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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

For the transition period from                                  to                                 

Commission file number 333-101463 (1933 Act)

WELLS REAL ESTATE FUND XIV, L.P.

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(g) of the Act:

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 non-affiliates:    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 XIV, L.P. (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 XIV, L.P. (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 October 25, 2002, for the purpose of acquiring, developing, owning, operating, improving, leasing, and managing income producing commercial properties for investment purposes. Upon subscription for units, the limited partners must elect whether to have their units treated as Cash Preferred Status Units or Tax Preferred Status Units. Thereafter, limited partners have the right to change their prior elections to have some or all of their units treated as Cash Preferred Status Units or Tax Preferred Status Units one time during each quarterly accounting period. 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; (c) add or remove a general partner; (d) elect a new general partner; (e) dissolve the Partnership; and (f) approve a sale involving all or substantially all of the Partnership’s assets, subject to certain limitations. The majority vote on any of the described matters will bind the Partnership, without the concurrence of the General Partners. Each limited partnership unit has equal voting rights, regardless of which class of unit is selected.

On May 14, 2003, the Partnership commenced an offering of up to $45,000,000 of Cash Preferred or Tax Preferred Status Units ($10.00 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 125,000 Units on July 24, 2003. As of December 31, 2003, the Partnership accepted subscriptions for approximately 962,441 Cash Preferred Status Units and 568,246 Tax Preferred Status Units for total limited partner capital contributions of $15,306,870. Pursuant to the terms of the partnership agreement, the original partner’s interest in the Partnership was redeemed for $100 upon the admission of additional limited partners following commencement of operations. After payment of $1,259,199 of selling commissions, $447,139 of organizational and offering costs, $521,662 in acquisition and advisory fees and acquisition expense reimbursements, and investing $9,119,653 in Fund XIII-XIV Associates (as defined below), as of December 31, 2003, the Partnership held net offering proceeds of approximately $4.0 million available for investment in properties.

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

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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

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

Management believes that the Partnership is currently straddling the fundraising phase and investing phase and, accordingly, is focusing on raising capital and devoting resources on locating suitable property acquisitions and managing the existing portfolio.

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, during the holding phase, management prefers to maximize operating cash flows distributed to investors commensurate with the period earned; however, it is likely that, during the positioning for sale phase, the Partnership will 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 the re-leasing of the Partnership’s properties. 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 compensation and 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 through its interest in a joint venture. In the opinion of management, 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 interests in the following two properties through the affiliated joint venture listed below (the “Joint Venture”):

Each of the aforementioned properties was acquired on an all-cash basis. The investment objectives of the joint venture partner listed in the above table are substantially identical to those of the Partnership. The Partnership does not have control over the operations of the Joint Venture; however, it does exercise significant influence. Accordingly, investments in the Joint Venture are recorded using the equity method of accounting.

As of December 31, 2003, the lease expirations scheduled during each of the following ten years for all properties owned by the Joint Venture, assuming no exercise of renewal options or termination rights, are summarized below:

The Joint Venture and properties in which the Partnership owns an interest as of December 31, 2003 during the periods presented are further described below:

Fund XIII-XIV Associates

On August 20, 2003, Fund XIII-XIV Associates was formed for the purposes of acquiring, developing, operating, and selling real properties. All income, loss, net cash flow, resale gain and sale proceeds of Fund XIII-XIV Associates are allocated and distributed to the Partnership and Wells Real Estate Fund XIII, L.P. according to their ownership interests, as calculated by the respective cumulative capital contributions made to Fund XIII-XIV

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Associates. As of December 31, 2003, the Partnership and Wells Real Estate Fund XIII, L.P. owned approximately 50% and 50%, respectively, of the following two properties based on their respective cumulative capital contributions to Fund XIII-IV Associates:

Siemens – Orlando Building

On October 30, 2003, Fund XIII-XIV Associates acquired the Siemens – Orlando Building, which is comprised of two one-story office buildings, containing approximately 82,000 aggregate rentable square feet, on an approximately 7.5-acre tract of land located in Orlando, Florida. The purchase price of the Siemens – Orlando Building was approximately $11,710,000, including closing costs. The acquisition of the Siemens – Orlando Building was funded by equal capital contributions made to Fund XIII-XIV Associates of approximately $5,855,000 by the Partnership and Wells Real Estate Fund XIII, L.P.

