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)