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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from                                 to                                 

Commission file number 0-14463

WELLS REAL ESTATE FUND I

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x     No ¨

Aggregate market value of the voting stock held by nonaffiliates:    Not Applicable

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

General economic risks

Real estate risks

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Other operational risks

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PART I

General

Wells Real Estate Fund I (the “Partnership”) is a Georgia public limited partnership with Leo F. Wells, III and Wells Capital, Inc. (“Wells Capital”), a Georgia corporation, serving as its general partners (the “General Partners”). The Partnership was formed on April 26, 1984 for the purpose of acquiring, developing, constructing, owning, operating, improving, leasing, and managing income-producing commercial properties for investment purposes. The Partnership has two classes of limited partnership interests, Class A and Class B Units. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations; (b) change the business purpose or investment objectives of the Partnership; and (c) add or remove a general partner. A majority vote on any of the above described matters will bind the Partnership without the concurrence of the General Partners. Each limited partnership unit has equal voting rights regardless of class.

On September 6, 1984, the Partnership commenced an offering of up to $50,000,000 of Class A or Class B limited partnership units ($250.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations upon receiving and accepting subscriptions for 5,000 units on February 15, 1985. The offering was terminated on September 5, 1986 at which time the Partnership had sold approximately 98,716 Class A Units and 42,568 Class B Units representing capital contributions of $35,321,000 from investors who were admitted to the Partnership as limited partners.

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

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

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

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

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

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The period during which the Partnership sells its real estate investments and distributes net sales proceeds to the partners

Currently, management believes that the Partnership is straddling the positioning-for-sale phase and the disposition and liquidation phase and, accordingly, will focus resources primarily on positioning its properties for sale and locating prospective acquirers of properties.

Cash management is a chief area of focus for the Partnership. Historically, the Partnership has not taken out borrowings from third-party lenders and, while operating cash flows and net property sales proceeds are withheld to provide for known events from time to time, the Partnership does not maintain as a general rule cash reserves for unknown events. Instead, management prefers to maximize operating cash flows distributed to investors commensurate with the period earned; however, it is likely that, in connection with the re-leasing of certain of the Partnership’s properties, the Partnership may be required to use cash flow from operations and/or net sale proceeds from the sale of the Partnership’s properties, which would otherwise be available for distribution to limited partners, to fund tenant improvements, leasing commissions, and other leasing costs associated with such re-leasing efforts. The Partnership’s cash needs evolve during the course of its life cycle and, accordingly, volatility in operating returns is a natural and expected part of the process.

Employees

The Partnership has no direct employees. The employees of Wells Capital and Wells Management Company, Inc. (“Wells Management”), an affiliate of the General Partners, perform a full range of real estate services including leasing and property management, accounting, asset management, and investor relations for the Partnership. See Item 11 “Compensation of General Partners and Affiliates,” for a summary of the fees paid to the General Partners and their affiliates during the year ended December 31, 2003.

Insurance

Wells Management carries comprehensive liability and extended coverage with respect to the properties owned by the Partnership holds an interest directly and through its interest in joint ventures. In the opinion of management of the Partnership, all such properties are adequately insured.

Competition

The Partnership will experience competition for tenants from owners and managers of competing projects which may include the General Partners and their affiliates. As a result, the Partnership may provide free rent, reduced charges for tenant improvements, and other inducements, all of which may have an adverse impact on results of operations. At the time the Partnership elects to dispose of its properties, the Partnership will also be in competition with sellers of similar properties to locate suitable purchasers for its properties.

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During the periods presented, the Partnership owned direct interests in the following three properties. Accordingly, the accounts of these properties are consolidated in the Partnership’s financial statements.

During the periods presented, the Partnership owned interests in three properties through the following affiliated joint ventures:

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

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The Partnership does not control the operations of Fund I-II-IIOW-VI-VII Associates or Fund I-II Tucker Associates (collectively, the “Joint Ventures”); however, it does exercise significant influence. Thus, the Partnership accounts for its investment in the Joint Ventures using the equity method of accounting. The Partnership substantially controls the operations of Wells-Baker Associates. Accordingly, the accounts of Wells-Baker Associates are consolidated in the accompanying consolidated financial statements.

As of December 31, 2003, the lease expirations scheduled during each of the following ten years for all properties in which the Partnership held an interest directly or through an affiliated joint venture, assuming no exercise of renewal options or termination rights, are summarized below:

The Joint Ventures and properties in which the Partnership owns an interest during the periods presented are further described below:

Paces Pavilion

On December 27, 1985, the Partnership acquired a three-story medical office building on 1.65 acres of land located on Howell Mill Road in metropolitan Atlanta, Fulton County, Georgia, known as Paces Pavilion for a purchase price of $3,443,203. Paces Pavilion is held in condominium ownership and contains approximately 30,800 net rentable square feet. As of December 31, 2003, six tenants occupied Paces Pavilion, the following three of which occupied 10% or more of the rentable space: Eye Consultants of Atlanta; King, Sanderson & Heidecker; and Peachtree Park Pediatrics. All of the tenants of Paces Pavilion are in the business of providing various medical services.

Eye Consultants of Atlanta occupies two suites representing 11,757 square feet (or approximately 38% of the premises) with annual base rent payable at $230,085 and a lease expiration date of December 31, 2006. King, Sanderson & Heidecker occupy 3,752 rentable square feet (or approximately 12% of the premises) with annual base rent payable at $87,219 and a lease expiration date of December 31, 2007. Peachtree Park Pediatrics occupies 5,906 rentable square feet (or approximately 19% of the premises) with an annual base rent payable at $114,458 and a lease expiration date of March 31, 2014.