The Siemens – Orlando Building, which was completed in 2002, is leased under net lease agreements (i.e., operating costs and maintenance costs are paid by the tenants) to Siemens Shared Services, LLC (approximately 63%); Rinker Materials of Florida, Inc. (approximately 16%); Cape Canaveral Tour & Travel, Inc. (approximately 12%); and Best Buy Stores, L.P. (approximately 9%). As of December 31, 2003, the Siemens-Orlando Building is 100% leased.

Siemens Shared Services LLC (“Siemens”) occupies approximately 52,000 rentable square feet of the Siemens – Orlando Building. Siemens, a subsidiary of Siemens AG, provides accounting and human resources services to the operating subsidiaries of Siemens AG, including Siemens Corporation, the guarantor of the Siemens lease, which conducts the American operations for Siemens AG. Siemens has its corporate headquarters in Iselin, New Jersey. Siemens AG is a worldwide electronics and electrical engineering company with corporate headquarters in Munich, Germany.

The Siemens lease (the “Siemens Lease”) commenced in 2002 and expires in 2009. The current annual base rent payable under the Siemens Lease is approximately $695,000. Siemens has the right, at its option, to extend the initial term of its lease for two additional three-year periods at 95% of the then-current market rental rate. Siemens has an option to lease additional space in the Siemens – Orlando Building upon such space becoming available and subject to first refusal rights of other tenants of the Siemens – Orlando Building. In addition, Siemens has the right to terminate up to 25,000 rentable square feet of the Siemens lease in 2007 by paying a termination fee equal to $7.47 per rentable square foot terminated.

Rinker Materials of Florida, Inc. (“Rinker”) occupies approximately 13,000 rentable square feet of the Siemens – Orlando Building. Rinker is a privately held concrete company with corporate headquarters in West Palm Beach, Florida. Rinker provides construction and building materials in Florida, Georgia, and South Carolina, including cement, aggregate, brick, glass block, reinforcing steel, construction chemicals, drywall, and fireplaces. Rinker is a wholly owned subsidiary of Rinker Group Limited (“Rinker Group”), an Australian company with corporate headquarters in Chatswood, Australia. Rinker Group is a worldwide heavy building materials corporation. The Rinker lease (the “Rinker Lease”) commenced in 2003 and expires in 2013. The current annual base rent payable under the Rinker Lease is approximately $170,000. Rinker has the right, at its option, to extend the initial term of its lease for two additional five-year periods at the then-current market rental rate. In addition, Rinker has a right of first refusal to lease additional space in the Siemens – Orlando Building upon such space becoming available.

Cape Canaveral Tour and Travel, Inc. (“Cape Canaveral”) occupies approximately 10,000 rentable square feet of the Siemens – Orlando Building under two separate leases. Cape Canaveral is a subsidiary of Kosmas Group International, Inc. (“Kosmas”), the guarantor of the Cape Canaveral leases (the “Cape Canaveral Leases”). Kosmas is a vacation ownership company with corporate headquarters in New Smyrna Beach, Florida. Kosmas

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provides timeshare ownership of ten resorts in New Smyrna Beach, two in Kissimmee, and one in Key West, Florida. The Cape Canaveral Leases, which commenced in 2002 and 2003, expire in 2007. The current annual base rent payable under the Cape Canaveral Leases is approximately $142,000. Cape Canaveral has the right, at its option, to extend the initial term of its leases for two additional five-year periods at the then-current market rental rate.

