UNITED STATES
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, 2002
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, 2002 and December 31, 2001
Statements for the Periods ended June 30, 2002 and 2001:
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 REAL ESTATE FUND XVII LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 2002 AND DECEMBER 31, 2001
(Unaudited)
ASSETS
2002 2001
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,085,034 $ 1,219,154
Receivables 881 45,995
----------- -----------
Total Current Assets 1,085,915 1,265,149
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,192,250 4,164,539
Buildings and Equipment 9,385,352 8,769,458
Construction in Progress 0 460,119
Accumulated Depreciation (3,155,405) (3,007,717)
----------- -----------
Net Investments in Real Estate 10,422,197 10,386,399
----------- -----------
Total Assets $11,508,112 $11,651,548
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 34,131 $ 27,323
Distributions Payable 285,772 286,607
Unearned Rent 54,074 5,456
----------- -----------
Total Current Liabilities 373,977 319,386
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (1,980) 0
Limited Partners, $1,000 Unit value;
30,000 Units authorized; 23,389 Units issued;
20,381 and 20,508 Units outstanding
in 2002 and 2001, respectively 11,136,115 11,332,162
----------- -----------
Total Partners' Capital 11,134,135 11,332,162
----------- -----------
Total Liabilities and Partners' Capital $11,508,112 $11,651,548
=========== ===========
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
6/30/02 6/30/01 6/30/02 6/30/01
INCOME:
Rent $ 438,756 $ 439,973 $ 853,650 $ 869,467
Investment Income 3,531 23,596 13,048 50,314
--------- --------- --------- ---------
Total Income 442,287 463,569 866,698 919,781
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 68,515 77,056 146,959 151,087
Partnership Administration
and Property Management -
Unrelated Parties 26,542 17,782 48,669 34,520
Depreciation 75,185 75,528 147,688 151,056
--------- --------- --------- ---------
Total Expenses 170,242 170,366 343,316 336,663
--------- --------- --------- ---------
NET INCOME $ 272,045 $ 293,203 $ 523,382 $ 583,118
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 2,721 $ 32,933 $ 5,234 $ 35,831
Limited Partners 269,324 260,270 518,148 547,287
--------- --------- --------- ---------
$ 272,045 $ 293,203 $ 523,382 $ 583,118
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
20,381, 20,645, 20,405 and
20,684 weighted average Units
outstanding for the periods,
respectively) $ 13.21 $ 12.61 $ 25.39 $ 26.46
========= ========= ========= =========
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)
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 523,382 $ 583,118
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 147,688 151,056
(Increase) Decrease in Receivables 45,114 (6,058)
Increase (Decrease) in Payable to
AEI Fund Management, Inc. 6,808 (19,262)
Increase in Unearned Rent 48,618 20,348
----------- -----------
Total Adjustments 248,228 146,084
----------- -----------
Net Cash Provided By
Operating Activities 771,610 729,202
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (183,486) (444,662)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (835) (554)
Distributions to Partners (616,208) (624,642)
Redemption Payments (105,201) (242,280)
----------- -----------
Net Cash Used For
Financing Activities (722,244) (867,476)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (134,120) (582,936)
CASH AND CASH EQUIVALENTS, beginning of period 1,219,154 1,673,908
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,085,034 $ 1,090,972
=========== ===========
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, 2000 $(82,637) $11,960,087 $11,877,450 20,944.36
Distributions (6,247) (618,395) (624,642)
Redemption Payments (2,423) (239,857) (242,280) (299.16)
Net Income 35,831 547,287 583,118
-------- ----------- ----------- ---------
BALANCE, June 30, 2001 $(55,476) $11,649,122 $11,593,646 20,645.20
======== =========== =========== =========
BALANCE, December 31, 2001 $ 0 $11,332,162 $11,332,162 20,508.35
Distributions (6,162) (610,046) (616,208)
Redemption Payments (1,052) (104,149) (105,201) (127.50)
Net Income 5,234 518,148 523,382
-------- ----------- ----------- ---------
BALANCE, June 30, 2002 $ (1,980) $11,136,115 $11,134,135 20,380.85
======== =========== =========== =========
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, 2002
(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. Robert P. Johnson, the President and sole
shareholder of AFM, serves as the Individual General Partner
and 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 offering terminated on
November 1, 1988 when the one-year offering period expired.
The Partnership received subscriptions for 23,388.7 Limited
Partnership Units. 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 operations, 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
JUNE 30, 2002
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of 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 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 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 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
JUNE 30, 2002
(Continued)
(3) Investments in Real Estate -
On November 2, 2001, the Partnership sold the Bennigan's
restaurant in Cincinnati, Ohio to an unrelated third party.
The Partnership received total net sale proceeds of
$710,652, which resulted in a net gain of $29,000. At the
time of sale, the cost and related accumulated depreciation
was $1,259,192 and $577,540, respectively.
During the six months ended June 30, 2002 and 2001, the
Partnership distributed $61,585 and $125,316 of net sale
proceeds to the Limited and General Partners as part of
their regular quarterly distributions which represented a
return of capital of $2.98 and $5.99 per Limited Partnership
Unit. The remaining net sale proceeds will either be re-
invested in additional property or distributed to the
Partners in the future.
