields of medical technology manufacturing,
     marketing and distribution.

            The monthly base rental payable under the Ohmeda Lease is $83,710
     through January 31, 2003; $87,891 from February 1, 2003 through January 31,
     2004; and $92,250 from February 1, 2004 through January 31, 2005. Under the
     Ohmeda Lease, Ohmeda is responsible for all utilities, taxes, insurance and
     other operating costs with respect to the Ohmeda Building during the term
     of the Ohmeda Lease. In addition, Ohmeda shall pay a $21,000 per year
     management fee for maintenance and administrative services of the Ohmeda
     Building. The Joint Venture, as landlord, is responsible for maintenance of
     the roof, exterior and structural walls, foundations, other structural
     members and floor slab, provided that the landlord's obligation to make
     repairs specifically excludes items of cosmetic and routine maintenance
     such as the painting of walls.

            The Ohmeda Lease contains an early termination clause that allows
     Ohmeda the right to terminate the Ohmeda Lease, subject to certain
     conditions, on either January 31, 2001 or January 31, 2002. In order to
     exercise this early termination clause, Ohmeda must give the Joint Venture
     notice on or before 5:00 p.m. MST, January 31, 2000, and said notice must
     identify which early termination date Ohmeda is exercising. If Ohmeda
     exercises its right to terminate on January 31, 2001, then Ohmeda must
     tender $753,388 plus an amount equal to the amount of real property taxes
     estimated to be payable to the landlord in 2002 for the tax year 2001 based
     on the most recent assessment information available on the early
     termination date. If Ohmeda exercises its right to terminate on January 31,
     2002, then Ohmeda must tender $502,259 plus an amount equal to the amount
     of real property taxes estimated to be payable to the landlord in 2003 for
     the tax year 2002 based on the most recent assessment information available
     on the early termination date. At the present time, real property taxes
     relating to this property are approximately $135,500 per year. The payment
     of these amounts by Ohmeda for early termination must be made on or before
     the 180th day prior to the appropriate early termination date. If the
     amount of the real property taxes actually assessed is greater or lesser
     than the amount paid by Ohmeda on the early termination date, then the
     difference shall be adjusted accordingly within thirty (30) days of notice
     of such difference.

            The Ohmeda Lease contains a provision whereby the tenant has the
     option to extend the primary lease term for up to two consecutive five year
     terms at the then current market rental rates.

            In addition, the Ohmeda Lease contains an option to expand the
     premises by an amount of square feet up to a total of 200,000 square feet
     which, if exercised by Ohmeda, will require the Joint Venture to expend
     funds necessary to acquire additional land, if such land is necessary to
     such expansion and available for purchase for said expansion purposes, and
     to construct the expansion space. Ohmeda's option to expand the premises is
     subject to deliverance of at least four (4) months' prior written notice to
     the Joint Venture. During the 4 months subsequent to the notice of Ohmeda's
     intention to expand the premises, Ohmeda and the Joint Venture shall
     negotiate in good faith and enter into an amendment to the Ohmeda Lease for
     the construction and rental of the expansion space. If Ohmeda exercises its
     option to expand the premises, the right to terminate clause described
     above will automatically be canceled, and the primary lease term shall be
     extended for a period of ten (10) years from the date on which a
     certificate of occupancy is issued by the City of Louisville with respect
     to the expansion space. The base rental for the expansion space payable
     under the Ohmeda Lease shall be calculated to generate a rate of return to
     the Joint Venture on its project costs and any retrofit expenses with
     respect to the existing premises incurred by landlord over the new, 10 year
     extended primary lease term, equal to the prime lending rate published by
     Norwest Bank, N.A. on the first day of such extended primary 

<PAGE>
 
     lease term, plus 3.0%, plus full amortization of the tenant finish costs
     with respect to the expansion space and the existing premises. This base
     rental shall be payable through January 31, 2005. The base rental payable
     under the Ohmeda Lease from February 1, 2005 through the remaining balance
     of the new, extended 10 year primary lease term, shall be based on a
     combined rental rate equal to the sum of (i) the base rental payable by
     Ohmeda during lease year number seven for the existing premises, plus (ii)
     the base rent payable by Ohmeda during lease year number seven for the
     expansion space, plus an amount equal to 2% of the combined rental rate.
     Thereafter, the base rent payable for the entire premises shall be the base
     rent payable during the previous lease year plus an amount equal to 2% of
     the base rent payable during such previous lease year.

     THE INTERLOCKEN BUILDING

            Description of the Building and the Site. The Joint Venture owns
            ----------------------------------------  
     certain real property located in Broomfield, Boulder County, Colorado (the
     "Broomfield Property"). The Broomfield Property contains a three-story
     multi-tenant office building with 51,974 rentable square feet (the
     "Interlocken Building"). Construction of the Interlocken Building was
     completed in December 1996.

            The Joint Venture purchased the Interlocken Building on March 20,
     1998, for a purchase price of $8,275,000, plus closing costs of
     approximately $18,000.

            The first floor of the Interlocken Building has multiple tenants and
     contains 15,599 rentable square feet; the second floor is leased to ODS
     Technologies, L.P. ("ODS") and contains 17,146 rentable square feet; and
     the third floor is leased to Transecon, Inc. ("Transecon") and contains
     19,229 rentable square feet.

            The Broomfield Property fronts on Highway 36 (the Boulder-Denver
     Turnpike), which is the main thoroughfare between Boulder and Denver, and
     is located approximately eight miles southeast of Boulder and approximately
     15 miles northwest of Denver. The site is a 5.1 acre tract of land in the
     Interlocken Business Park in Broomfield, Colorado. The Broomfield Property
     contains a parking lot surrounding the entire building with ample parking
     spaces available for tenants and visitors. The Interlocken Business Park is
     a 963-acre business park containing primarily advanced technology and
     research/development oriented companies. The Interlocken Conference Resort,
     which will contain a 430-room hotel, 57,000 square feet of conference space
     and a 27-hole championship golf course, is nearly complete and will border
     the Park's western boundary.

            Description of Leases. As stated above, the entire third floor of
            ---------------------
     the Interlocken Building containing 19,229 rentable square feet (37% of the
     total rentable square feet) is currently under lease to Transecon dated
     June 27, 1996 (the "Transecon Lease"). The Transecon Lease currently
     expires in October 2001, subject to Transecon's right to extend for one
     additional term of five years upon 180 days' notice.

            Transecon is a consumer distributor of environmental friendly
     products, including on-site video and audio production of environmental and
     alternative health videos using state-of-the-art electronics and sound
     stage. Transecon was founded in 1989 and currently employs approximately 60
     people.

            The monthly base rental payable under the Transecon Lease is
     approximately $24,000 for the initial term of the lease, and is calculated
     under the Transecon Lease based upon 18,011 rentable square feet. Under the
     Transecon Lease, Transecon is responsible for its share of utilities,
     taxes, insurance and other operating costs with respect to the Interlocken
     Building during the term of the Transecon Lease. In addition, Transecon has
     a right of first refusal under the lease for any second floor space
     proposed to be leased by the landlord. If Transecon elects to 

                                       13

<PAGE>
 
     extend the lease, the monthly base rental shall be a market rate, but no
     less than $24,000 and no more than $27,700. In accordance with the
     Transecon Lease, Golden Rule, Inc., an affiliate of Transecon, occupies
     6,621 rentable square feet of the third floor. Transecon guarantees the
     entire payment due under the Transecon Lease.

            Transecon also leases 1,510 rentable square feet on the first floor.
     The monthly base rent payable for this space is approximately $2,000
     through January 1999; approximately $2,100 through January 2000;
     approximately $2,150 through January 2001; and approximately $2,200 through
     October 2001.

            The entire second floor of the Interlocken Building containing
     17,146 rentable square feet (33% of total rentable square feet) is
     currently under lease to ODS dated January 14, 1997 (the "ODS Lease"). The
     ODS Lease currently expires in September 2003, subject to ODS's right to
     extend for one additional term of three years upon 180 days' notice.

            ODS provides in-home financial transaction services via telephone
     and television, and it has developed interactive computer-based
     applications for such in-home purchasing. Originally based in Tulsa,
     Oklahoma, ODS has relocated its business to the Interlocken Building.

            The monthly base rental payable under the ODS Lease is approximately
     $22,150 through January 1999; approximately $22,600 through January 2000;
     approximately $23,100 through January 2001; approximately $23,550 through
     January 2002; approximately $24,050 through January 2003; and approximately
     $24,550 through September 2003. The rental payments to be made by the
     tenant under the ODS Lease are also secured by the assignment of a $275,000
     letter of credit which may be drawn upon by the landlord in the event of a
     tenant default under the lease. Under the ODS Lease, ODS is responsible for
     its share of utilities, taxes, insurance and other operating costs with
     respect to the Interlocken Building during the term of the ODS Lease. If
     ODS elects to extend the lease, the monthly base rental shall be a market
     rate as described in the ODS Lease.

            The first floor of the Interlocken Building containing 15,599
     rentable square feet is occupied by several tenants whose leases expire in
     late 2001 or 2002. The aggregate monthly base rental payable under these
     leases for 1998 is approximately $21,250. Each lessee is responsible for
     its share of utilities, taxes, insurance and other operating costs with
     respect to the Interlocken Building during the term of its lease. Most of
     these leases contain a right to extend for one additional five year period
     upon 180 days' notice.

            In the event that Transecon, ODS or any of the first floor tenants
     fail to extend their respective leases, the Joint Venture will be required
     to find one or more new suitable tenants for the Interlocken Building at
     the then prevailing market rental rates.

     PROPERTY MANAGEMENT FEES

            Wells Management Company, Inc. ("Wells Management"), an Affiliate of
     the Company and the Advisor, has been retained to manage and lease all of
     the properties currently owned by the Joint Venture. While the Company and
     Wells Fund XI are authorized to pay aggregate management and leasing fees
     to Wells Management in the amount of 4.5% of gross revenues, Wells Fund IX
     and Wells Fund X are authorized to pay aggregate management and leasing
     fees to Wells Management in the amount of 6% of gross revenues. Since, as
     of June 30, 1998, Wells Fund IX and Wells Fund X held an aggregate 87.8%
     ownership percentage interest in the Joint Venture, while the Company and
     Wells Fund XI held an aggregate 12.2% ownership percentage interest in the
     Joint Venture, 87.8% of the gross revenues of the Joint Venture are subject
     to a 6% property management and leasing fee, while 12.2% of the gross
     revenues of the Joint Venture are subject to a 4.5% property management and
     leasing fee. Wells Management has also received an initial lease fee equal
     to the first month's rent for the ABB Lease and the Lucent Lease. In

                                       14

<PAGE>
 
     addition, Wells Management is entitled to one-time initial lease-up fees
     equal to five percent (5%) of the gross revenues over the initial terms of
     the ABB Lease and the Lucent Lease (not to exceed five years).

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 June 30, 1998, the Company had raised a total of $2,683,595
     in offering proceeds (268,359 Shares). After the payment of $93,926 in
     acquisition and advisory fees and expenses, the payment of $335,449 in
     selling commissions and organizational and offering expenses and the
     payment of $1,421,466 in capital contributions to the Joint Venture, as of
     June 30, 1998, the Company was holding net offering proceeds of $832,754
     available for investment in additional properties.

FINANCIAL STATEMENTS

     The financial statements of Fund IX and X Associates (the Joint Venture)
as of December 31, 1997 and for the period from March 20, 1997 to December 31,
1997 and of the Lucent Building for the three months ended March 31, 1998,
included herein as Appendix I to this Supplement No. 2, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports thereto, and are included herein upon the authority of said firm as
experts in giving said reports. The interim financial information of Fund IX and
X Associates (the Joint Venture) as of March 31, 1998 and for the three month
period ended March 31, 1998, and the pro forma financial information for Wells
Real Estate Investment Trust, Inc. as of December 31, 1997 and for the three
month period ended March 31, 1998, which are included in Appendix I to this
Supplement No. 2, have not been audited.

                                       15

<PAGE>
 
                                                                      APPENDIX I

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
 
                                                                              Page
                                                                              ----
<S>                                                                           <C>
 
FUND IX AND X ASSOCIATES
   Financial Statements
      Report of Independent Public Accountants                                 I-1
      Balance Sheets as of March 31, 1998 (Unaudited) and
      December 31, 1997 (Audited)                                              I-2
      Statements of Income (Loss) for the three months ended March 31,
      1998 (Unaudited) and the Period from Inception (March 20, 1997)
      to December 31, 1997 (Audited)                                           I-3
      Statements of Partners' Capital for the three months ended March 31,
      1998 (Unaudited) and the Period from Inception (March 20, 1997)
      to December 31, 1997 (Audited)                                           I-4
      Statements of Cash Flows for the three months ended March 31, 1998
      (Unaudited) and the Period from Inception (March 20, 1997) to
      December 31, 1997 (Audited)                                              I-5
      Notes to Financial Statements                                            I-6
 
LUCENT BUILDING
   Audited Financial Statements
      Report of Independent Public Accountants                                I-10
      Statement of Revenues Over Operating Expenses for the three months
      ended March 31, 1998                                                    I-11
      Notes to Statement of Revenues Over Operating Expenses for the three

      months ended March 31, 1998                                             I-12
 
WELLS REAL ESTATE INVESTMENT TRUST, INC.
   Unaudited Pro Forma Financial Statements
      Summary of Unaudited Pro Forma Financial Statements                     I-13
      Pro Forma Balance Sheet as of March 31, 1998                            I-14
      Pro Forma Statement of Loss for the year ended December
      31, 1997                                                                I-15
      Pro Forma Statement of Income for the three months ended
      March 31, 1998                                                          I-16
 
</TABLE>



<PAGE>
 

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Fund IX and X Associates:

We have audited the accompanying balance sheet of FUND IX AND X ASSOCIATES (a
Georgia Joint Venture) as of December 31, 1997 and the related statements of
loss, partners' capital, and cash flows for the period from inception (March 20,
1997) to December 31, 1997.  These financial statements are the responsibility
of the Joint Venture's management.  Our responsibility is to express an opinion
on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fund IX and X Associates as of
December 31, 1997 and the results of its operations and its cash flows for the
period from inception (March 20, 1997) to December 31, 1997 in conformity with
generally accepted accounting principles.


/s/ Arthur Andersen LLP


Atlanta, Georgia
January 9, 1998


                                      I-1

<PAGE>
 
                            FUND IX AND X ASSOCIATES

                           (A GEORGIA JOINT VENTURE)


                                 BALANCE SHEETS

                      MARCH 31, 1998 AND DECEMBER 31, 1997



                                     ASSETS


<TABLE>
<CAPTION>
                                                                            1998             1997       
                                                                       -------------    -------------   
                                                                       (UNAUDITED)                      
<S>                                                                    <C>              <C>             
REAL ESTATE ASSETS, AT COST:                                                                            
  Land                                                                 $  5,004,893     $     607,930   
  Building and improvements, less accumulated                                                           
   depreciation of $205,915 in 1998 and $36,863 in 1997                  22,005,710         6,445,300   
  Construction in progress                                                    6,498            35,622   
                                                                       -------------    --------------  
         Total real estate assets                                        27,017,101         7,088,852   
                                                                                                        
CASH AND CASH EQUIVALENTS                                                   390,276           289,171   
                                                                                                        
ACCOUNTS RECEIVABLE                                                         150,402            40,512   
                                                                                                        
PREPAID EXPENSES AND OTHER ASSETS                                           383,399           329,310   
                                                                       -------------    --------------  
        Total assets                                                   $ 27,941,178     $   7,747,845   
                                                                       =============    ==============  
                                                                                                         
                                                                                                        
                       LIABILITIES AND PARTNERS' CAPITAL                           
                                                                                                        
                                                                                                        
LIABILITIES:                                                                                            
  Accounts payable                                                     $    385,072     $     379,770   
  Due to affiliates                                                           2,281             2,479   
                                                                       -------------    --------------  
         Total liabilities                                                  387,353           382,249   
                                                                       -------------    --------------  
                                                                                                        
PARTNERS' CAPITAL:                                                                                      
  Wells Real Estate Fund IX                                              14,569,085         3,702,793   
  Wells Real Estate Fund X                                               12,984,740         3,662,803   
                                                                       -------------    --------------  
       Total partners' capital                                           27,553,825         7,365,596   
                                                                       -------------    --------------  
       Total liabilities and partners' capital                         $ 27,941,178     $   7,747,845   
                                                                       =============    ==============   
</TABLE>


      The accompanying notes are an integral part of these balance sheets.

                                      I-2

<PAGE>
 
                            FUND IX AND X ASSOCIATES

                           (A GEORGIA JOINT VENTURE)


                          STATEMENTS OF INCOME (LOSS)

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998

                AND THE PERIOD FROM INCEPTION (MARCH 20, 1997)

                             TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                             1998            1997
                                                                         ------------    ----------- 
                                                                          (UNAUDITED)
<S>                                                                      <C>             <C>
REVENUES:
  Rental income                                                          $   351,203     $   28,512
                                                                         ------------    ----------- 
EXPENSES:
  Depreciation and amortization                                              178,881         36,863  
  Management and leasing fees                                                 22,838          1,711  
  Operating costs, net of reimbursements                                      24,052         10,118  
  Property administration                                                      5,632              0  
                                                                         ------------    ----------- 
                                                                             231,403         48,692
                                                                         ------------    -----------
NET INCOME (LOSS)                                                        $   119,800     $  (20,180)
                                                                         ============    ===========

NET INCOME (LOSS) ALLOCATED TO WELLS REAL ESTATE FUND IX                 $    57,858     $  (10,145)
                                                                         ============    ===========              

NET INCOME (LOSS) ALLOCATED TO WELLS REAL ESTATE FUND X                  $    61,942     $  (10,035)
                                                                         ============    ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      I-3

<PAGE>
 
                            FUND IX AND X ASSOCIATES

                           (A GEORGIA JOINT VENTURE)


                        STATEMENTS OF PARTNERS' CAPITAL

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998

                AND THE PERIOD FROM INCEPTION (MARCH 20, 1997)

                             TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                      WELLS REAL            WELLS REAL             TOTAL    
                                                        ESTATE                ESTATE             PARTNERS'  
                                                        FUND IX               FUND X              CAPITAL    
                                                   -----------------    ------------------  ------------------- 
<S>                                                <C>                  <C>                 <C>
BALANCE, DECEMBER 31, 1996                          $             0      $              0     $              0
 
  Net loss                                                  (10,145)              (10,035)             (20,180)
  Partnership contributions                               3,712,938             3,672,838            7,385,776  
                                                   -----------------    ------------------  ------------------- 
BALANCE, DECEMBER 31, 1997                                3,702,793             3,662,803            7,365,596  
                                                                                                                
  Partnership distributions                                (100,863)             (101,419)            (202,282) 
  Net income                                                 57,858                61,942              119,800  
  Partnership contributions                              10,909,297             9,361,414           20,270,711   
                                                   -----------------    ------------------  -------------------  
BALANCE, MARCH 31, 1998 (UNAUDITED)                 $    14,569,085      $     12,984,740     $     27,553,825
                                                   =================    ==================  ===================
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      I-4

<PAGE>
 
                            FUND IX AND X ASSOCIATES

                           (A GEORGIA JOINT VENTURE)


                           STATEMENTS OF CASH FLOWS

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998

                 AND THE PERIOD FROM INCEPTION (MARCH 20, 1997)

                             TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                                         1998                 1997      
                                                                                     -------------       -------------  
                                                                                     (UNAUDITED)                         
<S>                                                                                  <C>                 <C>            
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                    
  Net income (loss)                                                                  $    119,800        $     (20,180)  
                                                                                     -------------       -------------   
  Adjustments to reconcile net income (loss) to net cash provided by operating                                           
    activities:                                                                                                          
     Depreciation                                                                         178,881               36,863   
     Changes in assets and liabilities:                                                                                  
       Accounts receivable                                                               (109,890)             (40,512)  
       Prepaid expenses and other assets                                                  (54,089)            (329,310)  
       Accounts payable                                                                     5,302              379,770   
       Due to affiliates                                                                     (198)               2,479   
                                                                                     ------------        -------------   
        Total adjustments                                                                  20,006               49,290   
                                                                                     ------------        -------------   
        Net cash provided by operating activities                                         139,806               29,110  
                                                                                     ============        =============  
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                   
 Investment in real estate from partners                                              (19,123,419)          (5,715,847) 
                                                                                     ------------        -------------  
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                   
 Distributions to joint venture partners                                                 (202,282)                   0  
 Contributions received from partners                                                  19,287,000            5,975,908  
                                                                                     ------------        -------------  
       Net cash provided by financing activities                                       19,084,718                       
                                                                                     ------------        -------------  
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 101,105              289,171  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                            289,171                    0  
                                                                                     ------------        -------------  
CASH AND CASH EQUIVALENTS, END OF PERIOD                                             $    390,276        $     289,171  
                                                                                     ============        =============  
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:                                                                          
  Deferred project costs applied by partners, net of deferred project costs                                             
    transferred                                                                      $    983,711        $     318,981  
                                                                                     ============        =============  
                                                                                                                        
  Contribution of real estate assets                                                 $          0        $   1,090,887  
                                                                                     ============        =============   
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      I-5

<PAGE>
 
                            FUND IX AND X ASSOCIATES

                           (A GEORGIA JOINT VENTURE)


                         NOTES TO FINANCIAL STATEMENTS

                      MARCH 31, 1998 AND DECEMBER 31, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   ORGANIZATION AND BUSINESS

   On March 20, 1997, Fund IX and X Associates (a joint venture between Wells
   Real Estate Fund IX, L.P. ("Fund IX") and Wells Real Estate Fund X, L.P.
   ("Fund X") was formed to acquire, develop, operate, and sell real properties.
   On March 20, 1997, Fund IX contributed a 5.62-acre tract of real property in
   Knoxville, Tennessee, and improvements thereon, known as the ABB Property, to
   Fund IX and X Associates (the "Joint Venture").  A 83,885-square-foot, three-
   story office building was constructed and commenced operations at the end of
   1997.

   CASH AND CASH EQUIVALENTS

   For the purposes of the statements of cash flows, the Joint Venture considers
   all highly liquid investments purchased with an original maturity of three
   months or less to be cash equivalents.  Cash equivalents include cash and
   short-term investments.  Short-term investments are stated at cost, which
   approximates fair value, and consist of investments in money market accounts.

   USE OF ESTIMATES AND FACTORS AFFECTING THE PARTNERSHIP

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the reported amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the financial statements and
   the reported amounts of revenues and expenses during the reporting period.
   Actual results could differ from those estimates.

   The carrying values of the real estate assets are based on management's
   current intent to hold the real estate assets as long-term investments.  The
   success of the Joint Venture's future operations and the ability to realize
   the investment in its assets will be dependent on the Joint Venture's ability
   to maintain an appropriate level of rental rates, occupancy, and operating
   expenses in future years.  Management believes that the steps it is taking
   will enable the Joint Venture to realize its investment in its assets.

                                      I-6

<PAGE>
 
   INCOME TAXES

   The Joint Venture is not subject to federal or state income taxes, and
   therefore, none have been provided for in the accompanying financial
   statements.  The partners of Fund IX and Fund X are required to include their
   respective shares of profits and losses in their individual income tax
   returns.

   REAL ESTATE ASSETS

   Real estate assets held by the Joint Venture are stated at cost less
   accumulated depreciation.  Major improvements and betterments are capitalized
   when they extend the useful life of the related asset.  All ordinary repairs
   and maintenance are expensed as incurred.

   Management continually monitors events and changes in circumstances which
   could indicate that the carrying amounts of real estate assets may not be
   recoverable. When events or changes in circumstances are present that
   indicate the carrying amounts of real estate assets may not be recoverable,
   management assesses the recoverability of real estate assets under Statement
   of Financial Accounting Standards No. 121, "Accounting for the Impairment of
   Long-Lived Assets and for Long-Lived Assets to Be Disposed of," by
   determining whether the carrying value of such real estate assets will be
   recovered through the future cash flows expected from the use of the asset
   and its eventual disposition. Management believes that there has been no
   impairment in the carrying value of real estate assets held by the Joint
   Venture.

   Depreciation of buildings and land improvements is calculated using the
   straight-line method over 25 years.  Tenant improvements are amortized over
   the life of the related lease or the life of the asset, whichever is shorter.

   REVENUE RECOGNITION

   All leases on real estate assets held by the Joint Venture are classified as
   operating leases, and the related rental income is recognized on a straight-
   line basis over the terms of the respective leases.

   PARTNERS' DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS

   Cash available for distribution and allocations of profit and loss to Fund IX
   and Fund X by the Joint Venture are made in accordance with the terms of the
   joint venture agreement.  Generally, these items are allocated in proportion
   to the partners' respective ownership interests.  Cash distributions are
   generally paid by the Joint Venture to Fund IX and Fund X quarterly.

   DEFERRED LEASE ACQUISITION COSTS

   Costs incurred to procure operating leases are capitalized and amortized on a
   straight-line basis over the terms of the related leases.

                                      I-7

<PAGE>
 
2. DEFERRED PROJECT COSTS

   The Wells Real Estate Funds pay a percentage of limited partner contributions
   to Wells Capital, Inc., an affiliate of the Joint Venture, for acquisition
   and advisory services. These payments, as stipulated by the partnership
   agreement, can be up to 5% of the limited partner contributions, subject to
   certain overall limitations contained in the partnership agreement. These
   fees are allocated to specific properties as they are purchased or developed
   and are included in capitalized assets of the Joint Venture.

3. FUTURE MINIMUM RENTAL INCOME

   The future minimum rental income due Fund IX and X Associates under
   noncancelable operating leases at December 31, 1997 is as follows:

          Year ending December 31:

            1998                               $  646,250
            1999                                  646,250
            2000                                  646,250
            2001                                  646,250
            2002                                  646,250
          Thereafter                            3,583,021
                                               -----------                      
                                               $6,814,271
                                               ===========
 
4. COMMITMENTS AND CONTINGENCIES

   Management, after consultation with legal counsel, is not aware of any
   significant litigation or claims against the Joint Venture or its partners.
   In the normal course of business, the Joint Venture or its partners may
   become subject to such litigation or claims.

5. SUBSEQUENT EVENTS (UNAUDITED)

   On February 13, 1998, the Joint Venture acquired a two-story office building,
   the Ohmeda Building, a 106,750-square-foot office building located in
   Louisville, Colorado, for a cash purchase price of $10,325,000 plus
   acquisition expenses of $6,644.  The building is 100% occupied by one tenant
   with an original lease term of ten years that commenced February 1, 1988.
   The lease term was extended for an additional seven years commencing February
   1, 1998.

   On March 20, 1998, the Joint Venture acquired the Interlocken Building, a
   51,974-square-foot three-story multitenant office building located in
   Broomfield, Colorado, for a cash purchase price of $8,275,000 plus
   acquisition expenses of $18,000.

   On June 11, 1998, Wells Operating Partnership, L.P. (of which Wells Real
   Estate Investment Trust, Inc. is the sole general partner) and Wells Real
   Estate Fund XI, L.P. were admitted to the Joint Venture.  The Joint Venture
   agreement was restated and amended as such and was renamed the Fund IX, Fund
   X, Fund XI, and REIT Joint Venture.

                                      I-8

<PAGE>
 
   On June 24, 1998, Fund IX, Fund X, Fund XI, and REIT Joint Venture acquired
   the Lucent Building, a one-story office building, from Wells Development
   Corporation, an affiliate of the Joint Venture, for a cash purchase price of
   $5,504,276 which equaled the book value of the building.  The building is
   100% occupied by one tenant with an original lease term of ten years that
   commenced January 1, 1998.