The average effective annual rental rate per square foot at Paces Pavilion was $19.58 for 2003, $17.88 for 2002, $7.78 for 2001, $3.84 for 2000, and $3.31 for 1999.

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Black Oak Plaza

On December 31, 1986, the Partnership acquired a portion of a retail shopping center located in Metropolitan Knoxville, Knox County, Tennessee known as Black Oak Plaza which was initially developed in 1981. Black Oak Plaza contains a total of approximately 175,000 square feet and is currently occupied by multiple tenants, including Kmart department store (“Kmart”) and Kroger Food/Drug (“Kroger”). The Partnership does not own the portion of the shopping center occupied by Kmart and Kroger. The portion of the shopping center owned and operated by the Partnership contains 69,000 net rentable square feet. As of December 31, 2003, Black Oak Plaza was leased to sixteen tenants with no single tenant occupying more than 10% of the premises.

The average annual rental rate per square foot for Black Oak Plaza was $5.59 for 2003, $5.91 for 2002, $6.37 for 2001, $6.01 for 2000, and $5.53 for 1999.

Crowe’s Crossing

On December 31, 1986, the Partnership acquired a retail shopping center located in metropolitan Atlanta, DeKalb County, Georgia known as Crowe’s Crossing containing approximately 94,000 net rentable square feet.

On January 11, 2001, the Partnership sold the Crowe’s Crossing property to an unrelated third party. This sale resulted in a gain of approximately $1,139,000 and yielded net proceeds of $6,486,653.

The average effective rental rate per square foot for Crowe’s Crossing was $0.19 through January 11, 2001, $8.81 for 2000, and $7.64 for 1999.

Peachtree Place

In 1985, the Partnership acquired an interest in two commercial office buildings located on Holcomb Bridge Road in Norcross, Gwinnett County, Georgia known as Peachtree Place. Peachtree Place is owned by Wells-Baker Associates. The land on which Peachtree Place was developed was originally purchased by Wells & Associates, Inc. for a purchase price of approximately $190,000. Upon the formation of Wells-Baker Associates, Wells & Associates, Inc. contributed the land to this joint venture as its initial capital contribution. As of December 31, 2003, the Partnership and Wells-Baker Associates owned approximately 90% and 10% of Peachtree Place, respectively.

Wells-Baker Associates sold one of its commercial office buildings, 3875 Peachtree Place, on August 31, 2000, for net sale proceeds of approximately $704,000 and recognized a gain on the sale of approximately $268,000, of which approximately $634,000 and $241,000, respectively, were allocated to the Partnership.

The remaining office building at Peachtree Place contains approximately 11,000 net rentable square feet and is leased to six tenants, of which the following four tenants occupy 10% or more of the total rentable square footage: Law Offices of Jules & Associates; Adevco Corporation, a commercial real estate development company; Flying Fotos, Inc., an aerial photo company; and American Express Financial, a financial services company.

Law Offices of Jules & Associates leases 3,004 rentable square feet (or approximately 27% of the premises) with annual base rent payable at $49,566 and a lease expiration date of September 30, 2006. Adevco Corporation leases 1,512 rentable square feet (or approximately 14% of the premises) with an annual base rent payable at $27,594 and a lease expiration date of September 30, 2005. Flying Fotos, Inc. leases 1,449 rentable square feet (or approximately 13% of the premises) with a base rent payable at $26,807 and a lease expiration date of

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January 31, 2004. American Express Financial leases 1,512 rentable square feet (or approximately 13% of the premises) with an annual base rent payable at $24,948 and a lease expiration date of October 31, 2006.

The average annual rental rate per square foot at Peachtree Place was $12.15 for 2003, $18.79 for 2002, $14.06 for 2001, $18.05 for 2000, and $13.86 for 1999.

Fund I-II Tucker Associates

On December 10, 1986, Fund I-II Tucker Associates was formed for the purpose of investing in commercial real estate properties. As of December 31, 2003, the Partnership and Fund II and Fund II-OW held equity interests of approximately 52% and 48%, respectively, in the following property based on their respective cumulative capital contributions to Fund I-II Tucker Associates:

Heritage Place

Fund I-II Tucker Associates developed and constructed Heritage Place, a retail shopping center containing approximately 29,858 square feet and a commercial office building complex containing approximately 67,212 square feet and located in Tucker, DeKalb County, Georgia.

On April 7, 2003, the Fund I-II Tucker Associates sold the retail portion of Heritage Place, which comprises approximately 30% of the total premises. The retail portion of Heritage Place was sold for a gross sales price of $3,400,000, resulting in a gain of approximately $293,000, net of selling expenses of approximately $158,000. As a result of this sale, net sales proceeds of approximately $1,665,000 and a gain of approximately $152,000 were allocated to the Partnership.

No individual tenant occupied ten percent or more of the total rentable square footage of the property as of December 31, 2003. The principal businesses of the tenants at Heritage Place include primarily commercial office services.

The average effective annual rental rate per square foot at Heritage Place was $10.90 for 2003, $12.66 for 2002, $13.66 for 2001, $14.29 for 2000, and $14.11 for 1999.

