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: September 30, 1999
Commission file number: 0-29274
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1789725
(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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1999 and December 31, 1998
Statements for the Periods ended September 30, 1999 and 1998:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
CURRENT ASSETS:
Cash and Cash Equivalents $ 908,516 $ 557,646
Receivables 0 16,052
----------- -----------
Total Current Assets 908,516 573,698
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 6,719,763 6,921,884
Buildings and Equipment 11,528,125 11,350,021
Construction in Progress 0 289,014
Property Acquisition Costs 0 10,782
Accumulated Depreciation (1,149,973) (816,805)
----------- -----------
Net Investments in Real Estate 17,097,915 17,754,896
----------- -----------
Total Assets $18,006,431 $18,328,594
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 33,301 $ 54,136
Distributions Payable 390,971 451,171
----------- -----------
Total Current Liabilities 424,272 505,307
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (33,364) (30,953)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,829 Units outstanding 17,615,523 17,854,240
----------- -----------
Total Partners' Capital 17,582,159 17,823,287
----------- -----------
Total Liabilities and Partners' Capital $18,006,431 $18,328,594
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/99 9/30/98 9/30/99 9/30/98
INCOME:
Rent $ 465,581 $ 452,922 $1,420,395 $1,247,467
Investment Income 7,444 14,374 14,045 140,616
--------- --------- ---------- ----------
Total Income 473,025 467,296 1,434,440 1,388,083
--------- --------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 57,109 58,163 175,086 187,294
Partnership Administration
and Property Management -
Unrelated Parties 22,472 30,853 66,748 94,495
Depreciation 127,276 123,898 384,696 324,522
--------- --------- ---------- ----------
Total Expenses 206,857 212,914 626,530 606,311
--------- --------- ---------- ----------
OPERATING INCOME 266,168 254,382 807,910 781,772
GAIN ON SALE OF REAL ESTATE 163,463 65,440 163,463 235,377
--------- --------- ---------- ----------
NET INCOME $ 429,631 $ 319,822 $ 971,373 $1,017,149
========= ========= ========== ==========
NET INCOME ALLOCATED:
General Partners $ 4,296 $ 3,198 $ 9,714 $ 10,171
Limited Partners 425,335 316,624 961,659 1,006,978
--------- --------- ---------- ----------
$ 429,631 $ 319,822 $ 971,373 $1,017,149
========= ========= ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,829 weighted average
Units outstanding in 1999
and 1998) $ 17.85 $ 13.29 $ 40.36 $ 42.26
========= ========= ========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 971,373 $ 1,017,149
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 384,696 324,522
Gain on Sale of Real Estate (163,463) (235,377)
Decrease in Receivables 16,052 159,343
Decrease in Payable to
AEI Fund Management, Inc. (20,835) (33,175)
Increase in Unearned Rent 0 24,200
----------- -----------
Total Adjustments 216,450 239,513
----------- -----------
Net Cash Provided By
Operating Activities 1,187,823 1,256,662
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (221,884) (2,475,090)
Proceeds from Sale of Real Estate 657,632 862,718
----------- -----------
Net Cash Used For
Investing Activities 435,748 (1,612,372)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable (60,200) 156,409
Distributions to Partners (1,212,501) (1,454,547)
----------- -----------
Net Cash Used For
Financing Activities (1,272,701) (1,298,138)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 350,870 (1,653,848)
CASH AND CASH EQUIVALENTS, beginning of period 557,646 2,506,790
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 908,516 $ 852,942
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1997 $(24,706) $18,472,657 $18,447,951 23,828.87
Distributions (14,546) (1,440,001) (1,454,547)
Net Income 10,171 1,006,978 1,017,149
-------- ----------- ----------- ----------
BALANCE, September 30, 1998 $(29,081) $18,039,634 $18,010,553 23,828.87
======== =========== =========== ==========
BALANCE, December 31, 1998 $(30,953) $17,854,240 $17,823,287 23,828.87
Distributions (12,125) (1,200,376) (1,212,501)
Net Income 9,714 961,659 971,373
-------- ----------- ----------- ----------
BALANCE, September 30, 1999 $(33,364) $17,615,523 $17,582,159 23,828.87
======== =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 Income & Growth Fund XXI Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XXI, 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 April 14, 1995 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. On January 31, 1997, the
Partnership offering terminated when the maximum
subscription limit of 24,000 Limited Partnership Units
($24,000,000) was reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$24,000,000 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 INCOME & GROWTH FUND XXI 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 10% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) any
remaining balance will be distributed 90% to the Limited
Partners and 10% 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 in the same ratio as the last dollar of Net Cash
Flow is distributed. Net losses from operations will be
allocated 99% to the Limited Partners and 1% 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 10% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
On December 21, 1995, the Partnership purchased a 34.0%
interest in a Media Play retail store in Apple Valley,
Minnesota for $1,414,060. The property was leased to The
Musicland Group, Inc. (MGI) under a Lease Agreement with a
primary term of 18 years and annual rental payments of
$139,587.