Best Buy Stores, L.P. (“Best Buy”) occupies approximately 7,000 rentable square feet of the Siemens-Orlando Building. Best Buy is a wholly owned subsidiary of Best Buy Co., Inc. (“Best Buy Co.”). Best Buy Co. is a retailer of consumer electronics, personal computers, entertainment software and appliances in North America. Best Buy Co., whose shares are publicly traded on the New York Stock Exchange, has its corporate headquarters located in Minneapolis, Minnesota. The Best Buy lease (the “Best Buy Lease”) commenced in 2001 and expires in 2006. The current annual base rent payable under the Best Buy Lease is approximately $102,000. Best Buy has the right, at its option, to extend the initial term of its lease for two additional five-year periods at 95% of the then-current market rental rate.

The average effective annual rental rate per square foot for the Siemens – Orlando Building was approximately $20.26 for 2003, the first year of ownership.

Randstad – Atlanta Building

On December 19, 2003, in a sale-leaseback transaction, Fund XIII-XIV Associates acquired the Randstad – Atlanta Building, a four-story office building containing approximately 65,000 aggregate rentable square feet, on an approximately 2.9-acre tract of land located in Atlanta, Georgia. The purchase price of the Randstad – Atlanta Building was approximately $6,520,000, including closing costs. The purchase price was funded by equal capital contributions made to Fund XIII-XIV Associates of approximately $3,260,000 by the Partnership and Wells Real Estate Fund XIII, L.P.

The Randstad – Atlanta Building, which was completed in 1985, is leased under a net lease agreement (i.e., operating costs and maintenance costs are paid by the tenants) entirely to Randstad Staffing Services, Inc. (“Randstad”), an affiliate of Randstad Holdings NV (“Randstad Holdings”). Randstad Holdings, the guarantor of the Randstad lease (the “Randstad Lease”), is an international supplier of temporary and contract staffing services. Randstad, which has its corporate headquarters in the Randstad – Atlanta Building, manages the operations of Randstad Holdings in the United States and Canada. Randstad operates in five core areas, including office, industrial, creative, technical and professional services.

The Randstad Lease commenced in 2003 and expires in 2013. The current annual base rent payable under the Randstad Lease is approximately $646,000. Randstad has the right, at its option, to extend the initial term of its lease for two additional five-year periods at 95% of the then-current market rental rate. In addition, Randstad has a right of first refusal to purchase the Randstad – Atlanta Building should Fund XIII-XIV Associates decide to sell the Randstad – Atlanta Building in the future. Fund XIII-XIV Associates, as landlord, is responsible for the maintenance and repair of the roof, plumbing, electrical, heating and air conditioning, exterior walls, doors, windows, corridors and other common areas of the Randstad – Atlanta Building.

The average effective annual rental rate per square foot for the Randstad – Atlanta Building was approximately $11.24 for 2003, the first year of ownership.

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There were no material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during the fourth quarter of 2003.

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

PART II

As of February 15, 2004, the Partnership had 1,013,161 outstanding Cash Preferred Status Units held by a total of 225 limited partners and 578,504 outstanding Tax Preferred Status Units held by a total of 29 limited partners. The capital contribution per unit is $10.00. There is no established public trading 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.

In order for NASD members and their associated persons to participate in the offering and sale of units of the Partnership, the Partnership is required pursuant to NASD Rule 2810(b)(5) to disclose in each annual report distributed to limited partners a per-unit estimated value of the units, the method by which it was developed and the date of the data used to develop the estimated value. In addition, pursuant to Section 15.2 of the partnership agreement and the Partnership’s prospectus, the General Partners are required to prepare annual statements of estimated unit values to assist fiduciaries of retirement plans subject to the annual reporting requirements of ERISA in the preparation of their reports relating to an investment in the Partnership. Pursuant to Section 15.2 of the partnership agreement and the Partnership’s prospectus, during the offering period and for the first three fiscal years following the termination of the offering of units in the Partnership, the estimated value of the units shall be deemed to be $10 per unit for these purposes. The basis for this valuation is the fact that the Partnership is currently engaged in a public offering of its units at the price of $10.00 per unit. However, please note that there is no public trading market for the units nor is one ever expected to develop and there can be no assurance that limited partners could receive $10 per unit if such a market did exist and they sold their units or that they will be able to receive such amount for their units in the future. In addition, the Partnership has not performed an evaluation of the Partnership properties and, therefore, this valuation is not based upon the value of the Partnership properties, nor does it represent the amount limited partners would receive if the Partnership properties were sold and the proceeds distributed to the limited partners in a liquidation of the Partnership, which amount would most likely be less than $10.00 per unit as a result of the fact that, at the time the Partnership is purchasing its properties, the amount of funds available for investment in properties is reduced by the 16% of offering proceeds raised by the Partnership, which are used to pay selling commissions and dealer manager fees, organization and offering expenses and acquisition and advisory fees, as described in more detail in this Annual Report and the Partnership’s prospectus.

