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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer” , “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated filer ¨ Accelerated filer ¨ Non-Accelerated filer x Smaller reporting company ¨

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

only class of common stock, as of ~~April 30,~~July 31, 2008: ~~394,260,405~~413,788,389 shares

Certain statements contained in this Form 10-Q of Wells Real Estate Investment Trust II, Inc. (“Wells REIT II,” “we,” “our” or “us”) 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. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, including 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. We make no representations or warranties (express or implied) about the accuracy of any such forward-looking statements contained in this Form 10-Q, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Any such forward-looking statements are subject to 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, make distributions to stockholders, and maintain the value of our real estate properties, may be significantly hindered. See Item 1A in Wells REIT II’s Annual Report on Form 10-K for the year ended December 31, 2007, for a discussion of some of the risks and uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements. The risk factors described in our Annual Report are not the only ones we face, but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also harm our business.

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

The accompanying financial statements should be read in conjunction with the notes to Wells REIT II’s financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q and with Wells REIT II’s Annual Report on Form 10-K for the year ended December 31, 2007. Wells REIT II’s results of operations for the three months and six months ended ~~March 31,~~June 30, 2008 are not necessarily indicative of the operating results expected for the full year.


	(Unaudited) March 31, 2008			December 31, 2007			(Unaudited) June 30, 2008			December 31, 2007
Assets:
Real estate assets, at cost:
Land	$	504,040		$	494,431		$	532,799		$	494,431
Buildings and improvements, less accumulated depreciation of $157,423 and $139,940 as of March 31, 2008 and December 31, 2007, respectively		2,385,548			2,364,471
Intangible lease assets, less accumulated amortization of $206,479 and $184,532 as of March 31, 2008 and December 31, 2007, respectively		571,184			587,185
Buildings and improvements, less accumulated depreciation of $176,005 and $139,940 as of June 30, 2008 and December 31, 2007, respectively								2,569,210			2,364,471
Intangible lease assets, less accumulated amortization of $211,439 and $184,532 as of June 30, 2008 and December 31, 2007, respectively								583,545			587,185
Construction in progress		25,734			17,279			34,820			17,279

Total real estate assets		3,486,506			3,463,366			3,720,374			3,463,366
Cash and cash equivalents		111,950			47,513			41,544			47,513
Tenant receivables, net of allowance for doubtful accounts of $543 and $1,747 as of March 31, 2008 and December 31, 2007, respectively		76,605			70,409
Tenant receivables, net of allowance for doubtful accounts of $579 and $1,747 as of June 30, 2008 and December 31, 2007, respectively								78,432			70,409
Prepaid expenses and other assets		76,485			86,636			83,178			86,636
Deferred financing costs, less accumulated amortization of $2,908 and $2,668 as of March 31, 2008 and December 31, 2007, respectively		4,648			3,881
Intangible lease origination costs, less accumulated amortization of $105,013 and $93,356 as of March 31, 2008 and December 31, 2007, respectively		321,100			319,496
Deferred lease costs, less accumulated amortization of $3,612 and $2,942 as of March 31, 2008 and December 31, 2007, respectively		33,697			32,857
Investment in bonds		78,000			78,000
Deferred financing costs, less accumulated amortization of $1,213 and $2,668 as of June 30, 2008 and December 31, 2007, respectively								4,245			3,881
Intangible lease origination costs, less accumulated amortization of $114,209 and $93,356 as of June 30, 2008 and December 31, 2007, respectively								338,981			319,496
Deferred lease costs, less accumulated amortization of $4,247 and $2,942 as of June 30, 2008 and December 31, 2007, respectively								33,723			32,857
Investment in development authority bonds								294,000			78,000

Total assets	$	4,188,991		$	4,102,158		$	4,594,477		$	4,102,158

Liabilities:
Lines of credit and notes payable	$	924,402		$	928,297		$	974,216		$	928,297
Accounts payable, accrued expenses, and accrued capital expenditures		74,003			59,627			66,320			59,627
Due to affiliates		6,442			13,385			2,979			13,385
Dividends payable		10,132			9,710			10,025			9,710
Deferred income		20,024			16,436			19,594			16,436
Intangible lease liabilities, less accumulated amortization of $24,524 and $21,270 as of March 31, 2008 and December 31, 2007, respectively		108,897			109,149
Intangible lease liabilities, less accumulated amortization of $27,895 and $21,270 as of June 30, 2008 and December 31, 2007, respectively								110,983			109,149
Obligations under capital leases		78,000			78,000			294,000			78,000

Total liabilities		1,221,900			1,214,604			1,478,117			1,214,604
Commitments and Contingencies (Note 5)		—			—			—			—
Minority Interest		3,167			3,170			2,333			3,170
Redeemable Common Stock		624,997			596,464			647,113			596,464
Stockholders’ Equity:
Common stock, $0.01 par value; 900,000,000 shares authorized; 387,802,613 and 371,510,095 shares issued and outstanding as of March 31, 2008 and December 31, 2007, respectively		3,878			3,715
Common stock, $0.01 par value; 900,000,000 shares authorized; 408,867,013 and 371,510,095 shares issued and outstanding as of June 30, 2008 and December 31, 2007, respectively								4,089			3,715
Additional paid-in capital		3,457,610			3,311,895			3,646,561			3,311,895
Cumulative distributions in excess of earnings		(490,956	)		(427,857	)		(533,101	)		(427,857	)
Redeemable common stock		(624,997	)		(596,464	)		(647,113	)		(596,464	)
Other comprehensive loss		(6,608	)		(3,369	)		(3,522	)		(3,369	)

Total stockholders’ equity		2,338,927			2,287,920			2,466,914			2,287,920

Total liabilities, minority interest, redeemable common stock, and stockholders’ equity	$	4,188,991		$	4,102,158		$	4,594,477		$	4,102,158


	(Unaudited) Three Months Ended March 31,						(Unaudited) Three Months Ended June 30,						(Unaudited) Six Months Ended June 30,
	2008			2007			2008			2007			2008			2007
Revenues:
Rental income	$	91,642		$	73,557		$	96,678		$	75,785		$	188,320		$	149,342
Tenant reimbursements		25,885			20,291			23,903			20,700			49,788			40,991
Hotel income		4,551			4,554			6,645			7,010			11,196			11,563
Other rental income		—			20
Other property income								675			1,991			768			2,011

		122,078			98,422			127,901			105,486			250,072			203,907
Expenses:
Property operating costs		39,900			30,638			39,365			32,310			79,357			62,948
Hotel operating costs		3,948			4,027			4,499			4,914			8,447			8,941
Asset and property management fees:
Related-party		8,344			6,222			8,647			6,454			16,991			12,676
Other		973			1,411			1,084			1,324			2,057			2,735
Depreciation		17,500			14,194			18,842			14,097			36,343			28,291
Amortization		29,290			30,905			29,936			26,503			59,226			57,408
General and administrative		5,990			3,491			6,256			4,467			12,245			7,957

		105,945			90,888			108,629			90,069			214,666			180,956

Real estate operating income		16,133			7,534			19,272			15,417			35,406			22,951
Other income (expense):
Interest expense		(14,684	)		(11,722	)		(16,801	)		(10,389	)		(31,485	)		(22,111	)
Loss on interest rate swaps		(9,070	)		(7	)
Gain (loss) on interest rate swaps								8,431			(7	)		(639	)		(14	)
Loss on foreign currency exchange contract		(1,121	)		—			(184	)		—			(1,305	)		—
Gain on early extinguishment of debt								2,971			—			2,971			—
Interest and other income		2,097			1,611			3,904			2,684			6,001			4,295

		(22,778	)		(10,118	)		(1,679	)		(7,712	)		(24,457	)		(17,830	)

Loss before minority interest and income tax benefit (expense)		(6,645	)		(2,584	)
Minority interest in earnings of consolidated entities		(1	)		(8	)
Income before minority interest and income tax expense								17,593			7,705			10,949			5,121
Minority interest in loss (earnings) of consolidated entities								26			(11	)		24			(19	)

Loss before income tax benefit (expense)		(6,646	)		(2,592	)
Income tax benefit (expense)		293			(18	)
Income before income tax expense								17,619			7,694			10,973			5,102
Income tax expense								(782	)		(18	)		(489	)		(36	)

Net loss	$	(6,353	)	$	(2,610	)
Net income							$	16,837		$	7,676		$	10,484		$	5,066

Per-share information – basic and diluted:
Net loss available to common stockholders	$	(0.02	)	$	(0.01	)
Net income available to common stockholders							$	0.04		$	0.02		$	0.03		$	0.02

Weighted-average common shares outstanding – basic and diluted		378,525			291,017			397,692			317,184			388,108			304,173


	Common Stock					Additional Paid-In			Cumulative Distributions in Excess of			Redeemable Common			Other Comprehensive			Total Stockholders’			Common Stock					Additional Paid-In Capital				Cumulative Distributions in Excess of Earnings				Redeemable Common Stock				Other Comprehensive Loss				Total Stockholders’ Equity
	Shares		Amount			Capital			Earnings			Stock			Loss			Equity			Shares		Amount							Cumulative Distributions in Excess of Earnings				Redeemable Common Stock				Other Comprehensive Loss				Total Stockholders’ Equity
Balance, December 31, 2006	280,119		$	2,801		$	2,491,817		$	(225,549	)	$	—		$	(1,049	)	$	2,268,020		280,119		$	2,801		Additional Paid-In Capital			$	2,491,817			$	(225,549	)		$	—			$	(1,049	)		$	2,268,020
Adjustment resulting from the adoption of FIN 48	—			—			—			(410	)		—			—			(410	)	—			—			—				(410	)			—				—				(410	)

Balance, January 1, 2007	280,119			2,801			2,491,817			(225,959	)		—			(1,049	)		2,267,610		280,119			2,801			2,491,817				(225,959	)			—				(1,049	)			2,267,610
Issuance of common stock	97,251			973			971,541			—			—			—			972,514		97,251			973			971,541				—				—				—				972,514
Redemptions of common stock	(5,860	)		(59	)		(55,347	)		—			—			—			(55,406	)	(5,860	)		(59	)		(55,347	)			—				—				—				(55,406	)
Redeemable common stock	—			—			—			—			(596,464	)		—			(596,464	)	—			—			—				—				(596,464	)			—				(596,464	)
Dividends ($0.60 per share)	—			—			—			(197,230	)		—			—			(197,230	)	—			—			—				(197,230	)			—				—				(197,230	)
Commissions and discounts on stock sales and related dealer-manager fees	—			—			(86,376	)		—			—			—			(86,376	)	—			—			(86,376	)			—				—				—				(86,376	)
Other offering costs	—			—			(9,740	)		—			—			—			(9,740	)	—			—			(9,740	)			—				—				—				(9,740	)
Components of comprehensive loss:
Net loss	—			—			—			(4,668	)		—			—			(4,668	)	—			—			—				(4,668	)			—				—				(4,668	)
Foreign currency translation adjustment	—			—			—			—			—			1			1		—			—			—				—				—				1				1
Market value adjustment to interest rate swap	—			—			—			—			—			(2,321	)		(2,321	)	—			—			—				—				—				(2,321	)			(2,321	)

Comprehensive loss																			(6,988	)																							(6,988	)

Balance, December 31, 2007	371,510			3,715			3,311,895			(427,857	)		(596,464	)		(3,369	)		2,287,920		371,510			3,715			3,311,895				(427,857	)			(596,464	)			(3,369	)			2,287,920
Issuance of common stock	18,662			187			186,429			—			—			—			186,616		42,208			422			421,656				—				—				—				422,078
Redemptions of common stock	(2,369	)		(24	)		(22,311	)		—			—			—			(22,335	)	(4,851	)		(48	)		(45,522	)			—				—				—				(45,570	)
Redeemable common stock	—			—			—			—			(28,533	)		—			(28,533	)	—			—			—				—				(50,649	)			—				(50,649	)
Dividends ($0.15 per share)	—			—			—			(56,746	)		—			—			(56,746	)
Dividends ($0.30 per share)																					—			—			—				(115,728	)			—				—				(115,728	)
Commissions and discounts on stock sales and related dealer-manager fees	—			—			(15,997	)		—			—			—			(15,997	)	—			—			(36,553	)			—				—				—				(36,553	)
Other offering costs	—			—			(2,406	)		—			—			—			(2,406	)	—			—			(4,915	)			—				—				—				(4,915	)
Components of comprehensive loss:
Net loss	—			—			—			(6,353	)		—			—			(6,353	)
Components of comprehensive income:
Net income																					—			—			—				10,484				—				—				10,484
Foreign currency translation adjustment	—			—			—			—			—			(1	)		(1	)	—			—			—				—				—				(11	)			(11	)
Market value adjustment to interest rate swap	—			—			—			—			—			(3,238	)		(3,238	)	—			—			—				—				—				(142	)			(142	)