In December, 1996, the Partnership and MGI reached an
agreement in which MGI would buy out and terminate the Lease
Agreement by making a payment of $800,000, which was equal
to approximately two years' rent. The Partnership's share
of such payment was $272,000. A specialist in commercial
property leasing has been retained to locate a new tenant
for the property. While the property is vacant, the
Partnership is responsible for the real estate taxes and
other costs required to maintain the property.
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 Media Play was
approximately $748,000. In the fourth quarter of 1997, a
charge to operations for real estate impairment of $580,200
was recognized, which is the difference between the book
value at December 31, 1997 of $1,328,200 and the estimated
market value of $748,000. The charge was recorded against
the cost of the land, building and equipment.
On July 8, 1997, the Partnership purchased a parcel of land
in Livonia, Michigan for $1,074,384. The land is leased to
Champps under a Lease Agreement with a primary term of 20
years and annual rental payments of $75,207. Effective
January 3, 1998, the annual rent was increased to $115,496.
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 January 3, 1998, the
interest rate was increased to 10.75%. On May 19, 1998,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $429,135.
Total acquisition costs, including the cost of the land,
were $4,150,061.
On August 28, 1998, the Partnership purchased a 25% interest
in a parcel of land in Centerville, Ohio for $462,747. 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 $32,392. Effective December 25, 1998,
the annual rent was increased to $48,588. 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%. 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 $101,365. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $984,426. The remaining
interests in the Fund property are owned by AEI Real Estate
Fund XVII Limited Partnership, AEI Real Estate Fund XVIII
Limited Partnership and AEI Income & Growth Fund XXII
Limited Partnership, affiliates of the Partnership.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through December 31, 1998, the Partnership sold 40.7615% of
its interest in the Champps Americana restaurant in
Columbus, Ohio, in six separate transactions to unrelated
third parties. The Partnership received total net sale
proceeds of $1,383,508 which resulted in a total net gain of
$341,928. The total cost and related accumulated
depreciation of the interests sold was $1,087,502 and
$45,922, respectively. For the nine months ended September
30, 1998, the net gain was $235,377.
During the three months ended September 30, 1999, the
Partnership sold 63.4768% of its interest in the Arby's
restaurant in three separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $657,632 which resulted in a total net gain of $163,463.
The total cost and related accumulated depreciation of the
interest sold was $545,697 and $51,528, respectively.
Subsequent to September 30, 1999, the Partnership sold an
additional 21.5614% of its interest in the ArbyOs restaurant
to an unrelated third party. The Partnership received net
sale proceeds of approximately $224,000 which resulted in a
net gain of approximately $56,000.
In September, 1999, the Partnership entered into an
agreement to sell the Caribou Coffee store to an unrelated
third party. On October 26, 1999, the sale closed with the
Partnership receiving net sale proceeds of approximately
$1,575,000 for its interest in the property, which resulted
in a net gain of approximately $323,000.
During the first nine months of 1999 and 1998, the
Partnership distributed $19,895 and $348,252 of the net sale
proceeds to the Limited and General Partners as part of
their regular quarterly distributions which represented a
return of capital of $0.83 and $14.47 per Limited
Partnership Unit, respectively.
(4) Payable to AEI Fund Management, Inc. -
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 nine months ended September 30, 1999 and 1998, the
Partnership recognized rental income of $1,420,395 and
$1,247,467, respectively. During the same periods, the
Partnership earned investment income of $14,045 and $140,616,
respectively. In 1999, rental income increased primarily as a
result of rent received from the Champps Americana restaurants in
Livonia, Michigan and Centerville, Ohio. The increase in rental
income was partially offset by a decrease in investment income
earned on subscription and sale proceeds prior to the purchase of
the properties.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Musicland Group, Inc. (MGI), the lessee of the Media Play
retail store in Apple Valley, Minnesota experienced financial
difficulties and was aggressively restructuring its organization.
As part of the restructuring, the Partnership and MGI reached an
agreement in December, 1996 in which MGI would buy out and
terminate the Lease Agreement by making a payment of $800,000,
which is equal to approximately two years' rent. The
Partnership's share of such payment was $272,000. A specialist
in commercial property leasing has been retained to locate a new
tenant for the property. While the property is vacant, the
Partnership is responsible for the real estate taxes and other
costs required to maintain the property.
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 Media Play was approximately
$748,000. In the fourth quarter of 1997, a charge to operations
for real estate impairment of $580,200 was recognized, which is
the difference between the book value at December 31, 1997 of
$1,328,200 and the estimated market value of $748,000. The
charge was recorded against the cost of the land, building and
equipment.
During the nine months ended September 30, 1999 and 1998,
the Partnership paid Partnership administration expenses to
affiliated parties of $175,086 and $187,294, 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 $66,748 and $94,495, 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. The decrease
in these expenses in 1999, when compared to 1998, is the result
of expenses incurred in 1998 related to the Media Play situation
discussed above.
