AMENDMENT NO. 5 TO SUBORDINATED CREDIT AGREEMENT

Exhibit 10.40

EXECUTION COPY

AMENDMENT NO. 5

TO

SUBORDINATED CREDIT AGREEMENT

AMENDMENT NO. 5 TO SUBORDINATED CREDIT AGREEMENT , dated as of March 30, 2009 (this “ Amendment ”), among TIMBERLANDS II, LLC , a Delaware limited liability company (“ Wells Timberland ”), WELLS TIMBERLAND OPERATING PARTNERSHIP L.P. , a Delaware limited partnership (“ Wells Partnership ”; Wells Partnership and Wells Timberland, each a “ Borrower ” and, collectively, the “ Borrowers ”), the various other Loan Parties that are parties hereto, the various financial institutions that are parties hereto (collectively, the “ Lenders ”), and WACHOVIA BANK, NATIONAL ASSOCIATION , as administrative agent (in such capacity, the “ Administrative Agent ”) for the Lenders.

W I T N E S S E T H:

WHEREAS , the Borrowers, the Lenders and the Administrative Agent are parties to that certain Subordinated Credit Agreement (the “ Subordinated Credit Agreement ”), dated as of October 9, 2007, as amended by that certain Amendment No. 1 to Subordinated Credit Agreement dated as of November 26, 2007, as further amended by that certain Amendment No. 2 to Subordinated Credit Agreement dated as of February 29, 2008, as further amended by that certain Amendment No. 3 to Subordinated Credit Agreement dated as of October 15, 2008, and as further amended by that certain Amendment No. 4 to Subordinated Credit Agreement (“ Amendment No. 4 ”) dated as of December 18, 2008 (collectively, the “ Existing Credit Agreement ”) and, along with the other Loan Parties, as applicable, the other Loan Documents;

WHEREAS , the Borrowers have requested that, as of the Effective Date (as defined below), the Existing Credit Agreement be amended as herein provided, including the clarification of a scrivener’s error contained in Amendment No. 4; and

WHEREAS , the Lenders are willing, subject to the terms and conditions hereinafter set forth, to make such amendments.

NOW, THEREFORE , in consideration of the agreements herein contained, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Definitions . The following terms (whether or not underscored) when used in this Amendment shall have the following meanings:

“ Administrative Agent ” is defined in the preamble .

“ Amended Credit Agreement ” means the Existing Credit Agreement as amended by this Amendment as of the Effective Date.

“ Amendment ” is defined in the preamble .

“ Effective Date ” is defined in Section 5.1 .

“ Existing Credit Agreement ” is defined in the first recital .

“ Lenders ” is defined in the preamble .

“ Wells Partnership ” is defined in the preamble .

“ Wells Timberland ” is defined in the preamble .

SECTION 1.2. Other Definitions . Unless otherwise defined or the context otherwise requires, terms used herein (including in the preamble and recitals hereto) have the meanings provided for in the Amended Credit Agreement.

ARTICLE II

AMENDMENTS

Effective on (and subject to the occurrence of) the Effective Date, the Existing Credit Agreement is amended as follows:

SECTION 2.1. Additions to Section 1.1 . The following new definitions are added to Section 1.1 of the Existing Credit Agreement in the appropriate alphabetical order:

“ Amendment No. 5 to Subordinated Credit Agreement ” shall mean Amendment No. 5 to Subordinated Credit Agreement, dated as of March 30, 2009, among the parties to this Amendment.

“ Permitted Sub-S Corporation Tax Distribution ” shall mean a distribution payable to shareholders of WREF during any period in which WREF is and remains an “electing small business corporation” for the purposes of Subchapter S of the Code in an amount not to exceed the lesser of (i) taxes payable by such shareholders on account of their allocable shares of WREF’s taxable income or (ii) an aggregate of $15,000,000, with such aggregate amount increasing to $20,000,000 from and after January 1, 2010; provided that at the time such distribution is made (A) no Default or Event of Default has occurred and is continuing, (B) WREF is Solvent and (C) such distribution is permitted under applicable law.

“ Sixth Principal Reduction Date ” shall mean December 31, 2009.

“ Term Loan Agreement ” shall mean that certain Amended and Restated Loan Agreement, dated as of October 9, 2007, by and between WREF, the various Subsidiaries of WREF identified on the signature pages thereto and Wachovia, as amended, supplemented or otherwise modified from time to time.

“ Term Loan Indebtedness ” shall mean the Indebtedness incurred by WREF pursuant to the Term Loan Agreement.

“ Wells 1031 Exchange Program ” shall mean the program developed by Wells Capital and WREF to facilitate the completion of transactions complying with Section 1031 of the Code whereby Wells Capital and WREF formed a series of single-member limited liability companies for the purpose of acquiring income-producing commercial properties and facilitating the re-sale of co-tenancy interests in such real estate properties to be owned in co-tenancy arrangements with persons who are seeking to invest the proceeds from a sale of real estate held for investment in another real estate investment for purposes of qualifying for like-kind exchange treatment under the Code; provided that each of the properties acquired by such limited liability companies is financed by a combination of long-term financing and bridge financing obtained from institutional lenders.

