SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: June 30, 1999
Commission file number: 0-17467
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1603719
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(651) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 1999 and December 31, 1998
Statements for the Periods ended June 30, 1999 and 1998:
Income 4
Cash Flows 5
Changes in Partners' Capital 6
Notes to Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
CURRENT ASSETS:
Cash and Cash Equivalents $ 426,503 $ 280,625
Receivables 0 8,989
----------- -----------
Total Current Assets 426,503 289,614
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,953,826 4,933,769
Buildings and Equipment 11,092,371 10,819,889
Construction in Progress 0 161,848
Property Acquisition Costs 0 6,433
Accumulated Depreciation (3,073,392) (2,870,126)
----------- -----------
12,972,805 13,051,813
Real Estate Held for Sale 174,644 174,644
----------- -----------
Net Investments in Real Estate 13,147,449 13,226,457
----------- -----------
Total Assets $13,573,952 $13,516,071
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 7,700 $ 29,499
Distributions Payable 230,862 204,457
Deferred Income 53,350 0
----------- -----------
Total Current Liabilities 291,912 233,956
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (68,591) (68,591)
Limited Partners, $1,000 Unit value;
30,000 Units authorized; 23,389 Units issued;
21,948 Units outstanding 13,350,631 13,350,706
----------- -----------
Total Partners' Capital 13,282,040 13,282,115
----------- -----------
Total Liabilities and Partners' Capital $13,573,952 $13,516,071
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Three Months Ended Six Months Ended
6/30/99 6/30/98 6/30/99 6/30/98
INCOME:
Rent $ 449,072 $ 361,011 $ 895,351 $ 733,498
Investment Income 3,013 49,703 7,087 87,151
--------- --------- --------- ---------
Total Income 452,085 410,714 902,438 820,649
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 66,697 69,099 133,263 135,420
Partnership Administration
and Property Management -
Unrelated Parties 5,985 11,057 21,893 33,590
Depreciation 101,426 81,976 203,266 169,032
--------- --------- --------- ---------
Total Expenses 174,108 162,132 358,422 338,042
--------- --------- --------- ---------
OPERATING INCOME 277,977 248,582 544,016 482,607
GAIN ON SALE OF REAL ESTATE 0 0 0 416,282
--------- --------- --------- ---------
NET INCOME $ 277,977 $ 248,582 $ 544,016 $ 898,889
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 2,780 $ 2,487 $ 5,440 $ 8,990
Limited Partners 275,197 246,095 538,576 889,899
--------- --------- --------- ---------
$ 277,977 $ 248,582 $ 544,016 $ 898,889
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(21,948, 22,419, 21,948
and 22,487 weighted average
Units outstanding for the
periods, respectively) $ 12.54 $ 10.98 $ 24.54 $ 39.57
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 544,016 $ 898,889
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 203,266 169,032
Gain on Sale of Real Estate 0 (416,282)
(Increase) Decrease in Receivables 8,989 (44,210)
Decrease in Payable to
AEI Fund Management, Inc. (21,799) (25,324)
Increase in Unearned Rent 53,350 63,551
----------- -----------
Total Adjustments 243,806 (253,233)
----------- -----------
Net Cash Provided By
Operating Activities 787,822 645,656
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (124,258) (1,861,481)
Proceeds from Sale of Real Estate 0 850,996
----------- -----------
Net Cash Used For
Investing Activities (124,258) (1,010,485)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 26,405 34,701
Distributions to Partners (544,091) (555,186)
Redemption Payments 0 (100,156)
----------- -----------
Net Cash Used For
Financing Activities (517,686) (620,641)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 145,878 (985,470)
CASH AND CASH EQUIVALENTS, beginning of period 280,625 2,615,163
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 426,503 $ 1,629,693
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1997 $ (68,265) $13,382,977 $13,314,712 22,555.89
Distributions (5,552) (549,634) (555,186)
Redemption Payments (1,002) (99,154) (100,156) (137.20)
Net Income 8,990 889,899 898,889
--------- ----------- ----------- -----------
BALANCE, June 30, 1998 $ (65,829) $13,624,088 $13,558,259 22,418.69
========= =========== =========== ===========
BALANCE, December 31, 1998 $ (68,591) $13,350,706 $13,282,115 21,947.89
Distributions (5,440) (538,651) (544,091)
Net Income 5,440 538,576 544,016
--------- ----------- ----------- -----------
BALANCE, June 30, 1999 $ (68,591) $13,350,631 $13,282,040 21,947.89
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund XVII Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVII, Inc. (AFM), the Managing
General Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner of the Partnership. An affiliate
of AFM, AEI Fund Management, Inc., (AEI) performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on February 10, 1988 when minimum
subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated on November 1, 1988 when the one-year offering
period expired. The Partnership received subscriptions for
23,388.7 Limited Partnership Units ($23,388,700).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$23,388,700 and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% to the General Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those Partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% to the General Partners. Losses will be allocated 98%
to the Limited Partners and 2% to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the Partnership
or withdrawal by a General Partner, the General Partners
will contribute to the Partnership an amount equal to the
lesser of the deficit balances in their capital accounts or
1% of total Limited Partners' and General Partners' capital
contributions.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
In January, 1996, the Cheddar's restaurant in Indianapolis,
Indiana was destroyed by a fire. The Partnership reached an
agreement with the tenant and insurance company which called
for termination of the Lease, demolition of the building and
payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not
be rebuilt and the Partnership listed the land for sale. As
of December 31, 1997, based on an analysis of market
conditions in the area, it was determined the fair value of
the Partnership's interest in the land was approximately
$200,000. In the fourth quarter of 1997, a charge to
operations for real estate impairment of $62,000 was
recognized, which is the difference between the book value
at December 31, 1997 of $261,644 and the estimated fair
value of $200,000. In December, 1998, the Partnership re-
analyzed the market conditions in the area and determined
the fair value of the Partnership's interest in the land
declined to approximately $175,000. In the fourth quarter
of 1998, a charge to operations for real estate impairment
of $25,000 was recognized, which is the difference between
the book value at December 31, 1998 of $200,000 and the
estimated fair value of $175,000.
On February 20, 1998, the Partnership sold the am/pm Mini
Market in Carson City, Nevada to an unrelated third party.
The Partnership received net sale proceeds of $850,996,
which resulted in a net gain of $416,282. At the time of
sale, the cost and related accumulated depreciation was
$703,871 and $269,157, respectively.
During the first six months of 1998, the Partnership
distributed $12,622 of the net sale proceeds to the Limited
and General Partners which represented a return of capital
of and $0.55 per Limited Partnership Unit.
On December 23, 1997, the Partnership purchased a 26.05%
interest in a parcel of land in Troy, Michigan for $393,620.
The land is leased to Champps Entertainment, Inc. (Champps)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $27,553. Effective June 20, 1998,
the annual rent was increased to $41,330. Simultaneously
with the purchase of the land, the Partnership entered into
a Development Financing Agreement under which the
Partnership advanced funds to Champps for the construction
of a Champps Americana restaurant on the site. Initially,
the Partnership charged interest on the advances at a rate
of 7.0%. Effective June 20, 1998, the interest rate was
increased to 10.50%. On September 3, 1998, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $133,356. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $1,289,135. The
remaining interests in the property are owned by AEI Real
Estate Fund XV Limited Partnership, AEI Real Estate Fund
XVIII Limited Partnership and AEI Net Lease Income & Growth
Fund XIX Limited Partnership, affiliates of the Partnership.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On January 15, 1998, the Partnership purchased a parcel of
land in Rochester, Minnesota for $406,778. The land is
leased to Timber Lodge Steakhouse, Inc. (TLS) under a Lease
Agreement with a primary term of 20 years and annual rental
payments of $30,133. Effective May 14, 1998, the annual
rent was increased to $42,327. Simultaneously with the
purchase of the land, the Partnership entered into a
Development Financing Agreement under which the Partnership
advanced funds to TLS for the construction of a Timber Lodge
Steakhouse restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of
7.5%. Effective May 14, 1998, the interest rate was
increased to 10.535%. On September 3, 1998, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $198,363. Total
acquisition costs, including the cost of the land, were
$1,910,768.