Comprehensive loss	—			—			—			—			—			—			(9,592	)
Comprehensive income																					—			—			—				—				—				—				10,331

Balance, March 31, 2008	387,803		$	3,878		$	3,457,610		$	(490,956	)	$	(624,997	)	$	(6,608	)	$	2,338,927
Balance, June 30, 2008																					408,867		$	4,089		$	3,646,561			$	(533,101	)		$	(647,113	)		$	(3,522	)		$	2,466,914


	(unaudited) Three months ended March 31,						(unaudited) Six months ended June 30,
	2008			2007			2008			2007
Cash Flows from Operating Activities:
Net loss	$	(6,353	)	$	(2,610	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income							$	10,484		$	5,066
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		17,500			14,194			36,343			28,291
Amortization		31,795			35,531			64,122			64,964
Unrealized loss on interest rate swaps		9,070			7
Unrealized loss on foreign currency exchange contract		1,121			—
Loss on interest rate swaps								639			14
Loss on foreign currency exchange contract								1,305			—
Non-cash interest expense		3,748			1,272			7,413			2,638
Minority interest in earnings of consolidated entities		1			8
Gain on early extinguishment of debt								(2,971	)		—
Minority interest in (loss) earnings of consolidated entities								(24	)		19
Changes in assets and liabilities:
Increase in tenant receivables, net		(6,196	)		(6,776	)		(8,023	)		(11,610	)
Increase in prepaid expenses and other assets		(1,197	)		(4,455	)		(4,768	)		(2,395	)
Increase in accounts payable and accrued expenses		4,068			2,545			5,877			3,172
Decrease in due to affiliates		(2,453	)		(5,808	)		(6,337	)		(5,754	)
Increase in deferred income		3,588			3,171			3,158			1,623

Net cash provided by operating activities		54,692			37,079			107,218			86,028
Cash Flows from Investing Activities:
Investment in real estate and earnest money paid		(80,966	)		(117,014	)		(378,183	)		(126,122	)
Proceeds from master leases		—			176			—			182
Release of escrowed funds		18,848			—			18,848			—
Acquisition fees paid		(5,278	)		(7,940	)		(9,920	)		(14,210	)
Deferred lease costs paid		(1,277	)		(1,097	)		(2,308	)		(3,263	)

Net cash used in investing activities		(68,673	)		(125,875	)		(371,563	)		(143,413	)
Cash Flows from Financing Activities:
Deferred financing costs paid		(1,218	)		—			(1,241	)		(390	)
Proceeds from lines of credit and notes payable		100,802			73,602			259,223			144,698
Repayments of lines of credit and notes payable		(108,208	)		(158,886	)		(217,094	)		(216,376	)
Distributions paid to minority interest partners		(4	)		(4	)		(13	)		(28	)
Issuance of common stock		184,668			249,834			418,088			544,442
Redemptions of common stock		(21,936	)		(10,789	)		(45,174	)		(28,440	)
Dividends paid to stockholders		(56,324	)		(43,081	)		(115,413	)		(89,970	)
Commissions on stock sales and related dealer-manager fees paid		(15,318	)		(20,725	)		(33,479	)		(45,914	)
Other offering costs paid		(4,041	)		(3,631	)		(6,509	)		(5,633	)

Net cash provided by financing activities		78,421			86,320			258,388			302,389

Net increase (decrease) in cash and cash equivalents		64,440			(2,476	)		(5,957	)		245,004
Effect of foreign exchange rate on cash and cash equivalents		(3	)		—			(12	)		—
Cash and cash equivalents, beginning of period		47,513			46,100			47,513			46,100

Cash and cash equivalents, end of period	$	111,950		$	43,624		$	41,544		$	291,104

Wells Real Estate Investment Trust II, Inc. (“Wells REIT II”) is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes. Wells REIT II engages in the acquisition and ownership of commercial real estate properties, including properties that are under construction, are newly constructed, or have operating histories. Wells REIT II was incorporated on July 3, 2003 and commenced operations on January 22, 2004. Wells REIT II conducts business primarily through Wells Operating Partnership II, L.P. (“Wells OP II”), a Delaware limited partnership. Wells REIT II is the sole general partner of Wells OP II and possesses full legal control and authority over the operations of Wells OP II. Wells REIT II owns more than 99.9% of the equity interests in Wells OP II. Wells Capital, Inc. (“Wells Capital”), the external advisor to Wells REIT II, is the sole limited partner of Wells OP II. Wells OP II acquires, develops, owns, leases, and operates real properties directly, through wholly owned subsidiaries or through joint ventures. References to Wells REIT II herein shall include Wells REIT II and all subsidiaries of Wells REIT II, including consolidated joint ventures, Wells OP II, and Wells OP II’s direct and indirect subsidiaries. See Note 7 for a discussion of the advisory services provided by Wells Capital.

As of ~~March 31,~~June 30, 2008, Wells REIT II owned interests in 5960 office properties, one industrial building, one hotel, and one office property under construction, comprising approximately ~~17.4~~18.5 million square feet of commercial space located in 23 states and the District of Columbia. Of these properties, 5658 are wholly owned and ~~six~~five are owned through consolidated joint ventures. As of ~~March 31,~~June 30, 2008, the office and industrial properties were approximately 98% leased.

On December 1, 2003, Wells REIT II commenced its initial public offering of up to 785.0 million shares of common stock, of which 185.0 million shares were reserved for issuance through Wells REIT II’s dividend reinvestment plan, pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. Except for continuing to offer shares for sale through its dividend reinvestment plan, Wells REIT II stopped offering shares for sale under its initial public offering on November 26, 2005. Wells REIT II raised gross offering proceeds of approximately $2.0 billion from the sale of approximately 197.1 million shares under its initial public offering, including shares sold under the dividend reinvestment plan through March 2006. On November 10, 2005, Wells REIT II commenced a follow-on offering of up to 300.6 million shares of common stock, of which 0.6 million shares were reserved for issuance under Wells REIT II’s dividend reinvestment plan, pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. On April 14, 2006, Wells REIT II amended the aforementioned registration statements to offer in a combined prospectus 300.6 million shares registered under the follow-on offering and 174.4 million unsold shares related to the dividend reinvestment plan originally registered under the initial public offering. As of ~~March 31,~~June 30, 2008, Wells REIT II had raised gross offering proceeds of approximately ~~$2.0~~$2.3 billion from the sale of approximately ~~204.4~~228.0 million shares under the follow-on offering.

As of ~~March 31,~~June 30, 2008, Wells REIT II has raised gross offering proceeds from the sale of common stock under the initial public offering and follow-on offering of approximately ~~$4.0~~$4.3 billion. After deductions from such gross offering proceeds for payments of acquisition fees of approximately ~~$79.9~~$84.6 million, selling commissions and dealer-manager fees of approximately ~~$368.4~~$389.0 million, other organization and offering expenses of approximately ~~$55.2~~$57.7 million, and common stock redemptions of approximately ~~$137.1~~$161.9 million under the share redemption program, Wells REIT II had received aggregate net offering proceeds of approximately ~~$3.4~~$3.6 billion. Substantially all of Wells REIT II’s net offering proceeds have been invested in real properties and related assets. As of ~~March 31,~~June 30, 2008, approximately ~~118.2~~98.2 million shares remain available for sale to the public under the follow-on offering, exclusive of shares available under the dividend reinvestment plan.

On July 9, 2007, Wells REIT II filed a registration statement with the SEC to register 375.0 million shares of its common stock, of which up to 300.0 million shares are to be offered in a primary offering for $10 per share, with volume discounts available to investors who purchase more than 50,000 shares at any one time. As described in the registration statement, discounts may also be available for other categories of purchasers. The remaining 75.0 million shares of common stock are to be offered under Wells REIT II’s amended and restated dividend reinvestment plan at a purchase price equal to the higher of $9.55 per share or 95% of the estimated value of a share of its common stock. Wells REIT II has not issued any shares under the aforementioned registration statement as it has not been declared effective by the SEC. Wells REIT II does not expect to commence an offering under the aforementioned registration statement until the earlier of the date Wells REIT II sells all the shares available for sale in its current offering or November 10, 2008.

Wells REIT II’s stock is not listed on a public securities exchange. However, Wells REIT II’s charter requires that in the event Wells REIT II’s stock is not listed on a national securities exchange by October 2015, Wells REIT II must either seek stockholder approval to extend or amend this listing deadline or stockholder approval to begin liquidating investments and distributing the resulting proceeds to the stockholders. If Wells REIT II seeks stockholder approval to extend or amend this listing date and does not obtain it, Wells REIT II will then be required to seek stockholder approval to liquidate. In this circumstance, if Wells REIT II seeks and does not obtain approval to liquidate, Wells REIT II will not be required to list or liquidate and could continue to operate indefinitely as an unlisted company.

The consolidated financial statements of Wells REIT II have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X, and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, the statements for these unaudited interim periods presented include all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such periods. Results for these interim periods are not necessarily indicative of a full year’s results. Wells REIT II’s consolidated financial statements include the accounts of Wells REIT II, Wells OP II, and any variable interest entity in which Wells REIT II or Wells OP II is deemed the primary beneficiary. For further information, refer to the financial statements and footnotes included in Wells REIT II’s Annual Report on Form 10-K for the year ended December 31, 2007.

Investment in Development Authority Bonds and Obligations Under Capital Leases

In connection with the acquisition of certain real estate assets, Wells REIT II assumed investments in development authority bonds and corresponding obligations under capital leases of land or buildings. The county development authority issued bonds to developers to finance the initial development of these projects, a portion of which was then leased back to the developer under a capital lease. This structure enabled the developer to receive property tax abatements over the concurrent terms of the development authority bonds and capital leases. The remaining property tax abatement benefits transferred to Wells REIT II upon assumption of the bonds and corresponding capital leases. The development authority bonds are recorded at net principal value, and the obligations under capital leases are recorded at the present value of the expected payments. The related amounts of interest income and expense are recognized as earned in equal amounts and, accordingly, do not impact net income.

Wells REIT II’s share redemption program requires Wells REIT II to honor all redemption requests made within two years following the death of a stockholder. Wells REIT II has insurance-backed funding for the redemption of shares under its share redemption program in the event Wells REIT II receives an unusually large number of redemption requests due to the death of investors. As the decision to honor redemptions sought within two years following the death of a stockholder is outside of the control of Wells REIT II and the insurance agreement provides Wells REIT II with the ability to fund all of such redemptions, Wells REIT II has recorded redeemable common stock in the temporary equity section of

the accompanying consolidated balance sheet equal to the present value of the future estimated deductible amounts under the insurance agreement

In addition, Wells REIT II is required to honor redemptions (other than those sought within two years following the death of a stockholder) up to the amount of proceeds raised in the current calendar year under the dividend reinvestment plan. Accordingly, the amount of proceeds raised under the dividend reinvestment plan, less redemptions funded in the current calendar year, is also recorded as redeemable common stock in the temporary equity section of the accompanying consolidated balance sheet

Further, upon being tendered for redemption by the holder, Wells REIT II reclassifies redeemable common shares from temporary equity to a liability at settlement value.

Wells REIT II has elected to be taxed as a REIT under the Internal Revenue Code of 1986 (the “Code”), as amended, and has operated as such beginning with its taxable year ended December 31, 2003. To qualify as a REIT, Wells REIT II must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its REIT taxable income, as defined by the Code, to its stockholders. As a REIT, Wells REIT II generally is not subject to income tax on income it distributes to stockholders. Wells REIT II is subject to certain state and local taxes related to the operations of properties in certain locations, which have been provided for in the accompanying consolidated financial statements.

