0001073363-01-500017.txt : 20011112
0001073363-01-500017.hdr.sgml : 20011112
ACCESSION NUMBER: 0001073363-01-500017
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011105
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AEI INCOME & GROWTH FUND XXII LTD PARTNERSHIP
CENTRAL INDEX KEY: 0001023458
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 411848181
STATE OF INCORPORATION: MN
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-24003
FILM NUMBER: 1774930
BUSINESS ADDRESS:
STREET 1: 1300 MINNESOTA WORLD TRADE CENTER
STREET 2: 30 EAST SEVENTH ST
CITY: ST PAUL
STATE: MN
ZIP: 55101
BUSINESS PHONE: 6512277333
MAIL ADDRESS:
STREET 1: 1300 MINNESOTA WORLD TRADE CENTER
STREET 2: 30 SEVENTH ST EAST
CITY: ST PAUL
STATE: MN
ZIP: 55101
10QSB
1
q223-01.txt
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: 24003
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1848181
(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 XXII 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 XXII LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(Unaudited)
ASSETS
2001 2000
CURRENT ASSETS:
Cash and Cash Equivalents $ 685,606 $ 572,279
Receivables 0 28,040
----------- -----------
Total Current Assets 685,606 600,319
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 4,956,627 5,010,783
Buildings and Equipment 8,055,564 7,491,306
Construction in Progress 0 616,286
Accumulated Depreciation (698,986) (477,061)
----------- -----------
Net Investments in Real Estate 12,313,205 12,641,314
----------- -----------
Total Assets $12,998,811 $13,241,633
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 8,784 $ 21,606
Distributions Payable 297,392 300,145
Unearned Rent 7,771 0
----------- -----------
Total Current Liabilities 313,947 321,751
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (14,245) (40,033)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized; 16,917 Units issued;
16,596 and 16,657 Units outstanding in
2001 and 2000, respectively 12,699,109 12,959,915
----------- -----------
Total Partners' Capital 12,684,864 12,919,882
----------- -----------
Total Liabilities and Partners' Capital $12,998,811 $13,241,633
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII 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 $ 311,205 $ 277,210 $ 897,647 $ 848,902
Investment Income 4,007 27,904 73,509 59,672
--------- --------- --------- ---------
Total Income 315,212 305,114 971,156 908,574
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 55,937 45,252 149,648 123,290
Partnership Administration
and Property Management -
Unrelated Parties 6,956 4,349 29,160 21,568
Depreciation 86,547 75,313 240,994 239,278
--------- --------- --------- ---------
Total Expenses 149,440 124,914 419,802 384,136
--------- --------- --------- ---------
OPERATING INCOME 165,772 180,200 551,354 524,438
GAIN ON SALE OF REAL ESTATE 71,739 29,748 172,545 357,720
--------- --------- --------- ---------
NET INCOME $ 237,511 $ 209,948 $ 723,899 $ 882,158
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 21,125 $ 6,299 $ 50,717 $ 26,465
Limited Partners 216,386 203,649 673,182 855,693
--------- --------- --------- ---------
$ 237,511 $ 209,948 $ 723,899 $ 882,158
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(16,596, 16,657, 16,616 and
16,755 weighted average
Units outstanding for the
periods, respectively) $ 13.04 $ 12.23 $ 40.51 $ 51.07
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 723,899 $ 882,158
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 240,994 239,278
Gain on Sale of Real Estate (172,545) (357,720)
(Increase) Decrease in Receivables 28,040 (23,152)
Increase (Decrease) in Payable
to AEI Fund Management, Inc. (12,822) 15,011
Increase in Unearned Rent 7,771 35,626
----------- -----------
Total Adjustments 91,438 (90,957)
----------- -----------
Net Cash Provided By
Operating Activities 815,337 791,201
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (666,803) (1,411,006)
Proceeds from Sale of Real Estate 926,463 2,476,996
----------- -----------
Net Cash Provided By
Investing Activities 259,660 1,065,990
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable (2,753) 145,825
Distributions to Partners (911,256) (864,907)
Redemption Payments (47,661) (117,393)
----------- -----------
Net Cash Used For
Financing Activities (961,670) (836,475)
----------- -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 113,327 1,020,716
CASH AND CASH EQUIVALENTS, beginning of period 572,279 247,401
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 685,606 $ 1,268,117
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII 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 $(38,746) $13,176,233 $13,137,487 16,808.18
Distributions (20,706) (844,201) (864,907)
Redemption Payments (3,522) (113,871) (117,393) (150.86)
Net Income 26,465 855,693 882,158
--------- ----------- ----------- ----------
BALANCE, September 30, 2000 $(36,509) $13,073,854 $13,037,345 16,657.32
========= =========== =========== ==========
BALANCE, December 31, 2000 $(40,033) $12,959,915 $12,919,882 16,657.32
Distributions (23,499) (887,757) (911,256)
Redemption Payments (1,430) (46,231) (47,661) (61.67)
Net Income 50,717 673,182 723,899
--------- ----------- ----------- ----------
BALANCE, September 30, 2001 $(14,245) $12,699,109 $12,684,864 16,595.65
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
AEI INCOME & GROWTH FUND XXII 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 XXII 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 May 1, 1997 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The offering terminated January
9, 1999 when the extended offering period expired. The
Partnership received subscriptions for 16,917.222 Limited
Partnership Units ($16,917,222).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$16,917,222 and $1,000, respectively. During operations,
any Net Cash Flow, as defined, which the General Partners
determine to distribute will be distributed 97% to the
Limited Partners and 3% to the General Partners.
