-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F7uWleyiIu3X6kiAlkziirLS/wN/MppWYux2x2fU0+b5kBMIGmfnyh8RE4piEx1f CK31Qrw9j4AclGYcby4ZdQ== 0000793631-98-000010.txt : 19980515 0000793631-98-000010.hdr.sgml : 19980515 ACCESSION NUMBER: 0000793631-98-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEI INCOME & GROWTH FUND XXI LTD PARTNERSHIP CENTRAL INDEX KEY: 0000931755 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 411789725 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-85076 FILM NUMBER: 98619523 BUSINESS ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 EAST SEVENTH ST CITY: ST PAUL STATE: MN ZIP: 55101 BUSINESS PHONE: 6122277333 MAIL ADDRESS: STREET 1: 1300 MINNESOTA WORLD TRADE CENTER STREET 2: 30 EAST SEVENTH STREET CITY: ST PAUL STATE: MN ZIP: 55101 10QSB 1 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: March 31, 1998 Commission file number: 0-29274 AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP (Exact Name of Small Business Issuer as Specified in its Charter) State of Minnesota 41-1789725 (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1300 Minnesota World Trade Center, St. Paul, Minnesota 55101 (Address of Principal Executive Offices) (612) 227-7333 (Issuer's telephone number) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No Transitional Small Business Disclosure Format: Yes No [X] AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP INDEX PART I. Financial Information Item 1. Balance Sheet as of March 31, 1998 and December 31, 1997 Statements for the Periods ended March 31, 1998 and 1997: Income Cash Flows Changes in Partners' Capital Notes to Financial Statements Item 2. Management's Discussion and Analysis PART II. Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP BALANCE SHEET MARCH 31, 1998 AND DECEMBER 31, 1997 (Unaudited) ASSETS 1998 1997 CURRENT ASSETS: Cash and Cash Equivalents $ 2,328,791 $ 2,506,790 Receivables 72,704 162,677 ----------- ----------- Total Current Assets 2,401,495 2,669,467 ----------- ----------- INVESTMENTS IN REAL ESTATE: Land 6,448,835 6,612,866 Buildings and Equipment 8,456,069 8,779,112 Construction in Progress 2,051,667 1,078,108 Property Acquisition Costs 93,385 88,696 Accumulated Depreciation (470,623) (399,150) ----------- ----------- Net Investments in Real Estate 16,579,333 16,159,632 ----------- ----------- Total Assets $18,980,828 $18,829,099 =========== =========== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 63,364 $ 56,307 Distributions Payable 481,250 324,841 Unearned Rent 44,201 0 ----------- ----------- Total Current Liabilities 588,815 381,148 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partners (25,266) (24,706) Limited Partners, $1,000 Unit Value; 24,000 Units authorized and issued; 23,829 outstanding 18,417,279 18,472,657 ----------- ----------- Total Partners' Capital 18,392,013 18,447,951 ----------- ----------- Total Liabilities and Partners' Capital $18,980,828 $18,829,099 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF INCOME FOR THE PERIODS ENDED MARCH 31 (Unaudited) 1998 1997 INCOME: Rent $ 380,054 $ 184,159 Investment Income 72,433 165,451 ----------- ----------- Total Income 452,487 349,610 ----------- ----------- EXPENSES: Partnership Administration - Affiliates 66,660 51,705 Partnership Administration and Property Management - Unrelated Parties 34,032 22,615 Depreciation 92,821 54,330 ----------- ----------- Total Expenses 193,513 128,650 ----------- ----------- OPERATING INCOME 258,974 220,960 GAIN ON SALE OF REAL ESTATE 169,937 0 ----------- ----------- NET INCOME $ 428,911 $ 220,960 =========== =========== NET INCOME ALLOCATED: General Partners $ 4,289 $ 2,210 Limited Partners 424,622 218,750 ----------- ----------- $ 428,911 $ 220,960 =========== =========== NET INCOME PER LIMITED PARTNERSHIP UNIT (23,829 and 23,854 weighted average Units outstanding in 1998 and 1997, respectively) $ 17.82 $ 9.17 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED MARCH 31 (Unaudited) 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 428,911 $ 220,960 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 92,821 54,330 Gain on Sale of Real Estate (169,937) 0 Decrease in Receivables 89,973 1,400 Increase (Decrease) in Payable to AEI Fund Management, Inc. 7,057 (50,374) Increase in Unearned Rent 44,201 47,936 ----------- ----------- Total Adjustments 64,115 53,292 ----------- ----------- Net Cash Provided By Operating Activities 493,026 274,252 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in Real Estate (978,248) (1,533,798) Proceeds from Sale of Real Estate 