As of September 30, 1999, the Partnership's cash
distribution rate was 6.5% on an annualized basis. Distributions
of Net Cash Flow to the General Partners are 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. The Leases contain cost of living increases which
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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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 nine months ended September 30, 1999, the
Partnership's cash balances increased $350,870 mainly as a result
of proceeds received from the sale of property. Net cash
provided by operating activities decreased from $1,256,662 in
1998 to $1,187,823 in 1999 mainly as a result of net timing
differences in the collection of payments from the lessees and
the payment of expenses, which were partially offset by an
increase in income and a decrease in expenses in 1999.
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. During the nine months ended
September 30, 1999 and 1998, the Partnership expended $221,884
and $2,475,090, respectively, to invest in real properties
(inclusive of acquisition expenses). During the same periods,
the Partnership generated cash flow from the sale of real estate
of $657,632 and $862,718, respectively.
On July 8, 1997, the Partnership purchased a parcel of
land in Livonia, Michigan for $1,074,384. The land is leased to
Champps under a Lease Agreement with a primary term of 20 years
and annual rental payments of $75,207. Effective January 3,
1998, the annual rent was increased to $115,496. 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
January 3, 1998, the interest rate was increased to 10.75%. On
May 19, 1998, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$429,135. Total acquisition costs, including the cost of the
land, were $4,150,061.
On August 28, 1998, the Partnership purchased a 25%
interest in a parcel of land in Centerville, Ohio for $462,747.
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 $32,392. Effective December 25, 1998, the annual
rent was increased to $48,588. 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%. 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 $101,365. The Partnership's share of the
total acquisition costs, including the cost of the land, was
$984,426. The remaining interests in the Fund property are owned
by AEI Real Estate Fund XVII Limited Partnership, AEI Real Estate
Fund XVIII Limited Partnership and AEI Income & Growth Fund XXII
Limited Partnership, affiliates of the Partnership.
Through December 31, 1998, the Partnership sold 40.7615%
of its interest in the Champps Americana restaurant in Columbus,
Ohio, in six separate transactions to unrelated third parties.
The Partnership received total net sale proceeds of $1,383,508
which resulted in a total net gain of $341,928. The total cost
and related accumulated depreciation of the interests sold was
$1,087,502 and $45,922, respectively. For the nine months ended
September 30, 1998, the net gain was $235,377.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the three months ended September 30, 1999, the
Partnership sold 63.4768% of its interest in the Arby's
restaurant in three separate transactions to unrelated third
parties. The Partnership received total net sale proceeds of
$657,632 which resulted in a total net gain of $163,463. The
total cost and related accumulated depreciation of the interest
sold was $545,697 and $51,528, respectively.
Subsequent to September 30, 1999, the Partnership sold an
additional 21.5614% of its interest in the ArbyOs restaurant to
an unrelated third party. The Partnership received net sale
proceeds of approximately $224,000 which resulted in a net gain
of approximately $56,000.
In September, 1999, the Partnership entered into an
agreement to sell the Caribou Coffee store to an unrelated third
party. On October 26, 1999, the sale closed with the Partnership
receiving net sale proceeds of approximately $1,575,000 for its
interest in the property, which resulted in a net gain of
approximately $323,000.
During the first nine months of 1999 and 1998, the
Partnership distributed $19,895 and $348,252 of the net sale
proceeds to the Limited and General Partners as part of their
regular quarterly distributions which represented a return of
capital of $0.83 and $14.47 per Limited Partnership Unit,
respectively.
After completion of the acquisition phase, 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. 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. Effective January 1, 1999, the PartnershipOs
distribution rate was reduced from 7.5% to 7.0%. Effective April
1, 1999, the rate was reduced to 6.5%. As a result,
distributions were higher during 1998 when compared to the same
period in 1999.
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 October 1, 1999, ten Limited Partners redeemed a total
of 280.37 Partnership Units for $239,479 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, three
Limited Partners redeemed a total of 171.1 Partnership Units for
$154,021. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from property sales, 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
10.1 Purchase Agreement dated August 4,
1999 between the Partnership and VTA
Building Company relating to the property
at 2719 Zelda Road, Montgomery, Alabama.
10.2 Co-Tenancy Agreement dated August 6,
1999 between the Partnership and VTA
Building Company relating to the property
at 2719 Zelda Road, Montgomery, Alabama.
10.3 Purchase Agreement dated September
20, 1999 between the Partnership, AEI
Institutional Net Lease Fund '93 Limited
Partnership and Boulevard East, LLC
relating to the property at 1531 East
Boulevard, Charlotte, North Carolina.
10.4 Purchase Agreement dated September
29, 1999 between the Partnership and The
Barrett Family Trust relating to the
property at 2719 Zelda Road, Montgomery,
Alabama.
10.5 Co-Tenancy Agreement dated October
22, 1999 between the Partnership and The
Barrett Family Trust relating to the
property at 2719 Zelda Road, Montgomery,
Alabama.
27 Financial Data Schedule for period
ended September 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: November 8, 1999 AEI Income & Growth Fund XXI
Limited Partnership
By: AEI Fund Management XXI, 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)