Fund I-II-IIOW-VI-VII Associates

Fund I-II-IIOW-VI-VII Associates was formed for the purpose of developing, owning and operating Cherokee Commons, a retail shopping center comprised of approximately 104,000 net rentable square feet located in metropolitan Atlanta, Cherokee County, Georgia. Cherokee Commons was initially acquired and developed through a joint venture between the Partnership and Fund II and Fund II-OW. On August 1, 1995, the joint venture between the Partnership and Fund II and Fund II-OW contributed Cherokee Commons, and Wells Real Estate Fund VI, L.P., and Wells Real Estate Fund VII, L.P. contributed approximately $1 million each in order to fund the additional build-out of Cherokee Commons upon the formation of Fund I-II-IIOW-VI-VII Associates.

On October 1, 2001, Fund I-II-IIOW-VI-VII Associates sold Cherokee Commons for net sale proceeds of $8,414,089 and recognized a gain of $1,725,015 on the sale, of which approximately $2,126,000 and $436,000, respectively, were allocated to the Partnership.

The average effective rental rate per square foot at Cherokee Commons was $7.31 through September 30, 2001, $9.31 for 2000, and $9.11 for 1999.

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On January 17, 2003, the Partnership was served with a putative class action by a limited partner holding Class B units, on behalf of all limited partners holding Class B units as of January 15, 2003, that seeks equitable relief with regard to the rights and obligations of all the Partnership’s limited partners and general partners under the partnership agreement. This litigation was filed in the Superior Court of Gwinnett County, Georgia (Roy Johnston v. Wells Real Estate Fund I, Civil Action No. 03-A00525-6) (the “Johnston Action”). The plaintiff in the Johnston Action generally alleges that the terms of the partnership agreement, as it relates to the allocation and distribution of net sale proceeds, are inconsistent with the original intent of the parties. The plaintiff alleges that the original intent was that limited partners holding Class B units would have a priority in payment of cash distributions of net sale proceeds to bring them even with the amount of cash distributions previously made to limited partners holding Class A units. The Johnston Action seeks, among other things, to have the Partnership’s partnership agreement equitably reformed consistent with the alleged original intent or, in the alternative, to have the investments made by limited partners holding Class B units equitably rescinded, and requests an injunction prohibiting the General Partners of the Partnership from distributing net sales proceeds until the resolution of the action.

On April 15, 2003, several limited partners holding Class A units filed a motion to intervene in the Johnston Action on the grounds that Mr. Johnston seeks relief that would be detrimental to limited partners holding Class A units, and that judgment in favor of Mr. Johnston would impair or impede the Class A unit holders’ ability to protect their interests. The Partnership then filed its answer, a counterclaim seeking a declaratory judgment and an interpleader action, and a motion to join the intervenor Class A unit holders and recast the action as one in interpleader. In its counterclaim, the Partnership seeks a declaratory judgment as to how net sale proceeds should be distributed as between limited partners holding Class A units and limited partners holding Class B units.

On June 27, 2003, the Court entered an order granting the motion to intervene previously filed by certain limited partners holding Class A units (the “A Unit Holder Defendants”). On July 29, 2003, the A Unit Holder Defendants filed a cross-claim against the Partnership seeking that the Partnership be required and directed to disburse funds in accordance with the partnership documents.

On or about October 16, 2003, all of the A Unit Holder Defendants other than John Weiss (“Defendant Weiss”) filed a Dismissal Without Prejudice in the action. On or about that same date, Defendant Weiss filed a motion to dismiss or in the alternative for summary judgment. On November 3, 2003, the Partnership filed a motion to dismiss or in the alternative for summary judgment.

On or about December 8, 2003, the plaintiff in the Johnston action filed a Motion to Conditionally Certify Class Action Claims. On or about December 10, 2003, Mr. Johnston filed a Motion for Partial Summary Judgment as to his Count II for Rescission.

The Court held a hearing on February 2, 2004. The Court took matters under advisement, and directed that all the proceedings be held in abeyance pending further order from the Court.

No matters were submitted to a vote of the limited partners during the fourth quarter of 2003.

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PART II

As of February 15, 2004, the Partnership had 98,716 outstanding Class A Units held by a total of 3,350 limited partners and 42,568 outstanding Class B Units held by a total of 959 limited partners. The capital contribution per unit was $250. There is no established public trading market for the Partnership’s limited partnership units, and it is not anticipated that a public trading market for the units will develop. Under the partnership agreement, the General Partners have the right to prohibit transfers of units.

Class A Unit holders are entitled to an annual 9% distribution preference over Class B Unit holders as to distributions from Cash Available for Distribution but are initially allocated none of the depreciation, amortization, cost recovery, and interest expense. These items are allocated to Class B Unit holders until their capital account balances have been reduced to zero.

Cash Available for Distribution to the limited partners is distributed on a quarterly basis. No distributions were paid to Class B Units in 2003 or 2002. The cash distributions made to the limited partners holding Class A Units during 2002 and 2003 are summarized below:

The Partnership has reserved distributions to limited partners for the second quarter through the fourth quarter of 2003 in order to fund additional legal costs anticipated to be required in connection with the litigation discussed in Part I, Item 3, and lease-up costs anticipated to be needed in connection with increasing the occupancy of Paces Pavilion, Black Oak Plaza, and Heritage Place.

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The following sets forth a summary of selected financial data as of and for the years ended December 31, 2003, 2002, 2001, 2000, and 1999.