Distributions to Limited Partners will be made pro rata by
Units.
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 9%
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.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(2) Organization - (Continued)
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 9% 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) Investments in Real Estate -
On September 28, 2000, the Partnership purchased a 40%
interest in a Children's World daycare center in Golden,
Colorado for $671,846. 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
$66,344. The remaining interests in the property were
purchased by AEI Private Net Lease Millennium Fund Limited
Partnership and AEI Private Net Lease Fund 1998 Limited
Partnership, affiliates of the Partnership.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(3) Investments in Real Estate - (Continued)
On May 8, 2000, the Partnership purchased a 48% interest in
a parcel of land in Austin, Texas for $652,800. 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
$55,488. Effective October 4, 2000, the annual rent was
increased to $63,648. 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 development
was completed, the Lease Agreement was amended to require
annual rental payments of $152,662. The Partnership's share
of the total acquisition costs, including the cost of the
land, was $1,544,215. The remaining interests in the
property are owned by AEI Real Estate Fund XV Limited
Partnership, AEI Real Estate Fund XVII Limited Partnership,
and AEI Net Lease Income & Growth Fund XIX Limited
Partnership, affiliates of the Partnership.
On May 14, 2001, the Partnership purchased a 25% interest in
a Children's World daycare center in Plainfield, Illinois
for $368,176. 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 $35,269. The
remaining interests in the property are owned by AEI Real
Estate Fund 85-A Limited Partnership and AEI Private Net
Lease Millennium Fund Limited Partnership, affiliates of the
Partnership.
Through September 30, 2001, the Partnership sold 76.0645% of
the Children's World in DePere, Wisconsin, in five separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $1,023,633, which
resulted in a total net gain of $146,096. The total cost
and related accumulated depreciation of the interests sold
was $903,229 and $25,692, respectively. For the nine months
ended September 30, 2001 and 2000, the net gain was $18,543
and $127,553, respectively.
During the nine months ended September 30, 2000, the
Partnership sold its interest in the Marie Callender's
restaurant, in five separate transactions, to unrelated
third parties. The Partnership received total net sale
proceeds of $1,035,799, which resulted in a total net gain
of $108,736. The total cost and related accumulated
depreciation of the interests sold was $937,897 and $10,834,
respectively.
During the nine months ended September 30, 2000, the
Partnership sold 35.5084% of the Hollywood Video store in
Saraland, Alabama, in three separate transactions, to
unrelated third parties. The Partnership received total net
sale proceeds of $595,850, which resulted in a total net
gain of $121,431. The total cost and related accumulated
depreciation of the interests sold was $489,267 and $14,848,
respectively.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
(Continued)
(3) Investments in Real Estate - (Continued)
During the nine months ended September 30, 2001, the
Partnership sold 36.032% of the Children's World in Golden,
Colorado, in four separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds
of $748,177, which resulted in a total net gain of $154,002.
The total cost and related accumulated depreciation of the
interests sold was $605,199 and $11,024, respectively.
During the first nine months of 2001 and 2000, the
Partnership distributed $191,919 and $262,069 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 $11.43 and $15.54 per Limited
Partnership Unit, respectively. The remaining net sale
proceeds will either be reinvested in additional property or
distributed to the Partners in the future.
(4) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 2001 and 2000, the
Partnership recognized rental income of $897,647 and $848,902,
respectively. During the same periods, the Partnership earned
investment income of $73,509 and $59,672, 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 three properties. These increases in rental income
were partially offset by a decrease in rental income due to the
property sales discussed below. In 2001, additional investment
income was earned on the net proceeds from property sales.
During the nine months ended September 30, 2001 and 2000,
the Partnership paid Partnership administration expenses to
affiliated parties of $149,648 and $123,290, 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 $29,160 and $21,568, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs.
As of September 30, 2001, the Partnership's annualized
cash distribution rate was 7.1%, based on the Adjusted Capital
Contribution. Pursuant to the Partnership Agreement,
distributions of Net Cash Flow were allocated 97% to the Limited
Partners and 3% 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 $113,327 as a result of
cash generated from the sale of property, which was partially
offset by cash used to purchase property and the Partnership
distributed more cash to the Partners than it generated from
operating activities. Net cash provided by operating activities
increased from $791,201 in 2000 to $815,337 in 2001 as a result
of an increase in income in 2001, which was partially offset by
an increase in Partnership administration expenses in 2001 and
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 $926,463 and $2,476,996,
respectively. During the same periods, the Partnership expended
$666,803 and $1,411,006, respectively, to invest in real
properties (inclusive of acquisition expenses) as the Partnership
reinvested cash generated from property sales
On September 28, 2000, the Partnership purchased a 40%
interest in a Children's World daycare center in Golden, Colorado
for $671,846. 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 $66,344. The remaining
interests in the property were purchased by AEI Private Net Lease
Millennium Fund Limited Partnership and AEI Private Net Lease
Fund 1998 Limited Partnership, affiliates of the Partnership.
On May 8, 2000, the Partnership purchased a 48% interest
in a parcel of land in Austin, Texas for $652,800. 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 $55,488.
Effective October 4, 2000, the annual rent was increased to
$63,648. 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 development was completed, the Lease Agreement was amended
to require annual rental payments of $152,662. The Partnership's
share of the total acquisition costs, including the cost of the
land, was $1,544,215. The remaining interests in the property
are owned by AEI Real Estate Fund XV Limited Partnership, AEI
Real Estate Fund XVII Limited Partnership, and AEI Net Lease
Income & Growth Fund XIX Limited Partnership, affiliates of the
Partnership.