                                      I-9

<PAGE>
 
 
                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Wells Real Estate Fund IX, L.P.,
Wells Real Estate Fund X, L.P.,
Wells Real Estate Fund XI, L.P., and
Wells Real Estate Investment Trust, Inc.:

We have audited the accompanying statement of revenues over operating expenses
for the LUCENT BUILDING for the three months ended March 31, 1998.  This
financial statement is the responsibility of management.  Our responsibility is
to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues over operating expenses is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues
over operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Lucent
Building after acquisition by Wells Real Estate Fund IX, L.P., Wells Real Estate
Fund X, L.P., Wells Real Estate Fund XI, L.P., and Wells Real Estate Investment
Trust, Inc.  The accompanying statement of revenues over operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Lucent Building's revenues and expenses.

In our opinion, the statement of revenues over operating expenses presents
fairly, in all material respects, the revenues over operating expenses
(exclusive of expenses described in Note 2) of the Lucent Building for the three
months ended March 31, 1998 in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Atlanta, Georgia
June 30, 1998


                                     I-10

<PAGE>
 
                                LUCENT BUILDING


                          STATEMENT OF REVENUES OVER

                              OPERATING EXPENSES

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998




REVENUES:                                                  
  Rental revenue                                       $137,817

OPERATING EXPENSES                                          675
                                                       --------
REVENUES OVER OPERATING EXPENSES                       $137,142
                                                       --------  



         The accompanying notes are an integral part of this statement.

                                     I-11

<PAGE>
 
                                LUCENT BUILDING


                      NOTES TO STATEMENT OF REVENUES OVER

                              OPERATING EXPENSES

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

   DESCRIPTION OF REAL ESTATE PROPERTY ACQUIRED

   On June 24, 1998, Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X,
   L.P., Wells Real Estate Fund XI, L.P., and Wells Real Estate Investment
   Trust, Inc., through Fund IX, Fund X, Fund XI, and REIT Joint Venture (a
   Georgia joint venture), acquired the Lucent Building, a 57,186-square-foot
   one-story office building located in Oklahoma City, Oklahoma, for a cash
   purchase price of $5,504,276.  The building is 100% occupied by one tenant
   with an original lease term of 10 years that commenced January 1, 1998.  The
   lease is a triple net lease, whereby the terms require the tenant to pay all
   operating expenses relating to the building.

   RENTAL REVENUES

   Rental income from the lease is recognized on a straight-line basis over the
   life of the lease.

2. BASIS OF ACCOUNTING

   The accompanying statement of revenues over operating expenses are presented
   on the accrual basis.  This statement has been prepared in accordance with
   the applicable rules and regulations of the Securities and Exchange
   Commission for real estate properties acquired.  Accordingly, the statement
   excludes certain historical expenses, such as depreciation, interest, and
   management fees, not comparable to the operations of the Lucent Building
   after acquisition by Wells Real Estate Fund IX, L.P., Wells Real Estate Fund
   X, L.P, Wells Real Estate Fund XI, L.P., and Wells Real Estate Investment
   Trust, Inc.

                                     I-12

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

                  (UNAUDITED PRO FORMA FINANCIAL STATEMENTS)

The following unaudited pro forma balance sheet as of March 31, 1998 and the pro
forma statements of (loss) income for the year ended December 31, 1997 and three
months ended March 31, 1998 have been prepared to give effect to the following
transactions as if each occurred as of March 31, 1998 with respect to the
balance sheet and on January 1, 1997 with respect to the statements of
(loss)income :  (i) Wells Real Estate Investment Trust, Inc.'s acquisition of an
interest in Fund IX, Fund X, Fund XI, and REIT Joint Venture (formerly Fund IX-
Fund X Associates) and (ii) the Fund IX, Fund X, Fund XI, and REIT Joint
Venture's acquisition of the Lucent Building which commenced operations in
January 1998.

These unaudited pro forma financial statements are prepared for informational
purposes only and are not necessarily indicative of future results or of actual
results that would have been achieved had the acquisition been consummated at
the beginning of the period presented.

The pro forma financial statements are based on available information and
certain assumptions that management believes are reasonable.  Final adjustments
may differ from the pro forma adjustments herein.

                                     I-13

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

                            PRO FORMA BALANCE SHEET

                                MARCH 31, 1998

                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              WELLS
                                                                           REAL ESTATE
                                                                           INVESTMENT       PRO FORMA         PRO FORMA
                                                                           TRUST, INC.     ADJUSTMENTS          TOTAL
                                                                           -----------     -----------        ---------
<S>                                                                        <C>             <C>                <C>
ASSETS:
  Investment in joint venture                                              $         0     $1,480,741 (a)     $1,480,741
  Cash                                                                         317,378       (317,378)(b)              0
  Deferred project costs                                                         4,072         (4,072)(c)              0
  Deferred offering costs                                                      461,108              0            461,108
  Accounts receivable                                                               18              0                 18
                                                                           -----------     -----------------  ----------
        Total assets                                                       $   782,576     $1,159,291         $1,941,867
                                                                           ===========     =================  ==========
LIABILITIES:
  Sales commission payable                                                 $    11,053     $        0         $   11,053
  Due to affiliate                                                             468,718      1,159,291 (b)(c)   1,628,009
                                                                           -----------     -----------------  ----------
        Total liabilities                                                      479,771      1,159,291          1,639,062
                                                                           ===========     =================  ========== 
MINORITY INTEREST OF UNIT HOLDER IN OPERATING PARTNERSHIP                      200,000              0            200,000
                                                                           -----------     -----------------  ----------
SHAREHOLDERS' EQUITY:
  Common shares, $.01 par value; 40,000,000 shares authorized, 11,735
   shares issued and outstanding                                                   117              0                117
  Additional paid-in capital                                                   102,688              0            102,688
                                                                           -----------     -----------------  ----------
        Total shareholder's equity                                             102,805              0            102,805
                                                                           -----------     -----------------  ----------
        Total liabilities and shareholder's equity                         $   782,576     $1,159,291         $1,941,867
                                                                           ===========     =================  ==========  
</TABLE>


          (a)   Reflects Wells Real Estate Investment Trust, Inc.'s contribution
                to Fund IX, Fund X, Fund XI, and REIT Joint Venture.

          (b)   Reflects Wells Real Estate Investment Trust, Inc.'s portion of
                the $5,504,276 purchase price related to the Lucent Building.

          (c)   Reflects the deferred project costs allocated to the Fund IX,
                Fund X, Fund XI, and REIT Joint Venture.

                                     I-14

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.


                          PRO FORMA STATEMENT OF LOSS

                     FOR THE YEAR ENDED DECEMBER 31, 1997

                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                  WELLS
                                                               REAL ESTATE
                                                               INVESTMENT            PRO FORMA             PRO FORMA
                                                               TRUST, INC.           ADJUSTMENT              TOTAL
                                                            ----------------      -----------------     ---------------
<S>                                                         <C>                   <C>                   <C>
REVENUES:
  Equity in loss of joint venture                              $   0              $  (888)(a)           $   (888)
                                                            ----------------      -----------------     ---------------
NET LOSS                                                       $   0              $  (888)              $   (888)
                                                            ================      =================     ===============
EARNINGS PER SHARE (BASIC AND DILUTED)                         $0.00              $  (8.88)             $   (8.88)
                                                            ================      =================     ===============
</TABLE>


   (a)    Reflects Wells Real Estate Investment Trust, Inc.'s 4.4% equity in
          earnings of the Fund IX, Fund X, Fund XI, and REIT Joint Venture.

                                     I-15

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.


                         PRO FORMA STATEMENT OF INCOME

                   FOR THE THREE MONTHS ENDED MARCH 31, 1998

                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                   WELLS
                                                                REAL ESTATE
                                                                INVESTMENT            PRO FORMA           PRO FORMA
                                                                TRUST, INC.          ADJUSTMENT             TOTAL
                                                             ----------------   -----------------     ----------------   
<S>                                                          <C>                <C>                   <C>
REVENUES:
  Equity in income of joint ventures                            $   0              $9,282(a)               $9,282
                                                             ----------------   -----------------     ----------------   
NET INCOME                                                      $   0              $9,282                  $9,282
                                                             ================   =================     ================ 
EARNINGS PER SHARE (BASIC AND DILUTED)                          $0.00              $ 0.79                  $ 0.79
                                                             ================   =================     ================ 
</TABLE>




     (a)  Reflects Wells Real Estate Investment Trust, Inc.'s 4.4% equity in
          earnings of the Fund IX, Fund X, Fund XI, and REIT Joint Venture,
          including the Lucent Building on a pro forma basis.

                                     I-16

<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

            SUPPLEMENT NO. 3 DATED AUGUST 12, 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 and
Supplement No. 2 dated June 30, 1998 (collectively, the "Prospectus"). Unless
otherwise defined herein, capitalized terms used in this Supplement shall have
the same meanings as set forth in the Prospectus.

      The purpose of this Supplement is to describe the following:

      (i) The status of the offering of shares of common stock (the "Shares") in
Wells Real Estate Investment Trust, Inc. (the "Company");

      (ii) The contribution of the Iomega Building located in Ogden, Weber
County, Utah by Wells Real Estate Fund X, L.P. ("Wells Fund X") to the Fund IX,
Fund X, Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint Venture");

      (iii) The Joint Venture Agreements entered into between Wells Operating
Partnership, L.P. ("Wells OP") and Wells Development Corporation ("Wells
Development");

      (iv) The Joint Venture between Wells Real Estate Fund XI, L.P. ("Wells
Fund XI") and Wells Fund X (the "Fund X-XI Joint Venture") and the contracts
between the Fund X-XI Joint Venture and Wells Development;

      (v) The acquisition of the Fairchild Building located in Fremont, Alameda
County, California;

      (vi) The acquisition of the Cort Furniture Building located in Fountain
Valley, Orange County, California;

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

      (viii) Inclusion of Audited and Pro Forma Financial Statements as
described in the "Financial Statements" section of this Supplement.

Status of the Offering

      Pursuant to the Prospectus, the offering of Shares in the Company
commenced on January 30, 1998. 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 August 10, 1998, the Company had raised a total of
$5,739,061 in offering proceeds (573,906 Shares).

The Iomega Building

      Contribution of the Iomega Building. On July 1, 1998, Wells Fund X
contributed a single-story warehouse and office building with 108,000 rentable
square feet (the "Iomega Building") to the IX-X-XI-REIT Joint Venture as a
capital contribution. Wells Fund X was credited with making a capital
contribution to the IX-X-XI-REIT Joint Venture in the amount of $5,050,425,
which represents the purchase price of $5,025,000 plus $25,425 in closing costs
originally paid by Wells Fund X for the Iomega Building on April 1, 1998.

<PAGE>
 
      As of August 1, 1998, Wells Fund X had made total capital contributions to
the IX-X-XI-REIT Joint Venture of $18,410,965 and held an equity percentage
interest in the IX-X-XI-REIT Joint Venture of 49.9%; Wells Real Estate Fund IX,
L.P. had made total capital contributions to the IX-X-XI-REIT Joint Venture of
$14,571,686 and held an equity percentage interest in the IX-X-XI-REIT Joint
Venture of 39.5%; Wells Fund XI had made total capital contributions to the
IX-X-XI-REIT Joint Venture of $2,482,810 and held an equity percentage interest
in the IX-X-XI-REIT Joint Venture of 6.7%; and Wells OP had made total capital
contributions to the IX-X-XI-REIT Joint Venture of $1,421,466 and held an equity
percentage interest in the IX-X-XI-REIT Joint Venture of 3.9%.

      Description of the Building and Site. The exterior of the Iomega Building
is constructed of concrete tilt-up wall panels approximately 23 feet in height
in the warehouse area with windows along the west and north sides of the
building. The office portion of the Iomega Building on the north side is
constructed of masonry block. Construction of the Iomega Building was completed
in 1989. In 1997, the current tenant, Iomega Corporation, completed construction
of a 16,000 square foot two-level office space addition inside the warehouse
area on the west side of the Iomega Building. The Iomega Building contains an
asphaltic concrete paved parking lot with 286 parking spaces. A railroad spur
provides access to two rail docks on the east side of the Iomega Building.
Access to the Iomega Building is controlled by on-site security guards. The
IX-X-XI-REIT Joint Venture has no current plans to further develop, improve or
renovate the Iomega Building.

      The Iomega Building is located at 2976 South Commerce Way in the Ogden
Commercial and Industrial Park (the "Ogden Commercial Park") in Ogden City,
Utah. The site is an 8.03 acre tract of land located in an area containing
primarily light manufacturing and warehousing buildings. The Iomega Building is
one of the largest and most modern warehouse and office buildings in the Ogden
Commercial Park. Although the Ogden Commercial Park is a well established
industrial park, there are vacant land parcels immediately adjacent to the
Iomega Building on the north, west and south sides.

      The Ogden Commercial Park is located one mile north of Roy City, one mile
northwest of Riverdale City and three miles southwest of the Ogden central
business district. Interstate 15, a major north-south freeway through the state,
and Interstate 84, a major east-west freeway through Weber County, are within
one mile of the site.

      Description of Iomega Lease. The entire Iomega Building is currently under
a net Lease Agreement dated April 9, 1996 (the "Iomega Lease") with Iomega
Corporation ("Iomega"). Wells Fund X assigned its rights under the Iomega Lease
to the IX-X-XI REIT Joint Venture in connection with the contribution of the
Iomega Building on July 1, 1998. The Iomega Lease has a ten year lease term
which commenced on August 1, 1996 and expires on July 31, 2006. The Iomega Lease
contains no extension provisions. Iomega's world headquarters are located within
one mile of the Iomega Building. In the event that Iomega vacates the Iomega
Building at the expiration of its current lease term, the IX-X-XI-REIT Joint
Venture would be required to find one or more new suitable tenants for the
Iomega Building at the then prevailing market rental rates.

      Iomega, a New York Stock Exchange company, is a manufacturer of computer
storage devices used by individuals, businesses, government and educational
institutions, including "Zip" drives and disks, "Jaz" one gigabyte drives and
disks, and tape backup drives and cartridges. Iomega reported total sales of in
excess of $1.7 billion, net income of in excess of $115 million and a net worth
of in excess of $400 million for its fiscal year ended December 31, 1997.

      The monthly base rent payable under the Iomega Lease is $40,000 through
November 12, 1999. Beginning on the 40th and 80th months of the lease term, the
monthly base rent payable under the Iomega Lease will be increased to reflect an
amount equal to 100% of the increase in the Consumer Price Index (as defined in
the Iomega Lease) during the preceding 40 months; provided however, that in no
event shall the base rent be increased with respect to any one year by more than
6% or by less than 3% per annum, compounded annually, on a cumulative basis from
the beginning of the lease term. Under the Iomega Lease, Iomega is responsible
for all utilities, taxes, insurance and other operating costs with respect to
the Iomega Building during the term of the lease. The estimated annual real
estate taxes on the Iomega Building are $63,390. The Joint Venture, as landlord,
is responsible for


                                      -2-

<PAGE>
 
maintenance of the structural soundness of the roof, foundation and exterior
walls of the Iomega Building, reasonable wear and tear and uninsured losses and
damages caused by Iomega excluded.

      Iomega has used all of its $500,000 tenant improvement allowance provided
under the Iomega Lease for the construction of the 16,000 square foot two-level
office space addition described above and the addition of an additional parking
lot outside the south entrance of the Iomega Building.

      Under the terms of the Iomega Lease, the IX-X-XI-REIT Joint Venture is
responsible for carrying and maintaining all risk liability insurance covering
the full replacement cost of the Iomega Building. Iomega is responsible for
carrying and maintaining all risk property insurance covering the full
replacement cost of all property and improvements installed or placed on the
premises by Iomega; worker's compensation insurance with no less than the
minimum limits required by law; employer's liability insurance with such limits
as required by law; and commercial liability insurance, with a minimum limit of
$1,000,000 per occurrence and a minimum umbrella limit of $1,000,000, for a
total minimum combined general liability and umbrella limit of $2,000,000 for
property damage, personal injuries or deaths occurring in or about the premises.
The cost of the insurance paid by the landlord is billed on a monthly basis to
the tenant at a rate of $334. Management believes that the Iomega Building is
adequately insured against loss for property damage, personal injury and deaths
of persons in or about the premises.

The Joint Ventures

      The Fremont Joint Venture. In July 1998, Wells OP entered into a Joint
Venture Agreement known as Wells/Fremont Associates (the "Fremont Joint
Venture") with Wells Development. The purpose of the Fremont Joint Venture is
the acquisition, ownership, leasing, operation, sale and management of real
properties, including, but not limited to, that certain office building
containing 58,424 rentable square feet located in Fremont, Alameda County,
California (the "Fairchild Building").

      Wells Development had previously entered into that certain Agreement for
the Purchase and Sale of Property dated June 8, 1998 with Rose Ventures V, Inc.,
a California corporation, and Thomas G. Haury and Carleen S. Haury to acquire
the Fairchild Building (the "Fairchild Contract"). Prior to the closing of the
Fairchild Building, Wells Development assigned its rights to the Fairchild
Contract to the Fremont Joint Venture, and on July 21, 1998, the Fremont Joint
Venture acquired the Fairchild Building pursuant to the Fairchild Contract.

      The Cort Joint Venture. In July 1998, Wells OP entered into another Joint
Venture Agreement with Wells Development known as Wells/Orange County Associates
(the "Cort Joint Venture") for the purpose of the acquisition, ownership,
leasing, operation, sale and management of real properties, including, but not
limited to, that certain office building containing 52,000 rentable square feet
located in Fountain Valley, Orange County, California (the "Cort Furniture
Building").

      Wells Development had previously entered into that certain Purchase and
Sale Agreement and Joint Escrow Instructions dated June 12, 1998 with Spencer
Fountain Valley Holdings, Inc., a California corporation ("Spencer"), to acquire
the Cort Furniture Building (the "Cort Contract"). Prior to the closing of the
Cort Furniture Building, Wells Development assigned its rights to the Cort
Contract to the Cort Joint Venture, and on July 31, 1998, the Cort Joint Venture
acquired the Cort Furniture Building pursuant to the Cort Contract.

      The Fund X-XI Joint Venture. In July 1998, Wells Fund XI entered into a
Joint Venture Agreement with Wells Fund X known as Fund X and Fund XI Associates
(the "Fund X-XI Joint Venture") for the purpose of the acquisition, ownership,
leasing, operation, sale and management of real properties, and interests in
real properties, including, but not limited to, the acquisition of equity
interests in the Fremont Joint Venture and the Cort Joint Venture (as described
below).


                                      -3-

<PAGE>
 
      Wells OP is acting as the initial Administrative Venturer of both the
Fremont Joint Venture and the Cort Joint Venture and, as such, is responsible
for establishing policies and operating procedures with respect to the business
and affairs of each of these joint ventures. However, approval of each of Wells
OP and ultimately the Fund X-XI Joint Venture will be required for any major
decision or any action which materially affects the Fremont Joint Venture or the
Cort Joint Venture or its real property investments.

Contracts to Acquire Joint Venture Interests

      Acquisition of the Fremont Joint Venture Interest. On July 17, 1998, the
Fund X-XI Joint Venture entered into an Agreement for the Purchase and Sale of
Joint Venture Interest (the "Fremont JV Contract") with Wells Development.
Pursuant to the Fremont JV Contract, the Fund X-XI Joint Venture contracted to
acquire Wells Development's interest in the Fremont Joint Venture (the "Fremont
JV Interest") which, at closing, will result in the Fund X-XI Joint Venture
becoming a joint venture partner with Wells OP in the ownership of the Fairchild
Building. Wells Fund X, Wells XI and Wells Development are all Affiliates of
Wells Capital, Inc. (the "Advisor") and the Company.

      At the time of entering into the Fremont JV Contract, the Fund X-XI Joint
Venture delivered $2,000,000 to Wells Development as an earnest money deposit.
Wells Development contributed the earnest money it received from the Fund X-XI
Joint Venture to the Fremont Joint Venture as its initial capital contribution
of $2,000,000, and Wells OP simultaneously contributed $995,480 to the Fremont
Joint Venture as its initial capital contribution.

      Acquisition of the Cort JV Interest. On July 30, 1998, the Fund X-XI Joint
Venture entered into another Agreement for the Purchase and Sale of Joint
Venture Interest (the "Cort JV Contract") with Wells Development. Pursuant to
the Cort JV Contract, the Fund X-XI Joint Venture contracted to acquire Wells
Development's interest in the Cort Joint Venture (the "Cort JV Interest") which,
at closing, will result in the Fund X-XI Joint Venture becoming a joint venture
partner with Wells OP in the ownership of the Cort Furniture Building.

      At the time of entering into the Cort JV Contract, the Fund X-XI Joint
Venture delivered $1,500,000 to Wells Development as an earnest money deposit.
Wells Development contributed the earnest money it received from the Fund X-XI
Joint Venture to the Cort Joint Venture as its initial capital contribution of
$1,500,000, and Wells OP simultaneously contributed $168,000 to the Cort Joint
Venture as its initial capital contribution.

The Fairchild Building

      Purchase of the Fairchild Building. On July 21, 1998, the Fremont Joint
Venture acquired the Fairchild Building pursuant to the Fairchild Contract for a
purchase price of $8,900,000. The Fremont Joint Venture incurred acquisition
expenses including legal fees, title insurance fees, loan origination fees,
appraisal fees and other closing costs of approximately $60,000. The Fremont
Joint Venture used the $2,995,480 aggregate capital contributions described
above to partially fund the purchase of the Fairchild Building. The Fremont
Joint Venture also obtained a loan in the amount of $5,960,000 from NationsBank,
N.A., the proceeds of which were used to fund the remainder of the cost of the
Fairchild Building (the "Fairchild Loan").

      The Fairchild Loan. The Fairchild Loan matures on July 21, 1999 (the
"Fairchild Maturity Date"), unless the Fremont Joint Venture exercises its
option to extend the Fairchild Maturity Date to January 21, 2000. The interest
rate on the Fairchild Loan is a variable rate per annum equal to the rate
appearing on Telerate Page 3750 as the London InterBank Offered Rate (the "LIBOR
Rate") for a thirty day period plus 220 basis points. Commencing on September 1,
1998, and on the first day of each calendar month thereafter continuing through
and including the first day of the calendar month in which the Fairchild
Maturity Date occurs, the Fremont Joint Venture is required to pay to
NationsBank monthly installments of principal in the amount of $10,498 plus
accrued interest. The Fairchild Loan is secured by a first mortgage against the
Fairchild Building. In addition Leo F. Wells, III and Wells Development,
Affiliates of the Advisor and the Company, are co-guarantors of the Fairchild
Loan.


                                      -4-

<PAGE>
 
      Closing of the Fremont JV Interest. Under the Joint Venture Agreement of
the Fremont Joint Venture, cash flow distributions will be paid to Wells OP and
Wells Development in accordance with each such entity's equity interest in the
Fremont Joint Venture based upon each entity's relative capital contribution to
the Fremont Joint Venture. As of July 31, 1998, Wells OP held an approximately
33% equity interest and Wells Development held an approximately 67% equity
interest in the Fremont Joint Venture. As additional offering proceeds are
raised by the Wells REIT, it is anticipated that Wells OP will make additional
capital contributions to the Fremont Joint Venture, which will be utilized to
pay down the Fairchild Loan and will increase Wells OP's relative equity
interest (and decrease Wells Development's relative equity interest) in the
Fremont Joint Venture. Cash flow distributions payable by the Fremont Joint
Venture to Wells Development shall be credited as a purchase price adjustment or
paid to the Fund X-XI Joint Venture at the closing of the acquisition of the
Fremont JV Interest from Wells Development, since Wells Development is
prohibited from making any profit on the transaction during the holding period.

      At such time as sufficient funds have been raised, either in the Fund X-XI
Joint Venture or the Wells REIT, or a combination thereof, to pay off the
Fairchild Loan, the Fund X-XI Joint Venture shall close the acquisition of the
Fremont JV Interest. This closing shall take place on or before July 21, 1999;
however, the Fund X-XI Joint Venture has the right to extend the closing date
for two successive periods of six months if sufficient cash has not been raised
to pay off the Fairchild Loan. At the conclusion of such transaction, the Fund
X-XI Joint Venture will be admitted to the Fremont Joint Venture as a joint
venturer partner in the place of Wells Development. The ultimate equity
percentage interests in the Fremont Joint Venture to be owned by Wells OP and
the Fund X-XI Joint Venture are dependent upon the amount of offering proceeds
which are raised in the future by the Company and by Wells Fund XI and,
accordingly, are indeterminable at this time.

      Description of the Fairchild Building. The Fairchild Building is a
two-story office and manufacturing building with 58,424 rentable square feet.
The Fairchild Building is composed of painted concrete tilt-up wall panels,
plaster walls with a clay tile covered mansard roof on the building's west and
north sides and aluminum framed windows. Construction of the Fairchild Building
was completed in 1985.

      The Fairchild Building is located at 47320 Kato Road on the corner of Kato
Road and Auburn Road in the City of Fremont, California. The site is
approximately 3.05 acres and is located in a commercial area composed of similar
use buildings. The parking area surrounds the Fairchild Building and contains
approximately 184 paved parking spaces.

      An independent appraisal of the Fairchild Building was prepared by CB
Richard Ellis Appraisal Services, a division of CB Commercial, as of June 29,
1998, pursuant to which the market value of the land and the leased fee interest
in the Fairchild Building subject to the Fairchild Lease (described below) was
estimated to be $8,900,000. The value estimate contained in this appraisal was
based upon a number of assumptions, including that the Fairchild Building will
continue operating at a stabilized level with Fairchild occupying 100% of the
rentable areas, and is not necessarily an accurate reflection of the fair market
value of the property. The Fremont Joint Venture also obtained an environmental
report prior to closing evidencing that the environmental condition of the land
encompassing the Fairchild Building was satisfactory.

      Fremont is considered Alameda County's extension of Silicon Valley as it
is home to a large number of high-technology manufacturing and new product
development companies. Fremont, which is the second largest city in Alameda
County and the fourth largest city in the Bay Area with a population of
approximately 190,000, is 25 miles south of Oakland and 15 miles north of San
Jose along Interstate 880. Fremont encompasses approximately 94 square miles and
is the largest source of current and future growth and development in Alameda
County due to its abundance of land relative to other areas and its location on
the fringe of Silicon Valley.

      The Fremont Joint Venture will experience competition for its current
tenant from owners and managers of various other office and manufacturing
buildings located in the immediate area of the Fairchild Building, which


                                      -5-

<PAGE>
 
could adversely affect the Fremont Joint Venture's ability to retain Fairchild
as a tenant, and if necessary in the future, to attract and retain other
tenants.

      The Fairchild Lease. The entire 58,424 rentable square feet of the
Fairchild Building is currently under a net lease agreement dated September 19,
1997 (the "Fairchild Lease") with Fairchild Technologies U.S.A., Inc.
("Fairchild"). Fairchild took early possession of the second floor of the
Fairchild Building on October 1, 1997 at a monthly base rental of $22,456. The
Fairchild Lease commenced on December 1, 1997 (the "Rental Commencement Date")
and expires on November 30, 2004, subject to Fairchild's right to extend the
Fairchild Lease for an additional five-year period. Fairchild must give written
notice of its intention to exercise said option not more than 180 days and not
less than 90 days before the last day of the initial term of the Fairchild
Lease. In the event that Fairchild vacates the Fairchild Building at the
expiration of its current lease term, the Fremont Joint Venture would be
required to find one or more new suitable tenants for the Fairchild Building at
the then prevailing market rental rates.