On May 8, 2000, the Partnership purchased a 17% interest in
a parcel of land in Austin, Texas for $231,200. The land is
leased to Razzoo's, Inc. (RI) under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$19,652. Effective October 4, 2000, the annual rent was
increased to $22,542. Simultaneously with the purchase of
the land, the Partnership entered into a Development
Financing Agreement under which the Partnership advanced
funds to RI for the construction of a Razzoo's restaurant on
the site. Initially, the Partnership charged interest on
the advances at a rate of 8.5%. Effective October 4, 2000
and April 15, 2001, the interest rate was increased to 9.75%
and 15.0%, respectively. On June 27, 2001, after the
development was completed, the Lease Agreement was amended
to require annual rental payments of $54,068. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $545,266. The remaining
interests in the property are owned by AEI Real Estate Fund
XV Limited Partnership, AEI Net Lease Income & Growth Fund
XIX Limited Partnership, and AEI Income & Growth Fund XXII
Limited Partnership, affiliates of the Partnership.
On April 27, 2001, the Partnership purchased a 28% interest
in a parcel of land in Utica, Michigan for $338,380. 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 $30,454. Effective October 23,
2001, the annual rent was increased to $36,376.
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 9.0%. Effective October 23, 2001, the
interest rate was increased to 10.75%. On February 12,
2002, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$105,350. The Partnership's share of the total acquisition
costs, including the cost of the land, was $961,647. The
remaining interests in the property are owned by AEI Net
Lease Income & Growth Fund XIX Limited Partnership and AEI
Net Lease Income & Growth Fund XX Limited Partnership,
affiliates of the Partnership.
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In May, 2001, Huntington Restaurants Group, Inc. (HRG), the
lessee of the Denny's Restaurant in Casa Grande, Arizona,
notified the Partnership that it was experiencing financial
problems and would not make the lease payments while they
worked out a plan which would enable them to continue
operations without seeking bankruptcy protection. For the
six months ended June 30, 2002 and the year ended December
31, 2001, HRG owed $62,911 and $55,981 for past due rent,
which has not been accrued. The Partnership is reviewing
its available options, which include allowing HRG to remain
in the property while they develop a work-out plan or
replacing them with a new lessee.
(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
The Management's Discussion and Analysis contains various
"forward looking statements" within the meaning of federal
securities laws which represent management's expectations or
beliefs concerning future events, including statements regarding
anticipated application of cash, expected returns from rental
income, growth in revenue, taxation levels, the sufficiency of
cash to meet operating expenses, rates of distribution, and other
matters. These, and other forward looking statements made by the
Partnership, must be evaluated in the context of a number of
factors that may affect the Partnership's financial condition and
results of operations, including the following:
Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for the Partners;
resolution by the General Partners of conflicts with
which they may be confronted;
the success of the General Partners of locating
properties with favorable risk return characteristics;
the effect of tenant defaults; and
the condition of the industries in which the tenants of
properties owned by the Partnership operate.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Critical Accounting Policies
The preparation of the Partnership's financial statements
requires management to make estimates and assumptions that may
affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and
liabilities. Management evaluates these estimates on an ongoing
basis, including those related to the carrying value of real
estate and the allocation by AEI Fund Management, Inc. of
expenses to the Partnership as opposed to other funds they
manage.
The Partnership purchases properties and records them in
the financial statements at the lower of cost or estimated
realizable value. The Partnership initially records the
properties at cost (including capitalized acquisition expenses).
The Partnership is required to periodically evaluate the carrying
value of properties to determine whether their realizable value
has declined. For properties the Partnership will hold and
operate, management determines whether impairment has occurred by
comparing the property's probability-weighted cash flows to its
current carrying value. For properties held for sale, management
determines whether impairment has occurred by comparing the
property's estimated fair value less cost to sell to its current
carrying value. If the carrying value is greater than the
realizable value, an impairment loss is recorded to reduce the
carrying value of the property to its realizable value. A change
in these assumptions or analysis could cause material changes in
the carrying value of the properties.
AEI Fund Management Inc. allocates expenses to each of the
funds they manage primarily on the basis of the number of hours
devoted by their employees to each fund's affairs. They also
allocate some expenses at the end of each month that are not
directly related to a fund's operations based upon the number of
investors in the fund and the fund's capitalization relative to
other funds they manage. The Partnership reimburses these
expenses subject to detailed limitations contained in the
Partnership Agreement.
Results of Operations
For the six months ended June 30, 2002 and 2001, the
Partnership recognized rental income of $853,650 and $869,467,
respectively. During the same periods, the Partnership earned
investment income of $13,048 and $50,314, respectively. In 2002,
rental income decreased as a result of the loss of rent from the
Denny's restaurant and property sales. These decreases in rental
income were partially offset by additional rent received from two
property acquisitions in 2002 and 2001, and rent increases on ten
properties. In 2002, investment income decreased due to the
Partnership receiving less interest income from construction
advances and having less money invested, due to property
acquisitions, at lower money market interest rates.