Wells TRS II, LLC (“Wells TRS”) is a wholly owned subsidiary of Wells REIT II and is organized as a Delaware limited liability company, which owns, among other things, a full-service hotel. Wells REIT II has elected to treat Wells TRS as a taxable REIT subsidiary. Wells REIT II may perform additional, non-customary services for tenants of buildings owned by Wells REIT II through Wells TRS, including any real estate or non-real estate related services; however, any earnings related to such services are subject to federal and state income taxes. In addition, for Wells REIT II to continue to qualify as a REIT, Wells REIT II’s investments in taxable REIT subsidiaries cannot exceed 20% of the value of the total assets of Wells REIT II. Deferred tax assets and liabilities represent temporary differences between the financial reporting basis and the tax basis of assets and liabilities based on the enacted rates expected to be in effect when the temporary differences reverse.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157,Fair Value Measurements (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures required for fair value measurements under GAAP. SFAS 157 emphasizes that fair value is a market-based measurement, as opposed to a transaction-specific measurement. In February 2008, the FASB issued Staff Position No. SFAS 157-1,Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 (“FSP 157-1”). FSP 157-1, which is effective upon the initial adoption of SFAS 157, excludes SFAS Statement No. 13,Accounting for Leases(“SFAS 13”), as well as other accounting pronouncements that address fair value measurements on lease classification or measurement under SFAS 13, from the scope of SFAS 157. In February 2008, the FASB issued Staff Position No. SFAS 157-2,Effective Date of FASB Statement No. 157(“FSP 157-2”). FSP 157-2 delays the effective date of SFAS 157 for all nonrecurring nonfinancial assets and liabilities until fiscal years beginning after November 15, 2008. Accordingly, aspects of SFAS 157 impacted by FSP 157-2 will be effective for Wells REIT II beginning January 1, 2009, and all other aspects of SFAS 157 isare effective for Wells REIT II beginning January 1, 2008. The adoption of this guidance has not had a material impact on Wells REIT II’s consolidated financial statements.

Fair value is defined by SFAS 157 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. SFAS 157 defines the following fair value hierarchy:

Level 1 – Assets or liabilities for which the identical term is traded on an active exchange, such as publicly-traded instruments or futures contracts.

Level 2 – Assets and liabilities valued based on observable market data for similar instruments.

Level 3 – Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally-developed, and considers risk premiums that a market participant would require.

Wells REIT II applied the provisions of SFAS 157 in recording its interest rate swaps and foreign currency exchange contract at fair value. The valuation of the interest rate swaps and foreign currency hedge contract is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each

derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities.

The following table presents information about Wells REIT II’s assets and liabilities measured at fair value on a recurring basis as of ~~March 31,~~June 30, 2008, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):


	Fair Value Measurements as of March 31, 2008								Fair Value Measurements as of June 30, 2008
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Liabilities:
Interest rate swaps	$	27,836	$	—	$	27,836	$	—	$	16,310	$	—	$	16,310	$	—
Foreign currency exchange contract	$	1,590	$	—	$	1,590	$	—	$	1,774	$	—	$	1,774	$	—

Certain prior period amounts have been reclassified to conform to the current period financial statement presentation.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 permits entities to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective for Wells REIT II beginning January 1, 2008. The adoption of this guidance has not had a material impact on Wells REIT II’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R),Business Combinations (“SFAS 141(R)”). SFAS 141(R) requires, among other things, for (i) transaction costs related to business combinations to be expensed as incurred and (ii) preacquisition contingencies related to contractual obligations and purchase price contingencies to be recorded at fair value as of the acquisition date. SFAS 141(R) will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the provisions of SFAS 141(R) and has not yet determined the financial impact, if any, on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires, among other things, for (i) noncontrolling ownership interests to be classified as equity, instead of as a minority interest component of mezzanine equity, and (ii) earnings from noncontrolling interests to be included in earnings from consolidated subsidiaries with an additional disclosure of the allocation of such earnings between controlling and noncontrolling interests on the face of the statement of ~~operations.~~income. SFAS 160 will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the provisions of SFAS 160 and has not yet determined the financial impact, if any, on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities- an amendment to FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires additional disclosures about an entity’s

derivative and hedging activities including, descriptions of how and why the entity uses derivative instruments, how such instruments are accounted for under SFAS No. 133, and how derivative instruments affect the entity’s financial position, operations, and cash flows. SFAS 161 will be effective for Wells REIT II beginning January 1, 2009. Wells REIT II is currently assessing the provisions of SFAS 161 and has not yet determined the financial impact, if any, on its consolidated financial statements.

As of ~~March 31,~~June 30, 2008, Wells REIT II owned interests in 6263 properties as a result of acquiring the property described below during the second quarter of 2008, acquiring 2 properties ~~described below~~ during the first quarter of 2008, acquiring 11 properties during the year ended December 31, 2007, and acquiring 49 properties in prior periods.

On ~~February 1,~~May 8, 2008, Wells REIT II ~~purchased a five-story~~acquired interests in five office ~~building~~buildings containing approximately ~~189,000~~one million rentable square feet located on ~~a 3.4-acre parcel~~an approximate 17-acre tract of land ~~at 13655 Riverport Drive~~ in ~~St. Louis, Missouri~~Atlanta, Georgia (the “Lenox Park Buildings”) for ~~a purchase price of approximately $31.6~~$275.3 million, exclusive of closing costs.

~~On March 3, 2008,~~ In connection with acquiring the Lenox Park Buildings, Wells REIT II ~~purchased~~assumed a ~~three-story office building containing approximately 230,000 rentable square feet located on~~$216.0 million investment in development authority bond and a ~~18.1-acre parcel of land at 11200 West Parkland Avenue in Milwaukee, Wisconsin for~~corresponding $216.0 million obligation under a ~~purchase price of approximately $23.6 million, exclusive of closing costs.~~capital lease (See Note 2).

As of ~~March 31,~~June 30, 2008 and December 31, 2007, Wells REIT II had the following indebtedness outstanding (in thousands):


Facility	March 31, 2008		December 31, 2007		June 30, 2008		December 31, 2007
222 E. 41^st Street Building mortgage note	$	135,521	$	133,260	$	137,821	$	133,260
100 East Pratt Street Building mortgage note		105,000		105,000		105,000		105,000
Wachovia Term Loan		100,000		—		100,000		—
Wildwood Buildings mortgage note		90,000		90,000		90,000		90,000
5 Houston Center Building mortgage note		90,000		90,000		90,000		90,000
Manhattan Towers Building mortgage note		75,000		75,000		75,000		75,000
Wachovia Line of Credit						58,000		84,000
80 Park Plaza Building mortgage note		50,709		49,875		51,584		49,875
263 Shuman Boulevard Building mortgage note		49,000		49,000		49,000		49,000
One West Fourth Street Building mortgage note		46,433		46,841		46,019		46,841
800 North Frederick Building mortgage note		46,400		46,400		46,400		46,400
SanTan Corporate Center mortgage note		39,000		39,000		39,000		39,000
Highland Landmark Building mortgage note		33,840		33,038		33,840		33,038
One and Four Robbins Road Buildings mortgage note		23,000		23,000		23,000		23,000
215 Diehl Road Building mortgage note		21,000		21,000		21,000		21,000
Bank Zenit Line of Credit						8,552		4,903
Key Center Complex mortgage notes		14,380		14,180		—		14,180
Bank Zenit Line of Credit		5,119		4,903
Wachovia Line of Credit		—		84,000
9 Technology Drive Building mortgage note		—		23,800		—		23,800

Total indebtedness	$	924,402	$	928,297	$	974,216	$	928,297

During the three months ended ~~March 31,~~June 30, 2008, Wells REIT II engaged in the following significant activities with respect to its notes payable:

~~In January~~On April 28, 2008, Wells REIT II ~~entered into a $100.0 million unsecured term loan with a syndicate of banks led by Wachovia Bank, N.A., which expires on May 9, 2009 (the “Wachovia Term Loan”).~~accepted an offer from the lender to prepay the Key Center Complex mortgage notes for approximately $11.5 million. The ~~loan bears interest, at the option of Wells REIT II,~~net book value of the ~~floating base rate or LIBOR for 7-, 30-, 60-, 90- or 180-day periods, plus an applicable margin ranging from 0.85% to 1.20%.~~Key Center Complex mortgage notes was approximately

~~Wells REIT II has an unsecured revolving financing facility (the “Wachovia Line~~$14.5 million, resulting in a gain on early extinguishment of ~~Credit”) with~~debt of approximately $3.0 million. This gain is reported as a ~~syndicate~~gain on early extinguishment of ~~banks led by Wachovia Bank, N.A. In January 2008, Wells REIT II extended~~debt in the ~~maturity date~~accompanying consolidated statements of the Wachovia Line of Credit from May 9, 2008 to May 9, 2009. In February 2008, Wells REIT II exercised the accordion feature of the Wachovia Line of Credit thereby increasing our total borrowing capacity from $400.0 million to $450.0 million under this facility.income.

~~On February 2, 2008, Wells REIT II repaid the 9 Technology Drive Building mortgage note for approximately $23.8 million.~~ Wells REIT II made interest payments, including amounts capitalized, of approximately ~~$9.6~~$19.8 million and ~~$10.0~~$17.9 million during the ~~three~~six months ended ~~March 31,~~June 30, 2008 and 2007, respectively.

On August 1, 2007, Wells REIT II entered into a development agreement with an unrelated third party for the purpose of constructing three office buildings comprised of approximately 824,000 rentable square feet and located in Cranberry, Pennsylvania (the “Cranberry Woods Drive Buildings”) for approximately ~~$206.8~~$185.2 million. As of ~~March 31,~~June 30, 2008, costs of approximately ~~$139.3~~$134.7 million remained to be incurred under the agreement. The Cranberry Woods Drive Buildings are scheduled to be completed in two phases, with approximately 424,000 rentable square feet to be completed in 2009, and approximately 400,000 rentable square feet to be completed in 2010. Upon completion of construction, the Cranberry Woods Drive Buildings will be 100% leased to Westinghouse Electric Company, LLC, at rental rates to be determined based on total construction costs.

On August 10, 2007, Wells REIT II entered into an agreement to acquire a 95% interest in a 14-story office building located in Atlanta, Georgia (the ~~“Three~~”Three Glenlake Building”) for approximately $100.6 million. The Three Glenlake Building is ~~currently under construction~~newly constructed and ~~is expected to be completed in 2008. The Three Glenlake Building~~ has been pre-leased to Newell Rubbermaid, Inc., at rental rates to be determined based on ~~total~~final construction costs. In connection with the execution of this agreement, Wells REIT II paid an earnest money deposit of $10.0 million in 2007. On July 31, 2008, Wells REIT II closed on the acquisition of a 95% interest in the Three Glenlake Building. In connection with the acquisition, Wells REIT II assumed a $120.0 million investment in development authority bond and a corresponding $120.0 million obligation under a capital lease (See Note 2). Wells REIT II also obtained a $25.0 million loan secured by the Three Glenlake Building. The loan bears interest at LIBOR plus 90 basis points and matures on July 31, 2013; however, interest has effectively been fixed at 5.95% for the life of the loan through an interest rate swap agreement. Interest is due monthly; however, under the terms of the loan agreement, a portion of the debt service amounts will be added to the outstanding balance of the note over the term.

On October 2, 2007, Wells REIT II acquired 100% of Wells International RE II Limited (“Wells International”), a Cypriot corporation, for approximately ~~$32.0~~$31.5 million. Wells International is party to a shared construction agreement with an unrelated third party for the development of a nine-story office tower in Moscow, Russia (“Dvintsev Business ~~Center-Tower~~Center – Tower B”). Construction of Dvintsev Business ~~Center-Tower~~Center – Tower B, which will contain approximately 136,000 rentable square feet, is expected to be completed in late 2008. Upon its completion, Wells International will acquire Dvintsev Business ~~Center-Tower~~Center – Tower B for a purchase price of approximately $63.2 million. Wells International may owe additional purchase consideration calculated pursuant to an earnout agreement between Wells International and the third party developer based on the amount of qualified leases, as defined, to be procured for currently vacant space within two years of closing. As of ~~March 31,~~June 30, 2008, Wells International has made earnest money deposits of ~~$36.9~~$40.1 million.

~~On October 2, 2007, in anticipation of~~ In connection with funding additional deposits for the future acquisition of the Dvintsev Business Center – Tower B, Wells REIT II entered into ~~a 7-year,~~an unsecured, fixed-rate line of credit with Bank Zenit for 930.0 million Russian rubles (the “Bank Zenit Line of Credit”).