On August 28, 1998, the Partnership purchased a 14% interest
in a parcel of land in Centerville, Ohio for $259,139. The
land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual
rental payments of $18,140. Effective December 25, 1998,
the annual rent was increased to $27,209. Simultaneously
with the purchase of the land, the Partnership entered into
a Development Financing Agreement under which the
Partnership advanced funds to ADC for the construction of a
Champps Americana restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of
7.0%. Effective December 25, 1998, the interest rate was
increased to 10.5%. On January 27, 1999, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $56,764. The
Partnership's share of the total purchase price, including
the cost of the land, was $551,677. The remaining interests
in the property are owned by AEI Real Estate Fund XVIII
Limited Partnership, AEI Income & Growth Fund XXI Limited
Partnership and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership.
(4) Payable to AEI Fund Management -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the six months ended June 30, 1999 and 1998, the
Partnership recognized rental income of $895,351 and $733,498,
respectively. During the same periods, the Partnership earned
investment income of $7,087 and $87,151, respectively. In 1999,
rental income increased as a result of rent received from three
property acquisitions in 1998 and 1999 and rent increases on ten
properties. These increases in rental income were partially
offset by a decrease in rent due to a property sale in 1998 and a
decrease in investment income earned on the net proceeds prior to
the purchase of the additional properties.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the six months ended June 30, 1999 and 1998, the
Partnership paid Partnership administration expenses to
affiliated parties of $133,263 and $135,420, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $21,893 and $33,590, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs.
As of June 30, 1999, the Partnership's annualized cash
distribution rate was 6.5%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants, due to inflation and real sales growth, will result
in an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
Liquidity and Capital Resources
During the six months ended June 30, 1999, the
Partnership's cash balances increased $145,878 as the Partnership
distributed less cash to the Partners than it generated from
operating activities. Net cash provided by operating activities
increased from $645,656 in 1998 to $787,822 in 1999 due to an
increase in income and a decrease in expenses in 1999 and net
timing differences in the collection of payments from the lessees
and the payment of expenses.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. For the six months ended June 30,
1999 and 1998, the Partnership generated cash flow from the sale
of real estate of $-0- and $850,996, respectively. During the
same periods, the Partnership expended $124,258 and $1,861,481,
respectively, to invest in real properties (inclusive of
acquisition expenses) as the Partnership reinvested the cash
generated from property sales.
In January, 1996, the Cheddar's restaurant in
Indianapolis, Indiana was destroyed by a fire. The Partnership
reached an agreement with the tenant and insurance company which
called for termination of the Lease, demolition of the building
and payment to the Partnership of $407,282 for the building and
equipment and $49,688 for lost rent. The property will not be
rebuilt and the Partnership listed the land for sale. As of
December 31, 1997, based on an analysis of market conditions in
the area, it was determined the fair value of the Partnership's
interest in the land was approximately $200,000. In the fourth
quarter of 1997, a charge to operations for real estate
impairment of $62,000 was recognized, which is the difference
between the book value at December 31, 1997 of $261,644 and the
estimated fair value of $200,000. In December, 1998, the
Partnership re-analyzed the market conditions in the area and
determined the fair value of the Partnership's interest in the
land declined to approximately $175,000. In the fourth quarter
of 1998, a charge to operations for real estate impairment of
$25,000 was recognized, which is the difference between the book
value at December 31, 1998 of $200,000 and the estimated fair
value of $175,000.