      Fairchild is a global leader in the design and manufacture of production
equipment for semiconductor and compact disk manufacturing. The semiconductor
equipment group recently unveiled a new line of semiconductor wafer processing
equipment which will provide alternatives to the traditional semiconductor chip
production methods.

      Fairchild is a wholly-owned subsidiary of the Fairchild Corporation, a
Delaware corporation ("Fairchild Corp"). Fairchild Corp is the largest aerospace
fastener and fastening system manufacturer and is one of the largest independent
aerospace parts distributors in the world. Fairchild Corp is a leading supplier
to aircraft manufacturers such as Boeing, Airbus, Lockheed Martin, British
Aerospace and Bombardier and to airlines such as Delta Airlines and U.S.
Airways. The aerospace fastener segment accounted for approximately 51.4% of the
company's net sales and the aerospace parts distribution segment accounted for
approximately 35.9% of the company's net sales in fiscal year 1997. The
obligations of Fairchild under the Fairchild Lease are guaranteed by Fairchild
Corp, which reported total consolidated sales of in excess of $680 Million and a
net worth of in excess of $232 Million for its fiscal year ended June 30, 1997.

      The monthly base rent payable under the Fairchild Lease is $68,128 through
November 30, 1998. On each one-year anniversary of the Rental Commencement Date,
the monthly base rent in effect for the preceding year shall be adjusted upward
by a 3% increase. The monthly base rent during the first year of the extended
term of the Fairchild Lease, if exercised by Fairchild, shall be 95% of the then
fair market rental value of the Fairchild Building subject to the annual 3%
increase adjustments. If Fairchild and the Fremont Joint Venture are unable to
agree upon the fair rental value for the extended lease term, each party shall
select an appraiser and the two appraisers shall establish the rent by
agreement. Under the Fairchild Lease, Fairchild is responsible for all
utilities, taxes, insurance and other operating costs with respect to the
Fairchild Building during the term of the Fairchild Lease. Currently, the annual
real estate taxes for the Fairchild Building are approximately $37,000. The
Fremont Joint Venture, as landlord, is responsible for the maintenance and
repair of the structural elements of the roof, bearing walls and foundation of
the Fairchild Building.

      Under the terms of the Fairchild Lease, Fairchild is required to carry and
maintain, at its own cost and expense, certain types of insurance in form
acceptable to the Fremont Joint Venture, naming the Fremont Joint Venture as an
additional insured. With respect to insurance against loss or damage to the
Fairchild Building, Fairchild is required to name the Fremont Joint Venture as
loss payee under its policy. Among other types of insurance, the Fairchild Lease
requires that Fairchild maintain liability insurance coverage covering the
leased premises and Fairchild's use thereof against claims for personal injury,
death, property damage and product liability, in single limit amounts of not
less than $2,000,000 per occurrence, and an equivalent form of insurance against
loss or damage of the Fairchild Building, including earthquake insurance, in an
amount not less than 100% of the actual replacement value of the building and
improvements thereto. Management believes that the Fairchild Building is
adequately insured against loss for property damage, personal injury and deaths
of persons in or about the premises.


                                      -6-

<PAGE>
 
The Cort Furniture Building

      Purchase of the Cort Furniture Building. On July 31, 1998, the Cort Joint
Venture acquired the Cort Furniture Building pursuant to the Cort Contract for a
purchase price of $6,400,000. The Cort Joint Venture incurred acquisition
expenses including legal fees, title insurance fees, loan origination fees,
appraisal fees and other closing costs of approximately $63,000. In addition, at
closing, the Cort Joint Venture paid $85,000 in real estate brokerage
commissions to Collins Commercial and Daum Commercial Real Estate, neither of
which are affiliated in any way with the Company or the Advisor. The Cort Joint
Venture used the $1,668,000 aggregate capital contributions to partially fund
the purchase of the Cort Furniture Building. The Cort Joint Venture also
obtained a loan in the amount of $4,875,000 from NationsBank, N.A., the proceeds
of which were used to fund the remainder of the cost of the Cort Furniture
Building (the "Cort Loan").

      The Cort Loan. The Cort Loan matures on July 31, 1999 (the "Cort Maturity
Date"), unless the Cort Joint Venture exercises its option to extend the Cort
Maturity Date to January 31, 2000. The interest rate on the Cort Loan is a
variable rate per annum equal to the rate appearing on Telerate Page 3750 as the
LIBOR Rate for a thirty day period plus 220 basis points. Commencing on
September 1, 1998, and on the first day of each calendar month thereafter
continuing through and including the first day of the calendar month in which
the Cort Maturity Date occurs, the Cort Joint Venture is required to pay to
Nationsbank monthly installments of principal in the amount of $8,587 plus
accrued interest. The Cort Loan is secured by a first mortgage against the Cort
Furniture Building. Leo F. Wells, III and Wells Development are also
co-guarantors of the Cort Loan.

      Closing of the Cort JV Interest. Under the Joint Venture Agreement of the
Cort Joint Venture, cash flow distributions will be paid to Wells OP and Wells
Development in accordance with each such entity's equity interest in the Cort
Joint Venture based upon each entity's relative capital contribution to the Cort
Joint Venture. As of July 31, 1998, Wells Development held an approximately 90%
equity interest and Wells OP held an approximately 10% equity interest in the
Cort Joint Venture. As additional offering proceeds are raised by the Wells
REIT, it is anticipated that Wells OP will make additional capital contributions
to the Cort Joint Venture, which will be utilized to pay down the Cort Loan and
will increase Wells OP's relative equity interest (and decrease Wells
Development's relative equity interest) in the Cort Joint Venture. Cash flow
distributions payable by the Cort Joint Venture to Wells Development shall be
credited as a purchase price adjustment or paid to the Fund X-XI Joint Venture
at the closing of the acquisition of the Cort JV Interest from Wells
Development, since Wells Development is prohibited from making any profit on the
transaction during the holding period.

      At such time as sufficient funds have been raised, either in the Fund X-XI
Joint Venture or the Company, or a combination thereof, to pay off the Cort Loan
on the Cort Furniture Building, the Fund X-XI Joint Venture shall close the
acquisition of the Cort JV Interest. This closing shall take place on or before
July 31, 1999; however, the Fund X-XI Joint Venture has the right to extend the
closing date for two successive periods of six months if sufficient cash has not
been raised to pay off the Cort Loan. At the conclusion of such transaction, the
Fund X-XI Joint Venture will be admitted to the Cort Joint Venture as a joint
venture partner in the place of Wells Development. The ultimate equity
percentage interests in the Cort Joint Venture to be owned by Wells OP and the
Fund X-XI Joint Venture are dependent upon the amount of offering proceeds which
are raised in the future by the Company and by Wells Fund XI and, accordingly,
are indeterminable at this time.

      Description of the Cort Furniture Building. The Cort Furniture Building is
a single-story office and warehouse building with 52,000 rentable squire feet
comprised of an 18,000 square foot office and open showroom area and a 34,000
square foot warehouse area. The Cort Furniture Building's foundation is shallow
reinforced concrete spread footings under load bearing columns with floor slabs
consisting of four inch thick reinforced concrete slab. The exterior walls of
the Cort Furniture Building are load bearing concrete tilt-wall panels. The roof
framing is composed of one-half inch thick plywood decking supported by glu-lam
beams and wood joyces. The main entrance of the Cort Furniture Building consists
of covered walkways. The site contains approximately 150 paved parking spaces.
Construction of the Cort Furniture Building was completed in 1975.


                                      -7-

<PAGE>
 
      An independent appraisal of the Cort Furniture Building was prepared by
Cushman Wakefield, real estate appraisers and consultants, as of July 1, 1998,
pursuant to which the market value of the land and the leased fee interest in
the Cort Furniture Building subject to the Cort Furniture Lease (described
below) was estimated to be $6,400,000. The value estimate contained in this
appraisal was based upon a number of assumptions, including that the Cort
Furniture Building will continue operating at a stabilized level with Cort
occupying 100% of the rentable areas, and is not necessarily an accurate
reflection of the fair market value of the property. The Cort Joint Venture also
obtained an environmental report prior to closing evidencing that the
environmental condition of the land encompassing the Cort Furniture Building was
satisfactory.

      The Cort Furniture Building is located at 10700 Spencer Street on the
southeast corner of Spencer Avenue and Mt. Langley Street adjacent on the south
side to Interstate 405 (with good freeway exposure) located in the City of
Fountain Valley, Orange County, California. The site consists of two parcels of
land totalling approximately 3.65 acres and is located in an established,
built-out industrial pocket within the southeastern region of the city. The site
is located approximately four miles West of the John Wayne Airport.

      Fountain Valley is considered an established bedroom community which is
characterized by a family-oriented, affluent resident population. The city is
located on the fringe of one of the county's major regional employment centers.
Most development within the immediate area consists of mid-sized warehouse
distribution facilities, garden office buildings, corporate headquarter
facilities, small incubator industrial parks and various retail showroom
buildings. Fountain Valley encompasses approximately 9.75 square miles and is
considered to be in the stable stage of its life cycle with relatively little
vacant land parcels available for development. While the population of Fountain
Valley as of 1997 was approximately 55,000 residents, Orange County had a
population in excess of 2.6 million. Orange County employs about 10% of the
state's workers despite having only about 8% of the state's population.

      The Cort Joint Venture will experience competition for its current tenant
from owners and managers from various other office and warehouse buildings
located in the immediate area of the Cort Furniture Building which could
adversely affect the Cort Joint Venture's ability to retain Cort as a tenant,
and if necessary in the future, to attract and retain other tenants.

      The Cort Furniture Lease. The entire 52,000 rentable square feet of the
Cort Furniture Building is currently under a net lease agreement dated October
25, 1988 (The "Cort Furniture Lease") with Cort Furniture Rental Corporation, a
New York corporation ("Cort"). Cort uses the Cort Furniture Building as its
regional corporate headquarters with an attached clearance showroom and
warehouse storage areas. The Cort Furniture Building was originally developed
for and occupied by Mary Kay Cosmetics as their regional corporate headquarters.
In March 1988, the Cort Furniture Building was leased to Cort. Subsequently,
Cort exercised an option to purchase the property in mid-1988. In October 1988,
Cort sold the property to Spencer and leased back the property for a 15 year
term at an initial lease rate of $0.914 per square foot per month (on a triple
net basis).

      The Cort Furniture Lease commenced on November 1, 1988 (the "Rental
Commencement Date") and contains a lease term of 15 years expiring on October
31, 2003. Cort has an option to extend the Cort Furniture Lease for an
additional five-year period of time. Such option must be exercised by Cort in a
written notice delivered to the Cort Joint Venture at least one year prior to
the expiration of the then current lease term. In the event that Cort vacates
the Cort Furniture Building at the expiration of its current lease term, the
Cort Joint Venture would be required to find one or more suitable tenants for
the Cort Furniture Building at the then prevailing market rental rates.

      Cort is a wholly owned subsidiary of Cort Business Services Corporation, a
New York Stock Exchange Company trading under the symbol CBZ ("Cort Business
Services"). Cort Business Services is the largest and only national provider of
high-quality office and residential rental furniture and related accessories.
Cort Business Services has operations that cover 32 states and the District of
Columbia, including 109 rental showrooms, 72 clearance centers and 72
distribution centers. The obligations of Cort under the Cort Furniture Lease are
guaranteed


                                      -8-

<PAGE>
 
by Cort Business Services, which reported net income of in excess of $22 million
on total consolidated revenue of in excess of $287 million, and reported a net
worth of in excess of $149 million for its fiscal year ended December 31, 1997.

      The monthly base rent payable under the Cort Furniture Lease is $63,247
through April 30, 2001 at which time the monthly base rent will be increased 10%
to $69,574 for the remainder of the lease term. The monthly base rent during the
first year of the extended term shall be 90% of the then fair market rental
value of the Cort Furniture Building, but will be no less than the rent in the
15th year of the Cort Furniture Lease. If Cort and the Cort Joint Venture are
unable to agree upon a fair rental value for the extended lease term, each party
shall select an appraiser and the two appraisers shall provide appraisals on the
Cort Furniture Building. If the appraisal values established are within 10% of
each other, the average of such appraised value shall be the fair market rental
value. If said appraisals are varied by more than 10%, the two appraisers shall
appoint a third appraiser and the middle appraisal of the three shall be the
fair rental value. Under the Cort Furniture lease, Cort is responsible for all
utilities, taxes, insurance and other operating costs with respect to the Cort
Furniture Building during the term of the Cort Furniture Lease. The estimated
annual real estate taxes on the Cort Furniture Building are $38,040. The Cort
Joint Venture, as landlord, is responsible for the maintenance and repair of the
structural portions of the exterior walls and the foundation of the Cort
Furniture Building, but shall not include painting or installing, maintaining or
repairing wall or floor coverings.

      Under the terms of the Cort Furniture Lease, the Cort Joint Venture is
responsible for carrying and maintaining liability insurance covering the leased
premises including claims for personal injury, death, property damage and
product liability, in single limit amounts of not less than $1,000,000. The
insurance against property damage to the Cort Furniture Building shall be in an
amount not less than 100% of the actual replacement value of the building and
improvements thereto. The cost of said insurance is billed on a monthly basis to
the tenant. Cort is required to maintain property insurance for its personal
property on the premises, including all inventory, equipment, fixtures and
tenant improvements that have not become a part of the premises, in an amount
equal to the full replacement value of such personal property. Pursuant to the
terms of the Cort Loan, the Cort Joint Venture is required to carry and maintain
earthquake insurance on the Cort Furniture Building for the full replacement
value of the building. Management believes that the Cort Furniture Building is
adequately insured against loss for property damage, personal injury and deaths
of persons in or about the premises.

Property Management Fees

      Iomega Building. Wells Management Company, Inc. ("Wells Management"), an
Affiliate of the Advisor and the Company, has been retained to manage and lease
all of the properties currently owned by the IX-X-XI-REIT Joint Venture,
including the Iomega Building. While Wells Fund XI and the Company are
authorized to pay aggregate management and leasing fees to Wells Management in
the amount of 4.5% of gross revenues, Wells Fund IX and Wells Fund X are
authorized to pay aggregate management and leasing fees to Wells Management in
the amount of 6% of gross revenues. Since, as of August 1, 1998, Wells Fund IX
and Wells Fund X held an aggregate 89.4% ownership percentage interest in the
IX-X-XI-REIT Joint Venture, while Wells Fund XI and the Company held an
aggregate 10.6% ownership percentage interest in the IX-X-XI-REIT Joint Venture,
89.4% of the gross revenues of the IX-X-XI-REIT Joint Venture are subject to a
6% property management and leasing fee, while 10.6% of the gross revenues of the
IX-X-XI-REIT Joint Venture are subject to a 4.5% property management and leasing
fee.

      Fairchild and Cort Furniture Buildings. Wells Management has also been
retained to manage and lease the Fairchild Building and the Cort Furniture
Building. The Fremont Joint Venture and the Cort Joint Venture shall each pay
4.5% of gross revenues of these buildings to Wells Management for property
management and leasing services.


                                      -9-

<PAGE>
 
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 August 10, 1998, the Company had raised a total of
      $5,739,061 in offering proceeds (573,906 Shares). After the payment of
      $200,867 in acquisition and advisory fees and acquisition expenses, the
      payment of $717,382 in selling commissions and organizational and offering
      expenses, capital contributions of $1,421,466 to the IX-X-XI-REIT Joint
      Venture, capital contributions of $995,480 to the Fremont Joint Venture
      and capital contributions of $168,000 to the Cort Joint Venture, as of
      August 10, 1998, the Company was holding net offering proceeds of
      $2,235,866 available for investment in additional properties.

Financial Statements

      The financial statements of the Iomega Building, the Fairchild Building
and the Cort Furniture Building for the year ended December 31, 1997, included
herein as Appendix I to this Supplement No. 3, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein upon the authority of said firm as
experts in giving said reports. The pro forma financial information for Wells
Real Estate Investment Trust, Inc. for the year ended December 31, 1997 and for
the six month period ended June 30, 1998, and the financial statements of the
Iomega Building, the Fairchild Building and the Cort Furniture Building for the
six month period ended June 30, 1998, which are included in Appendix I to this
Supplement No. 3, have not been audited.


                                      -10-

<PAGE>
 
                                                                      APPENDIX F

                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----

Iomega Building
   Audited Financial Statements
      Report of Independent Public Accountants                               F-1
      Statement of Revenues Over Certain Operating Expenses for
      the year ended December 31, 1997 (Audited) and for the six
      months ended June 30, 1998 (Unaudited)                                 F-2
      Notes to Statement of Revenues Over Certain Operating Expenses
      for the year ended December 31, 1997 (Audited) and for the
      six months ended June 30, 1998 (Unaudited)                             F-3

Cort Furniture Building
   Audited Financial Statements
      Report of Independent Public Accountants                               F-5
      Statement of Revenues Over Certain Operating Expenses for
      the year ended December 31, 1997 (Audited) and for the six
      months ended June 30, 1998 (Unaudited)                                 F-6
      Notes to Statement of Revenues Over Certain Operating Expenses
      for the year ended December 31, 1997 (Audited) and for the six
      months ended June 30, 1998 (Unaudited)                                 F-7

Fairchild Building
   Audited Financial Statements
      Report of Independent Public Accountants                               F-9
      Statement of Revenues Over Certain Operating Expenses for
      the year ended December 31, 1997 (Audited) and for the six
      months ended June 30, 1998 (Unaudited)                                F-10
      Notes to Statement of Revenues Over Certain Operating Expenses
      for the year ended December 31, 1997 (Audited) and for the six
      months ended June 30, 1998 (Unaudited)                                F-11

Wells Real Estate Investment Trust, Inc.
   Unaudited Pro Forma Financial Statements
      Summary of Unaudited Pro Forma Financial Statements                   F-13
      Pro Forma Balance Sheet as of June 30, 1998                           F-14
      Pro Forma Statement of Income (Loss) for the year ended
      December 31, 1997                                                     F-15
      Pro Forma Statement of Income for the six months ended 
      June 30, 1998                                                         F-16


<PAGE>
 

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Wells Real Estate Fund XI, L.P. and
Wells Real Estate Investment Trust, Inc.:

We have audited the accompanying statement of revenues over certain operating
expenses for the IOMEGA BUILDING for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues over certain operating
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues over certain operating expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Iomega
Building after acquisition by Fund IX, X, XI, and REIT Joint Venture (a joint
venture between Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P.,
Wells Real Estate Fund XI, L.P. and Wells Operating Partnership, L.P.). The
accompanying statement of revenues over certain operating expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission and is not intended to be a complete presentation of the
Iomega Building's revenues and expenses.

In our opinion, the statement of revenues over certain operating expenses
presents fairly, in all material respects, the revenues over certain operating
expenses of the Iomega Building for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.


                                          /s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
August 6, 1998




                                      F-1


<PAGE>
 
                                 IOMEGA BUILDING

                       STATEMENTS OF REVENUES OVER CERTAIN

                               OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

                                                          1997         1998
                                                        ========     ========
                                                                    (Unaudited)

RENTAL REVENUES                                         $552,828     $276,414

OPERATING EXPENSES, net of reimbursements                 (1,426)       9,750
                                                        --------     --------
REVENUES OVER CERTAIN OPERATING EXPENSES                $554,254     $266,664
                                                        ========     ========

        The accompanying notes are an integral part of these statements.



                                      F-2


<PAGE>
 
                                 IOMEGA BUILDING

                         NOTES TO STATEMENTS OF REVENUES

                         OVER CERTAIN OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Description of Real Estate Property Acquired

      On July 1, 1998, Wells Real Estate Fund X, L.P. ("Fund X") contributed a
      single-story warehouse and office building with 108,000 rentable square
      feet (the "Iomega Building") to the Fund IX, Fund X, Fund XI, and REIT
      Joint Venture ("IX-X-XI-REIT Joint Venture") (a Georgia joint venture) as
      a capital contribution. Fund X was credited with making a capital
      contribution to the IX-X-XI-REIT Joint Venture in the amount of
      $5,050,425, which represents the purchase price of $5,025,000 plus
      acquisition expenses of $25,425 originally paid by Fund X for the Iomega
      Building on April 1, 1998. As of August 1, 1998, Fund X had made total
      capital contributions to the IX-X-XI-REIT Joint Venture of $18,410,965 and
      held an equity percentage interest in the IX-X-XI-REIT Joint Venture of
      49.9%; Wells Real Estate Fund IX, L.P. had made total capital
      contributions to the IX-X-XI-REIT Joint Venture of $14,571,686 and held an
      equity percentage interest in the IX-X-XI-REIT Joint Venture of 39.5%;
      Wells Operating Partnership, L.P. had made total capital contributions to
      the IX-X-XI-REIT Joint Venture of $1,421,466 and held an equity percentage
      interest in the IX-X-XI-REIT Joint Venture of 3.9%; and Wells Real Estate
      Fund XI, L.P. had made total capital contributions to the IX-X-XI-REIT
      Joint Venture of $2,482,810 and held an equity percentage interest in the
      IX-X-XI-REIT Joint Venture of 6.7%.

      The building is 100% occupied by one tenant with a ten year lease term
      that expires on July 31, 2006. The monthly base rent payable under the
      lease is $40,000 through November 12, 1999. Beginning on the 40th and 80th
      months of the lease term, the monthly base rent payable under the lease
      will be increased to reflect an amount equal to 100% of the increase in
      the Consumer Price Index (as defined in the lease) during the preceding 40
      months; provided however, that in no event shall the base rent be
      increased with respect to any one year by more than 6% or by less than 3%
      per annum, compounded annually, on a cumulative basis from the beginning
      of the lease term. The lease is a triple net lease, whereby the terms
      require the tenant to reimburse the IX-X-XI-REIT Joint Venture for certain
      operating expenses, as defined in the lease, related to the building.

      Rental Revenues

      Rental income from the lease is recognized on a straight-line basis over
      the life of the lease.



                                      F-3


<PAGE>
 
2.    BASIS OF ACCOUNTING

      The accompanying statement of revenues over certain operating expenses is
      presented on the accrual basis. This statement has been prepared in
      accordance with the applicable rules and regulations of the Securities and
      Exchange Commission for real estate properties acquired. Accordingly, the
      statement excludes certain historical expenses, such as depreciation and
      management fees, not comparable to the operations of the Iomega Building
      after acquisition by the IX-X-XI REIT Joint Venture.





                                      F-4



<PAGE>
 

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Wells Real Estate Fund XI, L.P. and
Wells Real Estate Investment Trust, Inc.:

We have audited the accompanying statement of revenues over certain operating
expenses for the CORT FURNITURE BUILDING for the year ended December 31, 1997.
This financial statement is the responsibility of management. Our responsibility
is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues over certain operating
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues over certain operating expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Cort
Furniture Building after acquisition by the Cort Joint Venture (a joint venture
between Wells Operating Partnership, L.P. and Wells Development Corporation).
The accompanying statement of revenues over certain operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Cort Furniture Building's revenues and expenses.

In our opinion, the statement of revenues over certain operating expenses
presents fairly, in all material respects, the revenues over certain operating
expenses of the Cort Furniture Building for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.


                                          /s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
August 6, 1998



                                      F-5


<PAGE>
 
                             CORT FURNITURE BUILDING

                       STATEMENTS OF REVENUES OVER CERTAIN

                               OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

                                                          1997         1998
                                                        ========     ========
                                                                    (Unaudited)

RENTAL REVENUES                                         $771,618     $385,809

OPERATING EXPENSES                                        16,408        4,104
                                                        --------     --------
REVENUES OVER CERTAIN OPERATING EXPENSES                $755,210     $381,705
                                                        ========     ========

        The accompanying notes are an integral part of these statements.


                                      F-6


<PAGE>
 
                             CORT FURNITURE BUILDING

                         NOTES TO STATEMENTS OF REVENUES

                         OVER CERTAIN OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Description of Real Estate Property Acquired

      The Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited
      partnership organized to own and operate properties on behalf of the Wells
      Real Estate Investment Trust, Inc, entered into a Joint Venture Agreement
      known as Wells/Orange County Associates ("Cort Joint Venture") with Wells
      Development Corporation. On July 31, 1998, the Cort Joint Venture acquired
      the Cort Furniture Building, a 52,000-square-foot warehouse and office
      building located in Fountain Valley, California, for a purchase price of
      $6,400,000 plus acquisition expenses of approximately $150,000. The Cort
      Joint Venture used the $1,668,000 aggregate capital contributions
      described below to partially fund the purchase of the Cort Furniture
      Building. The Cort Joint Venture obtained a loan in the amount of
      $4,875,000 from NationsBank, N.A., the proceeds of which were used to fund
      the remainder of the cost of the Cort Furniture Building (the "Cort
      Loan"). The Cort Loan matures on July 31, 1999 (the "Cort Maturity Date"),
      unless the Cort Joint Venture exercises its option to extend the Cort
      Maturity Date to January 31, 2000. The interest rate on the Cort Loan is a
      variable rate per annum equal to the rate appearing on Telerate Page 3750
      as the LIBOR Rate for 30-day period plus 220 basis points.

      The building is 100% occupied by one tenant with a 15-year lease term that
      commenced on November 1, 1988 and expires on October 31, 2003. The monthly
      base rent payable under the lease is $63,247 through April 30, 2001 at
      which time the monthly base rent will be increased 10% to $69,574 for the
      remainder of the lease term. The lease is a triple net lease, whereby the
      terms require the tenant to reimburse the Cort Joint Venture for certain
      operating expenses, as defined in the lease, related to the building.

      Acquisition of the Cort Joint Venture Interest

      Wells Real Estate Fund XI, L.P. ("Wells Fund XI") entered into a Joint
      Venture Agreement with Wells Real Estate Fund X, L.P. ("Wells Fund X")
      known as Fund X and Fund XI Associates ("Fund X-XI Joint Venture") for the
      purpose of the acquisition, ownership, leasing, operation, sale and
      management of real properties, and interests in real properties, including
      but not limited to, the acquisition of equity interests in the Cort Joint
      Venture.


                                      F-7


<PAGE>
 
      On July 30, 1998, the Fund X-XI Joint Venture entered into an Agreement
      for the Purchase and Sale of Joint Venture Interest (the "Cort JV
      Contract") with Wells Development. Pursuant to the Cort JV Contract, the
      Fund X-XI Joint Venture contracted to acquire Wells Development's interest
      in the Cort Joint Venture (the "Cort JV Interest") which, at closing, will
      result in the Fund X-XI Joint Venture becoming a joint venture partner
      with Wells OP in the ownership of the Cort Furniture Building. Wells Fund
      X, Wells OP and Wells Development are all affiliates of Wells Fund XI.

      At the time of entering into the Cort JV Contract, the Fund X-XI Joint
      Venture delivered $1,500,000 to Wells Development as an earnest money
      deposit (the "Cort Earnest Money"). Wells Fund XI contributed $750,000 of
      the Cort Earnest Money as a capital contribution to the Fund X-XI Joint
      Venture and, as of July 31, 1998, held an equity percentage interest in
      the Fund X-XI Joint Venture of 50%; and Wells Fund X contributed $750,000
      of the Cort Earnest Money as a capital contribution to the Fund X-XI Joint
      Venture and, as of July 31, 1998, held an equity percentage interest in
      the Fund X-XI Joint Venture of 50%. Wells Development contributed the Cort
      Earnest Money it received from the Fund X-XI Joint Venture to the Cort
      Joint Venture as its initial capital contribution, and Wells OP
      simultaneously contributed $168,000 to the Cort Joint Venture as its
      initial capital contribution.

