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, 2007
Commission file number: 000-50609
AEI INCOME & GROWTH FUND 25 LLC
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Delaware 75-3074973
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
30 East 7th Street, Suite 1300, 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 Exchange Act during the past
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
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes No [X]
Transitional Small Business Disclosure Format: Yes No [X]
AEI INCOME & GROWTH FUND 25 LLC
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 2007 and December 31, 2006
Statements for the Periods ended June 30, 2007 and 2006:
Income
Cash Flows
Changes in Members' Equity (Deficit)
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
Item 3. Controls and Procedures
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
Signatures
AEI INCOME & GROWTH FUND 25 LLC
BALANCE SHEET
JUNE 30, 2007 AND DECEMBER 31, 2006
(Unaudited)
ASSETS
2007 2006
CURRENT ASSETS:
Cash and Cash Equivalents $ 3,091,691 $ 794,181
Receivables 227,010 0
----------- -----------
Total Current Assets 3,318,701 794,181
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 10,585,818 11,051,339
Buildings and Equipment 22,516,515 23,039,248
Accumulated Depreciation (1,914,285) (1,511,835)
----------- -----------
31,188,048 32,578,752
Real Estate Held for Sale 922,913 2,131,848
----------- -----------
Net Investments in Real Estate 32,110,961 34,710,600
----------- -----------
Total Assets $35,429,662 $35,504,781
=========== ===========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 163,441 $ 64,049
Distributions Payable 601,544 654,931
Unearned Rent 68,810 0
----------- -----------
Total Current Liabilities 833,795 718,980
----------- -----------
MEMBERS' EQUITY (DEFICIT):
Managing Members 10 (24,269)
Limited Members, $1,000 per Unit;
50,000 Units authorized; 42,435 Units issued;
42,306 Units outstanding 34,595,857 34,810,070
----------- -----------
Total Members' Equity 34,595,867 34,785,801
----------- -----------
Total Liabilities and Members' Equity $35,429,662 $35,504,781
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 25 LLC
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Three Months Ended Six Months Ended
6/30/07 6/30/06 6/30/07 6/30/06
RENTAL INCOME $ 622,094 $ 603,112 $1,239,537 $1,191,822
EXPENSES:
LLC Administration -
Affiliates 89,448 89,128 170,822 182,575
LLC Administration
and Property Management -
Unrelated Parties 18,158 9,527 32,600 21,878
Depreciation 231,282 227,471 462,564 448,479
--------- --------- ---------- ----------
Total Expenses 338,888 326,126 665,986 652,932
--------- --------- ---------- ----------
OPERATING INCOME 283,206 276,986 573,551 538,890
OTHER INCOME:
Interest Income 9,471 14,300 15,728 35,293
--------- --------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS 292,677 291,286 589,279 574,183
Income from Discontinued
Operations 326,692 70,682 396,512 122,721
--------- --------- ---------- ----------
NET INCOME $ 619,369 $ 361,968 $ 985,791 $ 696,904
========= ========= ========== ==========
NET INCOME ALLOCATED:
Managing Members $ 48,558 $ 10,859 $ 59,551 $ 20,907
Limited Members 570,811 351,109 926,240 675,997
--------- --------- ---------- ----------
$ 619,369 $ 361,968 $ 985,791 $ 696,904
========= ========= ========== ==========
NET INCOME PER LLC UNIT:
Continuing Operations $ 6.71 $ 6.65 $ 13.51 $ 13.12
Discontinued Operations 6.78 1.62 8.38 2.81
--------- --------- ---------- ----------
Total $ 13.49 $ 8.27 $ 21.89 $ 15.93
========= ========= ========== ==========
Weighted Average Units
Outstanding 42,306 42,435 42,306 42,435
========= ========= ========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 25 LLC
STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED JUNE 30
(Unaudited)
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 985,791 $ 696,904
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 467,791 473,079
Gain on Sale of Real Estate (31,931) 0
Increase in Receivables (227,010) 0
Increase (Decrease) in Payable to
AEI Fund Management, Inc. 99,392 (247,085)
Increase in Unearned Rent 68,810 98,265
----------- -----------
Total Adjustments 377,052 324,259
----------- -----------
Net Cash Provided By
Operating Activities 1,362,843 1,021,163
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate 0 (1,586,095)
Proceeds from Sale of Real Estate 2,163,779 0
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 2,163,779 (1,586,095)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (53,387) (47,618)
Distributions to Members (1,175,725) (1,093,681)
----------- -----------
Net Cash Used For
Financing Activities (1,229,112) (1,141,299)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,297,510 (1,706,231)
CASH AND CASH EQUIVALENTS, beginning of period 794,181 3,249,144
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,091,691 $ 1,542,913
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 25 LLC
STATEMENT OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Limited
Member
Managing Limited Units
Members Members Total Outstanding
BALANCE, December 31, 2005 $ 4,102 $35,765,742 $35,769,844 42,434.76
Distributions (32,810) (1,060,871) (1,093,681)
Net Income 20,907 675,997 696,904
-------- ----------- ----------- -----------
BALANCE, June 30, 2006 $ (7,801) $35,380,868 $35,373,067 42,434.76
======== =========== =========== ===========
BALANCE, December 31, 2006 $(24,269) $34,810,070 $34,785,801 42,305.86
Distributions (35,272) (1,140,453) (1,175,725)
Net Income 59,551 926,240 985,791
-------- ----------- ----------- -----------
BALANCE, June 30, 2007 $ 10 $34,595,857 $34,595,867 42,305.86
======== =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND 25 LLC
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2007
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Company, 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 Company 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
Company's latest annual report on Form 10-KSB.
(2) Organization -
AEI Income & Growth Fund 25 LLC (the Company), a Limited
Liability Company, was formed on June 24, 2002 to acquire
and lease commercial properties to operating tenants. The
Company's operations are managed by AEI Fund Management XXI,
Inc. (AFM), the Managing Member. Robert P. Johnson, the
President and sole director of AFM, serves as the Special
Managing Member. AFM is a wholly owned subsidiary of AEI
Capital Corporation of which Mr. Johnson is the majority
shareholder. AEI Fund Management, Inc. (AEI), an affiliate
of AFM, performs the administrative and operating functions
for the Company.
The terms of the offering called for a subscription price of
$1,000 per LLC Unit, payable on acceptance of the offer.
The Company commenced operations on September 11, 2003 when
minimum subscriptions of 1,500 LLC Units ($1,500,000) were
accepted. The offering terminated May 12, 2005, when the
extended offering period expired. The Company received
subscriptions for 42,539.763 Units. Under the terms of the
Operating Agreement, the Limited Members and Managing
Members contributed funds of $42,539,763 and $1,000,
respectively. The Company shall continue until December 31,
2053, unless dissolved, terminated and liquidated prior to
that date.
During operations, any Net Cash Flow, as defined, which the
Managing Members determine to distribute will be distributed
97% to the Limited Members and 3% to the Managing Members.
Distributions to Limited Members will be made pro rata by
Units.
AEI INCOME & GROWTH FUND 25 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of properties which the Managing Members determine
to distribute will, after provisions for debts and reserves,
be paid in the following manner: (i) first, 99% to the
Limited Members and 1% to the Managing Members until the
Limited Members receive an amount equal to: (a) their
Adjusted Capital Contribution plus (b) an amount equal to 7%
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 Members and 10% to the
Managing Members. Distributions to the Limited Members 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 97% to the Limited Members and 3% to the Managing
Members. Net losses from operations will be allocated 99%
to the Limited Members and 1% to the Managing Members.
For tax purposes, profits arising from the sale, financing,
or other disposition of property will be allocated in
accordance with the Operating Agreement as follows: (i)
first, to those Members with deficit balances in their
capital accounts in an amount equal to the sum of such
deficit balances; (ii) second, 99% to the Limited Members
and 1% to the Managing Members until the aggregate balance
in the Limited Members' capital accounts equals the sum of
the Limited Members' Adjusted Capital Contributions plus an
amount equal to 7% 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
Members and 10% to the Managing Members. Losses will be
allocated 99% to the Limited Members and 1% to the Managing
Members.
The Managing Members are not required to currently fund a
deficit capital balance. Upon liquidation of the Company or
withdrawal by a Managing Member, the Managing Members will
contribute to the Company an amount equal to the lesser of
the deficit balances in their capital accounts or 1.01% of
the total capital contributions of the Limited Members over
the amount previously contributed by the Managing Members.
(3) Reclassification -
Certain items in the prior year's financial statements have
been reclassified to conform to 2007 presentation. These
reclassifications had no effect on Members' capital, net
income or cash flows.
AEI INCOME & GROWTH FUND 25 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Investments in Real Estate -
On February 17, 2006, the Company purchased an Advance Auto
Parts store in Brownsville, Texas for $1,585,269. The
property is leased to Advance Stores Company, Inc. under a
Lease Agreement with a remaining primary term of 14.5 years
and initial annual rent of $109,973.
On December 21, 2006, the Company purchased a 35% interest
in an Advance Auto Parts store in Indianapolis, Indiana for
$669,976. The property is leased to Advance Stores Company,
Inc. under a Lease Agreement with a remaining primary term
of 13.5 years and initial annual rent of $46,937. The
remaining interest in the property was purchased by AEI
Income & Growth Fund XXII Limited Partnership, an affiliate
of the Company.
(5) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Company. 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.
(6) Discontinued Operations -
On September 26, 2006, Tia's Florida, LLC, the tenant of the
Tia's Tex-Mex restaurant in Brandon, Florida filed for
Chapter 7 bankruptcy, which leads to liquidation and
dissolution of the company. The tenant closed the
restaurant. The primary guarantor of the Lease, Julio's
Investors LLC (Julio's), continued to pay the rent and
property expenses. In the second quarter of 2007, the
Company and Julio's entered into an agreement whereby the
Company would release Julio's from its Lease guarantee in
exchange for a lump sum payment of $227,010. This payment
was contingent on completion of the sale of the property and
was received subsequent to June 30, 2007.
On June 22, 2007, the Company sold the Tia's Tex-Mex
restaurant in Brandon, Florida to an unrelated third party.
The Company received net sale proceeds of $2,163,779, which
resulted in a net gain of $31,931. At the time of sale, the
cost and related accumulated depreciation was $2,261,506 and
$129,658, respectively. At December 31, 2006, the property
was classified as Real Estate Held for Sale with a book
value of $2,131,848.
Subsequent to June 30, 2007, the Company sold 12.1584% of
the Jared Jewelry store in Goodlettsville, Tennessee, in two
separate transactions, to unrelated third parties. The
Company received total net sale proceeds of approximately
$619,000, which resulted in a net gain of approximately
$170,200. The cost and related accumulated depreciation of
the interests sold was $480,623 and $31,778, respectively.
The Company is attempting to sell its remaining 12.8416%
interest in the property. At June 30, 2007, the property
was classified as Real Estate Held for Sale with a book
value of $922,913.
AEI INCOME & GROWTH FUND 25 LLC
NOTES TO FINANCIAL STATEMENTS
(Continued)
(6) Discontinued Operations - (Continued)
The financial results for these properties are reflected as
Discontinued Operations in the accompanying financial
statements. The following are the results of discontinued
operations for the periods ended June 30:
Three Months Ended Six Months Ended
6/30/07 6/30/06 6/30/07 6/30/06
Rental Income $ 72,494 $ 76,523 $ 150,725 $ 152,858
Lease Settlement Income 227,010 0 227,010 0
Property Management Expenses (4,743) (613) (7,927) (5,537)
Depreciation 0 (5,228) (5,227) (24,600)
Gain on Disposal of
Real Estate 31,931 0 31,931 0
--------- --------- --------- ---------
Income from Discontinued
Operations $ 326,692 $ 70,682 $ 396,512 $ 122,721
========= ========= ========= =========
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, the sufficiency of cash to meet
operating expenses, rates of distribution, and other matters.
These, and other forward looking statements made by the Company,
must be evaluated in the context of a number of factors that may
affect the Company's financial condition and results of
operations, including the following:
Market and economic conditions which affect the value
of the properties the Company 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
effects of these consequences for Members;
resolution by the Managing Members of conflicts with
which they may be confronted;
the success of the Managing Members 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 Company operate.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The Application of Critical Accounting Policies
The preparation of the Company'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 Company as opposed to other funds they manage.
The Company purchases properties and records them in the
financial statements at the lower of cost or estimated realizable
value. The Company initially records the properties at cost
(including capitalized acquisition expenses). The Company is
required to periodically evaluate the carrying value of
properties to determine whether their realizable value has
declined. For properties the Company 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 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 Company reimburses these expenses
subject to detailed limitations contained in the Operating
Agreement.
Management of the Company has discussed the development
and selection of the above accounting estimates and the
management discussion and analysis disclosures regarding them
with the managing member of the Company.
Results of Operations
For the six months ended June 30, 2007 and 2006, the
Company recognized rental income from continuing operations of
$1,239,537 and $1,191,822, respectively. In 2007, rental income
increased due to additional rent received from two property
acquisitions in 2006 and rent increases on two properties.
For the six months ended June 30, 2007 and 2006, the
Company incurred LLC administration expenses from affiliated
parties of $170,822 and $182,575, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Members. During
the same periods, the Company incurred LLC administration and
property management expenses from unrelated parties of $32,600
and $21,878, respectively. These expenses represent direct
payments to third parties for legal and filing fees, direct
administrative costs, outside audit costs, taxes, insurance and
other property costs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
For the six months ended June 30, 2007 and 2006, the
Company recognized interest income of $15,728 and $35,293,
respectively. In 2007, interest income decreased due to the
Company having less money invested in money market accounts due
to property acquisitions.
In accordance with Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, upon complete disposal of a property or
classification of a property as Real Estate Held for Sale, the
Company includes the operating results and sale of the property
in discontinued operations. In addition, the Company
reclassifies the prior periods operating results and any partial
sales of the property to discontinued operations. For the six
months ended June 30, 2007, the Company recognized income from
discontinued operations of $396,512 representing rental and lease
settlement income less property management expenses and
depreciation of $364,581 and gain on disposal of real estate of
$31,931. For the six months ended June 30, 2006, the Company
recognized income from discontinued operations of $122,721,
representing rental income less property management expenses and
depreciation.
On September 26, 2006, Tia's Florida, LLC, the tenant of
the Tia's Tex-Mex restaurant in Brandon, Florida filed for
Chapter 7 bankruptcy, which leads to liquidation and dissolution
of the company. The tenant closed the restaurant. The primary
guarantor of the Lease, Julio's Investors LLC (Julio's),
continued to pay the rent and property expenses. In the second
quarter of 2007, the Company and Julio's entered into an
agreement whereby the Company would release Julio's from its
Lease guarantee in exchange for a lump sum payment of $227,010.
This payment was contingent on completion of the sale of the
property and was received subsequent to June 30, 2007.
On June 22, 2007, the Company sold the Tia's Tex-Mex
restaurant in Brandon, Florida to an unrelated third party. The
Company received net sale proceeds of $2,163,779, which resulted
in a net gain of $31,931. At the time of sale, the cost and
related accumulated depreciation was $2,261,506 and $129,658,
respectively. At December 31, 2006, the property was classified
as Real Estate Held for Sale with a book value of $2,131,848.
Subsequent to June 30, 2007, the Company sold 12.1584% of
the Jared Jewelry store in Goodlettsville, Tennessee, in two
separate transactions, to unrelated third parties. The Company
received total net sale proceeds of approximately $619,000, which
resulted in a net gain of approximately $170,200. The cost and
related accumulated depreciation of the interests sold was
$480,623 and $31,778, respectively. The Company is attempting to
sell its remaining 12.8416% interest in the property. At June
30, 2007, the property was classified as Real Estate Held for
Sale with a book value of $922,913.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
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 Company 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, 2007, the Company's
cash balances increased $2,297,510 as a result of cash generated
from the sale of property and cash generated from operating
activities in excess of distributions paid to the Members.
During the six months ended June 30, 2006, the Company's cash
balances decreased $1,706,231 as a result of cash used to
purchase property and distributions paid to the Members in excess
of cash generated from operating activities.
Net cash provided by operating activities increased from
$1,021,163 in 2006 to $1,362,843 in 2007 as a result of an
increase in total rental and interest income in 2007 and net
timing differences in the collection of payments from the tenants
and the payment of expenses, which were partially offset by an
increase in LLC administration and property management expenses
in 2007.
The major components of the Company'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, 2006, the Company expended $1,586,095 to invest in real
properties (inclusive of acquisition expenses). During the six
months ended June 30, 2007, the Company generated cash flow from
the sale of real estate of $2,163,779.
On February 17, 2006, the Company purchased an Advance
Auto Parts store in Brownsville, Texas for $1,585,269. The
property is leased to Advance Stores Company, Inc. under a Lease
Agreement with a remaining primary term of 14.5 years and initial
annual rent of $109,973.
On December 21, 2006, the Company purchased a 35% interest
in an Advance Auto Parts store in Indianapolis, Indiana for
$669,976. The property is leased to Advance Stores Company, Inc.
under a Lease Agreement with a remaining primary term of 13.5
years and initial annual rent of $46,937. The remaining interest
in the property was purchased by AEI Income & Growth Fund XXII
Limited Partnership, an affiliate of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
The Company's primary use of cash flow, other than
investment in real estate, is distribution and redemption
payments to Members. The Company declares its regular quarterly
distributions before the end of each quarter and pays the
distribution in the first ten days after the end of each quarter.
The Company attempts to maintain a stable distribution rate from
quarter to quarter. Redemption payments are paid to redeeming
Members on a semi-annual basis.
For the six months ended June 30, 2007 and 2006, the
Company declared distributions of $1,175,725 and $1,093,681,
respectively. Pursuant to the Operating Agreement, distributions
of Net Cash Flow were allocated 97% to the Limited Members and 3%
to the Managing Members. Distributions of Net Proceeds of Sale
were allocated 99% to the Limited Members and 1% to the Managing
Members. The Limited Members received distributions of
$1,140,453 and $1,060,871 and the Managing Members received
distributions of $35,272 and $32,810 for the periods,
respectively. In 2007, distributions were higher due to
increases in the distribution rate per Unit, effective January 1,
2007 and April 1, 2007.
The Company may acquire Units from Limited Members who
have tendered their Units to the Company. Such Units may be
acquired at a discount. The Company will not be obligated to
purchase in any year more than 2% of the total number of Units
outstanding on January 1 of such year. In no event shall the
Company be obligated to purchase Units if, in the sole discretion
of the Managing Member, such purchase would impair the capital or
operation of the Company.
On October 1, 2006, one Limited Member redeemed a total of
128.9 Units for $98,907 in accordance with the Operating
Agreement. The Company acquired these Units using Net Cash Flow
from operations. The redemptions increase the remaining Limited
Member's ownership interest in the Company. As a result of these
redemption payments and pursuant to the Operating Agreement, the
Managing Members received distributions of $3,059 in 2006. In
prior years, the Company did not redeem any Units from the
Limited Members.
The continuing rent payments from the properties, together
with cash generated from property sales, should be adequate to
fund continuing distributions and meet other Company obligations
on both a short-term and long-term basis.
ITEM 3. CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures
Under the supervision and with the participation of
management, including its President and Chief Financial Officer,
the Managing Member of the Company evaluated the effectiveness of
the design and operation of its disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Exchange Act).
Based upon that evaluation, the President and Chief Financial
Officer of the Managing Member concluded that, as of the end of
the period covered by this report, the disclosure controls and
procedures of the Company are adequately designed to ensure that
information required to be disclosed by us in the reports we file
or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in
applicable rules and forms and that such information is
accumulated and communicated to management, including the
President and Chief Financial Officer of the Managing Member, in
a manner that allows timely decisions regarding required
disclosure.
(b) Changes in internal controls
There were no significant changes made in the Company's
internal controls during the most recent period covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Company is a party or of which the Company's property is
subject.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
(a) During the period covered by this report, the Company
did not sell any equity securities that are not registered under
the Securities Act of 1933.
(b) Not Applicable.
(c) Pursuant to Section 7.7 of the Operating Agreement,
each Limited Member has the right to present Units to the Company
for purchase by submitting notice to the Managing Member during
January or July of each year. The purchase price of the Units is
equal to 80% of the net asset value of the Units, as of the first
business day of January or July of each year, as determined by
the Managing Member in accordance with the provisions of the
Operating Agreement. Units tendered to the Company during
January and July are redeemed on April 1st and October 1st,
respectively, of each year subject to the following limitations.
The Company will not be obligated to purchase in any year more
than 2% of the total number of Units outstanding on January 1 of
such year. In no event shall the Company be obligated to
purchase Units if, in the sole discretion of the Managing Member,
such purchase would impair the capital or operation of the
Company. During the period covered by this report, the Company
did not purchase any Units.
PART II - OTHER INFORMATION
(Continued)
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
31.1 Certification of Chief Executive Officer of Managing
Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer of Managing
Member pursuant to Rule 15d-14(a)(17 CFR 240.15d-14(a)) and
Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief
Financial Officer of Managing Member pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: August 6, 2007 AEI Income & Growth Fund 25 LLC
By: AEI Fund Management XXI, Inc.
Its: Managing Member
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Patrick W Keene
Patrick W. Keene
Chief Financial Officer
(Principal Accounting Officer)