DISCLOSURES

Click here to view SEC filings for up-to-the-minute updates to the Wells Timberland portfolio. Click here to view a PDF of the prospectus. Click here to view a risk factor disclosure.

This is neither an offer to sell nor a solicitation of an offer to buy Wells Timberland REIT, Inc.; an offering is made only by prospectus. This information must be preceded or accompanied by a prospectus in order to understand fully all of the implications and risks of the offering. Neither the Attorney General of the State of New York nor any other State regulators have passed on or endorsed the merits of the offering. Any representation to the contrary is a criminal offense.

RISK FACTORS

As of November 7, 2011, the REIT’s total borrowings were approximately 32% of the cost of the timber assets before adjustments for depletion and amortization and 53% of net assets.

This investment is not suitable for all investors. Please read the prospectus carefully for complete details and state suitability standards. Risks include:

• Illiquidity. Shares are not publicly traded; if shares can be sold, they may be worth less than what was paid for them.
• The REIT has qualified for and elected REIT tax status, and its management believes it is organized to continue to qualify for REIT tax status. Should REIT requirements not be met, taxes may increase, thereby reducing investors’ returns.
• Even though we have elected to be taxed as a REIT, we may not meet the requirements to maintain REIT status in the future, which will require us to pay additional taxes and which could reduce our funds available to make distributions to our stockholders.
• The REIT may pay distributions from sources other than cash from operations, including offering proceeds and borrowings, without limit. This could be considered return of capital and may reduce the funds available to acquire properties.
• The REIT is likely to utilize debt in the future, which represents investment risk. If debt financing occurs at high interest rates, this would impact the balance sheet, the portfolio’s operations, its intended diversification, and its ability to refinance. Higher interest rates may increase debt payments, increase expenses, reduce the number of acquisitions, and decrease investor distributions.
• If the REIT defaults on the loan, stockholders could lose some or all of their investments.
• Global market conditions may create an unpredictable business environment.
• The REIT’s participation in joint venture partnerships could reduce investors’ overall returns.
• The REIT has not yet paid any cash distributions. Future distributions may vary in frequency and amount.
• Regardless of fund performance, considerable fees and expenses are paid to the Advisor, its affiliates, and broker/dealers.
• Conflicts of interest regarding the use of financial and intellectual resources face the Advisor and its affiliates.
• The REIT may not meet its stated investment objectives, and investors may or may not lose their investments.
• Product not FDIC or NCUA/NCUSIF insured, not bank or credit union guaranteed, and may lose value.

For the year ended December 31, 2010, the REIT incurred an operating loss of approximately $5.5 million and generated cash from operations of approximately $5.2 million. The REIT also incurred a net loss of approximately $15.8 million, primarily as a result of incurring an operating loss and interest expense in connection with borrowings used to finance Mahrt Timberland. As of December 31, 2010, the REIT had an accumulated deficit of approximately $113.3 million as a result of net losses incurred since 2005.

Wells Timberland REIT, Inc. and Wells Real Estate Funds, Inc. are affiliated with Wells Investment Securities, Inc. — Distributor — Member FINRA/SIPC.