      Cash flow distributions allocable by the Cort Joint Venture to Wells
      Development will be credited as a purchase price adjustment or paid to the
      Fund X-XI Joint Venture at the closing of the acquisition of the Cort JV
      Interest from Wells Development since Wells Development is prohibited from
      making any profit on the transaction during the holding period. The Fund
      X-XI Joint Venture will have no property rights in the Cort Building prior
      to closing nor any potential liability on the Cort Loan, which will be
      paid off prior to closing.

      Rental Revenues

      Rental income from the lease is recognized on a straight-line basis over
      the life of the lease.

2.    BASIS OF ACCOUNTING

      The accompanying statement of revenues over certain operating expenses is
      presented on the accrual basis. This statement has been prepared in
      accordance with the applicable rules and regulations of the Securities and
      Exchange Commission for real estate properties acquired. Accordingly, the
      statement excludes certain historical expenses, such as interest,
      depreciation, and management fees, not comparable to the operations of the
      Cort Furniture Building after acquisition by the Cort Joint Venture.


                                      F-8


<PAGE>
 

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Wells Real Estate Fund XI, L.P. and
Wells Real Estate Investment Trust, Inc.:

We have audited the accompanying statement of revenues over certain operating
expenses for the FAIRCHILD BUILDING for the year ended December 31, 1997. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues over certain operating
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues over certain operating expenses. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the
Fairchild Building after acquisition by the Fremont Joint Venture (a joint
venture between Wells Operating Partnership, L.P. and Wells Development
Corporation). The accompanying statement of revenues over certain operating
expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and is not intended to be
a complete presentation of the Fairchild Building's revenues and expenses.

In our opinion, the statement of revenues over certain operating expenses
presents fairly, in all material respects, the revenues over certain operating
expenses of the Fairchild Building for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.


                                          /s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
August 6, 1998



                                      F-9


<PAGE>
 
                               FAIRCHILD BUILDING

                       STATEMENTS OF REVENUES OVER CERTAIN

                               OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

                                                          1997         1998
                                                        ========     ========
                                                                    (Unaudited)

RENTAL REVENUES                                         $220,090     $440,178

OPERATING EXPENSES                                        67,573       10,420
                                                        --------     --------
REVENUES OVER CERTAIN OPERATING EXPENSES                $152,517     $429,758
                                                        ========     ========

        The accompanying notes are an integral part of these statements.


                                     F-10


<PAGE>
 
                               FAIRCHILD BUILDING

                         NOTES TO STATEMENTS OF REVENUES

                         OVER CERTAIN OPERATING EXPENSES

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                   AND FOR THE SIX MONTHS ENDED JUNE 30, 1998

1.    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Description of Real Estate Property Acquired

      The Wells Operating Partnership, L.P. ("Wells OP"), a Delaware limited
      partnership organized to own and operate properties on behalf of the Wells
      Real Estate Investment Trust, Inc., entered into a Joint Venture Agreement
      known as Wells/Fremont Associates ("Fremont Joint Venture") with Wells
      Development Corporation. On July 21, 1998, the Fremont Joint Venture
      acquired the Fairchild Building, a 58,424-square-foot warehouse and office
      building located in Fremont, California, for a purchase price of
      $8,900,000 plus acquisition expenses of approximately $60,000. The Fremont
      Joint Venture used the $2,995,480 aggregate capital contributions
      described below to partially fund the purchase of the Fairchild Building.
      The Fremont Joint Venture obtained a loan in the amount of $5,960,000 from
      NationsBank, N.A., the proceeds of which were used to fund the remainder
      of the cost of the Fairchild Building (the "Fairchild Loan"). The
      Fairchild Loan matures on July 21, 1999 (the "Fairchild Maturity Date"),
      unless the Fremont Joint Venture exercises its option to extend the
      Fairchild Maturity Date to January 21, 2000. The interest rate on the
      Fairchild Loan is a variable rate per annum equal to the rate appearing on
      Telerate Page 3750 as the LIBOR Rate for a 30-day period plus 220 basis
      points.

      The building is 100% occupied by one tenant with a seven-year lease term
      that commenced on December 1, 1997 (with an early possession date of
      October 1, 1997) and expires on November 30, 2004. The monthly base rent
      payable under the lease is $68,128 with a 3% increase on each anniversary
      of the commencement date. The lease is a triple net lease, whereby the
      terms require the tenant to reimburse Wells/Fremont for certain operating
      expenses, as defined in the lease, related to the building. Prior to
      October 1, 1997, the building was unoccupied and all operating expenses
      were paid by the former owner of the Fairchild Building.

      Acquisition of the Fremont Joint Venture Interest

      Wells Real Estate Fund XI, L.P. ("Wells Fund XI") entered into a Joint
      Venture Agreement with Wells Real Estate Fund X, L.P. ("Wells Fund X")
      known as Fund X and Fund XI Associates ("Fund X-XI Joint Venture") for the
      purpose of the acquisition, ownership, leasing, operation, sale and
      management of real properties, and interests in real properties, 


                                      F-11


<PAGE>
 
      including but not limited to, the acquisition of equity interests in the
      Fremont Joint Venture.

      On July 17, 1998, the Fund X-XI Joint Venture entered into an Agreement
      for the Purchase and Sale of Joint Venture Interest (the "Fremont JV
      Contract") with Wells Development. Pursuant to the Fremont JV Contract,
      the Fund X-XI Joint Venture contracted to acquire Wells Development's
      interest in the Fremont Joint Venture (the "Freemont JV Interest") which,
      at closing, will result in the Fund X-XI Joint Venture becoming a joint
      venture partner with Wells OP in the ownership of the Fairchild Building.
      Wells Fund X, Wells OP and Wells Development are all affiliates of Wells
      Fund XI.

      At the time of the entering into the Fremont JV Contract, the Fund X-XI
      Joint Venture delivered $2,000,000 to Wells Development as an earnest
      money deposit (the "Fremont Earnest Money"). Wells Fund XI contributed
      $1,000,000 of the Fremont Earnest Money as a capital contribution to the
      Fund X-XI Joint Venture and, as of July 21, 1998, held an equity
      percentage interest in the Fund X-XI Joint Venture of 50%; and Wells Fund
      X contributed $1,000,000 of the Fremont Earnest Money as a capital
      contribution to the Fund X-XI Joint Venture and, as of July 21, 1998, held
      an equity percentage interest in the Fund X-XI Joint Venture of 50%. Wells
      Development contributed the Fremont Earnest Money it received from the
      Fund X-XI Joint Venture to the Fremont Joint Venture as its initial
      capital contribution, and Wells OP simultaneously contributed $995,480 to
      the Fremont Joint Venture as its initial capital contribution.

      Cash flow distributions allocable by the Fremont Joint Venture to Wells
      Development will be credited as a purchase price adjustment or paid to the
      Fund X-XI Joint Venture at the closing of the acquisition of the Fremont
      JV Interest from Wells Development since Wells Development is prohibited
      from making any profit on the transaction during the holding period. The
      Fund X-XI Joint Venture will have no property rights in the Fairchild
      Building prior to closing nor any potential liability on the Fairchild
      Loan, which will be paid off prior to closing.

      Rental Revenues

      Rental income from the lease is recognized on a straight-line basis over
      the life of the lease.

2.    BASIS OF ACCOUNTING

      The accompanying statement of revenues over certain operating expenses is
      presented on the accrual basis. This statement has been prepared in
      accordance with the applicable rules and regulations of the Securities and
      Exchange Commission for real estate properties acquired. Accordingly, the
      statement excludes certain historical expenses, such as interest,
      depreciation, and management fees, not comparable to the operations of the
      Fairchild Building after acquisition by Wells/Fremont.


                                     F-12


<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                   (Unaudited Pro Forma Financial Statements)

The following unaudited pro forma balance sheet as of June 30, 1998 and the pro
forma statements of (loss) income for the year ended December 31, 1997 and six
months ended June 30, 1998 have been prepared to give effect to the following
transaction as if each occurred as of June 30, 1998 with respect to the balance
sheet and on January 1, 1997 with respect to the statements of (loss) income :
(i) Wells Real Estate Investment Trust, Inc.'s adjusted equity interest in the
Fund IX, Fund X, Fund XI, and REIT Joint Venture ("Joint Venture") (a joint
venture between Wells Real Estate Fund IX, L.P., Wells Real Estate Fund X, L.P.,
Wells Real Estate Fund XI, L.P., and Wells Operating Partnership, L.P. and
formerly Fund IX--Fund X Associates) after giving effect to the Joint Venture's
acquisition of the Lucent Building and the contribution by Wells Real Estate
Fund X, L.P. of the Iomega Building to the Joint Venture; (ii) the acquisition
of the Cort Furniture Building by Wells/Orange County Associates (a joint
venture between Wells Operating Partnership, L.P. and Wells Development
Corporation), and (iii) the acquisition of the Fairchild Building by
Wells/Fremont Associates (a joint venture between Wells Operating Partnership,
L.P. and Wells Development Corporation).

These unaudited pro forma financial statements are prepared for informational
purposes only and are not necessarily indicative of future results or of actual
results that would have been achieved had the acquisition been consummated at
the beginning of the period presented.

The pro forma financial statements are based on available information and
certain assumptions that management believes are reasonable. Final adjustments
may differ from the pro forma adjustments herein.


                                     F-13


<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                             PRO FORMA BALANCE SHEET

                                  JUNE 30, 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            Pro Forma Adjustments
                                                           Wells      ----------------------------------
                                                        Real Estate                        Cort
                                                        Investment     Fairchild         Furniture           Pro Forma
                                                        Trust, Inc.    Building          Building              Total
                                                        ===========   ===============   ================    ===========
<S>                                                     <C>           <C>               <C>                 <C>        
ASSETS:
  Investment in joint venture                           $ 1,472,065   $ 1,039,082(a)    $   175,001(d)      $ 2,686,148
  Cash and cash equivalents                               1,112,656      (995,480)(b)      (117,176)(e)               0
  Deferred project costs                                     34,651       (34,651)(c)             0                   0
  Deferred offering costs                                   604,201             0                 0             604,201
  Due from affiliates                                        15,307             0                 0              15,307
  Prepared expenses and other assets                         10,000             0                 0              10,000
                                                        -----------   ---------------   ----------------    -----------
      Total assets                                        3,248,880         8,951            57,825           3,315,656
                                                        ===========   ===============   ================    ===========
LIABILITIES:
  Sales commission payable                                   33,675             0                 0              33,675
  Due to affiliate                                          655,160         8,951(c)         57,825(e,f)        721,936
                                                        -----------   ---------------   ----------------    -----------
      Total liabilities                                     688,835         8,951            57,825             755,611
                                                        -----------   ---------------   ----------------    -----------
MINORITY INTEREST OF UNIT HOLDER IN
  OPERATING PARTNERSHIP                                     200,000             0                 0             200,000
                                                        -----------   ---------------   ----------------    -----------
SHAREHOLDERS' EQUITY:
  Common shares, $.01 par value; 40,000,000 shares
    authorized, 268,459 shares issued and outstanding         2,685             0                 0               2,685
  Additional paid-in capital                              2,346,461             0                 0           2,346,461
  Retained earnings                                          10,899             0                 0              10,899
                                                        -----------   ---------------   ----------------    -----------
      Total shareholder's equity                          2,360,045             0                 0           2,360,045
                                                        -----------   ---------------   ----------------    -----------
      Total liabilities and shareholder's equity        $ 3,248,880   $     8,951       $    57,825         $ 3,315,656
                                                        ===========   ===============   ================    ===========
</TABLE>

            (a)   Reflects Wells Operating Partnership, L.P.'s contribution to
                  Wells/Fremont Associates.

            (b)   Reflects Wells Operating Partnership, L.P.'s portion of the
                  $8,900,000 purchase price related to the Fairchild Building.

            (c)   Reflects deferred project costs allocated to Wells Operating
                  Partnership, L.P.'s investment in Wells/Fremont Associates

            (d)   Reflects Wells Operating Partnership, L.P.'s contribution to
                  Wells/Orange County Associates.

            (e)   Reflects Wells Operating Partnership, L.P.'s portion of the
                  $6,400,000 purchase price related to the Cort Furniture
                  Building.

            (f)   Reflects deferred project costs allocated to Wells Operating
                  Partnership, L.P.'s investment in Wells/Orange County
                  Associates.


                                     F-14


<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                      PRO FORMA STATEMENT OF INCOME (LOSS)

                      FOR THE YEAR ENDED DECEMBER 31, 1997

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                       Pro Forma Adjustments
                                                Wells     -----------------------------------------------
                                             Real Estate  Fund IX, Fund X,                      Cort           Pro
                                             Investment   Fund XI and REIT   Fairchild       Furniture        Forma
                                             Trust, Inc.    Joint Venture    Building         Building        Total
                                             ===========  ================   =============   ============   ========= 
<S>                                             <C>         <C>              <C>             <C>            <C>       
REVENUES:                                                                    
  Equity in income (loss) of joint venture      $0          $  12,341(a)     $(203,458)(b)   $  18,252(c)   $(172,865)
                                                                             
EXPENSES                                         0                  0                0               0              0
                                             ===========  ================   =============   ============   ========= 
NET INCOME (LOSS)                               $0          $  12,341        $(203,458)      $  18,252      $(172,865)
                                             ===========  ================   =============   ============   ========= 
                                                                             
INCOME (LOSS) PER SHARE (basic and diluted)     $0          $  123.41        $(2,034.58)     $  182.52      $(1,728.65)
                                             ===========  ================   =============   ============   ========= 
</TABLE>


            (a)   Reflects Wells Operating Partnership, L.P.'s 3.9% equity in
                  earnings of Fund IX, Fund X, Fund XI, and REIT Joint Venture
                  which totaled $316,445 after giving effect to the contribution
                  by Wells Real Estate Fund X of the Iomega Building to the
                  Joint Venture. The pro forma adjustments result from rental
                  revenues less operating expenses, management fees, and
                  depreciation expense.

            (b)   Reflects Wells Operating Partnership, L.P.'s 33.3% equity in
                  net loss of Wells/Fremont Associates which totaled $610,374.
                  The pro forma adjustments result from rental revenues less
                  operating expenses, management fees, depreciation, and
                  interest expense.

            (c)   Reflects Wells Operating Partnership, L.P.'s 10% equity in
                  earnings of Wells/Orange County Associates which totaled
                  $182,520. The pro forma adjustments result from rental
                  revenues less operating expenses, management fees,
                  depreciation, and interest expense.


                                     F-15


<PAGE>
 
                    WELLS REAL ESTATE INVESTMENT TRUST, INC.

                          PRO FORMA STATEMENT OF INCOME

                     FOR THE SIX MONTHS ENDED JUNE 30, 1998

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                   Pro Forma Adjustments
                                                       --------------------------------------------
                                            Wells          Fund IX,
                                         Real Estate   Fund X, Fund XI,                     Cort        Pro
                                         Investment     and REIT Joint     Fairchild     Furniture     Forma
                                         Trust, Inc.       Venture          Building      Building     Total
                                         ===========   ================   ===========   ===========   =======
<S>                                        <C>             <C>             <C>            <C>         <C>    
REVENUES:
    Equity in income of joint ventures     $  6,631        $33,348(a)      $12,201(b)     $9,848(c)   $62,028
    Interest income                           4,286              0               0             0        4,286
                                         -----------   ----------------   -----------   -----------   -------
                                             10,917         33,348          12,201         9,848       66,314

EXPENSES:
    Office expense                               18              0               0             0           18
                                         -----------   ----------------   -----------   -----------   -------
NET INCOME                                  $10,899        $33,348         $12,201        $9,848      $66,296
                                         ===========   ================   ===========   ===========   =======

EARNINGS PER SHARE (basic and diluted)        $0.04          $0.12           $0.05         $0.04        $0.25
                                         ===========   ================   ===========   ===========   =======
</TABLE>


            (a)   Reflects Wells Operating Partnership, L.P.'s 3.9% equity in
                  earnings of Fund IX, Fund X, Fund XI, and REIT Joint Venture
                  which totaled $855,066 after giving effect to the Joint
                  Venture's acquisition of the Lucent Building and the
                  contribution by Wells Real Estate Fund X of the Iomega
                  Building to the Joint Venture.. The pro forma adjustments
                  result from rental revenues less operating expenses,
                  management fees, depreciation, and amortization.

            (b)   Reflects Wells Operating Partnership, L.P.'s 33.3% equity in
                  earnings of Wells/Fremont Associates which totaled $36,606.
                  The pro forma adjustments result from rental revenues less
                  operating expenses, management fees, depreciation, and
                  interest expense.

            (c)   Reflects Wells Operating Partnership, L.P.'s 10% equity in
                  earnings of Wells/Orange County Associates which totaled
                  $98,480. The pro forma adjustments result from rental revenues
                  less operating expenses, management fees, depreciation, and
                  interest expense.


                                     F-16


<PAGE>
     
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

           SUPPLEMENT NO. 6 DATED JANUARY 15, 1999 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, Supplement No. 3 dated August 12, 1998, Supplement
No. 4 dated November 1, 1998 and Supplement No. 5 dated December 14, 1998
(collectively, the "Prospectus").  This Supplement No. 6 supersedes Supplement
No. 4 and Supplement No. 5.  Unless otherwise defined herein, capitalized terms
used in this Supplement shall have the same meanings as set forth in the
Prospectus.

     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 "Investor Suitability Standards" and "Plan of
Distribution" sections of the Prospectus;

          (3)  Revisions to the "Legal Matters" and "Conflicts of Interest -Lack
of Separate Representation" sections of the Prospectus;

          (4)  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;

          (5)  The acquisition of an office building in Tampa, Hillsborough
County, Florida within the Sunforest Business Park;

          (6)  The status of the ABB Building;

          (7)  The status of the Cort Furniture Building;

          (8)  The status of the Fairchild Building;

          (9)  Revisions to the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of the Prospectus; and

          (10) Pro Forma Balance Sheet included as Appendix I.

STATUS OF THE OFFERING

     Pursuant to the Prospectus, the offering of shares in the Company commenced
on January 30, 1998.  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 January 10, 1999, the Company had raised a total of $32,484,200
in offering proceeds (3,248,420 shares).

INVESTOR SUITABILITY STANDARDS

     The information contained on page 15 in the "Investor Suitability
Standards" section of the Prospectus, as amended in Supplement No. 1 to the
Prospectus, is revised and amended as of the date of this Supplement by the
deletion of the fourth full paragraph of that section and the insertion of the
following paragraph in lieu thereof:

          The minimum purchase is 100 shares ($1,000) (except in certain states
     and as otherwise described below).  No transfers will be permitted of less
     than the minimum required purchase, nor (except in very limited
     circumstances) may an investor transfer, fractionalize or subdivide such
     shares so as to retain less

<PAGE>
 
     than such minimum number thereof.  For purposes of satisfying the minimum
     investment requirement for Retirement Plans, unless otherwise prohibited by
     state law, a husband and wife may jointly contribute funds from their
     separate Individual Retirement Accounts ("IRAs"), provided that each such
     contribution is made in increments of at least $100.  It should be noted,
     however, that an investment in the Company will not, in itself, create a
     Retirement Plan for any investor and that in order to create a Retirement
     Plan, an investor must comply with all applicable provisions of the Code.
     Except in Maine, Minnesota and Washington, investors who have satisfied the
     minimum purchase requirements and have purchased units in Prior Wells
     Public Programs or units or shares in other public real estate programs may
     purchase less than the minimum number of shares set forth above, but in no
     event less than 2.5 shares ($25).  The minimum purchase for New York
     investors is 250 shares ($2,500); however, the minimum investment for New
     York IRAs is 100 shares ($1,000).  After an investor has purchased the
     minimum investment, any additional investments must be made in increments
     of at least 2.5 shares ($25), except for (i) those made by investors in
     Maine, who must still meet the minimum investment requirement for Maine
     residents of $1,000 for IRAs and $2,500 for non-IRAs, (ii) purchases of
     shares pursuant to the Reinvestment Plan or reinvestment plans of other
     public real estate programs, which may be in lesser amounts, and (iii) the
     minimum purchase requirement for Minnesota investors other than IRAs and
     Qualified Plans of 250 shares ($2,500), and the minimum purchase
     requirement for Minnesota IRAs and Qualified Plans of 200 shares ($2,000).

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. FOR
ASSOCIATES PROPERTY

     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, and is scheduled to close on its 45% undivided interest on or
before January 19, 1999.  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.  It is currently anticipated that Wells
OP will close on its 55% undivided interest at such time as Wells Development
has expended the $1,350,000 earnest money deposit and $4,500,000 in loan
proceeds.  Wells Development shall not make any profit or incur any loss in
connection with this transaction.  At closing, Wells OP shall pay the purchase
price for its 55% undivided interest in cash or execute a promissory note for
any unfunded portion of the purchase price.

     At closing, 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:

                                       2

<PAGE>
 
     .    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;

     .    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 or assume the
obligations of Wells Development under 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

                                       3

<PAGE>
 
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.

     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 obtained a construction loan from
     -------------------                                                      
First Capital Bank in the amount of $4,500,000, the proceeds of which are being
used to fund the development and construction of the Project (the "Associates
Loan").  The Associates Loan matures on November 30, 1999, 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.  At closing, Wells OP
shall assume or take title to the Associates Property subject to the Associates
Loan.

     A nonrefundable loan fee of $22,500 (.5% of the loan amount) has been paid
by Wells Development.  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.

     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.

     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

                                       4

<PAGE>
 
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");

     .    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

                                       5

<PAGE>
 
     .    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 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

                                       6

<PAGE>
 
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.

     As of the date of this Supplement No. 6, Wells Development has spent in
excess of $1,350,000 towards the construction of the Project.  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:

          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
 

                                       7

<PAGE>
 
          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

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
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.
    
     The Contractor has begun 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.  As of
December 31, 1998, the Project was estimated to be 21% complete and the
Contractor has billed Wells Development $599,773. As of January 15, 1999, Wells
Development has paid the full balance of $599,773 to the Contractor. 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.

                                       8

<PAGE>
 
     Wells Development is making 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.  As of December 31, 1998, $59,977 has been withheld as
retainage.  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 an amount sufficient to complete
construction and development of the Project to reduce the risk of non-
performance and to assure compliance with approved plans and specifications.  In
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") is 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 prepares schematic design documents consisting of drawings and other
documents illustrating the scale and relationship of Project components.  The
Architect has completed the schematic design phase, and has been paid a fee of
$21,195 for such services.  During the design development phase, the Architect
prepares 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 has completed the design development stage, and has been paid
$42,390 for these services.  During the construction documents phase, the
Architect prepares construction documents consisting of drawings and
specifications setting forth in detail the

                                       9

<PAGE>
 
requirements for the construction of the Project.  The Architect has completed
approximately 95% of the construction documents phase, and has been 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 are being 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 are 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 total 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
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 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

                                       10

<PAGE>
 
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
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

                                       11

<PAGE>
 
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 PWC BUILDING

     Purchase of the PWC Building.  On December 31, 1998, Wells OP acquired a
     ----------------------------                                            
four-story office building containing approximately 130,090 rentable square feet
(the "PWC Building") which was recently developed and constructed on an
approximately 9 acre tract of real property located in Tampa, Hillsborough
County, Florida.  Wells OP purchased the PWC Building from Carter Sunforest,
L.P. (the "Seller"), a Georgia limited partnership, pursuant to the terms of the
Amended and Restated Purchase Agreement dated December 4, 1998 (the "Purchase
Agreement") between the Seller and Wells OP.  The total purchase price for the
PWC Building pursuant to the Purchase Agreement was $21,127,854.  Wells OP paid
TriNet Corporate Realty Trust, a Maryland corporation, ("TriNet"), the sum of
$420,000 for the rights to purchase the PWC Building as they were the original
purchasers under the Purchase Agreement, out of which TriNet paid the Seller
$100,000 as a real estate commission.  At the closing, Wells OP paid a purchase
price of $20,707,854 to the Seller plus $98,609.30 for closing costs.  Neither
Seller nor TriNet are affiliated with the Company or its Advisor.
    
     The SouthTrust Loan.  Wells OP purchased the PWC Building subject to a loan
     -------------------                                                        
from SouthTrust Bank, National Association ("SouthTrust") in the outstanding
principal amount of $14,132,537.87 (the "SouthTrust Loan"). The SouthTrust Loan
consists of a revolving credit facility whereby SouthTrust agreed to loan up to
$15.5 million. The SouthTrust Loan matures on December 31, 2000. The interest
rate on the SouthTrust Loan is a variable rate per annum equal to the London
InterBank Offered Rate for a thirty day period plus 185 basis points. Commencing
on February 1, 1999, Wells OP is required to pay to SouthTrust monthly
installments of principal in the amount of $12,500.00 plus accrued interest. The
SouthTrust Loan is secured by a first mortgage against the PWC Building.
     
     Description of the Building and the Site.  The PWC Building is a four-story
     ----------------------------------------                                   
office building with 130,091 rentable square feet located in Tampa, Florida.
The building is constructed using a steel frame design and concrete tilt-up wall
panels.  Construction of the PWC Building was completed in December 1998.  The
parking area contains approximately 600 paved parking spaces, including a two
level parking deck accommodating 312 spaces, approximately 126 of which are
covered.

     An independent appraisal of the PWC Building was prepared by RE Marketing
Consultants, Inc., as of March 2, 1998, pursuant to which the market value of
the land and the leased fee interest subject to the PWC Lease (described below)
was estimated to be $22,000,000, in cash or terms equivalent to cash.  This
value estimate was based upon a number of assumptions, including that the PWC
Building will continue operating at a stabilized level with PWC occupying 100%
of the rentable area, and is not necessarily an accurate reflection of the fair
market value of the property.  Wells OP also obtained an environmental report
prior to closing evidencing that the environmental condition of the land
encompassing the PWC Building was satisfactory.

     The site consists of approximately 9 acres of land located between
Eisenhower Boulevard and George Road approximately 1,250 feet south of West
Hillsborough Avenue.  The site is located in Sunforest Business Park which is
located in the southwest quadrant of the Veteran's Expressway and West
Hillsborough Avenue.  The Sunforest Business Park is located in the Westshore
Business District, which is a suburban business center surrounding Tampa
International Airport.  The total supply of office space in this subsector is
9.8 million square feet, which is 3.57 million square feet larger than the
Downtown Central Business District.  The overall occupancy rate in the Westshore
Business District is 93.5% compared to the countywide occupancy rate of 90.5%.

     According to the 1990 census, the Tampa Bay area, including Tampa, St.
Petersburg and Clearwater, comprises 2.16 million people, and is the 22nd
largest metropolitan area in the United States.  Tampa is bordered on the west
and south by Upper and Old Tampa Bays and is divided by the Hillsborough River.
The City of Tampa is located in Hillsborough County midway down the west coast
of Florida.  In contrast to much of Florida's West

                                       12

<PAGE>
 
Coast, Hillsborough County is relatively young with approximately 87% of the
population under 65 years of age and a median of age 33.2 years.

     The PWC Lease.  On December 31, 1998, the Seller assigned all of its rights
     -------------                                                              
pursuant to the Lease Agreement dated as of March 30, 1998 between the Seller,
as landlord, and Price Waterhouse LLP, which has subsequently merged with
Coopers & Lybrand to form PriceWaterhouseCoopers ("PWC"), as tenant (such
agreement, as assigned, is referred to herein as the "PWC Lease").  The PWC
Lease currently expires in December 2008, subject to PWC's right to extend the
lease for two additional five year periods of time.

     PWC provides a full range of business advisory services to leading global,
national and local companies and to public institutions.  These services include
audit, accounting and tax advice; management, information technology and human
resource consulting; financial advisory services including mergers and
acquisitions, business recovery, project finance and litigation support;
business process outsourcing services; and legal advice through a global network
of affiliated law firms.  PWC employs more than 140,000 people in 152 countries.