On May 14, 2001, the Partnership purchased a 25% interest
in a Children's World daycare center in Plainfield, Illinois for
$368,176. 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 $35,269. The remaining
interests in the property are owned by AEI Real Estate Fund 85-A
Limited Partnership and AEI Private Net Lease Millennium Fund
Limited Partnership, affiliates of the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through September 30, 2001, the Partnership sold 76.0645%
of the Children's World in DePere, Wisconsin, in five separate
transactions, to unrelated third parties. The Partnership
received total net sale proceeds of $1,023,633, which resulted in
a total net gain of $146,096. The total cost and related
accumulated depreciation of the interests sold was $903,229 and
$25,692, respectively. For the nine months ended September 30,
2001 and 2000, the net gain was $18,543 and $127,553,
respectively.
During the nine months ended September 30, 2000, the
Partnership sold its interest in the Marie Callender's
restaurant, in five separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds of
$1,035,799, which resulted in a total net gain of $108,736. The
total cost and related accumulated depreciation of the interests
sold was $937,897 and $10,834, respectively.
During the nine months ended September 30, 2000, the
Partnership sold 35.5084% of the Hollywood Video store in
Saraland, Alabama, in three separate transactions, to unrelated
third parties. The Partnership received total net sale proceeds
of $595,850, which resulted in a total net gain of $121,431. The
total cost and related accumulated depreciation of the interests
sold was $489,267 and $14,848, respectively.
During the nine months ended September 30, 2001, the
Partnership sold 36.032% of the Children's World in Golden,
Colorado, in four separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds of
$748,177, which resulted in a total net gain of $154,002. The
total cost and related accumulated depreciation of the interests
sold was $605,199 and $11,024, respectively.
During the first nine months of 2001 and 2000, the
Partnership distributed $191,919 and $262,069 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 $11.43 and $15.54 per Limited Partnership Unit,
respectively. The remaining net sale proceeds will either be
reinvested in additional property or distributed to the Partners
in the future.
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 semi-annual 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 April 1, 2001, four Limited Partners redeemed a total
of 61.67 Partnership Units for $46,231 in accordance with the
Partnership Agreement. On October 1, 2001, two Limited Partners
redeemed a total of 39.02 Partnership Units for $29,272. The
Partnership acquired these Units using Net Cash Flow from
operations. In prior years, eleven Limited Partners redeemed a
total of 259.90 Partnership Units for $201,102. The redemptions
increase the remaining Limited Partner's ownership interest in
the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II - OTHER INFORMATION
(Continued)
ITEM 5.OTHER INFORMATION
None.
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Purchase Agreement dated August 14, 2001 between the
Partnership and Munkberg Farms Inc. relating to the property
at 18601 Eagle Ridge, Golden, Colorado.
10.2 Property Co-Tenancy Ownership Agreement dated August
17, 2001 between the Partnership and Munkberg Farms Inc.
relating to the property at 18601 Eagle Ridge, Golden,
Colorado.
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 23, 2001 AEI Income & Growth Fund XXII
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)
EX-10.1
4
munkpacw.txt
PURCHASE AGREEMENT
Children's World Learning Centers
Golden, Colorado
This AGREEMENT, entered into effective as of the 14th of August,
2001.
l. PARTIES. Seller is AEI Income & Growth Fund XXII Limited
Partnership which owns an undivided 14.5191% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Entire Property"). Buyer is Munkberg
Farms, Inc., a Minnesota corporation ("Buyer"). Seller wishes to
sell and Buyer wishes to buy a portion as Tenant in Common of
Seller's interest in the Entire Property.
2. PROPERTY. The Property to be sold to Buyer in this transaction
consists of an undivided 10.5511 percentage interest
(hereinafter, simply the "Property") as Tenant in Common in the
Entire Property.
3. PURCHASE PRICE . The purchase price for this percentage
interest in the Entire Property is $250,000 all cash.
4. TERMS. The purchase price for the Property will be paid by
Buyer as follows:
(a) Buyer will deposit the purchase price, $250,000 into
escrow in sufficient time to allow escrow to close on the
closing date.
5. CLOSING DATE. Escrow shall close on or before August 24,
2001.
6. DUE DILIGENCE. Buyer will have until the expiration of the
fifth business day (The "Review Period") after delivery of each
of following items, to be supplied by Seller, to conduct all of
its inspections and due diligence and satisfy itself regarding
each item, the Property, and this transaction. Buyer agrees to
indemnify and hold Seller harmless for any loss or damage to the
Entire Property or persons caused by Buyer or its agents arising
out of such physical inspections of the Entire Property.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) A copy of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) A copy of an "as built" survey of the Entire Property
done concurrent with Seller's acquisition of the Property.
(d) Lease (as further set forth in paragraph 11(a) below) of
the Entire Property showing occupancy date, lease expiration
date, rent, and Guarantys, if any, accompanied by such
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
tenant financial statements as may have been provided most
recently to Seller by the Tenant and/or Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) copies of the Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and AEI Income & Growth Fund XXII
Limited Partnership and dated on the escrow closing date be
delivered to the Seller on the closing date.
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
the Review Period. Such notice shall be deemed effective only
upon receipt by Seller.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under the first paragraph of section 6 of this
agreement (which will survive), Buyer (after execution of such
documents reasonably requested by Seller to evidence the
termination hereof) will have absolutely no rights, claims or
interest of any type in connection with the Property or this
transaction, regardless of any alleged conduct by Seller or
anyone else.