The following discussion and analysis should be read in conjunction with the Selected Financial Data presented in Item 6 and our accompanying consolidated financial statements and notes thereto.

Currently, management believes that the Partnership is straddling the positioning for sale phase and the disposition and liquidation phase. Upon investing all capital proceeds and exiting the investing phase, the Partnership owned interests in six properties, either directly or through interests in affiliated joint ventures. As of the date of this filing, two properties are greater than 80% leased, two properties are less than 80% leased, and two properties and a portion of two other properties have been sold. Management will continue to pursue various re-leasing strategies for the space currently vacant at the properties in the Partnership’s portfolio during 2004.

As the Partnership evolves through the life cycle detailed in Item 1, our most significant risks and challenges continue to evolve concurrently. In our attempts to position our remaining properties for sale, we will continue to focus on re-leasing vacant space and space that may become vacant upon the expiration of our current leases. In doing so, we seek to maximize returns to the limited partners by negotiating long-term leases at market rental rates while attempting to minimize downtime, re-leasing expenditures, ongoing property level costs, and portfolio costs. As we focus on the disposition and liquidation phase, we have shifted our attention to locating suitable acquirers, negotiating purchase and sale contracts that will attempt to maximize the total return to the limited partners, and minimize contingencies and our post-closing involvement with the acquirer.

During 2003, net loss increased primarily as a result of incurring additional legal costs in connection with the litigation discussed in Part I, Item 3, of this report. Cash flows increased in 2003, primarily due to net proceeds received in connection with the sale of the retail portion of Heritage Place in April 2003.

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Substantially all of our operating revenues are generated from the operations of the properties in the Partnership’s portfolio. On a quarterly basis, we deduct the expenses related to the recurring operations of the properties and the portfolio from such revenues and assess the amount of the remaining cash flows that will be required to fund known re-leasing costs and other capital improvements or other major expenses such as legal fees required in connection with litigation. Any residual operating cash flows are considered available for distribution to the limited partners and are generally paid quarterly. As further outlined in section (b) below, we anticipate using a portion of our future operating cash flows to fund litigation costs (see Part I, Item 3) and the costs necessary to re-lease currently vacant space in the properties within the Partnership’s portfolio.

Industry Factors

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

General Economic and Real Estate Market Commentary

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

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

The office market has significant excess space. Vacancy levels are believed to be at or near their peak. There is some encouraging news, new construction continues to taper off, coming to a complete halt in many markets. As a result of the slow down in new construction and the modest decline in sublease space, net absorption has turned positive, although barely, at year-end. Many industry professionals believe office market fundamentals are bottoming-out; however, a recovery cannot be expected until job growth and corresponding demand for office space increases.

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

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

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

Gross Revenues

Gross revenues of the Partnership were $1,499,363, $1,504,446, and $3,219,730 for the years ended December 31, 2003, 2002, and 2001, respectively. Gross revenues for 2003 remained relatively stable, as compared to 2002.

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The 2002 decrease, as compared to 2001, resulted primarily from (i) the gains recognized in 2001 from the sales of Crowe’s Crossing and a portion of Peachtree Place, and loss of future related rental and reimbursement revenues, and (ii) the corresponding decline in equity in income of Joint Ventures described below.

Equity In (Loss) Income of Joint Ventures – Continuing Operations

Gross Revenues of Joint Ventures

Gross revenues of the Joint Ventures decreased in 2003, as compared to 2002, due to a decline in occupancy of Heritage Place owned by Fund I-II Tucker Associates, and a reduction in interest income earned on the net sales proceeds for Cherokee Commons previously owned by Fund I-II-IIOW-VI-VII Associates, which were transferred to the joint venture partners in the fourth quarter of 2002. The 2002 increase, as compared to 2001, was primarily due to the interest income earned in 2002 on net proceeds from the fourth quarter 2001 sale of Cherokee Commons, partially offset by a decline in occupancy at Heritage Place in 2002, as compared to 2001.

Expenses of Joint Ventures

The expenses of the Joint Ventures decreased for 2003 from 2002, and for 2002 from 2001, primarily due to the corresponding period-to-period declines in occupancy for Heritage Place.

Equity in Income of Joint Ventures – Discontinued Operations

Equity in income generated by the Joint Ventures from discontinued operations increased in 2003, as compared to 2002, primarily as a result of the gain recognized on the sale of the retail portion of Heritage Place in April 2003. Such equity in income of Joint Ventures decreased in 2002, as compared to 2001, primarily as a result of the gain recognized on the sale of the Cherokee Commons in 2001 and decline in occupancy of the retail portion of Heritage Place during 2002.

As a result of the aforementioned factors, equity in income of Joint Ventures was $139,039, $102,801, and $671,097 for 2003, 2002, and 2001, respectively.

Expenses of the Partnership

Expenses of the Partnership were $2,010,279, $1,904,750, and $1,477,461 for the years ended December 31, 2003, 2002, and 2001, respectively. The 2003 increase, as compared to 2002, and the 2002 increase, as compared to 2001, resulted primarily from increased legal costs related to litigation discussed in Part I, Item 3, of this report.

Net (Loss) Income of the Partnership

As a result of the aforementioned factors, net (loss) income of the Partnership was $(508,763), $(410,907), and $1,734,777 for the years ended December 31, 2003, 2002, and 2001, respectively.