     The annual base rent payable under the PWC Lease will be $1,915,741.13
($14.73 per square foot) payable in equal monthly installments of $159,645.09
during the first year of the initial lease term.  The base rent escalates at the
rate of 3% per year throughout the ten year lease term.  In addition, PWC is
required to pay a "reserve" of $13,009.00 ($.10 per square foot) as additional
rent.  Under the PWC Lease, PWC is responsible for the payment of all property
taxes, operating expenses and other repair and maintenance work relating to the
PWC Building.  PWC is also required to reimburse the landlord the cost of
casualty insurance for the property.  Wells OP, as landlord, is responsible for
all maintenance, repairs and replacements to the roof and structural components
of the PWC Building, including without limitation, the roof system, exterior
walls, load bearing walls, foundations, glazing and curtain wall systems.

     The initial term of the PWC Lease is ten years which commenced on December
28, 1998 (the "Rental Commencement Date").  As stated above, PWC has the option
to extend the initial term of the PWC Lease for two additional five year
periods.  Each extension option must be exercised by giving (i) written "non-
binding" notice to the landlord at least 15 months but not more than 18 months
prior to the expiration date of the then current lease term, or (ii) written
"binding" notice to the landlord at least 12 months prior to the expiration date
of the then current lease term.  The annual base rent for each renewal term
under the lease will be equal to the greater of (i) ninety percent (90%) of the
"market rent rate" for such space multiplied by the rentable area of the leased
premises, or (ii) one hundred percent (100%) of the base rent paid during the
last lease year of the initial term, or the then current renewal term, as the
case may be.  If the base rent for the first lease year under the renewal term
is determined pursuant to Clause (i) above, then the base rent for each lease
year of such renewal term after the first lease year shall be one hundred three
percent (103%) of the base rent for the immediately preceding lease year.  If
the base rent for the first lease year of a renewal term is determined pursuant
to Clause (ii) above, then there shall be no escalation of the base rent until
such time that the total base rent paid during the renewal term is equal to the
total base rent that would have been paid during such renewal term if the base
rent had been determined pursuant to Clause (i) above; and thereafter, the base
rent for each subsequent lease year of such renewal term shall be one hundred
three percent (103%) of the base rent for the immediately preceding lease year.

     The "market rent rate" under the PWC lease shall be determined by agreement
of the parties within thirty (30) days after the date on which PWC delivers its
notice of renewal.  If Wells OP and PWC are unable to reach agreement on the
market rent rate within said thirty (30) day period, then each party shall
simultaneously submit to the other in a sealed envelope its good faith estimate
of the market rent rate within seven (7) days of expiration of the thirty (30)
day period.  If the higher of such estimates is not more than one hundred five
percent (105%) of the lower of such estimates then the market rent rate shall be
the average of the two estimates.  Otherwise, within five (5) days either party
may request in writing to resolve the dispute by arbitration.  The "market rate
rent" should be based upon the fair market rent then being charged by landlords
under new leases of office space in the Westshore Business District for similar
space in a building of comparable quality with comparable amenities.

     In addition, the PWC Lease contains an option to expand the premises to
include a second three or four story building with an amount of square feet up
to a total of 132,000 square feet (the "Expansion Building") which, if exercised
by PWC, will require Wells OP to expend funds necessary to construct the
Expansion Building.  PWC

                                       13

<PAGE>
 
may exercise its expansion option by delivering written notice to Wells OP at
any time between the sixtieth (60th) day after the Rental Commencement Date and
the expiration of the initial term of the lease.  If PWC for any reason fails to
deliver the expansion notice on or prior to the last day of the initial term,
the expansion option shall automatically expire.  Upon PWC's delivery of the
expansion notice and commencement of construction of the improvements by Wells
OP, the term of the lease shall automatically be extended for an additional
period of ten (10) years from the date of substantial completion of the
Expansion Building, without further action by either PWC or Wells OP.  During
the first five lease years of the initial term, Wells OP shall be obligated to
construct the Expansion Building if PWC delivers the expansion notice.  Wells OP
and PWC have agreed that Wells OP shall not be required to construct the
Expansion Building, however, if PWC delivers the expansion notice after the end
of the fifth lease year and, following delivery of such expansion notice, Wells
OP determines not to construct the Expansion Building based upon the base rent
it would receive for the Expansion Building.  If Wells OP notifies PWC in
writing of such determination within thirty (30) days after Wells OP's receipt
of the expansion notice, PWC shall have the right to exercise its option to
purchase the PWC building (the "Purchase Option"), as described below.

     If PWC elects to exercise its expansion option, in addition to the
construction of a second building which is of a quality equal to or better than
the PWC building, Wells OP will be required to expand the parking garage such
that a sufficient number of parking spaces, at least equal to four (4) parking
spaces per 1,000 square feet of rentable area, is maintained.  Wells OP agrees
to fund the cost of the design, development and construction of the Expansion
Building up to a maximum of $150.00 per square foot of rentable area, as
increased by increases in the Consumer Price Index between the Rental
Commencement Date and the date of expansion notice (the "Maximum Expansion
Cost").  PWC shall be responsible for the payment of any costs of the Expansion
Building in excess of the Maximum Expansion Cost.

     The base rent per square foot of rentable area payable for the Expansion
Building in the first lease year of such building shall be an amount equal to
the product of (a) the Expansion Building cost per square foot of rentable area
multiplied by (b) the sum of 300 basis points plus the weekly average yield on
United States Treasury Obligations, amortized on an annual basis over a period
of twenty (20) years.  The base rent for each subsequent lease year shall be one
hundred three percent (103%) of the base rent for the immediately preceding
lease year.

     In the event that PWC elects to exercise its expansion option and Wells OP
determines not to proceed with the construction of the Expansion Building as
described above, or if Wells OP is otherwise required to construct the Expansion
Building and fails to do so in a timely basis pursuant to the PWC Lease, PWC may
exercise its Purchase Option by giving Wells OP written notice of such exercise
within thirty (30) days after either such event.  If PWC properly exercises its
Purchase Option, PWC must simultaneously deliver a deposit in the amount of
$50,000 in the form of cash, wire transfer or cashier's check.  The purchase
price for the PWC Building pursuant to the Purchase Option shall be equal to (a)
the average of the monthly base rent for each month remaining in the initial
term as of the closing date on the Purchase Option multiplied by 12 (the
"Average Annual Base Rent"), and (b) the Average Annual Base Rent shall be
multiplied by 11.

     There are no assurances that Wells OP will be able to attract or obtain
suitable replacement tenants for the PWC Building upon the expiration of the PWC
Lease.

PROPERTY MANAGEMENT FEES

     Wells Management Company, Inc. ("Wells Management"), an Affiliate of the
Company and the Advisor, has been retained to manage and lease the PWC Building.
The Company shall pay management and leasing fees to Wells Management in the
amount of 4.5% of gross revenues.

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

                                       14

<PAGE>
 
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.

     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 January 10, 1999 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 January 10, 1999,
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 January 10, 1999, the Company had raised a total of $32,484,200 in
     offering proceeds (3,248,420 shares), and had paid $1,136,947 in
     acquisition and advisory fees and acquisition expenses and $4,060,525 in
     selling commissions and organizational and offering expenses.  As of
     January 10, 1999, the

                                       15

<PAGE>
 
     Company had invested $18,442,540 in properties and was holding net offering
     proceeds of $8,844,188 available for investment in additional properties.

PLAN OF DISTRIBUTION

     The information contained on page 74 in the "Plan of Distribution" section
of the Prospectus is revised as of the date of this Supplement by the deletion
of the fourth full paragraph on that page and the insertion of the following
paragraph in lieu thereof:

          Payment for shares should be made by check payable to "NationsBank,
     N.A., as Escrow Agent."  Subscriptions will be effective only upon
     acceptance by the Company, and the Company reserves the right to reject any
     subscription in whole or in part.  In no event may a subscription for
     shares be accepted until at least five business days after the date the
     subscriber receives this Prospectus.  Each subscriber will receive a
     confirmation of his purchase.  Except for purchases pursuant to the
     Reinvestment Plan or  reinvestment plans of other public real estate
     programs, all accepted subscriptions will be for not less than 100 shares
     ($1,000).  See "Investor Suitability Standards."  Except in Maine,
     Minnesota and Washington, investors who have satisfied the minimum purchase
     requirement and have purchased units in Prior Wells Public Programs or
     units or shares in other public real estate programs may purchase less than
     the minimum number of shares discussed above, provided that such investors
     purchase a minimum of 2.5 shares ($25).  After investors have satisfied the
     minimum purchase requirement, minimum additional purchases must be in
     increments of at least 2.5 shares ($25), except for purchases pursuant to
     the Reinvestment Plan or reinvestment plans of other public real estate
     programs.

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."

FINANCIAL STATEMENTS

     The pro forma balance sheet of Wells Real Estate Investment Trust, Inc. as
of September 30, 1998, which is included in Appendix I to this Supplement No. 6,
has not been audited.

                                       16

<PAGE>
 
                                                                      APPENDIX I

                         INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
                                                                                

WELLS REAL ESTATE INVESTMENT TRUST, INC.
   Unaudited Pro Forma Financial Statements
      Summary of Unaudited Pro Forma Balance Sheet                           I-1
      Pro Forma Balance Sheet as of September 30, 1998                       I-2
 

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

                      (Unaudited Pro Forma Balance Sheet)

The following unaudited pro forma balance sheet as of September 30, 1998 has 
been prepared to give effect to Wells Real Estate Investment Trust, Inc.'s 
acquisition of the PricewaterhouseCoopers Building as if the transaction had 
occurred as of September 30, 1998.

         
                                      I-1

<PAGE>
 
                   WELLS REAL ESTATE INVESTMENT TRUST, INC.

                            PRO FORMA BALANCE SHEET

                              SEPTEMBER 30, 1998

                                  (Unaudited)

    

<TABLE> 
<CAPTION> 
                                                          WELLS
                                                       REAL ESTATE
                                                       INVESTMENT             PRO FORMA        PRO FORMA
                                                       TRUST, INC.           ADJUSTMENTS          TOTAL
                                                      -------------        ---------------    -------------
<S>                                                   <C>                  <C>                <C>
ASSETS:
     Real estate assets, at cost:
          Land                                         $         0         $ 1,520,834 (a)     $ 1,520,834
          Building                                               0          20,076,845 (a)      20,076,845
                                                      -------------        ---------------    -------------
               Total real estate assets                          0          21,597,679          21,597,679
     Investment in joint ventures                        9,861,770                   0           9,861,770
     Cash                                                  591,122            (591,122)(a)               0
     Due from affiliates                                   162,877                   0             162,877
     Deferred project costs                                 10,584             (10,584)(b)               0
     Deferred offering costs                               648,130                   0             648,130
     Prepaid expenses and other assets                      11,250                   0              11,250
                                                      -------------        ---------------    -------------
               Total assets                            $11,285,733         $20,995,973         $32,281,706
                                                      =============        ===============    =============

LIABILITIES:
     Notes payable                                     $         0         $14,132,538 (a)     $14,132,538
     Sales commissions payable                              99,599                   0              99,599
     Due to affiliates                                     681,674           6,863,435(a)(b)     7,545,109
     Partnership distribution payable                      102,987                   0             102,987
     Minority interest of unit holder in Operating
          Partnership                                      200,000                   0             200,000
                                                      -------------        ---------------    -------------
               Total liabilities                         1,084,260          20,995,973          22,080,233
                                                      -------------        ---------------    -------------

SHAREHOLDER'S EQUITY:
     Common shares, $.01 par value, 165,000,000
      shares authorized, 1,169,292 issued and
      outstanding                                           11,693                   0              11,693
     Additional paid-in capital                         10,219,740                   0          10,219,740
     Account deficit                                       (29,690)                  0             (29,690)
                                                      -------------        ---------------    -------------
               Total shareholders' equity               10,201,473                   0          10,201,473
                                                      -------------        ---------------    -------------
               Total liabilities and shareholders'
                equity                                 $11,285,733         $20,995,973         $32,281,706
                                                      =============        ===============    =============
</TABLE>
 


          (a)  Reflects Wells Real Estate Investment Trust, Inc.'s purchase
               price related to the PricewaterhouseCoopers Building.

          (b)  Reflects the deferred project costs allocated to the
               PricewaterhouseCoopers Building.
     
                                      I-2


<PAGE>
 
 
                                   PART II
                    INFORMATION NOT REQUIRED IN PROSPECTUS

Items 31 through 35 and Item 37 of Part II are incorporated by reference to the
Registrant's Registration Statement, as amended to date, Commission File No.
333-32099.

Item 36   Financial Statements and Exhibits.
          --------------------------------- 

          (a)  Financial Statements:
               -------------------- 

               The following financial statements of Wells Real Estate
               Investment Trust, Inc. are filed as part of this Registration
               Statement and are included in the Prospectus:

                    Audited Balance Sheet
                    (1) Report of Independent Public Accountants,
                    (2) Consolidated Balance Sheet as of December 31, 1997, and
                    (3) Notes to Consolidated Balance Sheet.

               The following financial statements of Fund IX and X Associates
               are filed as part of this Registration Statement and are included
               in Supplement No. 2 to the Prospectus:

                    Financial Statements
                    (1) Report of Independent Public Accountants,
                    (2)  Balance Sheets as of March 31, 1998 (Unaudited) and
                         December 31, 1997 (Audited),
                    (3)  Statements of Income (Loss) for the three months ended
                         March 31, 1998 (Unaudited) and the Period from
                         Inception (March 20, 1997) to December 31, 1997
                         (Audited),
                    (4)  Statements of Partners' Capital for the three months
                         ended March 31, 1998 (Unaudited) and the Period from
                         Inception (March 20, 1997) to December 31, 1997
                         (Audited),
                    (5)  Statements of Cash Flows for the three months ended
                         March 31, 1998 (Unaudited) and the Period from
                         Inception (March 20, 1997) to December 31, 1997
                         (Audited), and
                    (6)  Notes to Financial Statements.

               The following financial statements relating to the acquisition of
               the Lucent Building by the Joint Venture are filed as part of
               this Registration Statement and included in Supplement No. 2 to
               the Prospectus:

                    Audited Statement of Revenues Over Operating Expenses
                    (1)  Report of Independent Public Accountants,
                    (2)  Statement of Revenues Over Operating Expenses for the
                         three months ended March 31, 1998, and
                    (3)  Notes to Statement of Revenues Over Operating Expenses
                         for the three months ended March 31, 1998.

               The following unaudited pro forma financial statements of Wells
               Real Estate Investment Trust, Inc. are filed as part of this
               Registration Statement and are included in Supplement No. 2 to
               the Prospectus:

                    Unaudited Pro Forma Financial Statements
                    (1)  Summary of Unaudited Pro Forma Financial Statements,
                    (2)  Pro Forma Balance Sheet as of March 31, 1998,

                                      II-1

<PAGE>
 
                    (3)  Pro Forma Statement of Loss for the year ended December
                         31, 1997, and
                    (4)  Pro Forma Statement of Income for the three months
                         ended March 31, 1998.

               The following financial statements relating to the acquisition of
               the Iomega Building by the IX-X-XI-REIT Joint Venture are filed
               as part of this Registration Statement and included in Supplement
               No. 3 to the Prospectus:

                    Statement of Revenues Over Operating Expenses
                    (1)  Report of Independent Public Accountants,
                    (2)  Statement of Revenues Over Certain Operating Expenses
                         for the year ended December 31, 1997 (Audited) and for
                         the six months ended June 30, 1998 (Unaudited), and
                    (3)  Notes to Statement of Revenues Over Certain Operating
                         Expenses for the year ended December 31, 1997 (Audited)
                         and for the six months ended June 30, 1998 (Unaudited).
 
               The following financial statements relating to the acquisition of
               the Cort Furniture Building by the Cort Joint Venture are filed
               as part of this Registration Statement and included in Supplement
               No. 3 to the Prospectus:

                    Statement of Revenues Over Operating Expenses
                    (1)  Report of Independent Public Accountants,
                    (2)  Statement of Revenues Over Certain Operating Expenses
                         for the year ended December 31, 1997 (Audited) and for
                         the six months ended June 30, 1998 (Unaudited), and
                    (3)  Notes to Statement of Revenues Over Certain Operating
                         Expenses for the year ended December 31, 1997 (Audited)
                         and for the six months ended June 30, 1998 (Unaudited).

               The following financial statements relating to the acquisition of
               the Fairchild Building by the Fremont Joint Venture are filed as
               part of this Registration Statement and included in Supplement
               No. 3 to the Prospectus:

                    Statement of Revenues Over Operating Expenses
                    (1)  Report of Independent Public Accountants,
                    (2)  Statement of Revenues Over Certain Operating Expenses
                         for the year ended December 31, 1997 (Audited) and for
                         the six months ended June 30, 1998 (Unaudited), and
                    (3)  Notes to Statement of Revenues Over Certain Operating
                         Expenses for the year ended December 31, 1997 (Audited)
                         and for the six months ended June 30, 1998 (Unaudited).

               The following unaudited pro forma financial statements of Wells
               Real Estate Investment Trust, Inc. are filed as part of this
               Registration Statement and are included in Supplement No. 3 to
               the Prospectus:

                    Unaudited Pro Forma Financial Statements
                    (1)  Summary of Unaudited Pro Forma Financial Statements,
                    (2)  Pro Forma Balance Sheet as of June 30, 1998,
                    (3)  Pro Forma Statement of Income (Loss) for the year ended
                         December 31, 1997, and
                    (4)  Pro Forma Statement of Income for the six months ended
                         June 30, 1998.

                                      II-2

<PAGE>
 
               The following unaudited pro forma financial statements of Wells
               Real Estate Investment Trust, Inc. are filed as part of this
               Registration Statement and are included in Supplement No. 6 to
               the Prospectus:
    
                    Unaudited Pro Forma Financial Statements
                    (1)  Summary of Unaudited Pro Forma Balance Sheet, and
                    (2)  Pro Forma Balance Sheet as of September 30, 1998.
      

          (b)  Exhibits (See Exhibit Index):
               ---------------------------- 

Exhibit No.    Description
- -----------    -----------

1.1            Form of Dealer Manager Agreement between the Registrant and Wells
               Investment Securities, Inc. (previously filed and incorporated by
               reference to the Registrant's Registration Statement on Form S-
               11, as amended to date, Commission File No. 333-32099)

3.1            Form of Amended and Restated Articles of Incorporation of the
               Registrant (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

3.2            Bylaws of the Registrant (previously filed and incorporated by
               reference to the Registrant's Registration Statement on Form S-
               11, as amended to date, Commission File No. 333-32099)

4.1            Form of Subscription Agreement and Subscription Agreement
               Signature Page (included as Exhibit B to Prospectus)

4.2            Form of Dividend Reinvestment Plan (included as Exhibit C to
               Prospectus)

5.1            Form of Opinion of Hunton & Williams (previously filed and
               incorporated by reference to the Registrant's Registration
               Statement on Form S-11, as amended to date, Commission File No.
               333-32099)

8.1            Form of Opinion of Hunton & Williams as to Tax Matters
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.1           Form of Agreement of Limited Partnership of Wells Operating
               Partnership, L.P. (previously filed and incorporated by reference
               to the Registrant's Registration Statement on Form S-11, as
               amended to date, Commission File No. 333-32099)

10.2           Form of Escrow Agreement (previously filed and incorporated by
               reference to the Registrant's Registration Statement on Form S-
               11, as amended to date, Commission File No. 333-32099)

10.3           Form of Advisory Agreement (previously filed and incorporated by
               reference to the Registrant's Registration Statement on Form S-
               11, as amended to date, Commission File No. 333-32099)

10.3(a)        First Amendment to Advisory Agreement dated June 1, 1998
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.4           Amended and Restated Joint Venture Agreement of The Fund IX, Fund
               X, Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint
               Venture") dated June 11, 1998 (previously filed and incorporated
               by reference to the Registrant's Registration Statement on Form 
               S-11, as amended to date, Commission File No. 333-32099)

                                      II-3

<PAGE>
 
10.5           Lease Agreement for the ABB Building dated December 10, 1996
               between the IX-X-XI-REIT Joint Venture (as successor in interest
               by assignment) and ABB Flakt, Inc. (previously filed as Exhibit
               10(kk) and incorporated by reference to the Registration
               Statement on Form S-11 of Wells Real Estate Fund VIII, L.P. and
               Wells Real Estate Fund IX, L.P., as amended, Commission File No.
               33-83852)

10.6           Agreement for the Purchase and Sale of Real Property relating to
               the Ohmeda Building dated November 14, 1997 between Lincor
               Centennial, Ltd. and Wells Real Estate Fund X, L.P. (previously
               filed and incorporated by reference to the Registrant's
               Registration Statement on Form S-11, as amended to date,
               Commission File No. 333-32099)

10.7           Agreement for the Purchase and Sale of Property relating to the
               Interlocken Building dated February 11, 1998 between Orix Prime
               West Broomfield Venture and Wells Development Corporation
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.8           Agreement for the Purchase and Sale of Real Property relating to
               the Lucent Building dated May 30, 1997 between Wells Development
               Corporation and the IX-X-XI-REIT Joint Venture (previously filed
               as Exhibit 10(k) and incorporated by reference to the
               Registration Statement on Form S-11 of Wells Real Estate Fund X,
               L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
               Commission File No. 333-7979)

10.8(a)        First Amendment to the Agreement for the Purchase and Sale of
               Real Property relating to the Lucent Building dated April 21,
               1998 between Wells Development Corporation and the IX-X-XI-REIT
               Joint Venture (previously filed and incorporated by reference to
               the Registrant's Registration Statement on Form S-11, as amended
               to date, Commission File No. 333-32099)

10.9           Development Agreement relating to the Lucent Building dated May
               30, 1997 between Wells Development Corporation and ADEVCO
               Corporation (previously filed as Exhibit 10(m) and incorporated
               by reference to the Registration Statement on Form S-11 of Wells
               Real Estate Fund X, L.P. and Wells Real Estate Fund XI, L.P., as
               amended to date, Commission File No. 333-7979)

10.10          Net Lease Agreement for the Lucent Building dated May 30, 1997
               between the IX-X-XI-REIT Joint Venture (as successor in interest
               by assignment) and Lucent Technologies, Inc. (previously filed as
               Exhibit 10(l) and incorporated by reference to the Registration
               Statement on Form S-11 of Wells Real Estate Fund X, L.P. and
               Wells Real Estate Fund XI, L.P., as amended to date, Commission
               File No. 333-7979)

10.10(a)       First Amendment to Net Lease Agreement for the Lucent Building
               dated March 30, 1998 between the IX-X-XI-REIT Joint Venture (as
               successor in interest by assignment) and Lucent Technologies,
               Inc. (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.11          Purchase and Sale Agreement relating to the Iomega Building dated
               February 4, 1998 between the IX-X-XI-REIT Joint Venture and SCI
               Development Services Incorporated (previously filed and
               incorporated by reference to the Registrant's Registration
               Statement on Form S-11, as amended to date, Commission File No.
               333-32099)

10.12          Lease Agreement for the Iomega Building dated April 9, 1996
               between the IX-X-XI-REIT Joint Venture (as successor in interest
               by assignment) and Iomega Corporation (previously filed and
               incorporated by reference to the Registrant's Registration
               Statement on Form S-11, as amended to date, Commission File No.
               333-32099)

                                      II-4

<PAGE>
 
10.13          Agreement for the Purchase and Sale of Property relating to the
               Fairchild Building dated June 8, 1998 between the Fremont Joint
               Venture (as successor in interest by assignment) and Rose
               Ventures V, Inc., Thomas G. Haury and Carleen S. Haury
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.14          Restatement of and First Amendment to Agreement for the Purchase
               and Sale of Property relating to the Fairchild Building dated
               July 1, 1998 between the Fremont Joint Venture (as successor in
               interest by assignment) and Rose Ventures V, Inc., Thomas G.
               Haury and Carleen S. Haury (previously filed and incorporated by
               reference to the Registrant's Registration Statement on Form S-
               11, as amended to date, Commission File No. 333-32099)

10.15          Promissory Note for $5,960,000 from the Fremont Joint Venture to
               NationsBank, N.A. relating to the Fairchild Building dated July
               16, 1998 (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.16          Deed of Trust securing the Fairchild Building dated July 16, 1998
               between the Fremont Joint Venture and NationsBank, N.A.
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.17          Joint Venture Agreement of Wells/Fremont Associates (the "Fremont
               Joint Venture") dated July 15, 1998 between Wells Development
               Corporation and Wells Operating Partnership, L.P. (previously
               filed and incorporated by reference to the Registrant's
               Registration Statement on Form S-11, as amended to date,
               Commission File No. 333-32099)

10.18          Joint Venture Agreement of Fund X and Fund XI Associates (the
               "Fund X-XI Joint Venture") dated July 15, 1998 between the
               Registrant and Wells Real Estate Fund X, L.P. (previously filed
               and incorporated by reference to the Registrant's Registration
               Statement on Form S-11, as amended to date, Commission File No.
               333-32099)

10.19          Agreement for the Purchase and Sale of Joint Venture Interest
               relating to the Fremont Joint Venture dated July 17, 1998 between
               Wells Development Corporation and the Fund X-XI Joint Venture
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.20          Lease Agreement for the Fairchild Building dated September 19,
               1997 between the Fremont Joint Venture (as successor in interest
               by assignment) and Fairchild Technologies USA, Inc. (previously
               filed and incorporated by reference to the Registrant's
               Registration Statement on Form S-11, as amended to date,
               Commission File No. 333-32099)

10.21          Purchase and Sale Agreement and Joint Escrow Instructions
               relating to the Cort Furniture Building dated June 12, 1998
               between the Cort Joint Venture (as successor in interest by
               assignment) and Spencer Fountain Valley Holdings, Inc.
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.22          First Amendment to Purchase and Sale Agreement and Joint Escrow
               Instructions relating to the Cort Furniture Building dated July
               16, 1998 between the Cort Joint Venture (as successor in interest
               by assignment) and Spencer Fountain Valley Holdings, Inc.
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.23          Promissory Note for $4,875,000 from the Cort Joint Venture to
               NationsBank, N.A. relating to the Cort Furniture Building dated
               July 30, 1998 (previously filed and incorporated by reference

                                      II-5

<PAGE>
 
               to the Registrant's Registration Statement on Form S-11, as
               amended to date, Commission File No. 333-32099)

10.24          Deed of Trust securing the Cort Furniture Building dated July 30,
               1998 between the Fremont Joint Venture and NationsBank, N.A.
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.25          Joint Venture Agreement of Wells/Orange County Associates (the
               "Cort Joint Venture") dated July 27, 1998 between Wells
               Development Corporation and Wells Operating Partnership, L.P.
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.26          Agreement for the Purchase and Sale of Joint Venture Interest
               relating to the Cort Joint Venture dated July 30, 1998 between
               Wells Development Corporation and the Fund X-XI Joint Venture
               (previously filed and incorporated by reference to the
               Registrant's Registration Statement on Form S-11, as amended to
               date, Commission File No. 333-32099)

10.27          Real Estate Option Agreement for the purchase of Lot #11 dated
               April 22, 1998 between The Development Corporation of Knox County
               and Wells Development Corporation, filed herewith

10.28          Real Estate Option Agreement for the purchase of Lot #10 dated
               June 21, 1998 between The Development Corporation of Knox County
               and Wells Development Corporation, filed herewith

10.29          Amendment to Real Estate Option Agreements (Lots 10 and 11) dated
               September 8, 1998 between The Development Corporation of Knox
               County and Wells Development Corporation, filed herewith

10.30          Second Amendment to Real Estate Option Agreements (Lots 10 and
               11) dated October 7, 1998 between The Development Corporation of
               Knox County and Wells Development Corporation, filed herewith

10.31          Agreement for the Purchase and Sale of Property for an undivided
               interest in the Associates Property dated September 15, 1998
               between Wells Development Corporation and Wells Operating
               Partnership, L.P., filed herewith

10.32          Development Agreement for the Associates Building dated September
               15, 1998 between Wells Development Corporation and ADEVCO
               Corporation, filed herewith

10.33          Guaranty of Development Agreement for the Associates Building
               dated September 15, 1998 by David M. Kraxberger, filed herewith

10.34          Owner-Contractor Agreement for the construction of the Associates
               Building dated September 10, 1998 between Wells Development
               Corporation and Integra Construction, Inc., filed herewith

10.35          Temporary Lease Agreement for remainder of the ABB Building dated
               September 10, 1998 between the IX-X-XI-REIT Joint Venture and
               Associates Housing Finance, LLC, filed herewith

10.36          Lease Agreement for the Associates Building dated September 10,
               1998 between Wells Development Corporation and Associates Housing
               Finance, LLC, filed herewith

10.37          Amended and Restated Purchase Agreement relating to the PWC
               Building dated December 4, 1998 between Carter Sunforest, L.P.
               and Wells Operating Partnership, L.P., filed herewith

                                      II-6

<PAGE>
 
10.38          Assignment and Assumption Agreement relating to the PWC Building
               dated December 4, 1998 between TriNet Corporate Realty Trust,
               Inc. and Wells Operating Partnership, L.P., filed herewith

10.39          Amended and Restated Loan Agreement dated December 31, 1998
               between Wells Operating Partnership, L.P. and SouthTrust Bank,
               National Association, filed herewith

10.40          Amended and Restated Promissory Note for $15,500,000 from Carter
               Sunforest, L.P. to SouthTrust Bank, National Association dated
               December 31, 1998, filed herewith

10.41          Amendment No. 1 to Mortgage and Security Agreement and other Loan
               Documents securing the PWC Building dated December 31, 1998
               between Carter Sunforest, L.P. and SouthTrust Bank, National
               Association, filed herewith

10.42          Lease for the PWC Building dated March 30, 1998 between Wells
               Operating Partnership, L.P. (as successor in interest by
               assignment) and Price Waterhouse LLP, filed herewith

10.43          Amended and Restated Warrant Purchase Agreement dated December
               31, 1998 between the Registrant and Wells Investment Securities,
               Inc., filed herewith

23.1           Consent of Hunton & Williams (included in Exhibits 5.1 and 8.1)

23.2           Consent of Arthur Andersen LLP, filed herewith

24.1           Power of Attorney, filed herewith

- -----------------------------------

                                      II-7

<PAGE>
 

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-11 and has duly caused this Post-Effective
Amendment No. 4 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Norcross, and State of
Georgia, on the 12th day of January, 1999.