After the expiration of this three-year period, the General Partners are required under the partnership agreement to determine an estimated per unit valuation by estimating the amount a holder of Partnership units would receive if the Partnership properties were sold as of the close of the Partnership’s fiscal year at their estimated fair market values and the proceeds from such sales (without reductions for selling expenses and other costs), together with any other funds of the Partnership, were distributed in a liquidation of the Partnership. Such estimated property

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values will be based upon annual valuations performed by the General Partners, and no independent property appraisals will be obtained. Accordingly, these estimates, when prepared by the General Partners, should not be viewed as an accurate reflection of the values of the limited partners’ units, what a limited partner might be able to sell his units for, or the fair market value of the Partnership properties, nor will they represent the amount of net proceeds limited partners would receive if the Partnership properties were sold and the proceeds distributed in a liquidation of the Partnership. The valuations to be performed by the General Partners will be estimates only, and will be based a number of assumptions which may not be accurate or complete. In addition, property values are subject to change and could decline after the date of the valuations.

Limited partners holding Cash Preferred Status Units are entitled to a distribution from Net Cash From Operations, as defined in the partnership agreement, of cash flow, less adequate cash reserves for other obligations of the Partnership for which there is no provision, on a per unit basis until they have received distributions in each fiscal year of the Partnership equal to 10% of their adjusted capital contributions. After this preference is satisfied, the General Partners will receive an amount of Net Cash From Operations equal to 10% of the total amount of Net Cash From Operations distributed. Thereafter, the limited partners holding Cash Preferred Status Units will receive 90% of Net Cash From Operations and the General Partners will receive 10%. No Net Cash From Operations will be distributed to limited partners holding Tax Preferred Status Units. Holders of Cash Preferred Status Units will, except in limited circumstances, be allocated none of the Partnership’s net loss, depreciation, and amortization deductions. These deductions will be allocated to limited partners holding Tax Preferred Status Units until their capital account balances have been reduced to zero.

Cash available for distribution to the limited partners is distributed on a quarterly basis. Cash distributions made to limited partners holding Cash Preferred Status Units during 2003 is summarized below:

The fourth quarter 2003 distribution was accrued in 2003 and paid to limited partners holding Cash Preferred Status Units in February 2004. No distributions have been made to limited partners holding Tax Preferred Status Units or to the General Partners in 2003 or 2002.

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The following sets forth a summary of the selected financial data as of and for the year ended December 31, 2003 and 2002:

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

(a)    Overview

Management believes that the Partnership is currently straddling the fundraising phase and the investing phase. As of December 31, 2003, the Partnership owned interests in two properties through interests in an affiliated joint venture and held investor proceeds of approximately $4.0 million available for investment in properties. As of the date of this filing, each of the two properties in which the Partnership owns an interest is fully leased to tenants at the beginning of their respective initial lease terms.

As the Partnership evolves through the life cycle detailed in Item 1, our most significant risks and challenges continue to evolve concurrently. Later as we embark into the holding phase, we will focus resources on managing the Partnership existing portfolio and locating suitable replacement tenants for vacant space as necessary. At such time as we enter the positioning for sale phase, we anticipate that we will focus on re-leasing vacant space and space that may become vacant upon the expiration of our current leases. In doing so, we will 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. During the disposition and liquidation phase, our attention will shift to locating suitable acquirers, negotiating purchase-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.