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SECTION 2.2. Amendments to Section 1.1 . Section 1.1 of the Existing Credit Agreement is amended as follows:

(a) The definition of “ Agreement ” is amended and restated in its entirety to read as follows:

““ Agreement ” means this Subordinated Credit Agreement, as amended by Amendment No. 1 to Subordinated Credit Agreement, Amendment No. 2 to Subordinated Credit Agreement, Amendment No. 3 to Subordinated Credit Agreement, Amendment No. 4 to Subordinated Credit Agreement and Amendment No. 5 to Subordinated Credit Agreement.”

(b) The definition of “ Fifth Principal Reduction Date ” is amended and restated in its entirety to read as follows:

““ Fifth Principal Reduction Date ” means September 30, 2009.”

(c) The definition of “ Fourth Principal Reduction Date ” is amended and restated in its entirety to read as follows:

““ Fourth Principal Reduction Date ” means June 30, 2009.”

(d) The definition of “ Stated Maturity Date ” is amended and restated in its entirety to read as follows:

““ Stated Maturity Date ” means April 30, 2010.”

SECTION 2.3. Amendments to Section 3.1.2 . Section 3.1.2 of the Existing Credit Agreement is amended as follows:

(a) Section 3.1.2(c4) is amended by deleting the phrase “twenty-five million dollars ($25,000,000)” and inserting “thirty million dollars ($30,000,000)” in lieu thereof.

(b) The following is added as new subsection 3.1.2(c5) immediately between Section 3.1.2 subsections (c4) and (d):

“(c5) A principal payment shall be made on the Sixth Principal Reduction Date in an amount which, when added to all previously made principal payments, reduces the aggregate outstanding principal balance of the Loans to an amount not greater than fifteen million dollars ($15,000,000);”

SECTION 2.4. Amendments to Section 7.2.2 . Section 7.2.2 of the Existing Credit Agreement is amended as follows:

(a) Subsection 7.2.2(c) is amended by deleting the word “and” at the end of the subsection.

(b) Subsection 7.2.2(d) is amended by replacing the period at the end of the subsection with a semicolon and inserting the word “and” immediately after such semicolon.

(c) The following is added as new subsection 7.2.2(e) immediately after subsection 7.2.2(d):

“(e) with respect to WREF only, (i) purchase money Indebtedness not exceeding $500,000 in aggregate principal amount at any time outstanding incurred to purchase tangible fixed assets, provided that the amount of such Indebtedness shall not at any time exceed the purchase price of such assets, (ii) Indebtedness incurred in the Wells 1031 Exchange Program that is not recourse to WREF and (iii) the Term Loan Indebtedness.”.

SECTION 2.5. Amendments to Section 7.2.3 . Section 7.2.3 of the Existing Credit Agreement is amended as follows:

(a) Subsection 7.2.3(e) is amended by deleting the word “and” at the end of the subsection.

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(b) Subsection 7.2.3(f) is amended by replacing the period at the end of the subsection with a semicolon and inserting the word “and” immediately after such semicolon.

(c) The following is added as new subsection 7.2.3(g) immediately after subsection 7.2.3(f):

“(g) with respect to WREF only, (i) Liens securing the payment of purchase money Indebtedness not exceeding $500,000 in aggregate principal amount at any time outstanding incurred to purchase tangible fixed assets, provided that any such Lien does not secure more than the purchase price of such assets and does not encumber property other than the purchased assets, (ii) Liens arising out of operation of law and securing the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords, provided that the obligations secured by such Liens are not past due or are being diligently contested in good faith by appropriate proceedings that suspend enforcement of such, (iii) Liens consisting of deposits or pledges made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social security or similar laws, (iv) Liens granted in the Wells 1031 Exchange Program and (v) Liens not otherwise permitted by this Section 7.2.3 and described on Schedule 6.2 to the Term Loan Agreement.”.

SECTION 2.6. Amendments to Section 7.2.5 . Section 7.2.5 of the Existing Credit Agreement is amended as follows:

(a) Subsection 7.2.5(a) is amended by replacing the word “and” immediately before clause (vii) of the subsection with a comma.

(b) Subsection 7.2.5(a) is amended by replacing the period at the end of the clause (vii) of the subsection the following:

“and (viii) Investments of WREF in any Subsidiary of WREF existing as of the date hereof.”.

(c) The following is added as new subsection 7.2.5(c) immediately after subsection 7.2.5(b):

“(c) Notwithstanding anything in this Section 7.2.5 to the contrary, WREF may (i) purchase direct obligations of the United States government, (ii) make deposits in commercial banking institutions, (iii) purchase commercial paper of any United States corporation having the highest rating then given by Moody’s Investors Services, Inc. or Standard & Poor’s Corporation, (iv) make advances to employees for business travel and other expenses incurred in the ordinary course of business that do not at any time exceed $250,000 in the aggregate, (v) make Investments in Subsidiaries of WREF formed as part of the Wells 1031 Exchange Program, (vi) make the $42,828,000 Investment in Wells REIT referr