                                        WELLS REAL ESTATE INVESTMENT TRUST, INC.
                                        A MARYLAND CORPORATION
                                        (Registrant)

                                        By:  /s/ Leo F. Wells, III
                                             -----------------------------------
                                             Leo F. Wells, III
                                             President

     Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 4 to Registration Statement has been signed below on
January 12, 1999 by the following persons in the capacities indicated.

/s/ Leo F. Wells, III              President and Director
- --------------------------------                        
Leo F. Wells, III                  (Principal Executive Officer)

/s/ Brian M. Conlon                Executive Vice President and Director
- --------------------------------
Brian M. Conlon                    (Principal Financial and Accounting Officer)

/s/ Walter W. Sessoms          *   Director
- --------------------------------
Walter W. Sessoms

/s/ John L. Bell               *   Director
- --------------------------------
John L. Bell

/s/ Richard W. Carpenter       *   Director
- --------------------------------
Richard W. Carpenter

/s/ Bud S. Carter              *   Director
- --------------------------------
Bud Carter

/s/ Donald S. Moss             *   Director
- --------------------------------
Donald S. Moss

/s/ Neil H. Strickland         *   Director
- --------------------------------
Neil H. Strickland

/s/ William H. Keogler, Jr.    *   Director
- --------------------------------
William H. Keogler, Jr.

*    By Brian M. Conlon, Attorney-in-fact, pursuant to Power of Attorney dated
     August 19, 1998 and included as Exhibit 24.1 herein.

<PAGE>
 

                                 EXHIBIT INDEX
                                 -------------

Sequential
Exhibit No.  Description
- -----------  -----------

1.1          Form of Dealer Manager Agreement between the Registrant and Wells
             Investment Securities, Inc. (previously filed and incorporated by
             reference to the Registrant's Registration Statement on Form S-11,
             as amended to date, Commission File No. 333-32099)

3.1          Form of Amended and Restated Articles of Incorporation of the
             Registrant (previously filed and incorporated by reference to the
             Registrant's Registration Statement on Form S-11, as amended to
             date, Commission File No. 333-32099)

3.2          Bylaws of the Registrant (previously filed and incorporated by
             reference to the Registrant's Registration Statement on Form S-11,
             as amended to date, Commission File No. 333-32099) 4.1 Form of
             Subscription Agreement and Subscription Agreement Signature Page
             (included as Exhibit B to Prospectus)

4.2          Form of Dividend Reinvestment Plan (included as Exhibit C to
             Prospectus)

5.1          Form of Opinion of Hunton & Williams (previously filed and
             incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)                                           

8.1          Form of Opinion of Hunton & Williams as to Tax Matters (previously
             filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)                                  

10.1         Form of Agreement of Limited Partnership of Wells Operating
             Partnership, L.P. (previously filed and incorporated by reference
             to the Registrant's Registration Statement on Form S-11, as amended
             to date, Commission File No. 333-32099)                

10.2         Form of Escrow Agreement (previously filed and incorporated by
             reference to the Registrant's Registration Statement on Form S-11,
             as amended to date, Commission File No. 333-32099)

10.3         Form of Advisory Agreement (previously filed and incorporated by
             reference to the Registrant's Registration Statement on Form S-11,
             as amended to date, Commission File No. 333-32099)

10.3(a)      First Amendment to Advisory Agreement dated June 1, 1998
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.4         Amended and Restated Joint Venture Agreement of The Fund IX, Fund
             X, Fund XI and REIT Joint Venture (the "IX-X-XI-REIT Joint
             Venture") dated June 11, 1998 (previously filed and incorporated by
             reference to the Registrant's Registration Statement on Form S-11,
             as amended to date, Commission File No. 333-32099)

10.5         Lease Agreement for the ABB Building dated December 10, 1996
             between the IX-X-XI-REIT Joint Venture (as successor in interest by
             assignment) and ABB Flakt, Inc. (previously filed as Exhibit 10(kk)
             and incorporated by reference to the Registration Statement on Form
             S-11 of Wells Real Estate Fund VIII, L.P. and Wells Real Estate
             Fund IX, L.P., as amended, Commission File No. 33-83852)

10.6         Agreement for the Purchase and Sale of Real Property relating to
             the Ohmeda Building dated November 14, 1997 between Lincor
             Centennial, Ltd. and Wells Real Estate Fund X, L.P. (previously
             filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

<PAGE>
 
10.7         Agreement for the Purchase and Sale of Property relating to the
             Interlocken Building dated February 11, 1998 between Orix Prime
             West Broomfield Venture and Wells Development Corporation
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.8         Agreement for the Purchase and Sale of Real Property relating to
             the Lucent Building dated May 30, 1997 between Wells Development
             Corporation and the IX-X-XI-REIT Joint Venture (previously filed as
             Exhibit 10(k) and incorporated by reference to the Registration
             Statement on Form S-11 of Wells Real Estate Fund X, L.P. and Wells
             Real Estate Fund XI, L.P., as amended to date, Commission File No.
             333-7979)

10.8(a)      First Amendment to the Agreement for the Purchase and Sale of Real
             Property relating to the Lucent Building dated April 21, 1998
             between Wells Development Corporation and the IX-X-XI-REIT Joint
             Venture (previously filed and incorporated by reference to the
             Registrant's Registration Statement on Form S-11, as amended to
             date, Commission File No. 333-32099)

10.9         Development Agreement relating to the Lucent Building dated May 30,
             1997 between Wells Development Corporation and ADEVCO Corporation
             (previously filed as Exhibit 10(m) and incorporated by reference to
             the Registration Statement on Form S-11 of Wells Real Estate Fund
             X, L.P. and Wells Real Estate Fund XI, L.P., as amended to date,
             Commission File No. 333-7979)

10.10        Net Lease Agreement for the Lucent Building dated May 30, 1997
             between the IX-X-XI-REIT Joint Venture (as successor in interest by
             assignment) and Lucent Technologies, Inc. (previously filed as
             Exhibit 10(l) and incorporated by reference to the Registration
             Statement on Form S-11 of Wells Real Estate Fund X, L.P. and Wells
             Real Estate Fund XI, L.P., as amended to date, Commission File No.
             333-7979)

10.10(a)     First Amendment to Net Lease Agreement for the Lucent Building
             dated March 30, 1998 between the IX-X-XI-REIT Joint Venture (as
             successor in interest by assignment) and Lucent Technologies, Inc.
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.11        Purchase and Sale Agreement relating to the Iomega Building dated
             February 4, 1998 between the IX-X-XI-REIT Joint Venture and SCI
             Development Services Incorporated (previously filed and
             incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

10.12        Lease Agreement for the Iomega Building dated April 9, 1996 between
             the IX-X-XI-REIT Joint Venture (as successor in interest by
             assignment) and Iomega Corporation (previously filed and
             incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

10.13        Agreement for the Purchase and Sale of Property relating to the
             Fairchild Building dated June 8, 1998 between the Fremont Joint
             Venture (as successor in interest by assignment) and Rose Ventures
             V, Inc., Thomas G. Haury and Carleen S. Haury (previously filed and
             incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

10.14        Restatement of and First Amendment to Agreement for the Purchase
             and Sale of Property relating to the Fairchild Building dated July
             1, 1998 between the Fremont Joint Venture (as successor in interest
             by assignment) and Rose Ventures V, Inc., Thomas G. Haury and
             Carleen S. Haury (previously filed and incorporated by reference to
             the Registrant's Registration Statement on Form S-11, as amended to
             date, Commission File No. 333-32099)

<PAGE>
 
10.15        Promissory Note for $5,960,000 from the Fremont Joint Venture to
             NationsBank, N.A. relating to the Fairchild Building dated July 16,
             1998 (previously filed and incorporated by reference to the
             Registrant's Registration Statement on Form S-11, as amended to
             date, Commission File No. 333-32099)

10.16        Deed of Trust securing the Fairchild Building dated July 16, 1998
             between the Fremont Joint Venture and NationsBank, N.A. (previously
             filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.17        Joint Venture Agreement of Wells/Fremont Associates (the "Fremont
             Joint Venture") dated July 15, 1998 between Wells Development
             Corporation and Wells Operating Partnership, L.P. (previously filed
             and incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

10.18        Joint Venture Agreement of Fund X and Fund XI Associates (the "Fund
             X-XI Joint Venture") dated July 15, 1998 between the Registrant and
             Wells Real Estate Fund X, L.P. (previously filed and incorporated
             by reference to the Registrant's Registration Statement on Form S-
             11, as amended to date, Commission File No. 333-32099)

10.19        Agreement for the Purchase and Sale of Joint Venture Interest
             relating to the Fremont Joint Venture dated July 17, 1998 between
             Wells Development Corporation and the Fund X-XI Joint Venture
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.20        Lease Agreement for the Fairchild Building dated September 19, 1997
             between the Fremont Joint Venture (as successor in interest by
             assignment) and Fairchild Technologies USA, Inc. (previously filed
             and incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

10.21        Purchase and Sale Agreement and Joint Escrow Instructions relating
             to the Cort Furniture Building dated June 12, 1998 between the Cort
             Joint Venture (as successor in interest by assignment) and Spencer
             Fountain Valley Holdings, Inc. (previously filed and incorporated
             by reference to the Registrant's Registration Statement on Form S-
             11, as amended to date, Commission File No. 333-32099)

10.22        First Amendment to Purchase and Sale Agreement and Joint Escrow
             Instructions relating to the Cort Furniture Building dated July 16,
             1998 between the Cort Joint Venture (as successor in interest by
             assignment) and Spencer Fountain Valley Holdings, Inc. (previously
             filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.23        Promissory Note for $4,875,000 from the Cort Joint Venture to
             NationsBank, N.A. relating to the Cort Furniture Building dated
             July 30, 1998 (previously filed and incorporated by reference to
             the Registrant's Registration Statement on Form S-11, as amended to
             date, Commission File No. 333-32099)

10.24        Deed of Trust securing the Cort Furniture Building dated July 30,
             1998 between the Fremont Joint Venture and NationsBank, N.A.
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.25        Joint Venture Agreement of Wells/Orange County Associates (the
             "Cort Joint Venture") dated July 27, 1998 between Wells Development
             Corporation and Wells Operating Partnership, L.P. (previously filed
             and incorporated by reference to the Registrant's Registration
             Statement on Form S-11, as amended to date, Commission File No. 
             333-32099)

<PAGE>
 
10.26        Agreement for the Purchase and Sale of Joint Venture Interest
             relating to the Cort Joint Venture dated July 30, 1998 between
             Wells Development Corporation and the Fund X-XI Joint Venture
             (previously filed and incorporated by reference to the Registrant's
             Registration Statement on Form S-11, as amended to date, Commission
             File No. 333-32099)

10.27        Real Estate Option Agreement for the purchase of Lot #11 dated
             April 22, 1998 between The Development Corporation of Knox County
             and Wells Development Corporation, filed herewith

10.28        Real Estate Option Agreement for the purchase of Lot #10 dated June
             21, 1998 between The Development Corporation of Knox County and
             Wells Development Corporation, filed herewith

10.29        Amendment to Real Estate Option Agreements (Lots 10 and 11) dated
             September 8, 1998 between The Development Corporation of Knox
             County and Wells Development Corporation, filed herewith

10.30        Second Amendment to Real Estate Option Agreements (Lots 10 and 11)
             dated October 7, 1998 between The Development Corporation of Knox
             County and Wells Development Corporation, filed herewith

10.31        Agreement for the Purchase and Sale of Property for an undivided
             interest in the Associates Property dated September 15, 1998
             between Wells Development Corporation and Wells Operating
             Partnership, L.P., filed herewith

10.32        Development Agreement for the Associates Building dated September
             15, 1998 between Wells Development Corporation and ADEVCO
             Corporation, filed herewith

10.33        Guaranty of Development Agreement for the Associates Building dated
             September 15, 1998 by David M. Kraxberger, filed herewith

10.34        Owner-Contractor Agreement for the construction of the Associates
             Building dated September 10, 1998 between Wells Development
             Corporation and Integra Construction, Inc., filed herewith

10.35        Temporary Lease Agreement for remainder of the ABB Building dated
             September 10, 1998 between the IX-X-XI-REIT Joint Venture and
             Associates Housing Finance, LLC, filed herewith

10.36        Lease Agreement for the Associates Building dated September 10,
             1998 between Wells Development Corporation and Associates Housing
             Finance, LLC, filed herewith

10.37        Amended and Restated Purchase Agreement relating to the PWC
             Building dated December 4, 1998 between Carter Sunforest, L.P. and
             Wells Operating Partnership, L.P., filed herewith

10.38        Assignment and Assumption Agreement relating to the PWC Building
             dated December 4, 1998 between TriNet Corporate Realty Trust, Inc.
             and Wells Operating Partnership, L.P., filed herewith

10.39        Amended and Restated Loan Agreement dated December 31, 1998 between
             Wells Operating Partnership, L.P. and SouthTrust Bank, National
             Association, filed herewith

10.40        Amended and Restated Promissory Note for $15,500,000 from Carter
             Sunforest, L.P. to SouthTrust Bank, National Association dated
             December 31, 1998, filed herewith

10.41        Amendment No. 1 to Mortgage and Security Agreement and other Loan
             Documents securing the PWC Building dated December 31, 1998 between
             Carter Sunforest, L.P. and SouthTrust Bank, National Association,
             filed herewith

10.42        Lease for the PWC Building dated March 30, 1998 between Wells
             Operating Partnership, L.P. (as successor in interest by
             assignment) and Price Waterhouse LLP, filed herewith

<PAGE>
 
10.43        Amended and Restated Warrant Purchase Agreement dated December 31,
             1998 between the Registrant and Wells Investment Securities, Inc.,
             filed herewith

23.1         Consent of Hunton & Williams (included in Exhibits 5.1 and 8.1)

23.2         Consent of Arthur Andersen LLP, filed herewith

24.1         Power of Attorney, filed herewith


________________





<PAGE>
 
                                 EXHIBIT 10.27

                         REAL ESTATE OPTION AGREEMENT

                                  FOR LOT #11

              BETWEEN THE DEVELOPMENT CORPORATION OF KNOX COUNTY

                                      AND

                         WELLS DEVELOPMENT CORPORATION

<PAGE>
 
                         REAL ESTATE OPTION AGREEMENT
                         ----------------------------


      This REAL ESTATE OPTION AGREEMENT is made and entered into effective as of
the 22nd day of April, 1998 (the "Effective Date"), by and between THE
DEVELOPMENT CORPORATION OF KNOX COUNTY, a Tennessee non-profit corporation,
hereinafter referred to as "Seller," and WELLS DEVELOPMENT CORPORATION, a
Georgia corporation, hereinafter referred to as "Purchaser."

                                  WITNESSETH:
                                  ---------- 

      WHEREAS, Seller is the owner in fee simple of a certain unimproved tract
of land consisting of approximately 4.7 acres, more or less, comprised of LOT
#11 in CENTERPOINT BUSINESS PARK, located in Knox County, Tennessee, as is more
particularly described on Exhibit A, attached hereto and incorporated herein by
                          ---------                                            
reference (hereinafter referred to as the "Premises"); and

      WHEREAS, Purchaser wishes to purchase an option on the Premises as
hereinafter provided.

      NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein contained, the payment of the Option Price hereinafter specified, the
foregoing recitals which are incorporated into this Agreement by
 reference, and
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

      1.  Grant of Option.  Subject to the conditions of this Agreement, Seller
          ---------------                                                      
hereby grants to Purchaser an option to purchase the Premises together with all
improvements thereon, if any, on an "as is, where is" basis except as provided
in Paragraph 7.

      2.  Option Period.  This Option shall remain in full force and effect
          -------------                                                    
for a period of two (2) months from the Effective Date, such Option Period
commencing upon the Effective Date, and terminating at 11:59 p.m. on the 22nd
day of June, 1998, which period of time is hereinafter referred to as the
"Exercise Period." By mutual agreement of the parties, the Exercise 

<PAGE>
 
Period may be extended for an additional period of thirty (30) days, which
extension will be evidenced by an amendment to this Agreement signed by both
parties.

      3.  Exercise of Option.  This Option may be exercised by Purchaser at any
          ------------------                                                   
time during the Exercise Period by written notice from Purchaser to Seller which
is actually delivered to and received by Seller during the Exercise Period.

      4.  Option Consideration.  Purchaser shall pay to Seller the sum of Five
          --------------------                                                
Thousand and No/100 Dollars ($5,000.00) ("Option Price") as consideration for
the granting of the Option, the receipt of which is hereby acknowledged.  In the
event Purchaser does not exercise the Option as herein provided, the Option
Price shall be retained by Seller free and clear of all claims.  In the event
Purchaser properly exercises the Option as herein provided, the Option Price
shall be credited against the Purchase Price.

      5.  Exceptions to Title.  In the event of the exercise of the Option, the
          -------------------                                                  
Premises will be sold and conveyed subject to:

      a.  Real property taxes for the year 1998, which shall be apportioned
          between the parties hereto at the closing hereof and assumed by
          Purchaser;

      b.  Utilities easements serving the Premises and plat restrictions of
          record;

      c.  Such other easements, covenants, and restrictions as are of record in
          the Knox County Register's Office; and

      d.  Such other affirmative covenants and restrictions which are contained
          in the proposed form of the warranty deed, attached hereto as Exhibit
                                                                        -------
          B.
          - 

 

<PAGE>
 
      6.  Purchase Price.  In the event of the exercise of the Option, the total
          --------------                                                        
purchase price for the Premises will be ONE HUNDRED THIRTY THOUSAND DOLLARS
($130,000.00) per acre (the "Purchase Price"), the exact acreage to be
determined by a survey performed at Purchaser's sole cost.  The Purchase Price
shall be payable as follows:

      (a) The Option Price shall be applied to the Purchase Price;

      (b) The balance of the Purchase Price shall be paid in cash or by
          cashier's or certified check at the Closing of the sale of the
          Premises hereinafter specified (the "Closing").

      7.  Soils Testing.
          ------------- 

      (a) Environmental.     Purchaser, at its own expense, may conduct a Phase
I environmental report.  This report must show that there are no environmental
hazards, defects, or violations on the premises that might require correction or
clean-up by Purchaser.  If, after receipt by the parties of the Phase I
environmental report, it appears that additional environmental reports are
necessary and/or expense will have to be incurred to clean-up the property, then
the Seller shall, at its option, proceed further and incur these expenses or
terminate this agreement.  If this agreement is terminated, the Purchaser shall
be entitled to a return of its option deposit.

      (b) Structural and Topographical.  Upon full execution of this Agreement,
Purchaser may obtain, at its cost, technical engineering to determine the
suitability of soil conditions and topography for the construction of a
manufacturing facility.  Should technical reports indicate the property is
unsuitable for this use, then Purchaser may terminate this Option Agreement by
written notice to Seller, in which event the Option Price shall be immediately
returned to Purchaser and each of the parties shall be released from further
liability to the other.

      8.  Assignment of Option.  This Agreement may not be assigned by Purchaser
          --------------------                                                  
without the prior written consent of Seller, which shall not be unreasonably 
withheld.

<PAGE>
 
      9.  Existing Mortgages.  If there be a mortgage or deed of trust on the
          ------------------                                                 
Premises and in the event of the exercise of the Option, Seller agrees to obtain
at Seller's expense and deliver to Purchaser, on or before the Closing
hereunder, a release thereof, properly executed and acknowledged in form for
recording.

      10. Title to the Premises.  Purchaser agrees at Purchaser's expense to
          ---------------------                                             
cause the title to the Premises to be examined by any reputable title company or
attorney, and to obtain a survey of the Premises, both certified and delivered
to Seller and Purchaser.  The new survey description shall be used for the deed
described in paragraph 13.
             ------------ 

      11. Purchaser's Rights on Seller's Default.  In the event of the exercise
          --------------------------------------                               
of the Option and if (i) Seller defaults in its performance hereunder; or (ii)
Seller is unable to convey good title to the Premises at Closing as required
hereunder; or (iii) a qualified and licensed architect or engineer concludes
that the Premises are unsuitable for construction due to soil or geologic
conditions, then Purchaser shall have the following rights:

      a.  To accept the Premises or any part thereof subject to any of the
          foregoing and, if necessary, obtain specific performance of this
          Agreement subject to such matters; or

      b.  To cancel and terminate this Agreement by written notice to Seller, in
          which event the Option Price, together with any accrued interest
          thereon, shall be returned to Purchaser.

      Purchaser must elect one of the foregoing remedies, upon which election
the selected remedy shall become Purchaser's sole remedy at law or in equity.

      12. Seller's Rights Upon Purchaser's Default.  In the event Purchaser
          ----------------------------------------                         
should exercise the Option and thereafter default under this Agreement, Seller
shall have any and all remedies available to Seller under applicable law at law
or in equity.

<PAGE>
 
      13. Title Documents.  In the event of the exercise of the Option, the deed
          ---------------                                                       
by which the Premises are conveyed to Purchaser at the Closing shall be a
special warranty deed substantially in the form of Exhibit B, suitable for
                                                   ---------              
recording and duly executed and acknowledged by Seller, subject to the matters
stated in paragraph 5.  Seller shall pay the cost of preparing said deed and
          -----------                                                       
Purchaser shall pay the cost of recording the same,  including all taxes.
Purchaser agrees to pay all other closing costs.

      14. Purchaser's Right to Possession.  In the event of the exercise of the
          -------------------------------                                      
Option, Seller agrees to give actual possession and occupancy of the Premises to
Purchaser at the time of Closing hereunder, provided, however, during the
Exercise Period, Purchaser shall have the right to enter the Premises, together
with men and materials, for the following purposes:  (i) to make a physical
inspection of the Premises, including subsurface tests, test borings, and
hazardous waste tests; and (ii) to make an accurate survey of the boundaries of
the Premises.  Purchaser shall also have the right to inspect the Premises
immediately prior to or on the day of Closing.  In the event Purchaser enters
upon the Premises for the purposes specified in subparagraphs (i) and (ii)
                                                -----------------     ----
above, Purchaser will indemnify Seller for any claim made against Seller as a
result of Purchaser's entry and, if the Closing does not take place as provided
hereunder, Purchaser will indemnify Seller for any damage to the Premises caused
by Purchaser's entry.  Purchaser's indemnity obligations contained in this
paragraph 14 shall survive the expiration of the Option Period in the event the
- ------------                                                                   
Closing does not take place.

      15. Condemnation Prior to Closing.  In the event of the exercise of the
          -----------------------------                                      
Option and in the event of the taking of the Premises or any part thereof by
condemnation, the parties agree that Purchaser shall have the option to declare
this Agreement null and void (in which event the Option Price shall be returned
to Purchaser) or to accept the Premises in the condition in which they are left
following such taking, with an assignment by Seller to Purchaser of all rights
to the collection of any condemnation award.

<PAGE>
 
      16. Closing Adjustments.  In the event of the exercise of the Option, at
          -------------------                                                 
the time of Closing hereunder, real estate taxes shall be apportioned and
adjusted between the parties as of the date of Closing.

      17. Closing.  In the event of the exercise of the Option, the Closing of
          -------                                                             
the purchase of the Premises by Purchaser shall be held within thirty (30) days
after the exercise of the Option, with the location and time of said Closing to
be specified by Seller in a written notice.  At said Closing, the Purchase Price
shall be paid by Purchaser to Seller as required in paragraph 6 hereof and
                                                    -----------           
Seller shall deliver to Purchaser a special warranty deed for the Premises as
required by paragraph 13 hereof.
            ------------        

      18. Brokerage Commissions.  In the event of the exercise of the Option and
          ---------------------                                               
closing of the sale of the premises as herein specified, Seller agrees to pay
ADEVCO REALTY GROUP a commission equal to Five (5%) of the Purchase Price for
arranging the sale of the premises pursuant to a separate agreement with said
broker. Purchaser agrees to and hereby does indemnify and hold Seller free and
harmless from all losses, damages, costs, commissions and expenses, including
attorneys' fees, that Seller may suffer as a result of any claims or suits
brought by any other brokers or finders in connection with this transaction,
except with respect to a broker employed by Seller.