Cash Flows From Operating Activities

Net cash flows from operating activities were $119,982, $455,348, and $562,623 for 2003, 2002, and 2001, respectively. The 2003 decrease from 2002, and the 2002 decrease from 2001, resulted primarily from the corresponding increases in Partnership expenses as described above.

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Cash Flows From Investing Activities

Net cash flows from investing activities were $1,769,776, $2,199,048, and $6,895,309 for 2003, 2002, and 2001, respectively. The 2003 decrease, as compared to 2002, resulted primarily from the receipt of net sales proceeds of approximately $1.6 million from the sale of the retail portion of Heritage Place in 2003, as compared to receiving approximately $2.1 million from the fourth quarter 2001 sale of Cherokee Commons in 2002. The 2002 decrease, as compared to 2001, resulted primarily from receipt of net proceeds from the sale of Crowe’s Crossing, a wholly owned property, of approximately $6.5 million in 2001.

Cash Flows From Financing Activities

Net cash flows from financing activities were $(501,591), $(837,166), and $(1,139,120) for 2003, 2002, and 2001, respectively. Net cash flows from financing activities are solely comprised of operating distributions paid to limited partners. The 2003 decrease in cash flows used, as compared to 2002, and the 2002 decrease, as compared to 2001, resulted primarily from the decreases in cash flows provided to the Partnership by operating activities and operating cash flows generated by the Joint Ventures during the corresponding accounting period, as further described above.

Distributions

The Partnership declared distributions of net cash from operations to the limited partners holding Class A Units of $2.50, $10.00, and $10.16 per unit for the years ended December 31, 2003, 2002, and 2001, respectively. Cash flows otherwise distributable to the limited partners have been reserved for the second quarter through the fourth quarter of 2003 and are expected to be reserved in the future in order to fund additional legal costs anticipated to be required in connection with the litigation discussed in Part I, Item 3, and lease-up costs anticipated to be needed in connection with increasing the occupancy of Black Oak Plaza, Peachtree Place, and Heritage Place. No distributions were made to limited partners holding Class B Units.

Sales Proceeds

The Partnership’s share of the net proceeds generated from the sales of the Cherokee Commons, the Crowe’s Crossing, a portion of Peachtree Place, and the retail portion of Heritage Place have not been distributed. The Partnership has computed the amount of net sales proceeds available for distribution to limited partners out of the aggregate of approximately $10,900,000 in proceeds generated from the sales of certain real estate assets. In accordance with Section 9.3 of the partnership agreement, except for reinvestment of net sale proceeds as provided in Section 11.3(g) (as amended), and after the payment or reserves allowed for Partnership debts and liabilities (including without limitation to management fees owed to Wells Management in the amount of approximately $2,800,000), and after the establishment of reserves which the General Partners, in their sole discretion, deem reasonably necessary, as of February 20, 2004, there were net sales proceeds in the amount of approximately $7,000,000 available for distribution to limited partners, which sum is being held in a separate, interest-bearing bank account. As more fully set forth therein, Section 9.3 of the partnership agreement provides that the net sales proceeds shall be distributed “to each Partner in accordance with the positive balance in his Capital Account as of the date of distribution under this Section 9.3 (after allocation of the Gain on Sale as provided in Section 10.4 hereof).” Due to pending litigation, however, the Partnership is not in position to distribute net sales proceeds until final resolution of the litigation described in Part I, Item 3.

Capital Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning, and operating income-producing real properties and has invested all of its funds available for investment. Accordingly, it is unlikely

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that the Partnership will acquire interests in any additional properties, except potentially for the acquisition of additional interests in Paces Pavilion. Other than those mentioned above, the General Partners are unaware of any specific need requiring capital resources.

Management and Leasing Fees

Wells Management, an affiliate of the General Partners, is entitled to compensation for the management and leasing of the Partnership’s properties owned through joint ventures equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term. The Partnership’s share of management and leasing fees and lease acquisition costs incurred from all of its real estate investments was $83,762, $107,332, and $109,433 for the years ended December 31, 2003, 2002, and 2001, respectively, which are payable to Wells Management.

Beginning in the third quarter of 1998, the management and leasing of Black Oak Plaza has been performed by an independent third-party property management company. The third-party management company receives a fee equal to 3% of gross rental revenues, and the balance of 3% of gross rental revenues is payable to Wells Management and accrued. Wells Management has elected to defer the receipt of management and leasing fees due from the Partnership. Accordingly, as of December 31, 2003 and 2002, the Partnership owed aggregate management and leasing fees to Wells Management of $2,816,703 and $2,731,594, respectively, of which $2,058,935 and $2,000,915, respectively, are recorded as due to affiliate in the accompanying consolidated balance sheets, and $757,768 and $730,679, respectively, are due from the Partnership’s interest in Fund I-II Tucker Associates and, therefore, included in Investment in Joint Ventures in the accompanying consolidated balance sheets.

Administration Reimbursements

Wells Capital and its affiliates perform certain administrative services for the Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel. During 2003, 2002, and 2001, the Partnership reimbursed $71,947, $71,264, and $71,005, respectively, to Wells Capital and its affiliates for these services.

Conflicts of Interest

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

The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases, which would protect the

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Partnership from the impact of inflation. These provisions include reimbursement billings for operating expense pass-through charges, real estate tax, and insurance reimbursements on a per-square-foot basis, or in some cases, annual reimbursement of operating expenses above a certain per-square-foot allowance. However, due to the long-term nature of the leases, the leases may not re-set frequently enough to cover inflation.