In connection with ~~entering into~~ the ~~Bank Zenit Line~~future acquisition of ~~Credit,~~the Dvintsev Business Center – Tower B, Wells REIT II entered into a foreign currency exchange contract to hedge exposure to fluctuations in the foreign exchange rate. ~~The~~This contract obligates Wells REIT II to purchase 802.4 million Russian rubles at a fixed price of $0.04 per Russian ruble from September 2008 through March 2009.

On May 30, 2008, Wells REIT II entered into a contract to acquire interests in two 14-story office buildings containing approximately 955,000 rentable square feet located on an approximate 3.0-acre tract of land in Atlanta, Georgia (the “Lindbergh Center Buildings”) for $285.0 million, exclusive of closing costs. In connection with the execution of this agreement, Wells REIT II paid a deposit of approximately $2.0 million to an escrow agent, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets. On July 1, 2008, Wells REIT II closed on the acquisition of the Lindbergh Center Buildings. In connection with acquiring the Lindbergh Center Buildings, Wells REIT II assumed a $250.0 million investment in development authority bond and a corresponding $250.0 million obligation under a capital lease (See Note 2).

On June 19, 2008, Wells REIT II entered into a contract to acquire two five-story office buildings containing approximately 315,000 rentable square feet located on an approximate 21.8-acre tract of land in Linthicum, Maryland (the “West Nursery Road Buildings”) for $97.6 million, exclusive of closing costs. In connection with the execution of this agreement, Wells REIT II paid a deposit of approximately $2.5 million to an escrow agent, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets. Wells REIT II will also assume a mortgage note of approximately $20 million secured by the West Nursery Road Buildings.

Certain properties are subject to leases, that meet the qualifications of a capital lease. Each of these obligations requires payments equal to the amounts of principal and interest receivable from related investments in development authority bonds, which mature in 2012 and 2013. The required payments under the terms of the leases are as follows as of June 30, 2008 (in thousands):

Certain lease agreements include provisions that, at the option of the tenant, may obligate Wells REIT II to expend capital to expand an existing property or provide other expenditures for the benefit of the tenant. As of ~~March 31,~~June 30, 2008, no tenants have exercised such options that had not been materially satisfied.

From time to time, Wells REIT II is party to legal proceedings, which arise in the ordinary course of its business. Wells REIT II is not currently involved in any legal proceedings for which the outcome is reasonably likely to have a material adverse effect on the results of operations or financial condition of Wells REIT II. Wells REIT II is not aware of any such legal proceedings contemplated by governmental authorities.

Outlined below are significant noncash investing and financing transactions for the ~~three~~six months ended ~~March 31,~~June 30, 2008 and 2007 (in thousands):


	Three months ended March 31,				Six months ended June 30,
	2008		2007		2008		2007
Investment in real estate funded with other assets	$	—	$	750	$	—	$	750

Acquisition fees applied to real estate assets	$	3,341	$	4,997	$	8,345	$	7,330

Assumption of investment in development authority bonds and obligations under capital leases					$	216,000	$	—

Assumption of minority interest in consolidated joint venture					$	800	$	—

Other liabilities assumed upon acquisition of properties	$	115	$	282	$	115	$	282

Market value adjustment to interest rate swap that qualifies for hedge accounting treatment	$	3,238	$	71	$	142	$	2,429

Accrued capital expenditures and deferred lease costs	$	6,543	$	34	$	10,455	$	1,364

Accrued redemptions of common stock	$	152	$	4,917	$	150	$	��

Acquisition fees due to affiliate	$	153	$	556	$	179	$	178

Commissions on stock sales and related dealer-manager fees due to affiliate	$	631	$	1,195	$	984	$	725

Other offering costs due to affiliate	$	766	$	676	$	807	$	1,330

Dividends payable	$	10,132	$	7,924	$	10,025	$	8,125

Discounts applied to issuance of common stock	$	1,948	$	1,693	$	3,990	$	3,707

Redeemable common stock	$	28,533	$	12,563	$	50,649	$	26,297

Wells REIT II and Wells Capital are party to an advisory agreement (the “Advisory Agreement”) under which Wells Capital receives the following fees and reimbursements:

~~0.25% of the net asset value of those investments at each quarter-end after deducting debt used to acquire or refinance properties;~~

Reimbursement for all costs and expenses Wells Capital incurs in fulfilling its duties as the asset portfolio manager, including (i) wages and salaries and other employee-related expenses of Wells Capital’s employees, who perform a full range of real estate services for Wells REIT II, including management, administration, operations, and marketing, and are billed to Wells REIT II based on the amount of time spent on Wells REIT II by such personnel, provided that such expenses are not reimbursed if incurred in connection with services for which Wells Capital receives a disposition fee (described below) or an acquisition fee, and (ii) amounts paid for IRA custodial service costs allocated to Wells REIT II accounts;

Either party may terminate the Advisory Agreement without cause or penalty upon providing 60 days’ prior written notice to the other. Under the terms of the Advisory Agreement, Wells REIT II is required to reimburse Wells Capital for certain organization and offering costs up to the lesser of actual expenses or 2% of gross equity proceeds raised. As of ~~March 31,~~June 30, 2008, Wells REIT II has incurred and charged to additional paid-in capital cumulative other offering costs of approximately $31.7 million related to the initial public offering and ~~$23.5~~$26.0 million related to the follow-on offering, which represents approximately 1.6% and 1.1% of cumulative gross proceeds raised by Wells REIT II under each offering, respectively.

Wells REIT II is party to a Dealer-Manager Agreement with Wells Investment Securities, Inc. (“WIS”), whereby WIS, an affiliate of Wells Capital, performs the dealer-manager function for Wells REIT II. For these services, WIS earns a commission of up to 7% of the gross offering proceeds from the sale of the shares of Wells REIT II, of which substantially all is re-allowed to participating broker dealers. Wells REIT II pays no commissions on shares issued under its dividend reinvestment plan.

Additionally, Wells REIT II is required to pay WIS a dealer-manager fee of 2.5% of the gross offering proceeds from the sale of Wells REIT II’s stock at the time the shares are sold. Under the dealer-manager agreement, up to 1.5% of the gross offering proceeds may be reallowed by WIS to participating broker dealers. Wells REIT II pays no dealer-manager fees on shares issued under its dividend reinvestment plan.

Wells REIT II and Wells Management Company, Inc. (“Wells Management”), an affiliate of Wells Capital, are party to a Master Property Management, Leasing, and Construction Agreement (the “Management Agreement”) under which Wells Management receives the following fees and reimbursements in consideration for supervising the management, leasing, and construction of certain Wells REIT II properties:

Pursuant to the terms of the agreements described above, Wells REIT II incurred the following related-party costs for the three months and six months ended ~~March 31,~~June 30, 2008 and 2007, respectively (in thousands):


	Three Months Ended March 31,				Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007		2008		2007
Commissions^{(1) (2)}	$	11,332	$	16,273
Commissions, net of discounts^{(1) (2)}					$	13,519	$	18,038	$	23,739	$	33,301
Asset management fees		7,447		5,960		7,728		6,070		15,175		12,030
Dealer-manager fees⁽¹⁾		4,665		6,288
Dealer-manager fees, net of discounts⁽¹⁾						4,995		6,680		8,824		12,285
Acquisition fees⁽³⁾		3,693		4,997		4,668		5,892		8,361		10,889
Administrative reimbursements		3,178		1,712		3,349		1,917		6,527		3,628
Other offering costs⁽¹⁾		2,406		1,924		2,509		2,656		4,915		4,580
Property management fees		897		262		919		384		1,816		646
Construction fees		50		—		202		—		252		—

Total	$	33,668	$	37,416	$	37,889	$	41,637	$	69,609	$	77,359

Wells REIT II incurred no related-party disposition fees, incentive fees, listing fees, or leasing commissions during the three months or six months ended ~~March 31,~~June 30, 2008 or 2007, respectively.

The detail of amounts due to affiliates is provided below as of ~~March 31,~~June 30, 2008 and December 31, 2007 (in thousands):


	March 31, 2008		December 31, 2007		June 30, 2008		December 31, 2007
Asset and property management fees due to Wells Capital and/or Wells Management	$	2,529	$	5,053
Commissions and dealer-manager fees due to WIS					$	984	$	1,900
Administrative reimbursements due to Wells Capital and/or Wells Management		2,363		2,293		932		2,293
Other offering cost reimbursements due to Wells Capital		766		2,401		807		2,401
Commissions and dealer-manager fees due to WIS		631		1,900
Acquisition fees due to Wells Capital		153		1,738		179		1,738
Asset and property management fees due to Wells Capital and/or Wells Management						77		5,053

	$	6,442	$	13,385	$	2,979	$	13,385

Wells REIT II has engaged Wells Capital and its affiliates, Wells Management and WIS, to provide certain services that are essential to Wells REIT II, including asset management services, supervision of the property management and leasing of some properties owned by Wells REIT II, asset acquisition and disposition services, the sale of shares of Wells REIT II’s common stock, as well as other administrative responsibilities for Wells REIT II, including accounting services, stockholder communications, and investor relations. As a result of these relationships, Wells REIT II is dependent upon Wells Capital, Wells Management, and WIS.

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

Future net income generated by WREF will be largely dependent upon the amount of fees earned by Wells Capital and Wells Management based on, among other things, the level of investor proceeds raised and the volume of future acquisitions and dispositions of real estate assets by Wells REIT II and other WREF-sponsored programs, as well as dividend income earned from equity interests in another REIT. As of ~~March 31,~~June 30, 2008, Wells REIT II believes that WREF is generating adequate cash flow from operations and has adequate liquidity available in the form of cash on hand and current receivables necessary to meet its current and future obligations as they become due.

In addition, WREF guarantees debt held by another WREF-sponsored product that is in the start-up phase of its operations equal to approximately ~~$127.3~~$106.9 million as of ~~April 30,~~July 31, 2008.

Effective July 1, 2008, Wells REIT II renewed its advisory agreement (the “Renewed Agreement”) with Wells Capital, after the existing advisory agreement, entered into effective April 24, 2008, expired on June 30, 2008. The Renewed Agreement is substantially the same as the agreement that remained in effect through June 30, 2008.

The Renewed Agreement includes a phased-in reduction of the asset management fee percentage. Through June 30, 2008 the monthly asset management fee was calculated based on an annualized fee of 0.75% of the adjusted cost of (i) all properties of Wells REIT II’s and (ii) investments in joint ventures. The Renewed Agreement requires payment of a monthly asset management fee based on an annualized fee of 0.75% of the adjusted cost of Wells REIT II’s properties and investment in joint ventures for the months of July, August, and September, 2008. Thereafter, the monthly asset management fee is based on an annualized fee of 0.625% of the adjusted cost of Wells REIT II’s properties and investments in joint ventures until the monthly payment equals $2,708,333.33 (or $32.5 million annualized). The monthly payment remains capped at that amount until the adjusted cost of Wells REIT II’s properties and investments in joint ventures is at least $6.5 billion, after which the monthly asset management fee is based on an annualized fee of 0.5% of the adjusted cost of Wells REIT II’s properties and investments in joint ventures. However, the Renewed Agreement provides that the asset management fee related to the Lindbergh Center Buildings, which were acquired July 1, 2008, will immediately be 0.5%.

In addition to the reduction of the asset management fee percentage, the Renewed Agreement changes how the limit on asset management fees is calculated. Previously, the limit (1% of net asset value) was calculated quarterly. The Renewed Agreement requires a monthly calculation of net asset value. Under the Renewed Agreement, the aggregate asset management fee payable in any three-month period is limited to 0.25% of the average of the preceding three months’ net asset value calculations. In both cases, to the extent the payments exceed the limitation, the excess is credited against future asset management fee payments. Net asset value is calculated as the adjusted cost of Wells REIT II’s properties and investment in joint ventures less Wells REIT II’s outstanding debt (excluding debt borrowed for purposes other than acquiring, improving or refinancing investment properties).

All other material terms, including the services to be performed, the standard of performance, and the limitations on Wells Capital’s other activities remain unchanged.

On July 23, 2008, the Board of Directors of Wells REIT II appointed John L. Dixon to serve as an independent director, which appointment filled a vacancy on the Board of Directors. Mr. Dixon will serve on the Conflicts Committee; the Board of Directors has not yet determined on what other committees of the Board of Directors Mr. Dixon will serve.

Also on July 23, 2008, the Board of Directors of Wells REIT II voted to reduce the size of the Board of Directors from ten members to eight. Following the appointment of Mr. Dixon, there are no vacant board positions.