      19. General Provisions.
          ------------------ 
      a.  All notices or demands hereunder shall be in writing and shall be
          deemed to have been sufficiently given or served for all purposes when
          presented personally or sent by registered or certified United States
          mail, return receipt requested, or forwarded by a nationally
          recognized overnight courier service, to any party hereto at the
          address set forth below or at such other address as any party shall
          subsequently designate in writing:

               If to Seller:
               The Development Corporation of Knox County
               601 W. Summit Hill Drive, Suite 200-A
               Knoxville, Tennessee 37902
               Contact:  Melissa A. Ziegler
               Phone:  (423) 546-5887

<PAGE>
 
               If to Purchaser:

               Wells Development Corporation
               3885 Holcomb Bridge Road
               Norcross, Georgia  30092
               Contact: Michael Berndt
               Phone: (770)449-7800
 


      b.  This Agreement shall be construed and enforced in accordance with the
          laws of the State of Tennessee.

      c.  If two or more persons constitute either Seller or Purchaser, the word
          "Seller" or the word "Purchaser" shall be construed as if it reads
          "Sellers" and "Purchasers" whenever the sense of this Agreement so
          requires.

      d.  The captions of this Agreement are inserted only for the purpose of
          convenient reference and in no way define, limit, or prescribe the
          scope or intent of this Agreement or any part thereof.

      e.  This Agreement constitutes the entire contract between the parties
          hereto, and may not be changed (including an extension of the Exercise
          Period as provided in paragraph 2) or terminated orally, but may only
                                -----------                                    
          be modified by an instrument in writing signed by the parties hereto.

      f.  The provisions hereof shall apply to and inure to the benefit of the
          successors, assigns and representatives of the respective parties
          hereto.

<PAGE>
 
      g.  This Agreement may be executed in multiple counterparts which shall be
          construed together as one instrument.

      h.  In any dispute relating to the enforcement of this Agreement, the
          defaulting party shall reimburse the costs incurred by the prevailing
          party, including reasonable attorneys fees.

 
      EXECUTED as of the day, year and month first above written.

                                        SELLER:

April 22, 1998  10:45 AM                THE DEVELOPMENT CORPORATION OF
- -------------------------- 
Date and time executed                  KNOX COUNTY

    
/s/ Douglas Lawfer                      By: /s/ Melissa A. Ziegler
- -------------------------                  -------------------------------
Witness                                       Melissa Ziegler
                                        Its:  Executive Director
     


                                        PURCHASER:

                                        WELLS DEVELOPMENT CORPORATION

April 22, 1998 12:05 PM
- -------------------------
Date and time executed

    
/s/ David M. Kraxberger                 By: /s/ Michael C. Berndt     
- -------------------------                   ------------------------------
Witness
                                        Title: VP-Chief Investment Officer
                                               ---------------------------  
     

<PAGE>
 

                                                                       EXHIBIT A

====The==============
     DEVELOPMENT           CENTERPOINT BUSINESS PARK   
     CORPORATION           KNOX COUNTY, TENNESSEE
====Of Knox County===

               [CHART OF CENTERPOINT BUSINESS PARK APPEARS HERE]

                       706 Walnut Street, Suite 700 . Knoxville, Tennessee 37902
                       Phone: (423)546-5887 . Fax: (423)546-6170
                       http://KnoxDevelopment.org  




<PAGE>
 
                                 EXHIBIT 10.28

                          REAL ESTATE OPTION AGREEMENT

                                  FOR LOT #10

               BETWEEN THE DEVELOPMENT CORPORATION OF KNOX COUNTY

                                      AND

                         WELLS DEVELOPMENT CORPORATION

<PAGE>
 
                         REAL ESTATE OPTION AGREEMENT
                         ----------------------------


      This REAL ESTATE OPTION AGREEMENT is made and entered into effective as of
the 21st day of June 1998 (the "Effective Date"), by and between THE DEVELOPMENT
CORPORATION OF KNOX COUNTY, a Tennessee non-profit corporation, hereinafter
referred to as "Seller," and WELLS DEVELOPMENT CORPORATION, a Georgia
corporation, hereinafter referred to as "Purchaser."

                                  WITNESSETH:
                                  ---------- 

      WHEREAS, Seller is the owner in fee simple of a certain unimproved tract
of land consisting of approximately 2.78 acres, more or less, comprised of LOT
#10 in CENTERPOINT BUSINESS PARK, located in Knox County, Tennessee, as is more
particularly described on Exhibit A, attached hereto and incorporated herein by
                          ---------                                            
reference (hereinafter referred to as the "Premises"); and

      WHEREAS, Purchaser wishes to purchase an option on the Premises as
hereinafter provided.

      NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein contained, the payment of the Option Price hereinafter specified, the
foregoing recitals which are incorporated into this Agreement by
 reference, and
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

      1.  Grant of Option.  Subject to the conditions of this Agreement, Seller
          ---------------                                                      
hereby grants to Purchaser an option to purchase the Premises together with all
improvements thereon, if any, on an "as is, where is" basis except as provided
in Paragraph 7.

      2.  Option Period.  This Option shall remain in full force and effect
          -------------                                                    
until terminating at 11:59 p.m. on the 1/st/ day of AUGUST, 1998, which period
of time is hereinafter referred to as the "Exercise Period."

<PAGE>
 
      3.  Exercise of Option.  This Option may be exercised by Purchaser at any
          ------------------                                                   
time during the Exercise Period by written notice from Purchaser to Seller which
is actually delivered to and received by Seller during the Exercise Period.

      4.  Option Consideration.  Purchaser shall pay to Seller the sum of Three
          --------------------                                                 
Thousand and No/100 Dollars ($3,000.00) ("Option Price") as consideration for
the granting of the Option, the receipt of which is hereby acknowledged.  In the
event Purchaser does not exercise the Option as herein provided, the Option
Price shall be retained by Seller free and clear of all claims.  In the event
Purchaser properly exercises the Option as herein provided, the Option Price
shall be credited against the Purchase Price.

      5.  Exceptions to Title.  In the event of the exercise of the Option, the
          -------------------                                                  
Premises will be sold and conveyed subject to:

      a.  Real property taxes for the year 1998, which shall be apportioned
          between the parties hereto at the closing hereof and assumed by
          Purchaser;

      b.  Utilities easements serving the Premises and plat restrictions of
          record;

      c.  Such other easements, covenants, and restrictions as are of record in
          the Knox County Register's Office; and

      d.  Such other affirmative covenants and restrictions which are contained
          in the proposed form of the warranty deed, attached hereto as Exhibit
                                                                        -------
          B.
          - 

6.    Purchase Price.  In the event of the exercise of the Option, the total
      --------------                                                        
purchase price for the Premises will be ONE HUNDRED THIRTY THOUSAND DOLLARS
($130,000.00) per acre (the "Purchase 

<PAGE>
 
Price"), the exact acreage to be determined by a survey performed at Purchaser's
sole cost. The Purchase Price shall be payable as follows:

      (a)  The Option Price shall be applied to the Purchase Price;

      (b)  The balance of the Purchase Price shall be paid in cash or by
           cashier's or certified check at the Closing of the sale of the
           Premises hereinafter specified (the "Closing").

      7.   Soils Testing.
           ------------- 

      (a)  Environmental.     Purchaser, at its own expense, may conduct a Phase
I environmental report.  This report must show that there are no environmental
hazards, defects, or violations on the premises that might require correction or
clean-up by Purchaser.  If, after receipt by the parties of the Phase I
environmental report, it appears that additional environmental reports are
necessary and/or expense will have to be incurred to clean-up the property, then
the Seller shall, at its option, proceed further and incur these expenses or
terminate this agreement.  If this agreement is terminated, the Purchaser shall
be entitled to a return of its option deposit.

      (b)  Structural and Topographical.  Upon full execution of this Agreement,
Purchaser may obtain, at its cost, technical engineering to determine the
suitability of soil conditions and topography for the construction of a
manufacturing facility.  Should technical reports indicate the property is
unsuitable for this use, then Purchaser may terminate this Option Agreement by
written notice to Seller, in which event the Option Price shall be immediately
returned to Purchaser and each of the parties shall be released from further
liability to the other.

      8.   Assignment of Option. This Agreement may not be assigned by Purchaser
           --------------------     
without the prior written consent of Seller.

      9.   Existing Mortgages.  If there be a mortgage or deed of trust on the
           ------------------                                                 
Premises and in the event of the exercise of the Option, Seller agrees to obtain
at Seller's expense and deliver to Purchaser, on or before the Closing
hereunder, a release thereof, properly executed and acknowledged in form for
recording.

<PAGE>
 
      10.  Title to the Premises.  Purchaser agrees at Purchaser's expense to
           ---------------------                                             
cause the title to the Premises to be examined by any reputable title company or
attorney, and to obtain a survey of the Premises, both certified and delivered
to Seller and Purchaser.  The new survey description shall be used for the deed
described in paragraph 13.
             ------------ 

      11.  Purchaser's Rights on Seller's Default.  In the event of the exercise
           --------------------------------------                               
of the Option and if (i) Seller defaults in its performance hereunder; or (ii)
Seller is unable to convey good title to the Premises at Closing as required
hereunder; or (iii) a qualified and licensed architect or engineer concludes
that the Premises are unsuitable for construction due to soil or geologic
conditions, then Purchaser shall have the following rights:

      a.   To accept the Premises or any part thereof subject to any of the
           foregoing and, if necessary, obtain specific performance of this
           Agreement subject to such matters; or

      b.   To cancel and terminate this Agreement by written notice to Seller,
           in which event the Option Price, together with any accrued interest
           thereon, shall be returned to Purchaser.

      Purchaser must elect one of the foregoing remedies, upon which election
the selected remedy shall become Purchaser's sole remedy at law or in equity.

      12.  Seller's Rights Upon Purchaser's Default.  In the event Purchaser
           ----------------------------------------                         
should exercise the Option and thereafter default under this Agreement, Seller
shall have any and all remedies available to Seller under applicable law at law
or in equity.

      13.  Title Documents. In the event of the exercise of the Option, the deed
           ---------------                                                    
by which the Premises are conveyed to Purchaser at the Closing shall be a
special warranty deed substantially in the form of Exhibit B, suitable for
                                                   ---------              
recording and duly executed and acknowledged by Seller, subject to the matters
stated in paragraph 5.  Seller shall pay the cost of preparing said deed and
          -----------                                                       

<PAGE>
 
Purchaser shall pay the cost of recording the same, including all taxes.
Purchaser agrees to pay all other closing costs.

      14.  Purchaser's Right to Possession.  In the event of the exercise of the
           -------------------------------                                      
Option, Seller agrees to give actual possession and occupancy of the Premises to
Purchaser at the time of Closing hereunder, provided, however, during the
Exercise Period, Purchaser shall have the right to enter the Premises, together
with men and materials, for the following purposes:  (i) to make a physical
inspection of the Premises, including subsurface tests, test borings, and
hazardous waste tests; and (ii) to make an accurate survey of the boundaries of
the Premises.  Purchaser shall also have the right to inspect the Premises
immediately prior to or on the day of Closing.  In the event Purchaser enters
upon the Premises for the purposes specified in subparagraphs (i) and (ii)
                                                -----------------     ----
above, Purchaser will indemnify Seller for any claim made against Seller as a
result of Purchaser's entry and, if the Closing does not take place as provided
hereunder, Purchaser will indemnify Seller for any damage to the Premises caused
by Purchaser's entry.  Purchaser's indemnity obligations contained in this
paragraph 14 shall survive the expiration of the Option Period in the event the
- ------------                                                                   
Closing does not take place.

      15.  Condemnation Prior to Closing.  In the event of the exercise of the
           -----------------------------                                      
Option and in the event of the taking of the Premises or any part thereof by
condemnation, the parties agree that Purchaser shall have the option to declare
this Agreement null and void (in which event the Option Price shall be returned
to Purchaser) or to accept the Premises in the condition in which they are left
following such taking, with an assignment by Seller to Purchaser of all rights
to the collection of any condemnation award.

      16.  Closing Adjustments.  In the event of the exercise of the Option, at
           -------------------                                                 
the time of Closing hereunder, real estate taxes shall be apportioned and
adjusted between the parties as of the date of Closing.

      17.  Closing.  In the event of the exercise of the Option, the Closing of
           -------                                                             
the purchase of the Premises by Purchaser shall be held within thirty (30) days
after the exercise of the Option, with 

<PAGE>
 
the location and time of said Closing to be specified by Seller in a written
notice. At said Closing, the Purchase Price shall be paid by Purchaser to Seller
as required in paragraph 6 hereof and Seller shall deliver to Purchaser a 
               -----------           
special warranty deed for the Premises as required by paragraph 13 hereof.
                                                      ------------        

      18.  Brokerage Commissions.    In the event of the exercise of the Option
           ---------------------                                               
and closing of the sale of the premises as herein specified, Seller agrees to
pay ADEVCO a commission equal to Five (5%) of the Purchase Price for arranging
the sale of the premises pursuant to a separate agreement with said broker.
Purchaser agrees to and hereby does indemnify and hold Seller free and harmless
from all losses, damages, costs, commissions and expenses, including attorneys'
fees, that Seller may suffer as a result of any claims or suits brought by any
other brokers or finders in connection with this transaction, except with
respect to a broker employed by Seller.

      19.  General Provisions.
           ------------------ 
      a.   All notices or demands hereunder shall be in writing and shall be
           deemed to have been sufficiently given or served for all purposes
           when presented personally or sent by registered or certified United
           States mail, return receipt requested, or forwarded by a nationally
           recognized overnight courier service, to any party hereto at the
           address set forth below or at such other address as any party shall
           subsequently designate in writing:

               If to Seller:
               The Development Corporation of Knox County
               601 W. Summit Hill Drive, Suite 200-A
               Knoxville, Tennessee 37902
               Contact:  Melissa A. Ziegler
               Phone:  (423) 546-5887

 
               If to Purchaser:

               Wells Development Corporation
               3885 Holcomb Bridge Road
               Norcross, Georgia  30092
               Contact: Michael Berndt
               Phone: (770)449-7800
 

<PAGE>
 
      b.   This Agreement shall be construed and enforced in accordance with the
           laws of the State of Tennessee.

      c.   If two or more persons constitute either Seller or Purchaser, the
           word "Seller" or the word "Purchaser" shall be construed as if it
           reads "Sellers" and "Purchasers" whenever the sense of this Agreement
           so requires.

      d.   The captions of this Agreement are inserted only for the purpose of
           convenient reference and in no way define, limit, or prescribe the
           scope or intent of this Agreement or any part thereof.

      e.   This Agreement constitutes the entire contract between the parties
           hereto, and may not be changed (including an extension of the
           Exercise Period as provided in paragraph 2) or terminated orally, but
                                          -----------
           may only be modified by an instrument in writing signed by the
           parties hereto.

      f.   The provisions hereof shall apply to and inure to the benefit of the
           successors, assigns and representatives of the respective parties
           hereto.

      g.   This Agreement may be executed in multiple counterparts which shall
           be construed together as one instrument.

      h.   In any dispute relating to the enforcement of this Agreement, the
           defaulting party shall reimburse the costs incurred by the prevailing
           party, including reasonable attorneys fees.

<PAGE>
 
EXECUTED as of the day, year and month first above written.

                                             SELLER:

     6/21/98  10:00 AM                       THE DEVELOPMENT CORPORATION OF
- ----------------------------
Date and time executed                       KNOX COUNTY


Douglas Lawfer                               By: /s/ Melissa Ziegler
- ----------------------------                     -----------------------------
Witness                                           Melissa Ziegler
                                             Its:  Executive Director



                                             PURCHASER:

                                             WELLS DEVELOPMENT CORPORATION
   June 19, 1998  2:10 PM
- ---------------------------- 
Date and time executed


Alice S. Ridenour                            By: /s/ Michael C. Brendt
- ----------------------------                     -----------------------------
Witness                                      Title: Chief Investment Officer
                                                    --------------------------

<PAGE>
 
                                                                       EXHIBIT A

====The==============
     DEVELOPMENT               CENTERPOINT BUSINESS PARK   
     CORPORATION               KNOX COUNTY, TENNESSEE
====Of Knox County===

               [CHART OF CENTERPOINT BUSINESS PARK APPEARS HERE]

                       706 Walnut Street, Suite 700 . Knoxville, Tennessee 37902
                       Phone: (423)546-5887 . Fax: (423)546-6170
                       http://KnoxDevelopment.org  



<PAGE>
 
                                 EXHIBIT 10.29

                   AMENDMENT TO REAL ESTATE OPTION AGREEMENTS

               BETWEEN THE DEVELOPMENT CORPORATION OF KNOX COUNTY

                                      AND

                         WELLS DEVELOPMENT CORPORATION

<PAGE>
 
                   AMENDMENT TO REAL ESTATE OPTION AGREEMENT
                   -----------------------------------------
                   (LOTS 10 & 11, CENTERPOINT BUSINESS PARK


     THIS AMENDMENT TO THE REAL ESTATE OPTION AGREEMENT (the "Amendment") is
made and entered into effective as of the 8 day of Sept, 1998 by and between
THE DEVELOPMENT CORPORATION OF KNOX COUNTY ("Seller") and WELLS DEVELOPMENT
CORPORATION ("Purchaser"):

                                   RECITALS:
                                   ---------

     WHEREAS, Seller and Purchaser entered into Real Estate Option Agreements
(the "Option Agreements") dated as of April 22, 1998 for the option to purchase
Lot 11 of CenterPoint Business Park, and as of June 21, 1998 for the option to
purchase Lot 10 of CenterPoint Business Park (the "Premises") as more
particularly described on Exhibit A to the Option Agreements and

     WHEREAS, pursuant to the Option Agreement, the Purchaser had the right to
conduct certain tests and inspections of the Premises, including without
limitation, environmental inspection and soil tests to determine if the Premises
is suitable for Purchaser's intended use; and

     WHEREAS, Purchaser's tests have discovered that the Premises contains
certain organic materials
 which must be removed for the Premises to be suitable
for Purchaser's use; and

     WHEREAS, Purchaser's sole remedy under the Option Agreement if the Premises
is not suitable for Purchaser's intended use is to terminate the Option
Agreement and receive a refund of the Option Price (as defined in the Option
Agreement); and

     WHEREAS, Purchaser has agreed to assume all responsibility for removal of
the unsuitable material and the replacement thereof with suitable materials on
the terms set forth in this Amendment in consideration of Seller agreeing to
reduce purchase price and agreeing to the other matters as set forth below;

     WHEREAS, Seller and Purchaser have agreed to certain amendments to the
Option Agreement as more particularly described herein;

     NOW, THEREFORE, in consideration of the foregoing, the mutual terms,
covenants and conditions set forth below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     1.   Paragraph 2 of the Option Agreement is hereby amended to provide that
the Exercise Period during which time the Purchaser has the right to exercise
its options to purchase the Premises shall be and is hereby extended through and
including 11:59 p.m. on the 15/th/ day of September, 1998.

                                       1

<PAGE>
 
     2.   Paragraph 6 of the Option Agreement is hereby amended to provide that
the Purchase Price for the Premises shall be $809,900. The Purchase Price
reflects reductions in the original Purchase Price because of existing site
conditions that will require additional site work to remove organic debris such
as logs and stumps that have been buried on the Premises.

     3.   The Purchaser acknowledges and agrees that it has had full and
complete opportunity to inspect the Premises and perform all tests and
inspections of the Premises and Purchaser is accepting the Premises in its "AS,
IS" condition. Purchaser further agrees that it hereby releases all claims
against Seller of every kind or nature, including, without limitation, any
claims related to or arising out of the condition of the Premises, whether known
or unknown.

     4.   The Purchaser agrees to remove all unsuitable material on the Premises
and haul such material off site and properly dispose of such material. The
Seller will allow the Purchaser to remove up to an aggregate of 16,500 cubic
yards of fill material from Lots 7 and 8 in CenterPoint Business Park to be used
for Lot 10 and Lot 11 of CenterPoint Business Park. If Purchaser does not
exercise its option to purchase Lot 10, then the amount of fill dirt which
Purchaser shall be entitled to use from Lots 7 and 8 shall be reduced in
proportion to the relative acreage of Lot 11 and Lot 10. The Purchaser will be
responsible for clearing and grubbing the Seller's designated sections of Lots 7
and 8 as identified on attached map "Exhibit A" in CenterPoint Business Park and
will ensure the proper removal of the non man-made debris from such lots. The
Purchaser will also be responsible for stripping topsoil, if any, and having it
placed at a location designated by Seller (see Exhibit "A") for the temporary
topsoil stockpile. The Purchaser may remove material to an elevation specified
by the Seller and Purchaser shall maintain proper erosion control and other
appropriate construction practices. On completion of the borrow operation, all
disturbed areas on Lots 7 and 8 must be left with slopes of 2 to 1 less,
positive drainage control (no ponding), topsoil, if any, shall be replaced and
the lots shall be seeded and mulched with a maintainable stand of grass
achieved. The Purchaser further agrees to remove all undercut materials and all
borrowed dirt in accordance with specifications established by Seller's
engineer, Wilbur Smith and Associates, as described in Exhibit "B".

     5.   The Purchaser agrees to obtain the permission of Knox County to cross
CenterPoint Boulevard, which is a public street controlled by Knox County, for
heavy trucks and other equipment and shall bear sole responsibility for repair
of any damage to the street and curbs resulting from the Purchaser's or
Purchaser's agents, contractors or subcontractors relating to the activities and
described in this Amendment.

     6.   The Purchaser agrees that it will be responsible for all field testing
of Purchaser's material only and will provide the proper bonds and insurance for
all aspects of the work described in this Amendment and will include Seller as
an additional insured for that portion of the work that occurs on the Seller's
Premises.  The Purchaser agrees to indemnify and hold Seller harmless from and
against any and all claims of every kind or 

                                       2

<PAGE>
 
nature (including, without limitation, attorney fees incurred by Seller in
defending any claims) arising out of Purchaser's work on or related to the
Premises being purchased by Purchaser pursuant to the Option Agreement, as
amended hereby, and any claims related to Purchaser's work on the other lots
and/or roads in CenterPoint Business Park. The Purchaser will provide assurances
to the Seller after completion of the work described above that all material was
properly removed and disposed of off site.
 
     7.   The covenants and agreements set forth in this Amendment shall survive
the closing of the purchase of the Premises by Purchaser.
 
     8.   Insofar as the specific terms and provisions of this Amendment purport
to amend or modify or are in conflict with the specific terms or provisions of
the Option Agreement, the terms and provisions of this Amendment shall govern
and control. In all other respects, the terms and provisions of the Option
Agreement shall remain in full force and effect and shall be unmodified.

    Executed this 8 day of Sept., 1998.
 
 
 
                         THE DEVELOPMENT CORPORATION OF KNOX COUNTY

                         By: /s/ Melissa A. Ziegler
                            --------------------------------------
                         Its:  Executive
                             -------------------------------------


                         WELLS DEVELOPMENT CORPORATION

                         By: /s/ Michael Berndt
                            --------------------------------------
                         Its:  V P
                             -------------------------------------

                                        3

<PAGE>
 
                                                                       EXHIBIT A
=====The============
    DEVELOPMENT               CENTERPOINT BUSINESS PARK
    CORPORATION               KNOX COUNTY, TENNESSEE
====of Knox County==
                                                                      
           [CHART OF CENTERPOINT BUSINESS PARK APPEARS HERE]

          601 W. Summit Hill Drive, Suite 200-A . Knoxville, TN 37902-2011
                   Phone: (423)546-5887 . Fax: (423)546-6170
                            www.KnoxDevelopment.org


<PAGE>
 
                                                                     "EXHIBIT B"


              PROVISIONS AND STANDARDS FOR BORROW PIT WITH ADEVCO

1)  Adevco shall maintain an accessway into the "Borrow Pit" area such that no
    mud or debris will be tracked onto CenterPoint Blvd.

2)  Adevco shall strictly comply with Knox County erosion and sediment control
    policies, including:

     a)  Slopes 2:1 or less; 10' wide bench will be required with each 20'
         difference in vertical elevation on all permanent slopes.
     b)  Use silt fencing or other sediment control measures as necessary to
         retain sediment on site, Adevco will be responsible for damages or
         cleanup.
     c)  When grading of an area is completed, replace topsoil and seed and
         mulch effected areas to achieve a maintainable stand of grass.

3)  Adevco shall obtain all required Knox County and other necessary permits.

4)  Adevco shall repair any damage to curbs or roadways along CenterPoint Blvd.
    This will be at the sole expense of Adevco.

5)  Adevco shall prevent others from obtaining borrow material.

6)  Adevco shall be absolutely responsible for and will indemnify and save
    harmless The Development Corporation and its officers, agents, employees,
    affiliates, successors, and assigns from and against any and all loss,
    damage, claims, expense including attorney's fees, or liability for: (i)
    injury to or death of any person occurring on said Borrow Pit Area during
    the term of or arising as a result of or in connections with Adevco's use of
    the Borrow Pit Area unless such loss, damage, claims, expenses or
    liabilities arise from the negligent acts of The Development Corporation;
    and (ii) loss of or damage to any property whatsoever, where such injury,
    loss or damage is caused by, arises out of, results from, or is incident to
    Adevco's use and occupation of said Borrow Pit Area or any portion thereof,
    unless such loss, damage, claims, expenses and liability arise solely from
    the negligent acts of The Development Corporation.

7)   (a)  Adevco's Contractor, Integra Construction, shall secure and keep in
    effect Comprehensive General Liability Insurance with a dollar limitation of
    coverage not less than a combined single limit of $1,000,000.00 per any one
    occurrence for all loss, damage, cost, and expense, including attorneys'
    fees, arising out of bodily injury liability and property damage liability
    during the policy of the period.

     (b)  The insurance described above shall be maintained during the term of
    the Agreement. Adevco shall give The Development Corporation notice of any
    significant changes to the insurance coverage.

<PAGE>
 
     (c) Adevco shall be required to submit a Certificate of Insurance to The
         Development Corporation. The Development Corporation will review the
         Certificate and advise Adevco if the limits, form, and substance of the
         insurance policies and certificates of insurance are satisfactory to
         The Development Corporation.

8)  Adevco may only remove material as agreed on-site and may not remove
    material below the agreed elevation. It is the sole responsibility of Adevco
    to determine in conjunction with The Development Corporation's engineer,
    Wilbur Smith and Associates, the exact location of these areas at the site.
    It is understood that Adevco requires 16,500 cubic yards of suitable fill
    material to remedy lots # 10 and 11. If for any reason, lot # 7 does not
    yield enough material, then The Development Corporation shall make field
    adjustments to designate another borrow area from within CenterPoint
    Business Park. _In the event that Adevco exposes bedrock in its excavation,
    then Adevco shall remove this bedrock or shall recover the exposed bedrock
    with topsoil and relocate the borrow pit operation.

9)  In the event The Development Corporation has a prospect or any site on which
    Adevco is removing material, The Development Corporation will notify Adevco.
    If a site is sold or optioned, The Development Corporation will notify
    Adevco of this situation and Adevco will have 30 days to remove all
    equipment from the site and restore the site to meet the Standards.

10) If The Development Corporation discovers that the borrow pit is creating
    excessive problems for its remaining property or the tenants in the park,
    The Development Corporation will contact Adevco and the two parties will
    resolve these problems in a mutually agreeable manner. If the problem
    persists and no agreement or solution can be reached, The Development
    Corporation may provide a 30 day notice to vacate the site.

11) Adevco shall police the area as necessary to eliminate illicit dumping.

 



<PAGE>
 
                                 EXHIBIT 10.30

               SECOND AMENDMENT TO REAL ESTATE OPTION AGREEMENTS

               BETWEEN THE DEVELOPMENT CORPORATION OF KNOX COUNTY

                                      AND

                         WELLS DEVELOPMENT CORPORATION

<PAGE>
 
               SECOND AMENDMENT TO REAL ESTATE OPTIONAGREEMENTS
               ------------------------------------------------
                   (LOTS 10 & 11, CENTERPOINT BUSINESS PARK)

    
     THIS SECOND AMENDMENT (the "Second Amendment") is made and entered into as
of the 7th day of October 1998 by and between THE DEVELOPMENT CORPORATION OF
KNOX COUNTY (hereinafter referred to as "Seller"), and WELLS DEVELOPMENT
CORPORATION (hereinafter referred to as "Purchaser").     