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

Below is a discussion of the accounting policies that management considers to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. Additional discussion of accounting policies that management considers to be significant, including further discussion of the critical accounting policies described below, is presented in Note 1 to the Partnership’s consolidated financial statements included in this report.

Investment in Real Estate Assets

The Partnership’s management is required to make subjective assessments as to the useful lives of its depreciable assets. The Partnership considers the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. The estimated useful lives of the Partnership’s assets by class are as follows:

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

Valuation of Real Estate Assets

Management continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which the Partnership has an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate assets may not be recoverable, management assesses the recoverability of the real estate assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying

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value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Partnership as of December 31, 2003.

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

Since the Partnership does not borrow any money or make any foreign investments, it is not subject to risks relating to interest rate or foreign currency exchange rate fluctuations.

The consolidated financial statements of the Registrant and supplementary data are detailed under Item 15(a) and filed as part of the report on the pages indicated.

There were no disagreements with the Partnership’s independent public accountants during the years ended December 31, 2003 and 2002.

On May 16, 2002, the general partners dismissed Arthur Andersen LLP (Andersen) as the Partnership’s independent public accountants effective immediately.

Andersen’s report on the consolidated financial statements of the Partnership for the year ended December 31, 2001 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the year ended December 31, 2001 and through the date of Andersen’s dismissal, there were no disagreements with Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Andersen’s satisfaction, would have caused Andersen to make reference to the subject matter in connection with its report on the consolidated financial statements of the Partnership for such year and there were no reportable events as set forth in Item 304(a)(1)(v) of Regulation S-K.

On July 3, 2002, the Partnership engaged Ernst & Young, LLP (Ernst & Young) to audit the consolidated financial statements of the Partnership, effective immediately. During the fiscal year ended December 31, 2001, and through the date of appointment of Ernst & Young as the Partnership’s independent public accountants, the Partnership did not consult Ernst & Young with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the consolidated financial statements of the Partnership, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

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The Partnership carried out an evaluation, under the supervision and with the participation of management of Wells Capital, the corporate General Partner of the Partnership, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures as of the end of the period covered by this report pursuant to the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Partnership’s disclosure controls and procedures were effective.

There were no significant changes in the Partnership’s internal control over financial reporting during the Partnership’s fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART III

Wells Capital

Wells Capital was formed in April 1984. The executive offices of Wells Capital are located at 6200 The Corners Parkway, Norcross, Georgia 30092. Leo F. Wells, III is the sole Director and the President of Wells Capital. Wells Capital was organized under the Georgia Business Corporation Code, and is primarily in the business of serving as general partner or as an affiliate to the general partner in affiliated public limited partnerships (“Wells Real Estate Funds”) and as the advisor to the Wells Real Estate Investment Trust, Inc. and Wells Real Estate Investment Trust II, Inc. (“Wells REITs”), each a Maryland corporation which qualifies as a real estate investment trust. In these capacities, Wells Capital performs certain services for the Wells Real Estate Funds and the Wells REITs, including presenting, structuring, and acquiring real estate investment opportunities, entering into leases and service contracts on acquired properties, arranging for and completing the disposition of properties, and providing other services such as accounting and administrative functions.

Leo F. Wells, III

Mr. Wells, who serves as one of our General Partners, is the President, Treasurer, and sole director of Wells Capital, which is our corporate General Partner. He is also the sole stockholder, President, and sole director of Wells Real Estate Funds, Inc., the parent corporation of Wells Capital, Wells Management, Wells Investment Securities, Inc. (“Wells Investment Securities”), and Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which Mr. Wells serves as principal broker. He is also the President, Treasurer, and sole director of:

Mr. Wells is the President and a director of Wells Real Estate Investment Trust, Inc. and Wells Real Estate Investment Trust II, Inc., which are both real estate investment trusts formed under Maryland law.

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Mr. Wells was a real estate salesman and property manager from 1970 to 1973 for Roy D. Warren & Company, an Atlanta-based real estate company, and he was associated from 1973 to 1976 with Sax Gaskin Real Estate Company. 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 Financial Planning Association (FPA).

On August 26, 2003, Mr. Wells and Wells Investment Securities entered into a Letter of Acceptance, Waiver and Consent (AWC) with the NASD relating to alleged rule violations. The AWC set forth the NASD’s findings that Wells Investment Securities and Mr. Wells had violated conduct rules relating to the provision of non-cash compensation of more than $100 to associated persons of NASD member firms in connection with their attendance at the annual educational and due diligence conferences sponsored by Wells Investment Securities in 2001 and 2002. Without admitting or denying the allegations and findings against them, Wells Investment Securities and Mr. Wells consented in the AWC to various findings by the NASD which are summarized in the following paragraph:

In 2001 and 2002, Wells Investment Securities sponsored conferences attended by registered representatives who sold its real estate investment products. Wells Investment Securities also paid for certain expenses of guests of the registered representatives who attended the conferences. In 2001, Wells Investment Securities paid the costs of travel to the conference and meals for many of the guests, and paid the costs of playing golf for some of the registered representatives and their guests. Wells Investment Securities later invoiced registered representatives for the cost of golf and for travel expenses of guests, but was not fully reimbursed for such. In 2002, Wells Investment Securities paid for meals for the guests. Wells Investment Securities also conditioned most of the 2001 conference invitations on attainment by the registered representatives of a predetermined sales goal for Wells Investment Securities products. This conduct violated the prohibitions against payment and receipt of non-cash compensation in connection with the sales of these products contained in NASD’s Conduct Rules 2710, 2810, and 3060. In addition, Wells Investment Securities and Mr. Wells failed to adhere to all of the terms of their written undertaking made in March 2001 not to engage in the conduct described above, and thereby engaged in conduct that was inconsistent with high standards of commercial honor and just and equitable principles of trade in violation of NASD Conduct Rule 2110.