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The Partnership commenced operations on July 24, 2003. Accordingly, gross revenues of the Partnership increased for 2003, as compared to 2002, as the Partnership invested in two income-producing properties through Fund XIII-XIV Associates as further discussed below.

Substantially all of our recurring 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. 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 increases in cash available for operating distributions to limited partners as the Partnership benefits from a full year of operations for the properties acquired in 2003 and to be acquired in 2004 with the remaining investor proceeds.

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.

(b)    Results of Operations

Gross Revenues of the Partnership

Gross revenues of the Partnership increased to $31,420 for 2003, as compared to $0 for 2002, as the Partnership commenced operations on July 24, 2003. During the periods presented, the Partnership invested in two income-producing properties through Fund XIII-XIV Associates as further discussed below.

Equity In Income of Joint Venture

Gross Revenues of Joint Venture

Gross revenues of the Joint Venture increased in 2003, as compared to 2002, primarily due to the acquisitions of the Siemens – Orlando Building in October 2003 and Randstad – Atlanta Building in December 2003.

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Expenses of Joint Venture

The expenses of the Joint Venture increased in 2003, as compared to 2002, primarily due to the operating costs incurred related to the Siemens – Orlando Building acquired in October 2003 and Randstad – Atlanta Building acquired in December 2003.

As a result of the aforementioned factors, equity in income of Joint Venture was $18,205 and $0 for 2003 and 2002, respectively.

Expenses of the Partnership

Expenses of the Partnership increased to $84,349 for 2003, as compared to $39 for 2002, primarily due to increases in organizational expenses, administrative salaries, and legal and accounting fees related to the growth of the offering and operations as a result of commencing active operations in July 2003.

Net Loss of the Partnership

As a result of the aforementioned factors, net loss of the Partnership was $52,929 for 2003, as compared to $39 for 2002.

(c)    Liquidity and Capital Resources

On May 14, 2003, the Partnership commenced a public offering of up to $45,000,000 of limited partnership units, at $10.00 per unit, pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership commenced active operations on July 24, 2003, upon receiving and accepting subscriptions for 125,000 units. As of December 31, 2003, the Partnership had sold 962,441 Cash Preferred Status Units and 568,246 Tax Preferred Status Units, net of conversions, held by a total of 210 and 27 limited partners, respectively, for total limited partner capital contributions of $15,306,870. After payment of $1,259,199 of selling commissions, $447,139 of organizational and offering costs, $521,662 in acquisition and advisory fees and acquisition expense reimbursements, and investing $9,119,653 in Fund XIII-XIV Associates, as of December 31, 2003, the Partnership held net offering proceeds of approximately $4.0 million available for investment in properties.

Cash Flows From Operating Activities

Net cash flows from operating activities were $(67,404) for 2003, as compared to $(39) for 2002. The increase in cash flows used is primarily due to the increase in expenses of the Partnership, as described above, partially offset by interest income earned on investor proceeds during 2003.

Cash Flows From Investing Activities

Net cash from investing activities were $(9,641,316) for 2003, as compared to $0 for 2002, primarily due to: (i) the Partnership’s investment in Fund XIII-XIV Associates for the purchase of the Siemens – Orlando Building and the Randstad – Atlanta Building in 2003, and (ii) payment of acquisition and advisory fees and acquisition expense reimbursements to Wells Capital, pursuant to the prospectus, which are capitalized and recorded as deferred project costs.

Cash Flows From Financing Activities

Net cash flows from financing activities increased to $13,503,167 for 2003, as compared to $600 for 2002, as the Partnership’s offering commenced in 2003.

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Distributions

The Partnership made distributions to the limited partners holding Cash Preferred Status Units of $0.15 per unit for the quarter ended December 31, 2003. Such distributions have been made from net cash from operations and distributions received from the Partnership’s investment in Fund XIII-XIV Associates. No distributions have been made to the limited partners holding Tax Preferred Status Units or to the General Partners.