In May, 2001, Huntington Restaurants Group, Inc. (HRG),
the lessee of the Denny's Restaurant in Casa Grande, Arizona,
notified the Partnership that it was experiencing financial
problems and would not make the lease payments while they worked
out a plan which would enable them to continue operations without
seeking bankruptcy protection. For the six months ended June 30,
2002 and the year ended December 31, 2001, HRG owed $62,911 and
$55,981 for past due rent, which has not been accrued. The
Partnership is reviewing its available options, which include
allowing HRG to remain in the property while they develop a work-
out plan or replacing them with a new lessee.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the six months ended June 30, 2002 and 2001, the
Partnership paid Partnership administration expenses to
affiliated parties of $146,959 and $151,087, 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 $48,669 and $34,520, 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 increase
in these expenses in 2002, when compared to 2001, is the result
of expenses incurred in 2002 related to the Denny's situation
discussed above.
As of June 30, 2002, the Partnership's annualized cash
distribution rate was 7.0%, 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
were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. Leases may contain rent increases, based on the
increase in the Consumer Price Index over a specified period,
which will result in an increase in rental income over the term
of the leases. In addition, leases may contain rent clauses
which entitle the Partnership to receive additional rent in
future years if gross receipts for the property exceed certain
specified amounts. Increases in sales volumes of the tenants,
due to inflation and real sales growth, may result in an increase
in rental income over the term of the leases. Inflation also may
cause the real estate to appreciate in value. However, inflation
and changing prices may have an adverse impact on the operating
margins of the properties' tenants, which could impair their
ability to pay rent and subsequently reduce the Net Cash Flow
available for distributions.
Liquidity and Capital Resources
During the six months ended June 30, 2002, the
Partnership's cash balances decreased $134,120 as a result of
cash used to purchase property. Net cash provided by operating
activities increased from $729,202 in 2001 to $771,610 in 2002
due to net timing differences in the collection of payments from
lessees and the payment of expenses which were partially offset
by a decrease in income and an increase in Partnership
administration expenses in 2002.
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 six months ended June
30, 2002 and 2001, the Partnership expended $183,486 and
$444,662, respectively, to invest in real properties (inclusive
of acquisition expenses) as the Partnership reinvested cash
generated from property sales.
On November 2, 2001, the Partnership sold the Bennigan's
restaurant in Cincinnati, Ohio to an unrelated third party. The
Partnership received total net sale proceeds of $710,652, which
resulted in a net gain of $29,000. At the time of sale, the cost
and related accumulated depreciation was $1,259,192 and $577,540,
respectively.
During the six months ended June 30, 2002 and 2001, the
Partnership distributed $61,585 and $125,316 of net sale proceeds
to the Limited and General Partners as part of their regular
quarterly distributions which represented a return of capital of
$2.98 and $5.99 per Limited Partnership Unit. The remaining net
sale proceeds will either be re-invested in additional property
or distributed to the Partners in the future.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On May 8, 2000, the Partnership purchased a 17% interest
in a parcel of land in Austin, Texas for $231,200. The land is
leased to Razzoo's, Inc. (RI) under a Lease Agreement with a
primary term of 15 years and annual rental payments of $19,652.
Effective October 4, 2000, the annual rent was increased to
$22,542. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement under
which the Partnership advanced funds to RI for the construction
of a Razzoo's restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 8.5%. Effective
October 4, 2000 and April 15, 2001, the interest rate was
increased to 9.75% and 15.0%, respectively. On June 27, 2001,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $54,068. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $545,266. The remaining interests in the
property are owned by AEI Real Estate Fund XV Limited
Partnership, AEI Net Lease Income & Growth Fund XIX Limited
Partnership, and AEI Income & Growth Fund XXII Limited
Partnership, affiliates of the Partnership.
On April 27, 2001, the Partnership purchased a 28%
interest in a parcel of land in Utica, Michigan for $338,380.
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 $30,454. Effective October 23, 2001, the
annual rent was increased to $36,376. 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 9.0%. Effective October 23, 2001, the
interest rate was increased to 10.75%. On February 12, 2002,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $105,350. The
Partnership's share of the total acquisition costs, including the
cost of the land, was $961,647. The remaining interests in the
property are owned by AEI Net Lease Income & Growth Fund XIX
Limited Partnership and AEI Net Lease Income & Growth Fund XX
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. Redemption payments
are paid to redeeming Partners on a quarterly basis.
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 January 1, 2002, nine Limited Partners redeemed a total
of 78.50 Partnership Units for $63,930 in accordance with the
Partnership Agreement. On April 1, 2002, four Limited Partners
redeemed a total of 49 Partnership Units for $40,219. The
Partnership acquired these Units using Net Cash Flow from
operations. In prior years, a total of 218 Limited Partners
redeemed 2,880.35 Partnership Units for $2,072,573. 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
99.1 Certification of Chief Executive Officer of General
Partner pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
99.2 Certification of Chief Financial Officer of General
Partner pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
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: August 6, 2002 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)