From ~~April~~July 1, 2008 through ~~April 30,~~July 31, 2008, Wells REIT II raised approximately ~~$72.0~~$63.9 million through the issuance of approximately ~~7.2~~6.4 million shares of common stock under its follow-on offering. As of ~~April 30,~~July 31, 2008, approximately ~~111.0~~91.8 million shares remained available for sale to the public under the follow-on offering, exclusive of shares available under Wells REIT II’s dividend reinvestment plan.

On April 24, 2008, the Conflicts Committee of the Board of Directors suspended the Independent Director Stock Option Plan. Wells REIT II does not expect to issue additional options to independent directors until its shares of common stock are listed on a national securities exchange.

On May 8, 2008 Wells REIT II purchased five office buildings containing approximately one million rentable square feet located on an approximate 17-acre tract of land at 1025, 1055, 1057 and 1277 Lenox Park Boulevard and 2180 Lake Boulevard in Atlanta, Georgia for a purchase price of approximately $275.3 million, exclusive of closing costs.

ITEM 2.

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

The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto. See also “Cautionary Note Regarding Forward-Looking Statements” preceding Part I, as well as our consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2007.

During the periods presented, we have continued to receive investor proceeds under our follow-on offering of common stock and to invest in real estate assets. Thus, our results of operations for the three months and six months ended ~~March 31,~~June 30, 2008 and 2007, respectively, reflect growing operational revenues and expenses and fluctuating interest and general and administrative expenses. The increases in operational revenues and expenses result from acquiring real properties, while the fluctuations in interest expense arise from using varying levels of short-term and long-term debt financing to fund such acquisitions.

We have continued to raise funds through the sale of our common stock under our follow-on offering and invested those proceeds in real properties in 2007 and 2008 and anticipate continuing to do so in the future. We also anticipate continuing to receive proceeds from the sale of our common stock under our dividend reinvestment plan in the future, and using a significant portion of those proceeds to fund redemptions of our common stock under our share redemption program. We expect that our primary source of future operating cash flows will be cash generated from the operations of the properties currently in our portfolio and those to be acquired in the future. The amount of future dividends to be paid to our stockholders will be largely dependent upon the amount of cash generated from our operating activities, how quickly we are able to invest ~~investor~~ proceeds from the sale of our common stock in quality income-producing assets, our expectations of future cash flows, and our determination of near-term cash needs for capital improvements, tenant re-leasing, redemptions of our common stock, and debt repayments.

The competition to acquire high-quality commercial office properties remains high. Timing differences arise between acquiring properties and raising capital and between making operating payments and collecting operating receipts. Accordingly, we may periodically be required to borrow funds on a short-term basis to meet our dividend payment schedule. Our primary focus, however, is to continue to maintain the quality of our portfolio. Thus, in this intensely competitive environment, we may opt to lower the dividend rather than compromise that quality by accumulating significant borrowings to meet a dividend level higher than operating cash flow would support. We continue to carefully monitor our cash flows and market conditions and their impact on our earnings and future dividend projections.

During the ~~three~~six months ended ~~March 31,~~June 30, 2008, we generated net cash flows from operating activities of approximately ~~$54.7~~$107.2 million, which is primarily comprised of receipts of rental payments, tenant reimbursements, hotel income, and interest and other income, partially offset by payments for operating costs, interest expense, asset and property management fees, and general and administrative expenses. From net cash flows from operating activities and cash on hand, we paid dividends to stockholders of approximately ~~$56.3~~$115.4 million during this period. During the ~~three~~six months ended ~~March 31,~~June 30, 2008, we collected investor proceeds held in a tenant improvement escrow account of $18.8 million, received net debt proceeds of $42.1 million and generated net proceeds from the sale of common stock under our follow-on offering, net of fees, offering cost reimbursements, and share redemptions of ~~$138.1~~$323.0 million, which were primarily used to fund investments in real estate of ~~$81.0 million, net debt repayments of $7.4 million, and leasing costs of $1.3~~$378.2 million. We expect to utilize the residual cash balance on hand as of ~~March 31,~~June 30, 2008 of approximately ~~$112.0~~$41.5 million to satisfy current liabilities, pay future dividends, fund future acquisitions of real properties, or to reduce indebtedness.

We intend to continue to generate capital from the sale of common stock under our follow-on offering and to use such capital, along with selective third party borrowings, primarily to fund future acquisitions of real estate. We expect that we

will use a significant portion of the proceeds from sales under our dividend reinvestment plan to fund redemptions under the share redemption program. As of ~~April 30,~~July 31, 2008, we had ~~no balance~~$361.0 million outstanding under the Wachovia Line of Credit. Accordingly, we believe that we have adequate capacity to ~~continue to expand our portfolio and~~ meet our ~~future operating cash flow needs.~~scheduled purchase and debt obligations noted in the contractual commitments and contingencies table below. We expect to use substantially all of our future operating cash flow, after payments for certain capital expenditures, to pay dividends to stockholders.

On ~~March 3,~~June 2, 2008, our board of directors declared a daily dividend for stockholders of record from ~~March~~June 16, 2008 through ~~June~~September 15, 2008 in an amount equal to an annualized dividend of $0.60 per share, which is consistent with the rate of dividends declared for the first ~~quarter~~two quarters of 2008 and each quarter of 2007 on a per-share basis. This dividend will be paid in ~~June~~September 2008.

We expect that our primary sources of capital over the long term will include proceeds from the sale of our common stock, proceeds from secured or unsecured borrowings from third-party lenders, and net cash flows from operations. As of ~~April 30,~~July 31, 2008, approximately ~~111.0~~91.8 million shares remain available for sale under our follow-on offering, which will expire upon the earlier of the sale of all 300.0 million shares or November 10, 2008. Thereafter, we expect to commence a second follow-on offering pursuant to a registration statement on Form S-11 that we filed with the SEC on July 9, 2007. We may continue to offer the 175.0 million dividend reinvestment plan shares beyond these dates until we have sold all of these shares through the reinvestment of dividends. We expect that our primary uses of capital will be for property acquisitions, either directly or through investments in joint ventures, tenant improvements, offering-related costs, operating expenses, interest expense, and dividends.

In determining how and when to allocate cash resources, we initially consider the source of the cash. We expect that substantially all future net operating cash flows will be used to pay dividends. However, we may temporarily use other sources of cash, such as short-term borrowings, to fund dividends from time to time (see “Liquidity and Capital Resources – Overview” above). We expect to use substantially all net cash flows generated from raising equity or debt financing to fund acquisitions, capital expenditures, the repayment of outstanding borrowings, and the redemption of shares under the share redemption program. If sufficient equity or debt capital is not available, our future investments in real estate will be lower.

To the extent that future cash flows provided by operations are lower due to lower returns on properties, future dividends paid may be lower as well. Cash flow from operations will depend significantly on the level of market rents and our tenants’ ability to make rental payments in the future. We believe that the diversity and creditworthiness of our tenant base helps to mitigate the risk of a tenant defaulting on a lease. However, general economic downturns, downturns in one or more of our core markets, or downturns in the particular industries in which our tenants operate could adversely impact the ability of our tenants to make lease payments and our ability to re-lease space on favorable terms when leases expire.

In the event of any of these situations, our cash flow and consequently our ability to meet capital needs, could adversely affect our ability to pay dividends in the future.

Our contractual obligations as of ~~March 31,~~June 30, 2008 will become payable in the following periods (in thousands):


Contractual Obligations	Total		2008		2009-2010		2011-2012		Thereafter		Total		2008		2009-2010		2011-2012		Thereafter
Outstanding debt obligations⁽¹⁾	$	924,402	$	90,656	$	125,029	$	101,165	$	607,552	$	974,216	$	90,984	$	184,958	$	88,849	$	609,425
Capital lease obligations⁽²⁾		78,000		—		—		78,000		—		294,000		—		—		78,000		216,000
Purchase obligations⁽³⁾		288,300		149,000		139,300		—		—		666,800		523,900		142,900		—		—
Operating lease obligations		124,392		907		2,420		2,555		118,510		124,090		605		2,420		2,555		118,510

Total	$	1,415,094	$	240,563	$	266,749	$	181,720	$	726,062	$	2,059,106	$	615,489	$	330,278	$	169,404	$	943,935

Our results of operations are not indicative of those expected in future periods as ~~we expect that rental income, tenant reimbursements, property operating costs, asset and property management fees, depreciation, amortization, and net income will increase in future periods as~~ a result of ~~owning the assets we acquired prior to and~~acquiring properties during the periods presented ~~for an entire period~~ and ~~as a result of anticipated~~ future acquisitions of real estate assets.

Comparison of the three months ended ~~March 31,~~June 30, 2007 versus the three months ended ~~March 31,~~June 30, 2008

Rental income and tenant reimbursements increased from approximately ~~$73.6~~$75.8 million and ~~$20.3~~$20.7 million, respectively, for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$91.6~~$96.7 million and ~~$25.9~~$23.9 million, respectively, for the three months ended ~~March 31,~~June 30, 2008, primarily ~~due to~~as a result of the growth in the portfolio. Rental income and tenant reimbursements are expected to continue to increase in future periods, as compared to historical periods, as a result of owning recently acquired properties for an entire period and future acquisitions of real estate assets.

Other property income decreased from approximately $2.0 million for the three months ended June 30, 2007 to $0.7 million for the three months ended June 30, 2008 primarily due to fees earned in connection with a lease termination at 5 Houston Center in 2007. Unlike the majority of rental income, which is recognized ratably over long-term contracts, income from lease terminations is recognized once we have completed our obligation to provide space to the tenant.

Property operating costs and asset and property management fees increased from approximately ~~$30.6~~$32.3 million and ~~$7.6~~$7.8 million, respectively, for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$39.9~~$39.4 million and ~~$9.3~~$9.7 million, respectively, for the three months ended ~~March 31,~~June 30, 2008, primarily as a result of the growth in the portfolio. Property operating costs and asset and property management fees are expected to continue to increase in future periods, as compared to historical periods, due to owning recently acquired properties for an entire period and future acquisitions of real estate assets.

Depreciation increased from approximately ~~$14.2~~$14.1 million for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$17.5~~$18.8 million for the three months ended ~~March 31,~~June 30, 2008, primarily as a result of the growth in the portfolio. Depreciation

is expected to continue to increase in future periods, as compared to historical periods, due to owning ~~the~~ recently acquired properties for an entire period and future acquisitions of real estate assets.

Amortization ~~decreased~~increased from approximately ~~$30.9~~$26.5 million for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$29.3~~$29.9 million for the three months ended ~~March 31,~~June 30, 2008, primarily ~~due to~~as a result of the growth in the portfolio offset by recognizing write-offs of unamortized ~~lease-specific~~lease specific assets related to a lease termination at 5 Houston Center of approximately $5.2 million during the first quarter of

~~2007, the majority of which is offset by growth in the portfolio.~~ 2007. Amortization is expected to increase in future periods, as compared to historical periods, due to owning ~~the~~ recently acquired properties for an entire period and future acquisitions of real estate assets.

General and administrative expenses increased from approximately ~~$3.5~~$4.5 million for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$6.0~~$6.3 million for the three months ended ~~March 31,~~June 30, 2008, primarily as a result of increases in administrative reimbursements related to the growth in our portfolio and costs incurred in connection with prospective acquisitions that did not close. General and administrative expenses are expected to increase in future periods, as compared to historical periods, due to future acquisitions of real estate assets.

Interest expense increased from approximately ~~$11.7~~$10.4 million for the three months ended ~~March 31,~~June 30, 2007 to approximately ~~$14.7~~$16.8 million for the three months ended ~~March 31,~~June 30, 2008, primarily due to ~~obtaining~~the capital lease obligation assumed in connection with the Lenox Park acquisition, new ~~mortgage notes~~borrowings and ~~the Wachovia Term loan, partially offset by a decrease~~an increase in the average balance outstanding ~~under~~on the Wachovia Line of ~~Credit and lower cost of borrowing. Future levels of interest expense will vary primarily based on the amounts of future borrowings and the costs of borrowings.~~Credit. We anticipate that future borrowings will be used primarily to fund future acquisitions of real ~~estate or interests therein.~~estate. Accordingly, the amounts of future borrowings and future interest expense will depend largely upon the level of additional proceeds that we are able to raise under our ~~ongoing~~ public ~~offering,~~offerings, the timing and availability of opportunities to acquire real estate assets consistent with our investment objectives, ~~the timing of such future acquisitions,~~our ability to secure financings or re-financings, and changes in market interest rates.