On February 20, 1998, the Partnership sold the am/pm Mini
Market in Carson City, Nevada to an unrelated third party. The
Partnership received net sale proceeds of $850,996, which
resulted in a net gain of $416,282. At the time of sale, the
cost and related accumulated depreciation was $703,871 and
$269,157, respectively.
During the first six months of 1998, the Partnership
distributed $12,622 of the net sale proceeds to the Limited and
General Partners which represented a return of capital of and
$0.55 per Limited Partnership Unit.
On December 23, 1997, the Partnership purchased a 26.05%
interest in a parcel of land in Troy, Michigan for $393,620. The
land is leased to Champps Entertainment, Inc. (Champps) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $27,553. Effective June 20, 1998, the annual rent
was increased to $41,330. Simultaneously with the purchase of
the land, the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to Champps
for the construction of a Champps Americana restaurant on the
site. Initially, the Partnership charged interest on the
advances at a rate of 7.0%. Effective June 20, 1998, the
interest rate was increased to 10.50%. On September 3, 1998,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $133,356. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $1,289,135. The remaining interests in the
property are owned by AEI Real Estate Fund XV Limited
Partnership, AEI Real Estate Fund XVIII Limited Partnership and
AEI Net Lease Income & Growth Fund XIX Limited Partnership,
affiliates of the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On January 15, 1998, the Partnership purchased a parcel of
land in Rochester, Minnesota for $406,778. The land is leased to
Timber Lodge Steakhouse, Inc. (TLS) under a Lease Agreement with
a primary term of 20 years and annual rental payments of $30,133.
Effective May 14, 1998, the annual rent was increased to $42,327.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership advanced funds to TLS for the construction of a
Timber Lodge Steakhouse restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of 7.5%.
Effective May 14, 1998, the interest rate was increased to
10.535%. On September 3, 1998, after the development was
completed, the Lease Agreement was amended to require annual
rental payments of $198,363. Total acquisition costs, including
the cost of the land, were $1,910,768.
On August 28, 1998, the Partnership purchased a 14%
interest in a parcel of land in Centerville, Ohio for $259,139.
The land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $18,140. Effective December 25, 1998, the annual
rent was increased to $27,209. Simultaneously with the purchase
of the land, the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to ADC for
the construction of a Champps Americana restaurant on the site.
Initially, the Partnership charged interest on the advances at a
rate of 7.0%. Effective December 25, 1998, the interest rate was
increased to 10.5%. On January 27, 1999, after the development
was completed, the Lease Agreement was amended to require annual
rental payments of $56,764. The Partnership's share of the total
purchase price, including the cost of the land, was $551,677.
The remaining interests in the property are owned by AEI Real
Estate Fund XVIII Limited Partnership, AEI Income & Growth Fund
XXI Limited Partnership and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first week after the end
of each quarter. The Partnership attempts to maintain a stable
distribution rate from quarter to quarter. Beginning in 1998,
redemption payments were paid to redeeming Partners on a
quarterly basis. The redemption payments generally are funded
with cash that would normally be paid as part of the regular
quarterly distributions. As a result, total distributions and
distributions payable have fluctuated from year to year due to
cash used to fund redemption payments.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
On July 1, 1999, twenty-one Limited Partners redeemed a
total of 290 Partnership Units for $224,344. The Partnership
acquired these Units using Net Cash Flow from operations. In
prior years, a total of ninety-six Limited Partners redeemed
1,440.9 Partnership Units for $936,523. The redemptions increase
the remaining Limited Partners' ownership interest in the
Partnership.
The continuing rent payments from the properties should be
adequate to fund continuing distributions and meet other
Partnership obligations on both a short-term and long-term basis.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
27 Financial Data Schedule for period
ended June 30, 1999.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: July 30, 1999 AEI Real Estate Fund XVII
Limited Partnership
By: AEI Fund Management XVII, Inc.
Its: Managing General Partner
By: /s/ Robert P. Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E. Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)