Capital Resources

The Partnership is an investment vehicle formed for the purpose of acquiring, owning and operating income-producing real properties. As of December 31, 2003, the Partnership was holding net offering proceeds of approximately $4.0 million available for investment in such properties. At this time the General Partners are unaware of any specific need requiring capital resources from the Partnership.

(d)    Related-Party Transactions

Offering Expense Reimbursements

The Partnership reimburses Wells Capital for organizational and offering expenses equal to the lesser of actual costs incurred or 3% of the aggregate gross offering proceeds, subject to the overall limitations of the partnership agreement. Organizational and offering expenses include such costs as legal and accounting fees, printing costs, and other offering expenses, but do not include sales or underwriting commissions. As of December 31, 2003, the Partnership had paid aggregate fees of $459,206 to Wells Capital, which amounted to 3% of the aggregate gross offering proceeds received to date.

Selling Commissions and Dealer-Managers Fees

The Partnership pays selling commissions and dealer manager fees up to 7% and equal to 2.5%, respectively, of aggregate gross offering proceeds to Wells Investment Securities, Inc., an affiliated and registered securities broker-dealer, and/or other broker-dealers participating in the offering of the Partnership’s limited partner units (“Participating Dealers”). Wells Investment Securities, Inc. may re-allow a portion of its dealer-manager fee to Participating Dealers in the aggregate amount of up to 1.5% of aggregate gross offering proceeds as marketing fees, or to reimburse Participating Dealers for the costs and expenses of representatives of such Participating Dealers of attending educational conferences and seminars. As of December 31, 2003, the Partnership had paid aggregate selling commissions of $1,071,481 and dealer-manager fees of $382,672, of which all $1,071,481 of the selling commissions and $214,856 of the dealer-manager fees were re-allowed to Participating Dealers.

Acquisition and Advisory Fees and Acquisition Expense Reimbursements

The Partnership pays Wells Capital for acquisition and advisory services and acquisition expense reimbursements equal to 3.5% of the aggregate gross offering proceeds, subject to certain overall limitations contained in the partnership agreement. As of December 31, 2003, the Partnership had paid aggregate fees of $535,740 to Wells Capital, which amounted to 3.5% of the aggregate gross offering proceeds received to date.

Property Management, Leasing, and Asset Management Fees

Wells Management, an affiliate of the General Partners, receives compensation for supervising the management and leasing of the Partnership properties equal to the lesser of (a) fees that would be paid to a comparable outside firm or (b) 4.5% of the gross revenues generally paid over the life of the lease plus a separate competitive fee for

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the one-time initial lease-up of newly constructed properties generally paid in conjunction with the receipt of the first month’s rent. In the case of commercial properties which are leased on a long-term (ten or more years) net basis, the maximum property management fee from such leases shall be 1% of the gross revenues generally paid over the life of the leases except for a one-time initial leasing fee of 3% of the gross revenues on each lease payable over the first five full years of the original lease term. Management and leasing fees are not paid directly by the Partnership but by the joint venture entity, which owns the properties. The Partnership’s share of these fees was $8,291 for the year ended December 31, 2003.

Administration Reimbursements

Wells Capital and its affiliates perform certain administrative services for the Partnership, such as accounting and other partnership administration, and incur 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, the Partnership had paid $10,476 to Wells Capital and its affiliates for reimbursement of such administrative services. See Note 8 to the financial statements included with this report for a summary of the Partnership’s administrative costs.

Conflicts of Interest

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

(e)    Inflation

The real estate market has not been affected significantly by inflation in the past three years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases, which would protect the Partnership from the impact of inflation. These provisions include reimbursement billings for operating expense pass-through charges, real estate tax, and insurance reimbursements on a per-square-foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. However, due to the long-term nature of the leases, the leases may not reset frequently enough to cover inflation.

(f)    Application of Critical Accounting Policies

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

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

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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: