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, 2001
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, 2001 and December 31, 2000
Statements for the Periods ended September 30, 2001 and 2000:
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, 2001 AND DECEMBER 31, 2000
(Unaudited)
ASSETS
2001 2000
CURRENT ASSETS:
Cash and Cash Equivalents $ 3,050,313 $ 1,388,156
Receivables 6,171 5,100
Short-Term Note Receivable 0 675,920
----------- -----------
Total Current Assets 3,056,484 2,069,176
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 5,897,504 6,134,768
Buildings and Equipment 10,495,531 10,832,312
Property Acquisition Costs 0 15,395
Accumulated Depreciation (1,610,034) (1,504,698)
----------- -----------
Net Investments in Real Estate 14,783,001 15,477,777
----------- -----------
Total Assets $17,839,485 $17,546,953
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 0 $ 61,934
Distributions Payable 405,730 390,705
Unearned Rent 80,450 0
----------- -----------
Total Current Liabilities 486,180 452,639
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (11,653) (38,243)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized and issued;
23,322 Units outstanding 17,364,958 17,132,557
----------- -----------
Total Partners' Capital 17,353,305 17,094,314
----------- -----------
Total Liabilities and Partners' Capital $17,839,485 $17,546,953
=========== ===========
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
9/30/01 9/30/00 9/30/01 9/30/00
INCOME:
Rent $ 424,785 $ 437,732 $1,371,592 $1,292,159
Investment Income 20,205 39,911 61,048 95,510
--------- --------- ---------- ----------
Total Income 444,990 477,643 1,432,640 1,387,669
--------- --------- ---------- ----------
EXPENSES:
Partnership Administration -
Affiliates 82,427 69,897 220,151 201,130
Partnership Administration
and Property Management -
Unrelated Parties 10,918 15,904 24,379 62,395
Depreciation 121,520 116,351 366,704 353,409
Real Estate Impairment 295,354 0 295,354 0
--------- --------- ---------- ----------
Total Expenses 510,219 202,152 906,588 616,934
--------- --------- ---------- ----------
OPERATING INCOME (LOSS) (65,229) 275,491 526,052 770,735
GAIN ON SALE OF REAL ESTATE 494,429 181,328 945,049 181,328
--------- --------- ---------- ----------
NET INCOME $ 429,200 $ 456,819 $1,471,101 $ 952,063
========= ========= ========== ==========
NET INCOME ALLOCATED:
General Partners $ 16,292 $ 4,569 $ 38,711 $ 9,521
Limited Partners 412,908 452,250 1,432,390 942,542
--------- --------- ---------- ----------
$ 429,200 $ 456,819 $1,471,101 $ 952,063
========= ========= ========== ==========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(23,322 and 23,548
weighted average Units
outstanding in 2001 and
2000, respectively) $ 17.70 $ 19.21 $ 61.42 $ 40.03
========= ========= ========== ==========
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)
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,471,101 $ 952,063
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 366,704 353,409
Real Estate Impairment 295,354 0
Gain on Sale of Real Estate (945,049) (181,328)
Increase in Receivables (1,071) (4,080)
Increase (Decrease) in Payable to
AEI Fund Management, Inc. (61,934) 44,085
Increase in Unearned Rent 80,450 0
----------- -----------
Total Adjustments (265,546) 212,086
----------- -----------
Net Cash Provided By
Operating Activities 1,205,555 1,164,149
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (2,174,765) (1,335,340)
Proceeds from Sale of Real Estate 3,152,532 332,662
Payments Received on Short-Term Note Receivable 675,920 0
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 1,653,687 (1,002,678)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 15,025 0
Distributions to Partners (1,212,110) (1,181,820)
----------- -----------
Net Cash Used For
Financing Activities (1,197,085) (1,181,820)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,662,157 (1,020,349)
CASH AND CASH EQUIVALENTS, beginning of period 1,388,156 2,412,278
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 3,050,313 $ 1,391,929
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Note Receivable Acquired in Sale of Property $ 680,000
===========
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, 1999 $(33,456) $17,606,412 $17,572,956 23,548.50
Distributions (11,819) (1,170,001) (1,181,820)
Net Income 9,521 942,542 952,063
--------- ----------- ----------- -----------
BALANCE, September 30, 2000 $(35,754) $17,378,953 $17,343,199 23,548.50
========= =========== =========== ===========
BALANCE, December 31, 2000 $(38,243) $17,132,557 $17,094,314 23,322.18
Distributions (12,121) (1,199,989) (1,212,110)
Net Income 38,711 1,432,390 1,471,101
--------- ----------- ----------- -----------
BALANCE, September 30, 2001 $(11,653) $17,364,958 $17,353,305 23,322.18
========= =========== =========== ===========
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, 2001
(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. 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 April 14, 1995 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. On January 31, 1997, the
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 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 INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(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
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 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 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.
(3) Short-Term Note Receivable -
On August 2, 2000, the Partnership received a Contract for
Deed from an affiliate of the buyer of the Media Play store
in Apple Valley, Minnesota. The Note bore interest at 9%
and was secured by the land, building and equipment. As of
December 31, 2000, the Partnership's share of outstanding
principal due on the Note was $675,920. On January 16,
2001, the Partnership received the outstanding principal and
accrued interest on the Note.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(4) Investments in Real Estate -
On August 2, 2000, the Media Play store was sold to an
unrelated third party for $2,500,000. The sale agreement
required $500,000 in cash and a $2,000,000 Contract for
Deed, which bore interest at 9%. On January 16, 2001, the
Partnership received its share of the outstanding principal
and accrued interest on the Note. The Partnership's share
of the net sale proceeds was $820,651, which resulted in a
net gain of $129,813. At the time of sale, the cost and
related accumulated depreciation was $833,860 and $143,022.
Through September 30, 2001, the Partnership sold its
interest in the Champps Americana restaurant in Columbus,
Ohio, in eleven separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds
of $2,295,174, which resulted in a total net gain of
$631,607. The total cost and related accumulated
depreciation of the interests sold was $1,808,880 and
$145,313, respectively. For the nine months ended September
30, 2001, the net gain was $289,679.
Through September 30, 2001, the Partnership sold 41.4388% of
the Champps Americana restaurant in Schaumburg, Illinois, in
ten separate transactions, to unrelated third parties. The
Partnership received total net sale proceeds of $2,419,052,
which resulted in a total net gain of $699,827. The total
cost and related accumulated depreciation of the interests
sold was $1,885,182 and $165,957, respectively. For the
nine months ended September 30, 2001 and 2000, the net gain
was $605,992 and $51,515, respectively.
Subsequent to September 30, 2001, the Partnership sold an
additional 7.239% of the Champps Americana restaurant in
Schaumburg, Illinois, in two separate transactions, to
unrelated third parties. The Partnership received net sale
proceeds of approximately $415,000, which resulted in a net
gain of approximately $117,000.
On September 18, 2001, the Partnership sold 3.5565% of the
Champps Americana restaurant in Livonia, Michigan to an
unrelated third party. The Partnership received net sale
proceeds of $180,748, which resulted in a net gain of
$49,378. The cost and related accumulated depreciation of
the interest sold was $147,597 and $16,227, respectively.
Subsequent to September 30, 2001, the Partnership sold an
additional 12.3037% of the Champps Americana restaurant in
Livonia, Michigan, in three separate transactions, to
unrelated third parties. The Partnership received net sale
proceeds of approximately $650,000, which resulted in a net
gain of approximately $196,000.
During the first nine months of 2000, the Partnership
distributed $55,577 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 $2.34
per Limited Partnership Unit. The remaining net sale
proceeds will either be reinvested in additional property or
distributed to the Partners in the future.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(4) Investments in Real Estate - (Continued)
On March 8, 2000, the Partnership purchased a parcel of land
in Fort Wayne, Indiana for $549,000. The land is leased to
Tumbleweed, Inc. (TWI) under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$48,038. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership advanced funds to TWI for the
construction of a Tumbleweed restaurant on the site.
Initially, the Partnership charged interest on the advances
at a rate of 8.75%. Effective July 5, 2000, the interest
rate was increased to 9.875%. On September 11, 2000, after
the development was completed, the Lease Agreement was
amended to require annual rental payments of $132,621.
Total acquisition costs, including the cost of the land,
were $1,334,315.
On March 30, 2001, the Partnership purchased a Children's
World daycare center in Mundelein, Illinois for $1,618,824.
The property is leased to ARAMARK Educational Resources,
Inc. under a Lease Agreement with a primary term of 15 years
and annual rental payments of $153,710.
On March 8, 2001, the Partnership purchased a 25% interest
in a parcel of land in Austin, Texas for $283,000. The land
is leased to Kona Restaurant Group, Inc. (KRG) under a Lease
Agreement with a primary term of 17 years and annual rental
payments of $29,715. Simultaneously with the purchase of
the land, the Partnership entered into a Development
Financing Agreement under which the Partnership advanced
funds to KRG for the construction of a Johnny Carino's
restaurant on the site. The Partnership charged interest on
the advances at a rate of 10.5%. On September 26, 2001,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $60,191. The
Partnership's share of the total acquisition costs,
including the cost of the land, was $571,335. The remaining
interests in the property are owned by AEI Real Estate Fund
85-A Limited Partnership, AEI Net Lease Income & Growth Fund
XX Limited Partnership, and AEI Income & Growth Fund 23 LLC,
affiliates of the Partnership.
In May, 2001, Huntington Restaurants Group, Inc. (HRG), the
lessee of the Denny's Restaurant in Covington, Louisiana
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. Through
September 30, 2001, HRG owed $50,812 for past due rent,
which has not been accrued. In October, 2001, the
Partnership received an offer to sell the restaurant for
$900,000. The Partnership is in the process of terminating
the Lease to accommodate the sale and it is improbable that
any of the unpaid rent will be collected. In the third
quarter of 2001, a charge to operations for real estate
impairment of $295,354 was recognized, which is the
difference between the book value at September 30, 2001 of
$1,145,354 and the estimated net sales proceeds of $850,000.
The charge was recorded against the cost of the building and
equipment.
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(5) 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, 2001 and 2000, the
Partnership recognized rental income of $1,371,592 and
$1,292,159, respectively. During the same periods, the
Partnership earned investment income of $61,048 and $95,510,
respectively. In 2001, rental income increased as a result of
additional rent received from three property acquisitions in 2000
and 2001, and rent increases on four properties. These increases
in rental income were partially offset by a decrease in rental
income as a result of the loss of rent from the Denny's
restaurant and the property sales discussed below.
In May, 2001, Huntington Restaurants Group, Inc. (HRG),
the lessee of the Denny's Restaurant in Covington, Louisiana
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. Through September 30, 2001, HRG
owed $50,812 for past due rent, which has not been accrued. In
October, 2001, the Partnership received an offer to sell the
restaurant for $900,000. The Partnership is in the process of
terminating the Lease to accommodate the sale and it is
improbable that any of the unpaid rent will be collected. In the
third quarter of 2001, a charge to operations for real estate
impairment of $295,354 was recognized, which is the difference
between the book value at September 30, 2001 of $1,145,354 and
the estimated net sales proceeds of $850,000. The charge was
recorded against the cost of the building and equipment.
During the nine months ended September 30, 2001 and 2000,
the Partnership paid Partnership administration expenses to
affiliated parties of $220,151 and $201,130, 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 $24,379 and $62,395, 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 2001, when compared to 2000, is mainly the
result of expenses incurred in 2000 related to the Media Play
store.
As of September 30, 2001, the Partnership's annualized
cash distribution rate was 6.75%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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.
Liquidity and Capital Resources
During the nine months ended September 30, 2001, the
Partnership's cash balances increased $1,662,157 mainly as a
result of cash generated from the sale of property, which was
partially offset by cash used to purchase property. Net cash
provided by operating activities increased from $1,164,149 in
2000 to $1,205,555 in 2001 as a result of an increase in income
and a decrease in Partnership administration expenses in 2001,
which were partially offset by net timing differences in the
collection of payments from the lessees and the payment of
expenses.
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, 2001 and 2000, the Partnership generated cash flow
from the sale of real estate of $3,152,532 and $332,662,
respectively. During the same periods, the Partnership expended
$2,174,765 and $1,335,340, respectively, to invest in real
properties (inclusive of acquisition expenses) as the Partnership
reinvested cash generated from property sales.
On August 2, 2000, the Media Play store was sold to an
unrelated third party for $2,500,000. The sale agreement
required $500,000 in cash and a $2,000,000 Contract for Deed,
which bore interest at 9%. On January 16, 2001, the Partnership
received its share of the outstanding principal and accrued
interest on the Note. The Partnership's share of the net sale
proceeds was $820,651, which resulted in a net gain of $129,813.
At the time of sale, the cost and related accumulated
depreciation was $833,860 and $143,022.
Through September 30, 2001, the Partnership sold its
interest in the Champps Americana restaurant in Columbus, Ohio,
in eleven separate transactions, to unrelated third parties. The
Partnership received total net sale proceeds of $2,295,174, which
resulted in a total net gain of $631,607. The total cost and
related accumulated depreciation of the interests sold was
$1,808,880 and $145,313, respectively. For the nine months ended
September 30, 2001, the net gain was $289,679.
Through September 30, 2001, the Partnership sold 41.4388%
of the Champps Americana restaurant in Schaumburg, Illinois, in
ten separate transactions, to unrelated third parties. The
Partnership received total net sale proceeds of $2,419,052, which
resulted in a total net gain of $699,827. The total cost and
related accumulated depreciation of the interests sold was
$1,885,182 and $165,957, respectively. For the nine months ended
September 30, 2001 and 2000, the net gain was $605,992 and
$51,515, respectively.
Subsequent to September 30, 2001, the Partnership sold an
additional 7.239% of the Champps Americana restaurant in
Schaumburg, Illinois, in two separate transactions, to unrelated
third parties. The Partnership received net sale proceeds of
approximately $415,000, which resulted in a net gain of
approximately $117,000.
On September 18, 2001, the Partnership sold 3.5565% of the
Champps Americana restaurant in Livonia, Michigan to an unrelated
third party. The Partnership received net sale proceeds of
$180,748, which resulted in a net gain of $49,378. The cost and
related accumulated depreciation of the interest sold was
$147,597 and $16,227, respectively.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Subsequent to September 30, 2001, the Partnership sold an
additional 12.3037% of the Champps Americana restaurant in
Livonia, Michigan, in three separate transactions, to unrelated
third parties. The Partnership received net sale proceeds of
approximately $650,000, which resulted in a net gain of
approximately $196,000.
During the first nine months of 2000, the Partnership
distributed $55,577 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 $2.34 per Limited
Partnership Unit. The remaining net sale proceeds will either be
reinvested in additional property or distributed to the Partners
in the future.
On March 8, 2000, the Partnership purchased a parcel of
land in Fort Wayne, Indiana for $549,000. The land is leased to
Tumbleweed, Inc. (TWI) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $48,038.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership advanced funds to TWI for the construction of a
Tumbleweed restaurant on the site. Initially, the Partnership
charged interest on the advances at a rate of 8.75%. Effective
July 5, 2000, the interest rate was increased to 9.875%. On
September 11, 2000, after the development was completed, the
Lease Agreement was amended to require annual rental payments of
$132,621. Total acquisition costs, including the cost of the
land, were $1,334,315.
On March 30, 2001, the Partnership purchased a Children's
World daycare center in Mundelein, Illinois for $1,618,824. The
property is leased to ARAMARK Educational Resources, Inc. under a
Lease Agreement with a primary term of 15 years and annual rental
payments of $153,710.
On March 8, 2001, the Partnership purchased a 25% interest
in a parcel of land in Austin, Texas for $283,000. The land is
leased to Kona Restaurant Group, Inc. (KRG) under a Lease
Agreement with a primary term of 17 years and annual rental
payments of $29,715. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to KRG for
the construction of a Johnny Carino's restaurant on the site.
The Partnership charged interest on the advances at a rate of
10.5%. On September 26, 2001, after the development was
completed, the Lease Agreement was amended to require annual
rental payments of $60,191. The Partnership's share of the total
acquisition costs, including the cost of the land, was $571,335.
The remaining interests in the property are owned by AEI Real
Estate Fund 85-A Limited Partnership, AEI Net Lease Income &
Growth Fund XX Limited Partnership, and AEI Income & Growth Fund
23 LLC, 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 in the fourth quarter of each
year. Effective April 1, 2001, the Partnership's distribution
rate was increased from 6.5% to 6.75%. As a result,
distributions were higher in 2001, when compared to 2000.
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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On October 1, 2001, eight Limited Partners redeemed a
total of 86.83 Partnership Units for $68,050 in accordance with
the Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, twenty-five
Limited Partners redeemed a total of 677.82 Partnership Units for
$579,879. 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.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing 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 investors;
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.
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.
PART II - OTHER INFORMATION
(Continued)
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 July 30, 2001 between the
Partnership and the Hoang/Do Living Trust relating to the
property at 955 Golf Road, Schaumburg, Illinois.
10.2 Purchase Agreement dated August 14, 2001 between the
Partnership and Munkberg Farms Inc. relating to the property
at 955 Golf Road, Schaumburg, Illinois.
10.3 Purchase Agreement, as amended, dated September 11,
2001 between the Partnership and The Elizabeth C. Hsu Living
Trust relating to the property at 19470 Haggerty Road,
Livonia, Michigan.
10.4 Purchase Agreement dated September 14, 2001 between the
Partnership and Barbara Bou-Sliman relating to the property
at 955 Golf Road, Schaumburg, Illinois.
10.5 Purchase Agreement dated September 14, 2001 between the
Partnership and Barbara Bou-Sliman Trust relating to the
property at 19470 Haggerty Road, Livonia, Michigan.
10.6 Property Co-Tenancy Ownership Agreement, as amended,
dated September 18, 2001 between the Partnership and The
Elizabeth C. Hsu Living Trust relating to the property at
19470 Haggerty Road, Livonia, Michigan.
10.7 Purchase Agreement, as amended, dated September 21,
2001 between the Partnership and The Sherrill L. Hossom
Family Trust relating to the property at 19470 Haggerty
Road, Livonia, Michigan.
10.8 Purchase Agreement, as amended, dated September 24,
2001 between the Partnership and The Linda L. Landes Family
Trust relating to the property at 19470 Haggerty Road,
Livonia, Michigan.
10.9 Purchase Agreement dated September 25, 2001 between the
Partnership and Kenneth Robert Mayne Properties, L.C.
relating to the property at 955 Golf Road, Schaumburg,
Illinois.
10.10 First Amendment to Net Lease Agreement dated
September 26, 2001 between the Partnership, AEI Real Estate
Fund 85-A Limited Partnership, AEI Income & Growth Fund XX
Limited Partnership, AEI Income & Growth Fund 23 LLC and
Kona Restaurant Group, Inc. relating to the property at 5601
Brodie Lane, Austin, Texas.
10.11 Property Co-Tenancy Ownership Agreement dated
October 1, 2001 between the Partnership and Barbara Bou-
Sliman relating to the property at 19470 Haggerty Road,
Livonia, Michigan.
10.12 Property Co-Tenancy Ownership Agreement, as
amended, October 1, 2001 between the Partnership and The
Linda L. Landes Family Trust relating to the property at
19470 Haggerty Road, Livonia, Michigan.
10.13 Property Co-Tenancy Ownership Agreement, as
amended, October 1, 2001 between the Partnership and The
Sherrill L. Hossom Family Trust relating to the property at
19470 Haggerty Road, Livonia, Michigan.
10.14 Purchase Agreement dated October 5, 2001 between
the Partnership and The Patricia A. Struif Trust relating to
the property at 955 Golf Road, Schaumburg, Illinois.
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: October 26, 2001 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)