Wells Investment Securities consented to a censure and Mr. Wells consented to suspension from acting in a principal capacity with an NASD member firm for one year. Wells Investment Securities and Mr. Wells also agreed to the imposition of a joint and several fine in the amount of $150,000. Although he is temporarily prohibited from acting in a principal capacity with Wells Investment Securities, Mr. Wells continues to engage in selling efforts and other non-principal activities on behalf of Wells Investment Securities.

Financial Oversight Committee

The Partnership does not have a board of directors or an audit committee. Accordingly, as the corporate General Partner of the Partnership, Wells Capital has established a Financial Oversight Committee consisting of Leo F. Wells, III, as the Principal Executive Officer; Douglas P. Williams, as the Principal Financial Officer; and Randall D. Fretz, as the Chief of Staff, of the corporate General Partner. The Financial Oversight Committee serves the equivalent function of an audit committee for, among others, the following purposes: appointment, compensation, review, and oversight of the work of our independent public accountant, and establishing and enforcing the code of ethics. However, as the Partnership and corporate General Partner do not have an audit committee and the Financial Oversight Committee is not independent of the Partnership or the General Partners, the Partnership does not have an “audit committee financial expert.”

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Code of Ethics

The Financial Oversight Committee has adopted a code of ethics applicable to our corporate General Partner’s Principal Executive Officer and Principal Financial Officer, as well as the principal accounting officer, controller, or other employees of our corporate General Partner performing similar functions on behalf of the Partnership, if any. You may obtain a copy of this code of ethics, without charge, upon request by calling our Investor Services Department at (800) 557-4830 or (770) 243-8282.

No cash compensation or fees were paid to the General Partners or their affiliates during the year ended December 31, 2003 from the Partnership or with respect to the Partnership’s interests in joint ventures owning and operating properties. Wells Management has elected to defer the receipt of property management and leasing fees from the Partnership and with respect to the Partnership’s interests in properties owned through joint ventures. Accordingly, as of December 31, 2003, the Partnership owed deferred cash compensation of approximately $2,816,703, of which $2,058,935 is recorded as due to affiliate, and $757,768 is due from the Partnership’s interest in Fund I-II Tucker Associates and, therefore, included in Investment in Joint Ventures in the accompanying consolidated balance sheets.

The following table summarizes the compensation and fees to the General Partners and their affiliates during the year ended December 31, 2003:

No limited partner is known by the Partnership to own beneficially more than 5% of the outstanding units of the Partnership. Set forth below is the security ownership of management as of February 15, 2004.

No arrangements exist which would, upon implementation, result in a change in control of the Partnership.

The following are compensation and fees paid or to be paid by the Partnership to the General Partners and their affiliates in connection with the operation of the Partnership.

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Interest in Partnership Cash Flow and Net Sale Proceeds

The General Partners are entitled to receive a subordinated participation in net cash flow from operations equal to 10% of net cash flow after the limited partners have received preferential distributions equal to 9% of their adjusted capital accounts in each fiscal year. In addition, after the limited partners receive their distributions equal to 9% of their capital contributions and the General Partners receive their distributions equal to 10% of the total distributions for such year, the General Partners will receive a participation of 10% of the additional distributions from cash available for distribution, 9% of which is to be paid to the General Partners as a Partnership Management Fee. The General Partners have not received any distributions of cash flow or net sale proceeds from the Partnership during 2003.

Property Management and Leasing Fees

Wells Management, an affiliate of the General Partners, is entitled to compensation for the management and leasing of the Partnership’s properties owned through joint ventures equal to 6% (3% management and 3% leasing) of rental income. In no event will such fees exceed the sum of (i) 6% of the gross receipts of each property, plus (ii) a separate one-time fee for initial rent-up or leasing-up of development properties in an amount not to exceed the fee customarily charged in arm’s-length transactions by others rendering similar services in the same geographic area for similar properties. With respect to properties leased on a net lease basis for a period of ten years or longer, property management fees will not exceed 1% of gross revenues from such leases, plus a one-time initial leasing fee of 3% of the gross revenues which are payable over the first five years of the term of such net leases. Since the third quarter of 1998, the management and leasing of Black Oak Plaza has been performed by an independent third-party property management company. The management company receives a 3% fee and the balance due to Wells Management is accrued. Wells Management has elected to defer the current receipt of management and leasing fees and initial lease-up costs due from the Partnership with respect to the properties owned by the Partnership directly and through its interest in joint ventures. Accordingly, such fees are expensed as incurred and comprise the due to affiliate balances presented in the accompanying balance sheets. Wells Management has earned a total of $75,039 in property management and leasing fee compensation for services rendered during the year ended December 31, 2003.