                             W I T N E S S E T H:
                             - - - - - - - - - - 

     WHEREAS, Seller and Purchaser entered into that certain Real Estate Option
Agreement dated as of April 22, 1998, with respect to Lot 11 of CenterPoint
Business Park, and that certain Real Estate Option Agreement dated as of June
21, 1998, with respect to Lot 10 of CenterPoint Business Park (collectively, the
"Original Option Agreements") (Lots 10 and 11 of CenterPoint Business Park, as
more particularly described in Exhibit "A" to the Original Option Agreements,
being collectively referred to as "Premises"); and

     WHEREAS, Seller and Purchaser entered into that certain Amendment to Real
Estate Option Agreement dated September 8, 1998 (the "First Amendment") (the
Original Option Agreements
 as modified by the First Amendment being hereinafter
referred to as the "Option Agreements"); and

     WHEREAS, Seller and Purchaser desire to modify and amend the Option
Agreements, all upon the terms and conditions hereinafter set forth.

     NOW, THEREFORE, for and in consideration TEN DOLLARS ($10.00) and other
good and valuable consideration in hand paid by each party hereto the other, the
receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser
agree as follows:


     1.   Terms used herein and denoted by their initial capitalization shall
have the meanings set forth in the Option Agreements unless specifically
indicated herein to the contrary. In the event of any conflict or inconsistency
between the terms and conditions of this Second Amendment and of the Option
Agreements, the terms and conditions of this Second Amendment shall govern and
control.

     2.   Seller shall be obligated to repurchase the Premises from Purchaser on
or before December 1, 1998, in the event Purchaser does not obtain, on or before
November 15, 1998, all approvals necessary to construct the approximately 70,000
square foot office building contemplated by Purchaser (limited to a Certificate
of Appropriateness from the Tennessee Technology Corridor Development Authority
and a Use on Review approval of Purchaser's development plan from the
Metropolitan Planning Commission and approval of Purchaser's plans by Seller
under and pursuant to the Protective Covenants for CenterPoint Business Park, as
corrected by Corrected Version, Protective Covenants for CenterPoint Business
Park, as corrected by CenterPoint Business Park Design Standards and Restrictive
Covenants, as amended).  

The purchase price shall be the same as the purchase price paid by Purchaser to
Seller, less a 5% realtor fee of $40,625.00 to Adevco Realty Group, LLC, and
shall be payable by Seller to Purchaser at the closing in cash, by cashier's
check, by wire transfer of immediately available federal funds or by other
method acceptable to Purchaser.


Agreed to by:


/s/ Michael Berndt                                         10/7/98
- ------------------------------------                      -----------
Michael Berndt, Wells Development                         Date


/s/ Melissa A. Ziegler                                    10/7/98
- -----------------------------------------------           ------------
Melissa A. Ziegler, The Development Corporation           Date  

Title to the Premises shall be conveyed by Purchaser to Seller by limited
warranty deed, subject only to such title exceptions in existence at the date
the Premises were originally conveyed by Seller to Purchaser. Purchaser shall
pay any real estate taxes attributable to Purchaser's period of

<PAGE>
 
ownership of the Premises, and for any utility assessments or fees resulting
from Purchaser's activities on the Premises. Current real property taxes and
installments of special assessments shall be prorated as of the date of closing.
Seller shall bear the cost of any title insurance coverage desired by Seller.
Seller shall pay the state transfer tax imposed in connection in connection with
the limited warranty deed from Purchaser to Seller. Purchaser shall pay the fees
and expenses of Seller's and Purchaser's attorneys in connection with the
transfer of the Premises from Purchaser to Seller. In the event Purchaser has
undertaken any excavation or clearing activities on the Premises, then at or
prior to such closing, Purchaser shall grade the surface of the Premises to
approximately the same contours as existed on the date of Closing, and shall
seed the graded portion with grass seed. The provisions of this Paragraph shall
survive the Closing of the transfer of the Premises from Seller to Purchaser.

     3.   The Premises shall be conveyed by Seller to Purchaser free and clear
of (and Seller shall waive any and all rights under) any repurchase option in
favor of Seller otherwise contained in the CenterPoint Business Park Design
Standards and Restrictive Covenants recorded at Deed Book 2261, page 805, in the
Register's Office for Knox County, Tennessee.

     4.   As expressly modified by this Second Amendment, the Option Agreements
shall remain in full force and effect, and are expressly ratified and confirmed
by the parties hereto.  The terms of this Second Amendment shall supersede and
control over any conflicting or contrary terms in the Option Agreements.  This
Second Amendment shall be governed by and construed in accordance with the laws
of the State of Tennessee, and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors, representatives and
assigns.

          IN WITNESS WHEREOF, Seller and Purchaser have caused this Second
Amendment to be duly authorized, executed and delivered as of the day and the
year first above written.


                     "SELLER":
                      ------  


                     THE DEVELOPMENT CORPORATION OF KNOX COUNTY


                     By:  /s/ Melissa A. Ziegler
                          -----------------------   
                     Its: Executive Director
                          ----------------------- 

                               (SEAL)



                     "PURCHASER":
                      ---------  


                     WELLS DEVELOPMENT CORPORATION


                     By:  /s/ Michael Berndt
                          ------------------------
                     Its: Vice President
                          ------------------------

                               (SEAL)

                                       2



<PAGE>
 
                                 EXHIBIT 10.31

                AGREEMENT FOR THE PURCHASE AND SALE OF PROPERTY

                     BETWEEN WELLS DEVELOPMENT CORPORATION

                                      AND

                       WELLS OPERATING PARTNERSHIP, L.P.

<PAGE>
 
                          AGREEMENT FOR THE PURCHASE
                             AND SALE OF PROPERTY

     THIS AGREEMENT, made and entered into as of the 15th day of September,
1998, by and between WELLS DEVELOPMENT CORPORATION, a Georgia corporation whose
address is 3885 Holcomb Bridge Road, Norcross, Georgia 30092 ("Seller"),and
WELLS OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, whose address
is 3885 Holcomb Bridge Road, Norcross, Georgia 30092 (the "Purchaser").

                             W I T N E S S E T H:
                             - - - - - - - - - - 

     WHEREAS, Seller has entered into those certain Real Estate Option
Agreements (the "Option Agreements") with the Development Corporation of Knox
County dated as of April 22, 1998; and June 21, 1998, as amended September 8,
1998, relating to certain improved property situated in Knoxville, Tennessee and
being more particularly described on Exhibit A hereto (the "Property"); and

     WHEREAS, Seller has entered into an Agreement for the Purchase and Sale of
Property (the "Beaver/Carter Agreement") with BEAVER RUIN - ARC WAY, LTD., a
Georgia limited partnership, ("BR"), with respect to an undivided interest in
the Property and to with CARTER BOULEVARD, LTD., a Georgia
 limited partnership,
("CB") with respect to an undivided interest in the Property; and

     WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to
acquire from Seller, the Seller's remaining undivided interest in the Property
(the "Undivided Interest") upon the terms and conditions hereinafter set forth;
and

     WHEREAS, it is the intent of the parties that a Tenancy in Common Agreement
be executed with respect to the Property; and

     WHEREAS, Seller intends to enter into a Development Agreement with Adevco
Corporation relating to the Property; and

     WHEREAS, it is the intent of the parties that the Property be acquired and
developed with the proceeds obtained hereby and from the Beaver/Carter Agreement
and the proceeds of a loan (the "Loan") from First Capital Bank; and

     WHEREAS, the property is subject to that certain triple net Lease with
Associates Housing Finance, LLC (the "Lease") relating to the Property;

     NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein set forth, the receipt, adequacy and sufficiency
of which are hereby expressly acknowledged by the parties hereto, Seller and
Purchaser do hereby covenant and agree as follows:

          1.   Agreement to Buy and Sell. Upon the terms and conditions set
               -------------------------  
forth in this Agreement, and subject to acquisition of the Property by the
Seller pursuant to the Option Agreement, Purchaser agrees to buy from Seller
and Seller agrees to sell to Purchaser the Undivided Interest. The percentage
interest shall be equal to the percentage equivalent of a fraction, the
numerator of which is the Purchase Price and the denominator of which is the
Purchase Price plus the aggregate purchase price paid to Seller pursuant to the
Beaver/Carter Agreement.

     2.  Purchase Price.  Subject to adjustment and credits as otherwise
         --------------                                                 
specified in this Agreement, the purchase price (the "Purchase Price") to be
paid by Purchaser to Seller for the Undivided Interest shall be $1,650,000. It
is the intent of the parties that Seller shall not make any profit or incur any
loss in connection with this transaction and, to that end, Seller agrees to hold
in an interest bearing account for the benefit of Purchaser any cash
distributions payable to Seller prior to Closing hereunder. It is the intent of
the parties, that the acquisition and development costs of the Property be
funded first with the proceeds attributable to the Beaver/Carter Agreement;
second, with up to $4,500,000 of proceeds of the Loan; third, with funds
provided pursuant to this Agreement; and fourthly, the balance, if any, with
remaining proceeds of the Loan. To that end, Purchaser shall evidence its
funding obligation either in the Tenancy in Common Agreement or by its
promissory note executed at Closing.

<PAGE>
 
     3.  Purchaser's Right of Inspection and Seller's Cooperation. From and
         --------------------------------------------------------          
after the date of this Agreement, Purchaser and its agents, engineers, or
representatives, with Seller's reasonable, good faith cooperation, shall have
the privilege of going upon the Property as needed to inspect, examine, test,
and survey the Property at all reasonable times and from time to time.  Such
privilege shall include the right to make said tests, borings, and other tests
to obtain information necessary to determine surface and subsurface conditions.
Such privilege shall also include the right to make any other tests deemed
reasonably necessary by Purchaser.  Purchaser hereby indemnifies and holds
Seller harmless from any liens, claims, liabilities, and damages incurred
through the exercise of such privilege.  The obligations of Purchaser under the
preceding sentence shall survive any termination of this Agreement. Seller shall
make available to Purchaser all work product in the possession of Seller
relating to the Property, including surveys, site plans, environmental audits,
soils tests, market studies, Seller's owner's title policy and all other
information provided to Seller or obtained by Seller with respect to the
Property.

     4.   Special Conditions to Closing.  Notwithstanding any other provision to
          -----------------------------                                         
the contrary contained in this Agreement, Purchaser's obligations hereunder are
expressly conditioned upon the following special conditions:

          (a) Purchaser shall have available to it at the date of Closing
     sufficient net proceeds available for investment in properties to fully
     fund the Purchase Price;

          (b) All of the representations and warranties set forth in paragraph 7
     shall be true and correct in all material respects on the Date of Closing;

          (c) The receipt by Purchaser of an appraisal reflecting the value of
     the Property as being not less than an amount equal to the sum of (i) the
     quotient of (A) the Purchase Price divided by (B) the percentage interest
     being acquired by Purchaser in the Property, and (ii) the Loan.

          (d) The receipt by Purchaser of evidence reasonably satisfactory to
     Purchaser that the Property is free of any Hazardous Materials;

          (e) The receipt of evidence that Associates Housing Finance, LLC has
     executed the Lease;

          (f) The execution of a Tenancy in Common Agreement with BR and CB in
     form and substance reasonably satisfactory to Purchaser;

          (g) Evidence that the transaction contemplated by the Beaver/Carter
     Agreement has closed; and

          (h) A policy of title insurance insuring Purchaser's interest in the
     Property.

In the event any of the conditions set forth above are not met on or prior to
the date of Closing, Purchaser shall be entitled to terminate this Agreement
upon written notice to Seller.  If Purchaser elects to so terminate this
Agreement, Seller shall be entitled to receive the sum of Twenty-Five Dollars
($25.00), whereupon, except as expressly provided to the contrary in this
Agreement, no party hereto shall have any other or further rights or obligations
under this Agreement.  Seller acknowledges that the sum of Twenty-Five Dollars
($25.00) is good and adequate consideration for the termination rights granted
to Purchaser hereunder.

     5.   Closing and Closing Date.  The consummation of the sale by Seller and
          ------------------------                                             
the purchase by Purchaser of the Property (herein referred to as the "Closing")
shall be held on or before the January 19,1999, at the offices of O'Callaghan &
Stumm LLP, 127 Peachtree Street N.E., Suite 1330, Atlanta, Georgia 30303 or such
other office as the parties may agree at such specific time and date as shall be
designated by Purchaser in a written notice to Seller not less than three (3)
business days prior to the date of Closing or absent such notice at 10:00 a.m.
on 

                                      -2-

<PAGE>
 
the first anniversary of the date hereof. At Closing, Seller shall execute,
where applicable, and deliver to Purchaser the following instruments, in form
and substance reasonable satisfactory to Purchaser (a) a Limited Warranty Deed
with respect to the Undivided Interest; (b) the Tenancy in Common Agreement; (c)
an Assignment of Lease; (d) an Assignment of the Development Agreement; and (e)
such other documents as may be reasonably required by Purchaser or Purchaser's
counsel in order to effectuate the transaction contemplated hereunder. At
Closing, Purchaser shall deliver to Seller the Purchase Price and shall execute
and deliver to Seller a Closing Statement, Tenancy in Common Agreement, evidence
reasonably satisfactory to Seller and/or its assigns of Purchaser's obligations
to fund any unfunded portion of the Purchase Price and such other documents as
may be reasonably required by Seller or Seller's counsel in order to effectuate
the transaction contemplated hereby.

     6.   Representations and Warranties of Seller.  Seller hereby makes the
          ----------------------------------------                          
following representations and warranties to Purchaser, each of which shall be
deemed material:

          (a) Title and Authority.  Seller is or shall be the owner of good and
              -------------------                                              
     marketable fee simple record title to the Property subject only to those
     matters set forth on Exhibit B hereto (the "Permitted Encumbrances") and,
     if applicable, to one or more mortgages which shall be canceled and
     satisfied at no cost to Purchaser at or before the Closing, it being the
     intent of the parties that the Property free and clear of any liens, claims
     or encumbrances except the Permitted Encumbrances, at the time Purchaser
     acquires the Undivided Interest. Seller has the full right, power and
     authority to execute and deliver this Agreement and to consummate the
     purchase and sale herein contemplated and to perform the covenants and
     agreement of Seller hereunder.

          (b) No Litigation.  There are no actions, suits, or proceedings
              -------------                                              
     pending, or, to the best of Seller's knowledge, threatened by any
     organization, person, individual, or governmental agency against Seller
     which would impair Seller's ability to convey the Undivided Interest
     pursuant to this Agreement or against the Property, nor does Seller know of
     any basis for such action.

          (c) Pre-existing Right to Acquire.  No person or entity has any right
              -----------------------------                                    
     or option to acquire the Undivided Interest which will have any force or
     effect after the execution hereof, other than Purchaser.

          (d) Ownership of Undivided Interest.  Seller owns or shall at the time
              -------------------------------                                   
     of Closing own beneficially and of record the Undivided Interest free and
     clear of all liens, claims, pledges, options, adverse claims and charges of
     any nature whatsoever.

     7.   Default.  In the event Seller fails to comply with or perform any of
          -------                                                             
the covenants, agreements or obligations to be performed by Seller under the
terms and provisions of this Agreement, or in the event Seller's warranties and
representations set forth in this Agreement are untrue or misleading, at
Purchaser's option: (i) Purchaser shall be entitled to an immediate refund of
all Earnest Money and to thereafter exercise any and all rights and remedies
available to Purchaser at law or in equity; or (ii) Purchaser shall be entitled,
upon giving written notice to Seller as herein provided, to terminate this
Agreement. Upon any such termination, all Earnest Money shall be immediately
returned to Purchaser and this Agreement and all rights and obligations created
hereunder shall be of no further force or effect.  In the event Purchaser fails
to comply with or perform any of the covenants, agreements or obligations to be
performed by Purchaser under the terms and provisions of this Agreement,
Seller's sole and exclusive remedy for any such default shall be to terminate
this Agreement and to receive $100 of the Earnest Money as full liquidated
damages for such default, the parties hereto acknowledging that it is impossible
to more precisely estimate the damages to be suffered by Seller upon Purchaser's
default, whereupon all rights and obligations created hereby shall terminate and
be of no further force or effect whatsoever.

     8.   Assignment.  Purchaser's rights and duties under this Agreement shall
          ----------                                                           

                                      -3-

<PAGE>
 
be freely transferable and assignable by Purchaser, either in full or in part,
and in the event of any such transfer or assignment, Seller shall look solely to
such transferee or assignee for the performance of all obligations, covenants,
conditions, and agreements imposed upon Purchaser pursuant to the terms of this
Agreement.

     9.   Broker's Commission. Seller shall and does hereby indemnify and hold
          -------------------                                                 
harmless Purchaser from and against any claim for any real estate sales
commission, finder's fees, or like compensation in connection with the sale
contemplated hereby and arising out of any act or agreement of Seller. Likewise,
Purchaser shall and does hereby indemnify and hold harmless Seller from and
against any claim for any real estate sales commission, finder's fees or like
compensation in connection with the sale contemplated hereby and arising out of
any act or agreement of Purchaser.

     10.  Notices.  Any notices which may be permitted or required hereunder
          -------                                                           
shall be in writing and sent or hand delivered to the addresses set forth
herein, and shall be deemed to have been duly given as of the date and time the
same are either personally delivered (if delivered by hand or by overnight
courier) or, if mailed, on the third (3rd) business day following the date same
is deposited with the United States Postal Service, postage prepaid, to be
mailed by registered or certified United States mail, return receipt requested.

     11.  Time Periods.  If the time period by which any right, option, or
          ------------                                                    
election provided under this Agreement must be exercised, or by which any act
required hereunder must be performed, or by which the Closing must be held,
expires on a Saturday, Sunday or holiday, then such time period shall be
automatically extended through the close of business on the next regularly
scheduled business day.

     12.  Survival of Provisions.  All covenants, warranties, and agreements set
          ----------------------                                                
forth in this Agreement shall survive the execution or delivery of any and all
deeds and other documents at any time executed or delivered under, pursuant to
or by reason of this Agreement, and shall survive the payment of all monies made
under, pursuant to, or by reason of this Agreement.

     13.  Severability.  This Agreement is intended to be performed in
          ------------                                                
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations.  If any provision of this Agreement, or the
application thereof to any person or circumstance, shall for any reason and to
any extent be invalid or unenforceable, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby but rather shall be enforced to the greatest extent permitted
by law.

     14.  General Provisions.  No failure of either party to exercise any power
          ------------------                                                   
given hereunder or to insist upon strict compliance with any obligation
specified herein, and no custom or practice at variance with the terms hereof,
shall constitute a waiver of either party's right to demand exact compliance
with the terms hereof.  This Agreement contains the entire agreement of the
parties hereto, and no prior representations, inducements, promises, or
agreements, oral or otherwise, between the parties not embodied herein or in
said Letter Agreement shall be of any force or effect.  Any amendment to this
Agreement shall not be binding upon Seller or Purchaser unless such amendment is
in writing and executed by both. The provisions of this Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, legal representatives, successors, and assigns.  Time is of the essence
in this Agreement.  This Agreement may be executed in multiple counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same agreement.  The headings inserted at the
beginning of each paragraph are for convenience only, and do not add to or
subtract from the meaning of the contents of each paragraph.  This Agreement
shall be construed and interpreted under the laws of the State of Georgia.
Except as otherwise provided herein, all rights, powers, and privileges
conferred hereunder upon the parties shall be cumulative but not restrictive to
those given by law.  All personal pronouns used in this Agreement, whether used
in the masculine, feminine, or neuter gender shall include 

                                      -4-

<PAGE>
 
all genders, and all references herein to the singular shall include the plural
and vice versa. The parties do not intend and this Agreement shall not be deemed
to create a joint venture, partnership, or any other relationship between Seller
and Purchaser or the Joint Venture and Purchaser except that of contracting
parties. The parties acknowledge that O'Callaghan & Stumm LLP has drafted this
Agreement, and that it has represented both Seller and Purchaser in various
aspects of this and other transactions.

     15.  Effective Date.  For purposes of the calculations of any time periods
          --------------                                                       
set forth in this Agreement, the effective date of this Agreement shall be
deemed to be the latest of the dates set forth below, or the date this Agreement
is last initialed, whichever is later.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by duly authorized representatives as of the day, month and year
first above written.
 

                    "SELLER":

                    WELLS DEVELOPMENT CORPORATION, a Georgia corporation

    
                    By: /s/ Leo F. Wells     
                        ----------------------------
 
                    Title: President
                           ------------------------- 

                    Date: September 15, 1998



                    "PURCHASER":

                    WELLS OPERATING PARTNERSHIP, L.P.,
                    a Delaware limited partnership
 
                    By:  WELLS REAL ESTATE INVESTMENT TRUST, INC.,
                         a Maryland corporation, as general partner


    
                         By: /s/ Leo F. Wells     
                             ----------------------------

                         Title: President
                                ------------------------ 

                         Date: September 15, 1998

                                      -5-

<PAGE>
 
                                   EXHIBIT A
                                   ---------


SITUATED, LYING and BEING in the Sixth (6th) Civil District of Knox County, 
Tennessee, without the corporate limits of any municipality, and being Lot 10 
and Lot 11 of Centerpoint Park as shown on plats recorded at Cabinet M, Slide 
31D and 32A in the Knox County Register of Deeds, also being Parcels 16.10 and 
16.11 as shown on Tax Map 118 in the Knox County Property Assessor's Office, and
being more particularly bounded and described as follows to wit:

POINT OF COMMENCEMENT is a concrete monument in the southwestern right-of-way of
Pellissippi Parkway (State Route 162), said monument being at station 169+00,
175 feet left of the centerline of the Tennessee Department of Transportation
Project # 47050-2202-04; thence, along the southwest right-of-way of Pellissippi
Parkway (State Route 162) (all bearings in this description have been rotated to
1991 magnetic north) North 44 deg. 52 min. 55 sec. West a distance of 183.93
feet to an iron rod (new), also being the north corner of property now or
formerly owned by Fund IX & Fund X Associates Joint Venture (Parcel 16.13, D.B.
2244, Page 401) this the POINT OF BEGINNING; thence, leaving the southwestern
right-of-way of Pellissippi Parkway (State Route 162) and along the northwest
line of property now or formerly owned by Fund IX or Fund X Associates Joint
Venture, South 57 deg. 32 min. 29 sec. West passing an iron rod (old) at a
distance of 522.62 feet in total a distance of 524.87 feet to an iron rod (new)
in the northeast right-of-way of Centerpoint Boulevard (being 35 feet from the
centerline); thence, along the aforesaid right-of-way the following three calls
and distances: 1) North 44 deg. 55 min. 18 sec. West a distance of 326.07 feet
to an iron rod (new); 2) along a tangential curve to the right having a radius
of 265.00 feet, an arc length of 431.69 feet, a delta angle of 93 deg. 20 min.
10 sec. and a chord of North 01 deg. 44min. 42 sec. East a distance of 385.52
feet to an iron rod (new); 3) North 48 deg. 24 min. 46 sec. East a distance of
232.96 feet to an iron rod (new) at the intersection of the southwestern right-
of-way of Pellissippi Parkway (State Route 162) and northeast right-of-way of
Centerpoint Boulevard (175.00 feet from the centerline of Pellissippi Parkway
and 49 feet from the centerline of Centerpoint Boulevard), thence along the
southwestern right-of-way of Pellissippi Parkway (State Route 162) the following
three calls and distances: 1) South 45 deg. 01 min. 15 sec. East 275.24 feet to
a concrete monument; 2) South 44 deg. 47 min. 45 sec. East 254.47 feet to an
iron rod (new); 3) South 44 deg. 46 min. 49 sec. East 160.64 feet to the POINT
OF BEGINNING containing 315,609 sq. ft. and 7.25 acres, according to the survey
by SITE, Inc, 8915 George Williams Dr., Knoxville, TN 37923, dated August 6,
1998, last revised date September 16, 1998 (File Name 1107Topo), William B.
Steelman, Surveyor, Tennessee RLS #1831.



<PAGE>
 
                                   EXHIBIT B

                            PERMITTED ENCUMBRANCES


Number: 72701
NBU File Number: 99801339

     Schedule B of the policy or policies to be issued will contain exceptions 
to the following matters unless the same are disposed of to the satisfaction of 
the Company.

1.   Defects, liens, encumbrances, adverse claims or other matters, if any,
     created, first appearing in the public records or attaching subsequent to
     the effective date hereof but prior to the date the proposed Insured
     acquires for value of record the estate or interest or mortgage thereon
     covered by this commitment.
2.   Any owner's policy issued pursuant hereto will contain under Schedule B the
     Standard Exceptions set forth at the inside cover hereof. Any loan policy
     will contain under Schedule B Standard Exceptions 1, 2, and 3 unless a
     satisfactory survey and inspection of the premises is made.

3.   Advalorem taxes for the year 1998 and subsequent years, a lien not yet due 
or payable.

4.   Declaration of Restrictions of record in Deed Book 2034, page 914, Deed 
Book 2060, page 987, and Deed Book 2261, page 805, in the Register's Office for 
Knox County, Tennessee, OMITTING any covenant or restriction based on race, 
color, religion, sex, handicap, familial status, or national origin unless and 
only to the extent that said covenant (a) is exempt under Chapter 42, Section 
3607 of the United States Code or (b) relates to handicap but does not 
discriminate against handicapped persons.

5.   Utility and drainage easements of 10 feet inside all exterior boundary 
lines, 5 feet along each side of all interior lot lines on LOTS 10 AND 11, as 
shown on map of record in Cabinet M, Slide 31D and 32A, in the Register's Office
for Knox County, Tennessee.

6.   Utility and drainage easement over western portion of LOT 10, as shown on 
map of record in Cabinet M, Slide 31D and 32A, in the Register's Office for 
Knox County, Tennessee.

7.   Utility and drainage easement over southwestern and southeastern portion of
LOT 11, as shown on map of record in Cabinet M, Slide 31D and 32A, in the 
Register's Office for Knox County, Tennessee.

8.   LOTS 10 and 11 shall have access from the interior road system only, as
shown on map of record in Cabinet M, Slide 31D and 32A, in the Register's Office
for Knox County, Tennessee.

9.   Sanitary sewer easement along western and southwestern portion of LOTS 10
AND 11, as shown on map of record in Cabinet M, Slide 31D and 32A, in the
Register's Office for Knox County, Tennessee.

10.  LOT 10 AND WESTERN PORTION OF LOT 11 zoned SP; REMAINDER OF LOT 11 zoned
PC, as shown on map of record in Cabinet M, Slide 31D and 32A, in the Register's
Office for Knox County, Tennessee.

                                      -6-



<PAGE>
 
                                 EXHIBIT 10.32

                             DEVELOPMENT AGREEMENT

                     BETWEEN WELLS DEVELOPMENT CORPORATION

                                      AND

                              ADEVCO CORPORATION

<PAGE>
 
                             DEVELOPMENT AGREEMENT



                                    BETWEEN



                         WELLS DEVELOPMENT CORPORATION
                                     Owner



                                     AND 



                              ADEVCO CORPORATION,
                                    Manager





                              September 15, 1998

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                               TABLE OF CONTENTS
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ARTICLE 1...........................................................  1
ARTICLE 2...........................................................  4
    2.1 Engagement..................................................  4
    2.2 Relationship................................................  4
ARTICLE 3...........................................................  4
ARTICLE 4...........................................................  5
    4.1 General Responsibility.............