We recognized a ~~loss~~gain on interest rate swaps that do not qualify for hedge accounting treatment of approximately ~~$9.1~~$8.4 million for the three months ended ~~March 31,~~June 30, 2008, compared to a loss of ~~approximately~~ $7,000 for the three months ended ~~March 31,~~June 30, 2007, primarily due to a market value adjustment to the interest rate swap agreement on the 222 E. 41^st Street Building loan in the second quarter of 2008 prompted by a revised economic outlook. We anticipate that future gains and losses on our interest rate swaps that do not qualify for hedge accounting treatment will fluctuate primarily as a result of changes in market interest rates and changes in the economic outlook for future market rates. Market value adjustments to swaps that qualify for hedge accounting treatment are recorded in other comprehensive income and do not impact net income.

We recognized a loss on foreign currency exchange contract of approximately $0.2 million for the three months ended June 30, 2008 due to a market value adjustment to our foreign currency exchange contract prompted by the decline in value of the U.S. Dollar compared to the Russian ruble. We anticipate that future gains and losses on our foreign currency exchange contract will fluctuate primarily as a result of the future fluctuations in value between the U.S. Dollar and the Russian ruble.

We recognized a gain on early extinguishment of debt of approximately $3.0 million for the three months ended June 30, 2008 in connection with accepting an offer from the lender to prepay the Key Center Complex mortgage notes for approximately $11.5 million. The net book value of the mortgage notes was approximately $14.5 million, resulting in a gain on early extinguishment of debt of approximately $3.0 million.

Interest and other income increased from approximately $2.7 million for the three months ended June 30, 2007 to approximately $3.9 million for the three months ended June 30, 2008, due to income earned on investment development authority bonds assumed in connection with the Lenox Park acquisition, partially offset by lower interest income from holding lower average cash balances during the three months ended June 30, 2008, as compared to the three months ended June 30, 2007, due to timing differences in raising capital in our public offerings and closing on property acquisitions. Future levels of interest income will vary primarily based on differences in the pace at which capital is raised in our public offerings and the pace at which such capital is invested in real estate assets or used to repay borrowings.

We recognized net income and net income per share of approximately $7.7 million and $0.02, respectively, for the three months ended June 30, 2007, as compared to $16.8 million and $0.04, respectively, for the three months ended June 30, 2008. These increases are primarily attributable to the impact of the market value adjustment to the interest rate swap on the 222 E. 41st Street Building loan and the gain on early extinguishment of debt described above. We expect future earnings and earnings per share to increase, exclusive of market value adjustments to the interest rate swap, as a result of current and future real estate acquisitions over the long-term.

Comparison of the six months ended June 30, 2007 versus the six months ended June 30, 2008

Rental income and tenant reimbursements increased from approximately $149.3 million and $41.0 million, respectively, for the six months ended June 30, 2007 to approximately $188.3 million and $49.8 million, respectively, for the six months ended June 30, 2008, primarily as a result of the growth in the portfolio. Rental income and tenant reimbursements are expected to continue to increase in future periods, as compared to historical periods, as a result of owning recently acquired assets for an entire period and future acquisitions of real estate assets.

Other property income decreased from approximately $2.0 million for the six months ended June 30, 2007 to $0.8 million for the six months ended June 30, 2008 primarily due to fees earned in connection with a lease termination at 5 Houston Center in the second quarter of 2007. Unlike the majority of rental income, which is recognized ratably over long-term contracts, income from lease terminations is recognized once we have completed our obligation to provide space to the tenant.

Property operating costs and asset and property management fees increased from approximately $62.9 million and $15.4 million, respectively, for the six months ended June 30, 2007 to approximately $79.4 million and $19.0 million, respectively, for the six months ended June 30, 2008, primarily as a result of the growth in the portfolio. Property operating costs and asset and property management fees are expected to continue to increase in future periods, as compared to historical periods, due to owning recently acquired assets for an entire period and future acquisitions of real estate assets.

Depreciation increased from approximately $28.3 million for the six months ended June 30, 2007 to approximately $36.3 million for the six months ended June 30, 2008, primarily as a result of the growth to the portfolio. Depreciation is expected to increase in future periods, as compared to historical periods, due to owning recently acquired assets for an entire period and future acquisitions of real estate assets.

Amortization increased from approximately $57.4 million for the six months ended June 30, 2007 to approximately $59.2 million for the six months ended June 30, 2008, primarily as a result of the growth in the portfolio. Amortization is expected to increase in future periods, as compared to historical periods, due to owning recently acquired assets for an entire period and future acquisitions of real estate assets.

General and administrative expenses increased from approximately $8.0 million for the six months ended June 30, 2007 to approximately $12.2 million for the six months ended June 30, 2008, primarily as a result of increases in administrative reimbursements related to the growth in our portfolio and costs incurred in connection with prospective acquisitions that did not close. General and administrative expenses are expected to increase in future periods, as compared to historical periods, due to future acquisitions of real estate assets.

Interest expense increased from approximately $22.1 million for the six months ended June 30, 2007 to approximately $31.5 million for the six months ended June 30, 2008, primarily due to the capital lease obligation assumed in connection with the Lenox Park acquisition and new borrowings, partially offset by a decrease in the cost of borrowing under the Wachovia Line of Credit. We anticipate that future borrowings will be used primarily to fund future acquisitions of real estate. Accordingly, the amounts of future borrowings and future interest expense will depend largely upon the level of additional proceeds that we are able to raise under our public offerings, the timing and availability of opportunities to acquire real estate assets consistent with our investment objectives, our ability to secure financings or re-financings, and changes in market interest rates.

We recognized a loss on interest rate swaps that do not qualify for hedge accounting treatment of approximately $0.6 million for the six months ended June 30, 2008, compared to a loss of $14,000 for the six months ended June 30, 2007, primarily due to market value adjustments to the interest rate swap agreement on the 222 E. 41^st Street Building loan in the first ~~quarter~~and second quarters of 2008 prompted by declines in market interest rates and a revised economic ~~outlook, which anticipates additional declines in market interest rates.~~outlook. We anticipate that future gains and losses on our interest rate swaps that do not qualify for hedge accounting treatment will fluctuate primarily as a result of additional changes in market interest rates and changes in the economic outlook for future market rates. Market value adjustments to swaps that qualify for hedge accounting treatment are recorded in other comprehensive income and do not impact net ~~loss.~~income.

We recognized a loss on foreign currency exchange contract of approximately ~~$1.1~~$1.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008 due to a market value adjustment to our foreign currency exchange contract prompted by the decline in value of the U.S. Dollar compared to the Russian ruble. We anticipate that future gains and losses on our foreign currency exchange contract will fluctuate primarily as a result of the future fluctuations in value between the U.S. Dollar and the Russian ruble.

We recognized a gain on early extinguishment of debt of approximately $3.0 million for the six months ended June 30, 2008 in connection with accepting an offer from the lender to prepay the Key Center Complex mortgage notes for approximately $11.5 million. The net book value of the mortgage notes was approximately $14.5 million, resulting in a gain on early extinguishment of debt of approximately $3.0 million.

Interest and other income increased from approximately ~~$1.6~~$4.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2007 to approximately ~~$2.1~~$6.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2008, primarily ~~as a result of~~due to income earned on investment in development authority bonds assumed in connection with the Lenox Park acquisition, partially offset by lower interest income from holding ~~higher~~lower average cash balances during the ~~three~~six months ended ~~March 31,~~June 30, 2008, as compared to the ~~three~~six months ended ~~March 31,~~June 30, 2007, due to timing differences in raising capital in our public offerings and closing on property acquisitions. Future levels of interest income will vary primarily based on differences in the pace at which capital is raised in our public offerings and the pace at which such capital is invested in real estate assets or used to repay borrowings.

~~We recognized net loss~~Net income and net ~~loss~~income per share ofincreased from approximately ~~$2.6 million and $0.01, respectively, for the three months ended March 31, 2007, as compared to $6.4~~$5.1 million and $0.02, respectively, for the ~~three~~six months ended ~~March 31, 2008. These decreases are~~June 30, 2007 to approximately $10.5 million and $0.03, respectively, for the six months ended June 30, 2008 primarily ~~attributable the impact that a decline in market interest rates has had on the value of the interest rate swap on the 222 E. 41~~^st ~~Street Building loan, which is partially offset by~~due to the continued growth of our portfolio, the ~~portfolio~~gain on early extinguishment of debt described above, and the write-off of unamortized lease-specific assets related to a lease termination in the first quarter of 2007. Absent ~~additional fluctuations in the value of~~market valuation adjustments to our interest rate ~~swaps that do not qualify for hedge accounting treatment,~~swap, we expect future earnings and earnings per share to increase as a result of current and future real estate ~~acquisitions.~~acquisitions over the long-term.

Funds from ~~operations~~Operations (“FFO”) is a non-GAAP financial measure ~~and should~~considered by some equity REIT’s in evaluating operating performance. We have presented FFO below for the periods included in the accompanying consolidated statements of income, however, do not ~~be viewed as an alternative~~intend to ~~net income as a measurement of our operating performance.~~do so in future filings. We believe that FFO, ~~is a beneficial indicator of~~as defined by the ~~performance~~

of equity REITs. Specifically, FFO calculations exclude factors such as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets. As such factors can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates, FFO may provide a valuable comparison of operating performance between periods and with other REITs. Management believes that accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentation, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. We calculate FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) ~~definition. However, other REITs may not define~~, has diverged from how we measure real estate operations considerably in recent periods. Changes in the accounting and reporting rules under GAAP that were put into effect after the establishment of NAREIT’s definition of FFO in ~~accordance with~~1999 have prompted a significant increase in the ~~NAREIT definition,~~magnitude of non-cash and non-operating items included in our FFO, as defined. Such non-cash and non-operating items include market value adjustments to interest rate swaps that do not qualify for hedge accounting treatment, amortization of certain in-place lease intangible assets and liabilities and gains or losses on early extinguishments of debt. Additionally, cash flows generated from FFO may ~~interpret the current NAREIT definition differently than we do.~~be used to fund certain capitalizable items that are excluded from FFO, such as tenant improvements, building improvements, deferred lease costs, and capitalized interest.

In addition to presenting FFO, ~~in accordance with the current~~as defined by NAREIT, ~~definition,~~ we have also ~~present~~presented below FFO, as adjusted to exclude market value adjustments to interest rate ~~swap contracts~~swaps that do not qualify for hedge accounting ~~treatment. We believe that FFO, as adjusted, is a meaningful supplemental measure of our operating performance~~treatment because, to the extent that the underlying contracts remain in effect for ~~their respective terms,~~the full term, the intra-term gains or losses will ~~remain unrealized.~~not be realized in cash. While we believe that FFO, as adjusted, ~~differs~~is more indicative of funds from ~~NAREIT’s definition~~our operations, we believe that, on a long-term basis, net cash flow from operations as presented in the accompanying consolidated statements of ~~FFO~~cash flows is the best measure of funds from our operations and ~~as a result, may not be comparable to that of~~offers more comparability with other ~~REITs~~REIT’s and real estate ~~companies,~~companies. For the six months ended June 30, 2008 and 2007, we ~~believe that by excluding the effects~~reported net cash flow from operations of ~~market value adjustments to our interest rate swap contracts that do not qualify for hedge accounting treatment (but that management has nonetheless entered into for hedging purposes), management~~$107.2 million and investors are presented with an indicator of our operating performance that more closely achieves the intended objectives of FFO disclosures because market value adjustments to swaps that qualify for hedge accounting treatment are recorded in other comprehensive loss and do not impact net income under GAAP or, thus, the calculation of FFO under the NAREIT definition.$86.0 million, respectfully.

Reconciliations of net ~~loss~~income to FFO, and to FFO, as adjusted to exclude market value adjustments to our interest rate swaps that do not qualify for hedge accounting treatment, are presented below (in thousands):

Set forth below is additional information related to certain cash and noncash items included in or excluded from net loss above, which may be helpful in assessing our operating results. In addition, cash flows generated from FFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO, such as capitalized interest, tenant improvements, building improvements, and deferred lease costs. Please see the accompanying consolidated statements of cash flows for detail of our operating, investing, and financing cash activities.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and have operated as such beginning with our taxable year ended December 31, 2003. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code, to our stockholders, computed without regard to the dividends-paid deduction and by excluding our net capital gain. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income for that year and for the four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.