Unless this Agreement is canceled by Buyer pursuant to the
terms hereof, if Buyer fails to pay the Purchase Price, Buyer
irrevocably will be deemed to be in default under this Agreement.
Seller may, at its option, declare this Agreement null and void,
in which event Buyer will be deemed to have canceled this
Agreement and relinquish all rights in and to the Property or
Seller may exercise its rights under Section 14 hereof. If this
Agreement is not canceled and the Purchase Price is paid when
required, all of Buyer's conditions and contingencies will be
deemed satisfied.
7. ESCROW. Escrow shall be opened by Seller upon acceptance of
this Agreement by both parties. The escrow holder will be a
nationally-recognized escrow company selected by Seller. A copy
of this Agreement will be delivered to the escrow holder and will
serve as escrow instructions together with the escrow holder's
standard instructions and any additional instructions required by
the escrow holder to clarify its rights and duties (and the
parties agree to sign these additional instructions). If there is
any conflict between these other instructions and this Agreement,
this Agreement will control.
8. TITLE. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; the rights of parties in
possession pursuant to the lease defined in paragraph 11 below;
all matters of public record; and other items disclosed to Buyer
during the Review Period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) this Agreement shall be null and void and of
no further force and effect. Seller has no obligation to spend
any funds or make any effort to satisfy Buyer's objections, if
any.
Pending satisfaction of Buyer's objections, the payments
hereunder required shall be postponed, but upon satisfaction of
Buyer's objections and within ten (10) days after written notice
of satisfaction of Buyer's objections to the Buyer, the parties
shall perform this Agreement according to its terms.
9. CLOSING COSTS. Seller will pay one-half of escrow fees, the
cost of the title commitment and any brokerage commissions
payable. The Buyer will pay the cost of issuing a Standard
Owners Title Insurance Policy in the full amount of the purchase
price, if Buyer shall decide to purchase the same. Buyer will
pay all recording fees, transfer taxes and clerk's fees imposed
upon the recording of the deed, one-half of the escrow fees, and
the cost of an update to the Survey in Seller's possession (if an
update is required by Buyer.) Each party will pay its own
attorney's fees and costs to document and close this transaction.
10. REAL ESTATE TAXES, SPECIAL ASSESSMENTS AND PRORATIONS.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid real estate taxes and unpaid
levied and pending special assessments existing on the date
of Closing shall be the responsibility of Buyer and Seller
in proportion to their respective Tenant in Common
interests, pro-rated, however, to the date of closing for
the period prior to closing, which shall be the
responsibility of Seller if Tenant shall not pay the same.
Seller and Buyer shall likewise pay all taxes due and
payable in the year after Closing and any unpaid
installments of special assessments payable therewith and
thereafter, if such unpaid levied and pending special
assessments and real estate taxes are not paid by any tenant
of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate share
of all operating expenses of the Entire Property incurred on
and after the date of closing.
11. SELLER'S REPRESENTATION AND AGREEMENTS.
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
(a) Seller represents and warrants as of this date that:
(i) Except for the Lease Agreement in existence between AEI
Income & Growth Fund XXII Limited Partnership, AEI Private Net
Lease Millennium Fund Limited Partnership, and AEI Private Net
Lease Fund 1998 Limited Partnership (as "Landlord") and
ARAMARK Educational Resources, Inc. dba Children's World Learning
Centers, Inc. ("Tenant"), dated September 28, 2000, Seller is not
aware of any leases of the Property.
(ii) It is not aware of any pending litigation or condemnation
proceedings against the Property or Seller's interest in the
Property.
(iii) Except as previously disclosed to Buyer and as
permitted in paragraph (b) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts that would materially affect the Property and be
binding on Buyer after the Closing Date without Buyer's
prior consent, which will not be unreasonably withheld.
However, Buyer acknowledges that Seller retains the right
both prior to and after the Closing Date to freely transfer
all or a portion of Seller's remaining undivided interest in
the Entire Property, provided such sale shall not encumber
the Property being purchased by Buyer in violation of the
terms hereof or the contemplated Co-Tenancy Agreement.
12. DISCLOSURES.
(a) Seller has not received any notice of any material,
physical, or mechanical defects of the Entire Property,
including without limitation, the plumbing, heating, air
conditioning, ventilating, electrical system. To the best of
Seller's knowledge without inquiry, all such items are in
good operating condition and repair and in compliance with
all applicable governmental, zoning, and land use laws,
ordinances, regulations and requirements. If Seller shall
receive any notice to the contrary prior to Closing, Seller
will inform Buyer prior to Closing.
(b) Seller has not received any notice that the use and
operation of the Entire Property is not in full compliance
with applicable building codes, safety, fire, zoning, and
land use laws, and other applicable local, state and federal
laws, ordinances, regulations and requirements. If Seller
shall receive any notice to the contrary prior to Closing,
Seller will inform Buyer prior to Closing.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent the Tenant from using and operating the Entire
Property after the Closing in the manner in which the Entire
Property has been used and operated prior to the date of
this Agreement. If Seller shall receive any notice to the
contrary prior to Closing, Seller will inform Buyer prior to
Closing.
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
(d) Seller has not received any notice that the Entire
Property is in violation of any federal, state or local law,
ordinance, or regulations relating to industrial hygiene or
the environmental conditions on, under, or about the Entire
Property, including, but not limited to, soil, and
groundwater conditions. To the best of Seller's knowledge,
there is no proceeding or inquiry by any governmental
authority with respect to the presence of Hazardous
Materials on the Entire Property or the migration of
Hazardous Materials from or to other property. Buyer agrees
that Seller will have no liability of any type to Buyer or
Buyer's successors, assigns, or affiliates in connection
with any Hazardous Materials on or in connection with the
Entire Property either before or after the Closing Date,
except such Hazardous Materials on or in connection with the
Entire Property arising out of Seller's gross negligence or
intentional misconduct. If Seller shall receive any notice
to the contrary prior to Closing, Seller will inform Buyer
prior to Closing.
(e) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY
IN ITS THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER
HAS NO OBLIGATIONS TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS
THEREON OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY,
EXCEPT AS EXPRESSLY PROVIDED HEREIN.
(f) BUYER ACKNOWLEDGES THAT, HAVING BEEN GIVEN THE
OPPORTUNITY TO INSPECT THE ENTIRE PROPERTY AND SUCH
FINANCIAL INFORMATION ON THE LESSEE AND GUARANTORS OF THE
LEASE AS BUYER OR ITS ADVISORS SHALL REQUEST, IF IN SELLER'S
POSSESSION, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION
OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED BY
SELLER OR TO BE PROVIDED EXCEPT AS SET FORTH HEREIN. BUYER
FURTHER ACKNOWLEDGES THAT THE INFORMATION PROVIDED AND TO BE
PROVIDED BY SELLER WITH RESPECT TO THE PROPERTY, THE ENTIRE
PROPERTY AND TO THE LESSEE AND GUARANTORS OF LEASE WAS
OBTAINED FROM A VARIETY OF SOURCES AND SELLER NEITHER (A)
HAS MADE INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH
INFORMATION, OR (B) MAKES ANY REPRESENTATIONS AS TO THE
ACCURACY OR COMPLETENESS OF SUCH INFORMATION EXCEPT AS
HEREIN SET FORTH. THE SALE OF THE PROPERTY AS PROVIDED FOR
HEREIN IS MADE ON AN "AS IS" BASIS, AND BUYER EXPRESSLY
ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENTS OF
SELLER HEREIN, EXCEPT AS OTHERWISE SPECIFIED HEREIN IN
PARAGRAPH 11(A) AND (B) ABOVE AND THIS PARAGRAPH 12, SELLER
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR
ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTY OF CONDITION, HABITABILITY, TENANTABILITY,
SUITABILITY FOR COMMERCIAL PURPOSES, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE, IN RESPECT OF THE
PROPERTY.
The provisions (d) - (f) above shall survive Closing.
13. CLOSING.
(a) Before the closing date, Seller will deposit into
escrow an executed special warranty deed warranting title
against lawful claims by, through, or under a conveyance
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
from Seller, but not further or otherwise, conveying
insurable title of the Property to Buyer, subject to the
exceptions contained in paragraph 8 above.
(b) On or before the closing date, Buyer will deposit into
escrow: the Purchase Price when required under Section 4;
any additional funds required of Buyer, (pursuant to this
agreement or any other agreement executed by Buyer) to close
escrow. Both parties will sign and deliver the Co-Tenancy
Agreement, and deliver to the escrow holder any other
documents reasonably required by the escrow holder to close
escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. DEFAULTS. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. In addition, Seller shall retain all remedies available
to Seller at law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has deposited the Purchase Price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. BUYER'S REPRESENTATIONS AND WARRANTIES.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. DAMAGES, DESTRUCTION AND EMINENT DOMAIN.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any ten-day period provided for above in this Subparagraph
16a for Buyer to elect to terminate this Agreement has
expired or Buyer has, by written notice to Seller, waived
Buyer's right to terminate this Agreement. If Buyer elects
to proceed and to consummate the purchase despite said
damage or destruction, there shall be no reduction in or
abatement of the purchase price, and Seller shall assign to
Buyer the Seller's right, title, and interest in and to all
insurance proceeds (pro-rata in relation to the Entire
Property) resulting from said damage or destruction to the
extent that the same are payable with respect to damage to
the Property, subject to rights of any Tenant of the Entire
Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, Buyer agrees to
execute such documents reasonably requested by Seller to evidence
the termination hereof).
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
17. BUYER'S 1031 TAX FREE EXCHANGE.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to Starker Services, Inc. who
will act as Accommodator to perfect the 1031 exchange by
preparing an agreement of exchange of Real Property whereby
Starker Services, Inc. will be an independent third party
purchasing the ownership interest in subject property from Seller
and selling the ownership interest in subject property to Buyer
under the same terms and conditions as documented in this
Purchase Agreement. Buyer asks the Seller, and Seller agrees to
cooperate in the perfection of such an exchange if at no
additional cost or expense to Seller or delay in time. Buyer
hereby indemnifies and holds Seller harmless from any claims
and/or actions resulting from said exchange. Pursuant to the
direction of Starker Services, Inc., Seller will deed the
property to Buyer.
18. CANCELLATION
If any party elects to cancel this Contract because of any
breach by another party or because escrow fails to close by
the agreed date, the party electing to cancel shall deliver
to escrow agent a notice containing the address of the party
in breach and stating that this Contract shall be cancelled
unless the breach is cured within 13 days following the
delivery of the notice to the escrow agent. Within three
days after receipt of such notice, the escrow agent shall
send it by United States Mail to the party in breach at the
address contained in the Notice and no further notice shall
be required. If the breach is not cured within the 13 days
following the delivery of the notice to the escrow agent,
this Contract shall be cancelled.
19. MISCELLANEOUS.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or understandings.
Exhibits attached to this Agreement are incorporated into
this Agreement.
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
(b) If this escrow has not closed by August 24, 2001,
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
AEI Income & Growth Fund XXII Limited Partnership
1300 Minnesota World Trade Center
30 East Seventh Street
St. Paul, MN 55101-4901
If to Buyer:
Munkberg Farms, Inc., a Minnesota corporation
John Munkberg, President
3000 325th Ave. NE
Cambridge, MN 55008
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller. Seller has five (5) business days from
receipt within which to accept this offer.
This Agreement shall be governed by, and interpreted in
accordance with, the laws of the state of Colorado.
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: Munkberg Farms, Inc., a Minnesota corporation
By: /s/ John Munkberg
John Munkberg, its President
WITNESS:
/s/ Lynn C Kelley
Lynn C Kelley
(Print Name)
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
SELLER: AEI Income & Growth Fund XXII Limited Partnership
By: AEI Fund Management XXI, Inc., its corporate
general partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Angela Terryll
Angela Terryll
(Print Name)
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
Buyer Initial: /s/ JM
Purchase Agreement for Children's World-Golden Colorado
EXHIBIT "A"
Lot 1A, Eagle Ridge Center Filing No. 3, Block 2, Lot 1,
Replat, County of Jefferson, State of Colorado.
EX-10.2
5
munkcocw.txt
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
Children's World Learning Center
Golden, Colorado
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 17th day of August, 2001, by and
between Munkberg Farms, Inc., a Minnesota corporation
(hereinafter called "Munkberg"), and AEI Income & Growth Fund
XXII Limited Partnership (hereinafter called "Co-Tenancy
Manager"), (Munkberg, Co-Tenancy Manager (and any other Owner in
Fee where the context so indicates) being hereinafter sometimes
collectively called "Co-Tenants" and referred to in the neuter
gender).
WITNESSETH:
WHEREAS, Fund XXII as the Co-Tenancy Manager presently owns an
undivided 3.9680% interest in and to, and AEI Private Net Lease
Fund 1998 Limited Partnership presently owns an undivided
27.6354% interest in and to, and AEI Private Net Lease Millennium
Fund Limited Partnership presently owns an undivided 18.0000%
interest in and to, and Munkberg Farms, Inc. presently owns an
undivided 10.5511% interest in and to, and Donald B. Wood and Sue
D. Wood, Trustees of the Wood Family Trust dated 3/15/93, as
amended 7/9/97 presently own an undivided 14.3646% interest in
and to, and Lynn Bushman and Camille Bushman, married as joint
tenants presently owns an undivided 4.5219% interest in and to,
and William C. Bashor presently owns an undivided 10.1743%
interest in and to, and James D. Rea and Mary M. Rea AKA Mary
Margaret Rea, married as joint tenants presently owns an
undivided 10.7847% interest in and to the land, situated in the
City of Golden, County of Jefferson, and State of Colorado,
(legally described upon Exhibit A attached hereto and hereby made
a part hereof) and in and to the improvements located thereon
(hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for: the orderly
monitoring of performance by the present tenant of the Premises
under the triple net lease agreement for the Premises; if
necessary, upon a vacancy in the Premises, the operation and
management of the Premises; the continued leasing of space within
the Premises; and, the distribution of income from and the pro-
rata sharing in expenses of the Premises by Co-Tenancy Manager in
connection with Munkberg's interest in the Premises.
NOW THEREFORE, in consideration of the purchase by Munkberg of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
1. Munkberg, subject to the limitations and power of
revocation herein expressed, hereby designates Co-Tenancy Manager
as its sole and exclusive agent and delegates to Co-Tenancy
Manager the sole right to monitor and enforce on behalf of
Munkberg the terms of the present lease of the Premises,
including but not limited to any amendments, consents to
assignment, sublet, releases or modifications to the lease or
guarantees of lease and to deal with any property agent or
tenant. Should the Premises become vacant, the operation and
management of the Premises is delegated by the Co-Tenants,
subject to revocation on an individual basis by an individual Co-
Tenant as otherwise set forth herein, to Co-Tenancy Manager, or
its designated agent, successors or assigns. Provided, however,
if Co-Tenancy Manager shall sell all of its interest in the
Premises, (or shall no longer be delegated the operation and
management of the Premises), the duties and obligations of the Co-
Tenancy Manager respecting management of the Premises as set
forth herein, including but not limited to its duties and
obligations respecting paragraphs 2, 3, and 4 hereof, shall be
exercised by the holder or holders of a majority of the undivided
co-tenancy interests in the Premises. Subject to the approval of
all Co-Tenants evidenced by their written consent, the Co-Tenancy
Manager shall negotiate and execute re-leases of the Premises
upon termination of the present lease of the Premises or
negotiate and execute easements affecting the Premises, may incur
ordinary and necessary operating expenses in connection with the
management of the Premises, and propose extraordinary or capital
expenditures to the Premises. Until Munkberg shall revoke such
authority as provided herein, Co-Tenancy Manager or Munkberg
itself may obligate Munkberg with respect to any ordinary and
necessary operating expense for the Premises. However, Co-
Tenancy Manager has no right to obtain a loan for which any other
Co-Tenant would be liable, nor may Co-Tenancy Manager finance or
refinance the Premises secured by any lien or any pledge of the
Premises. Munkberg agrees to execute and deliver to Co-Tenancy
Manager such written approval of documents approved by Munkberg,
such approval to take such form as may be reasonably required by
Co-Tenancy Manager to evidence its authority to sign approved
documents on behalf of Munkberg.
As further set forth in paragraph 2 hereof, Co-Tenancy Manager
agrees to require any lessee of the Premises to name Munkberg as
an insured or additional insured in all insurance policies
provided for, or contemplated by, any lease on the Premises. Co-
Tenancy Manager shall use its best efforts to obtain endorsements
adding Co-Tenants to said policies from lessee within 30 days of
commencement of this agreement. In any event, Co-Tenancy Manager
shall distribute any insurance proceeds it may receive, to the
extent consistent with any lease on the Premises, to the Co-
Tenants in proportion to their respective ownership of the
Premises.
2. Income and expenses shall be allocated among the Co-Tenants
in proportion to their respective share(s) of ownership. Shares
of net income shall be pro-rated for any partial calendar years
included within the term of this Agreement. Co-Tenancy Manager
may offset against, pay to itself and deduct from any payment due
to Munkberg under this Agreement, and may pay to itself the
amount of Munkberg's share of any reasonable expenses of the
Premises which are not paid by Munkberg to Co-Tenancy Manager or
its assigns, within ten (10) days after demand by Co-Tenancy
Manager. In the event there is insufficient operating income
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
from which to deduct Munkberg's unpaid share of operating
expenses, Co-Tenancy Manager may pursue any and all legal
remedies for collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
tenant under terms of any lease agreement of the Premises.
Munkberg has no requirement to, but has, nonetheless elected to
retain, and agrees to annually compensate, Co-Tenancy Manager in
the amount of $613 for the expenses, direct and indirect,
incurred by Co-Tenancy Manager in providing Munkberg with
quarterly accounting and distributions of Munkberg's share of net
income and for tracking, reporting and assessing the calculation
of Munkberg's share of operating expenses incurred from the
Premises. This invoice amount shall be pro-rated for partial
years and Munkberg authorizes Co-Tenancy Manager to deduct such
amount from Munkberg's share of revenue from the Premises.
Munkberg may terminate this agreement in this paragraph
respecting accounting and distributions at any time and attempt
to collect its share of rental income directly from the tenant;
Co-Tenancy Manager may terminate its obligation under this
paragraph upon 30 days written notice to Munkberg prior to the
end of each anniversary hereof, unless agreed in writing to the
contrary.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at Co-
Tenancy Manager 's principal office, and each Co-Tenant shall
have access to such books and may inspect and copy any part
thereof during normal business hours. Within ninety (90) days
after the end of each calendar year during the term hereof, Co-
Tenancy Manager shall prepare an accurate income statement for
the ownership of the Premises for said calendar year and shall
furnish copies of the same to all Co-Tenants. Quarterly, as its
share, Munkberg shall be entitled to receive 10.5511% of all
items of income and expense generated by the Premises. Upon
receipt of said accounting, if the payments received by each Co-
Tenant pursuant to this Paragraph 3 do not equal, in the
aggregate, the amounts which each are entitled to receive
proportional to its share of ownership with respect to said
calendar year pursuant to Paragraph 2 hereof, an appropriate
adjustment shall be made so that each Co-Tenant receives the
amount to which it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefore from Co-Tenancy Manager
shall, within fifteen (15) business days after receipt of notice,
make payment to Co-Tenancy Manager sufficient to pay said net
operating losses and to provide necessary operating capital for
the premises and to pay for said capital improvements, repairs
and/or replacements, all in proportion to their undivided
interests in and to the Premises. All Co-Tenants shall have the
right to review all contracts that will have a material effect on
the Premises. All Co-Tenants shall have the right to approve
budgets and major capital expenditures affecting the Premises.
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
While Co-Tenancy Manager shall own an interest in the Premises,
Co-Tenants agree to delegate the determination of such budgets
and need for capital expenditures to Co-Tenancy Manager subject
to the power of any Co-Tenant to revoke such delegation in
accordance with the provisions hereof.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant, and shall not create any lien upon
their individual interest if by operation of law such lien shall
by law extend to the interest of any other Co-Tenant. All Co-
Tenants reserve the right to escrow proceeds from a sale of their
interests in the Premises to obtain tax deferral by the purchase
of replacement property.
6. If any Co-Tenant shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This Co-Tenancy agreement shall continue in full force and
effect and shall bind and inure to the benefit of the Co-Tenant
and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns until September
28, 2015 or upon the sale of the entire Premises in accordance
with the terms hereof and proper disbursement of the proceeds
thereof, whichever shall first occur. Unless specifically
identified as a personal contract right or obligation herein,
this agreement shall run with any interest in the Property and
with the title thereto. Once any person, party or entity has
ceased to have an interest in fee in any portion of the Entire
Property, it shall not be bound by, subject to or benefit from
the terms hereof; but its heirs, executors, administrators,
personal representatives, successors or assigns, as the case may
be, shall be substituted for it hereunder. Any Co-Tenant may,
at any time effective upon written notice to Co-Tenancy Manager
revoke the designation of Co-Tenancy Manager as such Co-Tenant's
agent for the purposes as set forth herein. Any Co-Tenant
revoking such designation of Co-Tenancy Manager's agency shall
notify Co-Tenancy Manager in writing in accordance with the terms
hereof and such revocation shall be effective upon Co-Tenancy
Manager's receipt of such written revocation.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be given
to all known Co-Tenants and deemed given or served in accordance
with the provisions of this Agreement, if said notice or
elections addressed as follows;
If to Fund XXII or Fund 1998 or Millennium Fund:
AEI Income & Growth Fund XXII Limited Partnership,
AEI Private Net Lease Fund 1998 Limited Partnership,
AEI Private Net Lease Millennium Fund Limited Partnership
1300 Minnesota World Trade Center
30 Seventh Street East
St. Paul, MN 55101-4901
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
If to Munkberg:
Munkberg Farms, Inc., a Minnesota corporation
John Munkberg, its President
3000 325th Ave. N.E.
Cambridge, MN 55008
If to Wood:
Donald B. Wood and
Sue D. Wood, Trustees
of the Wood Family Trust
dated 3/15/93, as amended 7/9/97
280 Canon Drive
Santa Barbara, CA 93105
If to Bushman:
Lynn Bushman and
Camille Bushman, married as joint tenants
4752 South Ichabod Place
Holladay, UT 84117
If to Bashor:
William C. Bashor
57001 WCR 390
Grover, CO 80729
If to Rea:
James D. Rea and Mary M. Rea
AKA Mary Margaret Rea, married as joint tenants
3707 Fernleigh Avenue
Troy, MI 48083
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change. Any Co-Tenant
selling or transferring all or a portion of its interest in the
Premises shall provide, within a reasonable time after the
completion of such sale or transfer, written notice to all other
Co-Tenants of the name and address of such new Co-Tenant and the
interest held by such new Co-Tenant.
9. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them; no Co-
Tenant shall file any partnership tax returns nor otherwise take
any action respecting nor represent the relationship among the Co-
Tenants as other than co-tenants of undivided interests in real
property. The only relationship among and between the Co-Tenants
hereunder shall be that of owners of the Premises as tenants in
common subject to the terms hereof.
10. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
11. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
12. To the extent that this agreement binds all Co-Tenants of
the Premises, such covenants are deemed to run with the land and
shall be evidenced in a Co-Tenancy Agreement entered into by any
Co-Tenant with any purchaser of all or any portion of its
interest in the Premises. Except as otherwise provided or
modified herein, Co-Tenants retain all rights otherwise available
under law to any Co-Tenant of an interest in real Property.
13. Every Co-Tenant shall have a right of first refusal to
purchase the interest of any other Co-Tenant in the Premises,
upon the following limited terms and conditions. If and only
when a Co-Tenant shall give written notice to another Co-Tenant
(and only as to such Co-Tenant receiving such notice) of a desire
to be notified of any proposed sale ("Notice of Desire to
Purchase"), Co-Tenants desiring notice of proposed sales of Co-
Tenancy interests shall receive notice of proposed sales of the
interest of the Co-Tenant who has received a Notice of Desire to
Purchase. Any Co-Tenant offering its interest or any portion
thereof for sale ("Selling Co-Tenant") shall first notify all Co-
Tenants who have provided a Notice of Desire to Purchase. Such
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
notice ("Selling Co-Tenant's Notice") shall give Selling Co-
Tenant's name and address and state a price at which Selling Co-
Tenant intends to sell and will sell a specified portion or all
of its interest in the fee simple to the Leased Premises.
If a Co-Tenant shall fail to exercise its Right of First Refusal
as set forth herein, those Co-Tenant's exercising their Right of
First Refusal shall buy all, but not less than all, of the
interest in the Premises offered for sale by the Selling Co-
Tenant, purchasing prorata in proportion that the purchasing Co-
Tenant's interests in the Premises shall bear to one another.
For ten (10) business days (the "Right of First Refusal Period")
following the giving of such notice, a Co-Tenant shall have the
option to purchase such portion of the fee interest of the
Selling Co-Tenant as set forth in Selling Co-Tenant's Notice at
the price in cash stated in the Selling Co-Tenant's Notice. A
written notice addressed to Selling Co-Tenant and signed by the
purchasing Co-Tenant shall be given, in accordance with the
provisions hereof respecting the giving of notice, within the
period set forth above for exercising the Right of First Refusal.
If no Co-Tenant shall exercise its Right of First Refusal,
Selling Co-Tenant shall be free to market its interest in the
Premises after expiration of the Right of First Refusal Period
and shall be free to sell all or any portion of its interest in
the Premises at a price prorata greater than, or equal to, that
which is set forth in the Selling Co-Tenant's Notice.
The above provisions shall not apply to the sale or transfer of a
Co-Tenant's interest in the Premises if such sale or transfer
shall be to an affiliate of the selling or transferring Co-Tenant
or to a trust established by such Co-Tenant for estate planning
purposes.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Co-Tenant Initial: /s/ JM
Co-Tenancy Agreement for Children's World Learning Center-Golden, Colorado
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Munkberg Farms, Inc., a Minnesota corporation
By: /s/ John Munkberg
John Munkberg, its President
WITNESS:
/s/ Lynn C Kelley
Lynn C Kelley
(Print Name)
STATE OF MINNESOTA)
) ss
COUNTY OF ISANTI)
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 14th day of August,
2001, John Munkberg, President of Munkberg Farms, Inc., a
Minnesota corporation who executed the foregoing instrument in
said capacity.
/s/ Thomas L Satrom
Notary Public
[notary seal]
Fund XXII AEI Income & Growth Fund XXII Limited Partnership
By: AEI Fund Management XXI, Inc, its corporate general
partner
By: /s/ Robert P Johnson
Robert P. Johnson, President
WITNESS:
/s/ Angela Terryll
Angela Terryll
(Print Name)
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 17th day of August,
2001, Robert P. Johnson, President of AEI Fund Management XXI,
Inc., corporate general partner of AEI Income & Growth Fund XXII
Limited Partnership, who executed the foregoing instrument in
said capacity and on behalf of the corporation.
/s/ Debra A Jochum
Notary Public
[notary seal]
EXHIBIT "A"
Lot 1A, Eagle Ridge Center Filing No. 3, Block 2, Lot 1, Replat,
County of Jefferson, Sate of Colorado.