Real Estate Commissions

In connection with the sale of Partnership properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (a) 50% of the commissions customarily charged by other brokers in arm’s-length transactions involving comparable properties in the same geographic area or (b) 3% of the gross sales price of the property, and provided that payments of such commissions will be made only after limited partners have received prior distributions totaling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. During 2003, no real estate commissions were paid to the General Partners or their affiliates.

Preapproval Policies and Procedures

The Financial Oversight Committee preapproves all auditing and permissible non-auditing services provided by our independent public accountants. The approval may be given as part of the Financial Oversight Committee’s approval of the scope of the engagement of our independent public accountants or on an individual basis. The preapproval of certain audit-related services and certain non-auditing services not exceeding enumerated dollar limits may be delegated to one or more of the Financial Oversight Committee’s members, but the member to

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whom such authority is delegated shall report any preapproval decisions to the full Financial Oversight Committee. Our independent public accountants may not be retained to perform the non-auditing services specified in Section 10A(g) of the Securities Exchange Act of 1934.

Fees Paid to the Independent Public Accountants

As indicated in Item 9 above, we engaged Ernst & Young LLP to be our independent public accountants on July 3, 2002. The aggregate fees billed to the Partnership for professional accounting services, including the audit of the Partnership’s annual consolidated financial statements by Ernst & Young for the fiscal years ended December 31, 2003 and 2002, are set forth in the table below.

For purposes of the preceding table, the professional fees are classified as follows:

Since May 6, 2003, the effective date of the SEC Rules requiring audit committees to approve all services provided by independent public accountants, 100% of the services performed by Ernst & Young described above under the captions “Audit Fees,” “Audit-Related Fees,” “Tax Fees,” and “All Other Fees” were approved in advance by a member of the Financial Oversight Committee.

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PART IV

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SIGNATURES

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

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EXHIBIT INDEX

TO

2003 FORM 10-K

OF

WELLS REAL ESTATE FUND I

The following documents are filed as exhibits to this report. Those exhibits previously filed and incorporated herein by reference are identified below by an asterisk. For each such asterisked exhibit, there is shown below the description of the previous filing. Exhibits which are not required for this report are omitted.

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WELLS REAL ESTATE FUND I AND SUBSIDIARY

                                                                       (A Georgia Public Limited Partnership)                                                                       

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REPORT OF INDEPENDENT AUDITORS

The Partners

Wells Real Estate Fund I

We have audited the accompanying consolidated balance sheets of Wells Real Estate Fund I and subsidiary as of December 31, 2003 and 2002, and the related consolidated statements of (loss) income, partners’ capital, and cash flows for the years then ended. Our audits also included the financial statement schedule listed in the index at Item 15(a) as of December 31, 2003 and 2002. These financial statements and schedule are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. The consolidated financial statements and schedule of Wells Real Estate Fund I and subsidiary for the year ended December 31, 2001 were audited by other auditors who have ceased operations and whose report dated January 25, 2002 expressed an unqualified opinion on those financial statements and schedule before the restatement adjustments described in Note 1.

We conducted our audits in accordance with auditing standards generally accepted in the United States. 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 audits provide a reasonable basis for our opinion.

In our opinion, the 2003 and 2002 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wells Real Estate Fund I and subsidiary at December 31, 2003 and 2002 and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed above, the consolidated financial statements of Wells Real Estate Fund I and subsidiary for the year ended December 31, 2001 were audited by other auditors who have ceased operations. As described in Note 1, these financial statements have been restated. We audited the adjustments described in Note 1 that were applied to restate the 2001 financial statements. Our procedures included (a) agreeing the amounts in the restatement adjustments column to the corresponding accounts maintained in the underlying records of the Partnership, and (b) testing the application of the adjustments to the previously reported amounts. In our opinion, such adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2001 financial statements of Wells Real Estate Fund I and subsidiary other than with respect to such restatement adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial statements taken as a whole.

/s/    Ernst & Young LLP

Atlanta, Georgia

February 18, 2004

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(The following is a copy of the audit report previously issued by Arthur Andersen LLP in connection with the financial statements of Wells Real Estate Fund I for the fiscal year ended December 31, 2001 included in the 2001 Form 10-K filing. This audit report has not been reissued by Arthur Andersen in connection with the filing of this form 10-K for the fiscal year ended December 31, 2003.)

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Wells Real Estate Fund I and Subsidiary:

We have audited the accompanying consolidated balance sheets of WELLS REAL ESTATE FUND I (a Georgia limited partnership) AND SUBSIDIARY as of December 31, 2001 and 2000 and the related consolidated statements of income (loss), partners’ capital, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and the schedule referred to below are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule 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 audits provide 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 Wells Real Estate Fund I and subsidiary as of December 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule III—Real Estate Investments and Accumulated Depreciation as of December 31, 2001 is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Atlanta, Georgia

January 25, 2002

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WELLS REAL ESTATE FUND I AND SUBSIDIARY

                                                                       (A Georgia Public Limited Partnership)                                                                       

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2003 AND 2002

See accompanying notes.

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WELLS REAL ESTATE FUND I AND SUBSIDIARY

                                                                       (A Georgia Public Limited Partnership)                                                                       

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001

See accompanying notes.

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WELLS REAL ESTATE FUND I AND SUBSIDIARY

                                                                       (A Georgia Public Limited Partnership)                                                                       

CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001

See accompanying notes.

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WELLS REAL ESTATE FUND I AND SUBSIDIARY

                                                                       (A Georgia Public Limited Partnership)                                                                       

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2003, 2002, AND 2001