Wells TRS is a wholly owned subsidiary of Wells REIT II that is organized as a Delaware limited liability company and includes the operations of, among other things, a full-service hotel. We have elected to treat Wells TRS as a taxable REIT subsidiary. We may perform additional, non-customary services for tenants of buildings that we own through Wells TRS, including any real estate or non-real estate related services; however, any earnings related to such services are subject to federal and state income taxes. In addition, for us to continue to qualify as a REIT, our investments in taxable REIT

subsidiaries cannot exceed 20% of the value of our total assets. Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted rates expected to be in effect when the temporary differences reverse.

No provision for federal income taxes has been made in our accompanying consolidated financial statements, other than the provision relating to Wells TRS, as we made distributions in excess of taxable income for the periods presented. We are subject to certain state and local taxes related to property operations in certain locations, which have been provided for in our accompanying consolidated financial statements.

We are exposed to inflation risk, as income from long-term leases is the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that are intended to protect us from, and mitigate the risk of, the impact of inflation. These provisions include rent steps, reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements on a per-square-foot basis, or in some cases, annual reimbursement of operating expenses above a certain per-square-foot allowance. However, due to the long-term nature of the leases, the leases may not reset frequently enough to fully cover inflation.

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

We are required to make subjective assessments as to the useful lives of our depreciable assets. We consider 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 our assets by class are as follows:

Upon the acquisition of real properties, we allocate the purchase price of properties to tangible assets, consisting of land and building, and identified intangible assets and liabilities, including the value in-place leases, based in each case on our estimate of their fair values.

The fair values of the tangible assets of an acquired property (which includes land and building) are determined by valuing the property as if it were vacant, and the “as-if-vacant” value is then allocated to land and building based on our determination of the relative fair value of these assets. We determine the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors we consider in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, we include real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market demand.

Intangible Assets and Liabilities Arising from In-Place Leases where We are the Lessor

As further described below, in-place leases where we are the lessor may have values related to: direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease, tenant relationships, and effective contractual rental rates that are above or below market rates:

~~direct costs are included in intangible lease origination costs in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases.~~

The value of effective rental rates of in-place leases that are above or below the market rates of comparable leases is calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be received pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining terms of the leases. The capitalized above-market and below-market lease values are recorded as intangible lease assets or liabilities and amortized as an adjustment to rental income over the remaining terms of the respective leases.

Intangible Assets and Liabilities Arising from In-Place Leases where We are the Lessee

In-place ground leases where we are the lessee may have value associated with effective contractual rental rates that are above or below market rates. Such values are calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place lease and (ii) management’s estimate of fair market lease rates for the corresponding in-place lease, measured over a period equal to the remaining terms of the leases. The capitalized above-market and below-market in-place lease values are recorded as intangible lease liabilities or assets and amortized as an adjustment to property operating cost over the remaining term of the respective leases.

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate and related intangible assets of both operating properties and properties under construction, in which we have an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present that suggest that the carrying amounts of real estate and related intangible assets may not be recoverable, we assess the recoverability of these assets by determining whether the carrying value 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 value, we decrease the carrying value of the real estate and related intangible assets to the estimated fair values, pursuant to the provisions of SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, and recognize an impairment loss. Estimated fair values are calculated based on the following information, in order of preference, dependent upon availability: (i) recently quoted market prices, (ii) market prices for comparable properties, or (iii) the present value of undiscounted

cash flows, including estimated salvage value. We have determined that there has been no impairment in the carrying value of our real estate assets to date.

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

We have entered into agreements with our advisor, Wells Capital, and its affiliates, whereby we pay certain fees and reimbursements to Wells Capital or its affiliates, for acquisition fees, commissions, dealer-manager fees, asset and property management fees, construction fees, reimbursement of other offering costs, and reimbursement of operating costs. See Note 7 to our accompanying consolidated financial statements included herein for a discussion of the various related-party transactions, agreements, and fees.

On March 12, 2007, a stockholder of Piedmont REIT filed a putative class action and derivative complaint, presently styledIn re Wells Real Estate Investment Trust, Inc. Securities Litigation, in the United States District Court for the District of Maryland against, among others, Piedmont REIT; Leo F. Wells, III and Wells Capital, our General Partners; Wells Management, our property manager; certain affiliates of WREF; the directors of Piedmont REIT; and certain individuals who formerly served as officers or directors of Piedmont REIT prior to the closing of the internalization transaction on April 16, 2007. The complaint alleges, among other things, violations of the federal proxy rules and breaches of fiduciary duty arising from the Piedmont REIT internalization transaction and the related proxy statement filed with the SEC on February 26, 2007, as amended. The complaint seeks, among other things, unspecified monetary damages and nullification of the Piedmont REIT internalization transaction. On April 9, 2007, the District Court denied the plaintiff’s motion for an order enjoining the internalization transaction. On April 17, 2007, the Court granted the defendants’ motion to transfer venue to the United States District Court for the Northern District of Georgia, and the case was docketed in the Northern District of Georgia on April 24, 2007. On June 7, 2007, the Court granted a motion to designate the class lead plaintiff and class co-lead counsel. On June 27, 2007, the plaintiff filed an amended complaint, which attempts to assert class action claims on behalf of those persons who received and were entitled to vote on the Piedmont REIT proxy statement filed with the SEC on February 26, 2007, and derivative claims on behalf of Piedmont REIT. On July 9, 2007, the Court denied the plaintiff’s motion for expedited discovery related to an anticipated motion for a preliminary injunction. On August 13, 2007, the defendants filed a motion to dismiss the amended complaint. On March 31, 2008, the Court granted in part the defendants’ motion to dismiss the amended complaint. The Court dismissed five of the seven counts of the amended complaint in their entirety. The Court dismissed the remaining two counts with the exception of allegations regarding the failure to disclose in the Piedmont REIT proxy statement details of certain expressions of interest in acquiring Piedmont REIT. On April 21, 2008, the plaintiff filed a second amended complaint, which alleges violations of the federal proxy rules based upon allegations that the proxy statement to obtain approval for the Piedmont REIT internalization transaction omitted details of certain expressions of interest in acquiring Piedmont REIT. The second amended complaint seeks, among other things, unspecified monetary damages, to nullify and rescind the internalization transaction, and to cancel and rescind any stock issued to the defendants as consideration for the internalization transaction. On May 12, 2008, the defendants answered and raised defenses to the second amended complaint. On June 23, 2008, the plaintiff filed a motion for class certification. As of the date of this filing, the time for the defendants to respond to the plaintiff’s motion for class certification has not yet passed. The parties are presently engaged in discovery. Mr. Wells, Wells Capital, and Wells Management intend to vigorously defend this action. Any financial loss incurred by Wells Capital, Wells Management, or their affiliates could hinder their ability to successfully manage our operations and our portfolio of investments.

On August 24, 2007, two stockholders of Piedmont REIT filed a derivative complaint, styled Donald and Donna Goldstein, Derivatively on behalf of Defendant Wells Real Estate Investment Trust, Inc. v. Leo F. Wells, III, et al.,in the

Superior Court of Fulton County, Georgia, on behalf of Piedmont REIT against, among others, Leo F. Wells, III and Wells Capital, our General Partners, and a number of individuals who currently or formerly served as officers or directors of Piedmont REIT. The complaint alleges, among other things, that the consideration paid by Piedmont REIT as part of the internalization transaction was excessive; that the defendants breached their fiduciary duties to Piedmont REIT; and that the internalization transaction unjustly enriched the defendants. The complaint seeks, among other things, a judgment declaring that the defendants committed breaches of their fiduciary duties and were unjustly enriched at the expense of Piedmont REIT; monetary damages equal to the amount by which Piedmont REIT was damaged by the defendants; an order awarding Piedmont REIT restitution from the defendants and ordering disgorgement of all profits and benefits obtained by the defendants from their wrongful conduct and fiduciary breaches; an order rescinding the internalization transaction; and the establishment of a constructive trust upon any benefits improperly received by the defendants as a result of their wrongful conduct. On October 19, 2007, the Court verbally granted the defendants’ motion for a protective

order (and entered a written order on October 24, 2007) staying discovery until the Court rules on the defendants’ motion to dismiss the complaint. On October 31, 2007, the defendants filed their motion to dismiss the plaintiffs’ derivative complaint. On December 19, 2007, the Court entered an order allowing the plaintiffs to take limited written discovery on the issue of derivative demand, but the order staying discovery entered in October 2007 otherwise remains in effect. The defendants responded to the limited discovery requested by the plaintiffs. On January 10, 2008, the plaintiffs filed an amended complaint, which contains substantially the same counts against the same defendants as the original complaint with certain additional factual allegations based primarily on events occurring after the original complaint was filed. In addition, the plaintiffs have responded to the defendants’ motion to dismiss this lawsuit. A hearing on the motion to dismiss was held on February 22, 2008, and on March 13, 2008, the Court granted the motion to dismiss. On April 11, 2008, the plaintiffs filed a notice to appeal the Court’s judgment granting the defendants’ motion to dismiss.

We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 5 of our accompanying consolidated financial statements for further explanation. Examples of such commitments and contingencies include:

Effective July 1, 2008, we renewed our advisory agreement (the “Renewed Agreement”) with Wells Capital, after the existing advisory agreement, entered into effective April 24, 2008, expired on June 30, 2008. The Renewed Agreement is substantially the same as the agreement that remained in effect through June 30, 2008.

The Renewed Agreement includes a phased-in reduction of the asset management fee percentage. Through June 30, 2008 the monthly asset management fee was calculated based on an annualized fee of 0.75% of the adjusted cost of (i) all our properties and (ii) investments in joint ventures. The Renewed Agreement requires payment of a monthly asset management fee based on an annualized fee of 0.75% of the adjusted cost of our properties and investment in joint ventures for the months of July, August, and September, 2008. Thereafter, the monthly asset management fee is based on an annualized fee of 0.625% of the adjusted cost of our properties and investments in joint ventures until the monthly payment equals $2,708,333.33 (or $32.5 million annualized). The monthly payment remains capped at that amount until the adjusted cost of our properties and investments in joint ventures is at least $6.5 billion, after which the monthly asset management fee is based on an annualized fee of 0.5% of the adjusted cost of our properties and investments in joint ventures. However, the Renewed Agreement provides that the asset management fee related to the Lindbergh Center Buildings, which were acquired July 1, 2008, will immediately be 0.5%.

In addition to the reduction of the asset management fee percentage, the Renewed Agreement changes how the limit on asset management fees is calculated. Previously, the limit (1% of net asset value) was calculated quarterly. The Renewed Agreement requires a monthly calculation of net asset value. Under the Renewed Agreement, the aggregate asset management fee payable in any three-month period is limited to 0.25% of the average of the preceding three months’ net asset value calculations. In both cases, to the extent the payments exceed the limitation, the excess is credited against future asset management fee payments. Net asset value is calculated as the adjusted cost of our properties and investment in joint ventures less our outstanding debt (excluding debt borrowed for purposes other than acquiring, improving or refinancing investment properties).

All other material terms, including the services to be performed, the standard of performance, and the limitations on Wells Capital’s other activities remain unchanged.

On July 1, 2008 we acquired interests in two office buildings containing approximately 955,000 rentable square feet located on an approximate 3.0-acre tract of land in Atlanta, Georgia (“the Lindbergh Center Buildings”) for approximately $285.0 million, exclusive of closing costs. In connection with acquiring the Lindbergh Center Buildings, we assumed a $250.0 million investment in development authority bond and a corresponding $250.0 million obligation under a capital lease (See Note 2).

From ~~April~~July 1, 2008 through ~~April 30,~~July 31, 2008, we raised approximately ~~$72.0~~$63.9 million through the issuance of approximately ~~7.2~~6.4 million shares of our common stock under our follow-on offering. As of ~~April 30,~~July 31, 2008, approximately ~~111.0~~91.8 million shares remained available for sale to the public under the follow-on offering, exclusive of shares available under our dividend reinvestment plan.

On ~~April 24,~~July 23, 2008, our Board of Directors appointed John L. Dixon to serve as an independent director, which appointment filled a vacancy on the Board of Directors. Mr. Dixon will serve on the Conflicts ~~Committee~~Committee; the Board of Directors has not yet determined on what other committees of the Board of Directors ~~suspended~~Mr. Dixon will serve.

Also on July 23, 2008, our Board of Directors voted to reduce the ~~Independent Director Stock Option Plan. We do not expect~~size of the Board of Directors from ten members to ~~issue additional options to independent directors until our shares~~eight. Following the appointment of ~~common stock~~Mr. Dixon, there are ~~listed on a national securities exchange.~~no vacant board positions.

On ~~May 8,~~July 31, 2008, we ~~purchased five~~acquired a 95% interest in an office ~~buildings~~building containing approximately ~~one million~~824,000 rentable square feet located on an approximate ~~17-acre~~2.8-acre tract of land at ~~1025, 1055, 1057 and 1277 Lenox Park Boulevard and 2180 Lake Boulevard~~3 Glenlake Parkway in ~~Atlanta, Georgia~~Sandy Springs, GA (the “Three Glenlake Building” for ~~a purchase price of~~ approximately ~~$275.3~~$100.6 million, exclusive of closing costs. In connection with the acquisition, we assumed a $120.0 million investment in development authority bond and a corresponding $120.0 million obligation under a capital lease (See Note 2). We also obtained a $25.0 million loan secured by the Three Glenlake Building. The loan bears interest at LIBOR plus 90 basis points and matures on July 31, 2013; however, interest has effectively been fixed at 5.95% for the life of the loan through an interest rate swap agreement. Interest is due monthly; however, under the terms of the loan agreement, a portion of the debt service amounts will be added to the outstanding balance of the note over the term.

As a result of our debt facilities, we are exposed to interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flow primarily through a low to moderate level of overall borrowings. However, we currently have a substantial amount of debt outstanding. We manage our ratio of fixed- to floating-rate debt with the objective of achieving a mix that we believe is appropriate in light of anticipated changes in interest rates. We closely monitor interest rates and will continue to consider the sources and terms of our borrowing facilities to determine whether we have appropriately guarded ourselves against the risk of increasing interest rates in future periods.

Additionally, we have entered into interest rate swaps, and may enter into other interest rate swaps, caps, or other arrangements to mitigate our interest rate risk on a related financial instrument. We do not enter into derivative or interest rate transactions for speculative purposes; however, certain of our derivatives may not qualify for hedge accounting treatment. All of our debt was entered into for other than trading purposes.

Our financial instruments consist of both fixed-rate and variable-rate debt. Our variable rate borrowings consist of the Wachovia Line of Credit, the Wachovia Term Loan, the 222 E. 41st Street Building mortgage note and the 80 Park Plaza Building mortgage note; however, only the Wachovia Line of Credit and the Wachovia Term Loan bear interest at an effectively variable rate, as the variable rates on the 222 E. 41st Street Building mortgage note and the 80 Park Plaza Building mortgage note have been effectively fixed through the interest rate swap agreements described below. As of ~~March 31,~~June 30, 2008, we had $0$58.0 million outstanding on the Wachovia Line of Credit; $100.0 million outstanding on the Wachovia Term Loan; ~~$135.5~~$137.8 million outstanding on the 222 E. 41st Street Building mortgage note; ~~$50.7~~$51.6 million outstanding on the 80 Park Plaza Building mortgage note; ~~$5.1~~$8.6 million outstanding on the fixed-rate, Bank Zenit Line of Credit; and ~~$633.1~~$618.2 million outstanding on fixed-rate, term mortgage loans. The weighted-average interest rate of ~~our~~ all of our debt instruments was ~~5.4%~~5.3% as of ~~March 31,~~June 30, 2008.

The Wachovia Term Loan is subject to interest costs based on, at our option, LIBOR for 7-, 30-, 60-, 90-, or 180-day periods, plus an applicable margin ranging from 0.85% to 1.20% (“LIBOR Loans”), or the floating base rate. The applicable margin for LIBOR Loans is based on the ratio of debt-to-total asset value. The base rate for any day is the higher of Wachovia’s prime rate for such day, or the Federal Funds Rate for such day plus 50 basis points. The maturity date of the Wachovia line of credit is May 9, 2009.An increase in the variable interest rate on this line of credit constitutes a market risk, as an increase in rates would increase interest incurred and, therefore, decrease cash flows available for distribution to stockholders.

The Wachovia Line of Credit and the Wachovia Term Loan are subject to interest costs based on, at our option, LIBOR for 7-, 30-, 60-, 90-, or 180-day periods, plus an applicable margin ranging from 0.85% to 1.20% (“LIBOR Loans”), or the floating base rate. The applicable margin for LIBOR Loans is based on the ratio of debt-to-total asset value. The base rate for any day is the higher of Wachovia’s prime rate for such day, or the Federal Funds Rate for such day plus 50 basis points. ~~In January 2008, the maturity date of the~~The Wachovia Line of Credit ~~was extended from May 9, 2008 to May 9, 2009. The~~and the Wachovia Term Loan ~~matures~~mature on May 9, 2009.An increase in the variable interest rate on this line of credit or term loan constitutes a market risk, as an increase in rates would increase interest incurred and, therefore, decrease cash flows available for distribution to stockholders.

The 80 Park Plaza Building mortgage note was used to purchase the 80 Park Plaza Building. The note bears interest at LIBOR plus 130 basis points (approximately ~~3.899%~~3.781% per annum as of ~~March 31,~~June 30, 2008) and matures in September 2016. In connection with obtaining the 80 Park Plaza Building mortgage note, we entered into an interest rate swap agreement to hedge exposure to changing interest rates. The interest rate swap agreement has an effective date of September 22, 2006 and terminates September 21, 2016. The terms of the interest rate swap agreement effectively fix our interest rate on the 80 Park Plaza Building mortgage note at 6.575% per annum.

The 222 E. 41st Street Building mortgage note was used to purchase the 222 E. 41st Street Building. The note bears interest at LIBOR plus 120 basis points (approximately ~~4.018%~~3.671% per annum as of ~~March 31,~~June 30, 2008) and matures in August 2017. In connection with obtaining the 222 E. 41st Street Building mortgage note, we entered into an interest rate swap agreement to hedge exposure to changing interest rates. The interest rate swap agreement has an effective date of

August 16, 2007 and terminates August 16, 2017. The interest rate swap effectively fixes our interest rate on the 222 E. 41st Street Building mortgage note at 6.675%.

Approximately ~~$824.4~~$816.2 million of our total debt outstanding as of ~~March 31,~~June 30, 2008 is subject to fixed rates, either directly or when coupled with an interest rate swap agreement. As of ~~March 31,~~June 30, 2008, these balances incurred interest expense at an average interest rate of ~~5.6%~~5.7% and have expirations ranging from 2008 through 2018. A change in the market interest rate impacts the net financial instrument position of our fixed-rate debt portfolio; however, it has no impact on interest incurred or cash flows. The amounts outstanding on our variable-rate debt facilities in the future will largely depend upon

the level of investor proceeds raised under our public offering and the rate at which we are able to employ such proceeds in acquisitions of real properties.

We are also subject to foreign exchange risk arising from our foreign operations in Russia. Foreign operations represented 0.9% of total assets at ~~March 31,~~June 30, 2008 and 0% of total revenue for the ~~three~~six months ended ~~March 31,~~June 30, 2008. Assuming foreign exchange rates decreased 10% from the ~~March 31,~~June 30, 2008 level, the consolidated financial statements would not be materially affected.

Management’s Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

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

There have been no significant changes in our internal control over financial reporting during the quarter ended ~~March 31,~~June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our annual report on Form 10-K for the year ended December 31, 2007.

No matters were submitted to a vote of our stockholders during the ~~first~~second quarter of 2008.

The exhibits required to be filed with this report are set forth on the Exhibit Index to this quarterly report attached hereto.

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

The following documents are filed as exhibits to this report. Exhibits that are not required for this report are omitted.


			Page No.
PART I. FINANCIAL INFORMATION

	Item 1.	Consolidated Financial Statements	4

		Consolidated Balance Sheets as of ~~March 31,~~June 30, 2008 (unaudited) and December 31, 2007	5

		Consolidated Statements of ~~Operations~~Income for the Three Months and Six Months Ended ~~March 31,~~June 30, 2008 (unaudited) and 2007 (unaudited)	6

		Consolidated Statements of Stockholders’ Equity for the Year Ended December 31, 2007 and the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2008 (unaudited)	7

		Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2008 (unaudited) and 2007 (unaudited)	8

		Condensed Notes to Consolidated Financial Statements (unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3032

	Item 4T.	Controls and Procedures	3133

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	3133

	Item 1A.	Risk Factors	3133

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3233

	Item 3.	Defaults Upon Senior Securities	3234

	Item 4.	Submission of Matters to a Vote of Security Holders	3234

	Item 5.	Other Information	3234

	Item 6.	Exhibits	3234


2008	$	11,687
2009		19,109
2010		19,109
2011		19,109
2012		95,729
2013		229,226

		393,969
Amounts representing interest		(99,969	)

Total	$	294,000


Buildings		40 years
Building improvements		5-25 years
Tenant improvements		Shorter of economic life or lease term
Intangible lease assets		Lease term


~~Period~~	~~Total Number of~~ ~~Shares Redeemed~~⁽¹⁾	~~Average Price~~ ~~Paid per Share~~		~~Approximate Dollar~~ ~~Value of Shares Available~~ ~~That May Yet Be Redeemed~~ ~~Under the Program~~
~~January 2008~~	~~959~~	$	~~9.41~~	⁽²⁾
~~February 2008~~	~~822~~	$	~~9.48~~	⁽²⁾
~~March 2008~~	~~588~~	$	~~9.39~~	⁽²⁾


Period	Total Number of Shares Redeemed⁽¹⁾	Average Price Paid per Share		Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
April 2008	755	$	9.37	⁽²⁾
May 2008	829	$	9.38	⁽²⁾
June 2008	898	$	9.34	⁽²⁾


	For the Three Months Ended March 31,
	2008			2007
Net loss	$	(6,353	)	$	(2,610	)
Add:
Depreciation of real assets		17,500			14,194
Amortization of lease-related costs		29,290			30,905

FFO		40,437			42,489
Unrealized loss on interest rate swaps that do not qualify for hedge accounting treatment		9,070			7

FFO, as adjusted to exclude market value adjustments to interest rate swaps that do not qualify for hedge accounting treatment	$	49,507		$	42,496

Weighted-average common shares outstanding		378,525			291,017


	For The Three Months Ended June 30,					For The Six Months Ended June 30,
	2008			2007		2008		2007

Net income	$	16,837		$	7,676	$	10,484	$	5,066
Add:
Depreciation of real assets		18,842			14,097		36,343		28,291
Amortization of lease-related costs		29,936			26,503		59,226		57,408

FFO		65,615			48,276		106,053		90,765
(Gain) loss on interest rate swaps that do not qualify for hedge accounting treatment		(8,431	)		7		639		14

FFO, as adjusted to exclude market value adjustments to interest rate swaps that do not qualify for hedge accounting treatment	$	57,184		$	48,283	$	106,692	$	90,779

Weighted-average common shares outstanding		397,692			317,184		388,108		304,173


	WELLS REAL ESTATE INVESTMENT TRUST II, INC.(Registrant) ~~(Registrant)~~

Dated: ~~May 14,~~August 13, 2008	By:	/s/ DOUGLAS P. WILLIAMS
		Douglas P. Williams
	Executive Vice President, Treasurer and Principal Financial Officer


Exhibit No.		Description

3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 3 to the Registration Statement on Form S-11 (No. 333-107066) filed with the Commission on November 25, 2003 (the “IPO Registration Statement”))

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)

3.3		Amendment No. 1 to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)

4.1		Form of Subscription Agreement with Consent to Electronic Delivery (incorporated by reference to Appendix A to the Prospectus included in Amendment No. 1 to the Registration Statement on Form S-11 (No. 333-125643) filed with the Commission on October 19, 2005 (the “Follow-on Registration Statement”))

4.2		Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.2 to the IPO Registration Statement)

4.3		Amended and Restated Dividend Reinvestment Plan (incorporated by reference to Appendix B to the Prospectus included in the Follow-on Registration Statement)

4.4		Description of Share Redemption Program (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)

10.1		Advisory Agreement between the Company and Wells Capital, Inc. dated ~~April 24,~~July 1, 2008.

31.1		Certification of the Chief Executive Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the Chief Financial Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002