635,663 0 ----------- ----------- Net Cash Used For Investing Activities (342,585) (1,533,798) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contributions from Limited Partners 0 436,651 Organization and Syndication Costs 0 (59,286) Increase in Distributions Payable 156,409 48,667 Distributions to Partners (484,849) (481,908) ----------- ----------- Net Cash Used For Financing Activities (328,440) (55,876) ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (177,999) (1,315,422) CASH AND CASH EQUIVALENTS, beginning of period 2,506,790 10,729,033 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 2,328,791 $ 9,413,611 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF CHANGES IN PARTNERS' CAPITAL FOR THE PERIODS ENDED MARCH 31 (Unaudited) Limited Partnership General Limited Units Partners Partners Total Outstanding BALANCE, December 31, 1996 $ (9,754) $19,544,277 $19,534,523 23,563.35 Capital Contributions 0 436,651 436,651 436.65 Organization and Syndication Costs 0 (59,286) (59,286) Distributions (4,819) (477,089) (481,908) Net Income 2,210 218,750 220,960 -------- ----------- ----------- ----------- BALANCE, March 31, 1997 $(12,363) $19,663,303 $19,650,940 24,000.00 ======== =========== =========== =========== BALANCE, December 31, 1997 $(24,706) $18,472,657 $18,447,951 23,828.87 Distributions (4,849) (480,000) (484,849) Net Income 4,289 424,622 428,911 -------- ----------- ----------- ----------- BALANCE, March 31, 1998 $(25,266) $18,417,279 $18,392,013 23,828.87 ======== =========== =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS MARCH 31, 1998 (Unaudited) (1) The condensed statements included herein have been prepared by the Partnership, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results of operations for the interim period, on a basis consistent with the annual audited statements. The adjustments made to these condensed statements consist only of normal recurring adjustments. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the summary of significant accounting policies and notes thereto included in the Partnership's latest annual report on Form 10-KSB. (2) Organization - AEI Income & Growth Fund XXI Limited Partnership (Partnership) was formed to acquire and lease commercial properties to operating tenants. The Partnership's operations are managed by AEI Fund Management XXI, Inc. (AFM), the Managing General Partner of the Partnership. Robert P. Johnson, the President and sole shareholder of AFM, serves as the Individual General Partner of the Partnership. An affiliate of AFM, AEI Fund Management, Inc. (AEI), performs the administrative and operating functions for the Partnership. The terms of the Partnership offering call for a subscription price of $1,000 per Limited Partnership Unit, payable on acceptance of the offer. The Partnership commenced operations on April 14, 1995 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. On January 31, 1997, the Partnership offering terminated when the maximum subscription limit of 24,000 Limited Partnership Units ($24,000,000) was reached. Under the terms of the Limited Partnership Agreement, the Limited Partners and General Partners contributed funds of $24,000,000 and $1,000, respectively. During the operation of the Partnership, any Net Cash Flow, as defined, which the General Partners determine to distribute will be distributed 90% to the Limited Partners and 10% to the General Partners; provided, however, that such distributions to the General Partners will be subordinated to the Limited Partners first receiving an annual, noncumulative distribution of Net Cash Flow equal to 10% of their Adjusted Capital Contribution, as defined, and, provided further, that in no event will the General Partners receive less than 1% of such Net Cash Flow per annum. Distributions to Limited Partners will be made pro rata by Units. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (2) Organization - (Continued) Any Net Proceeds of Sale, as defined, from the sale or financing of the Partnership's properties which the General Partners determine to distribute will, after provisions for debts and reserves, be paid in the following manner: (i) first, 99% to the Limited Partners and 1% to the General Partners until the Limited Partners receive an amount equal to: (a) their Adjusted Capital Contribution plus (b) an amount equal to 10% of their Adjusted Capital Contribution per annum, cumulative but not compounded, to the extent not previously distributed from Net Cash Flow; (ii) any remaining balance will be distributed 90% to the Limited Partners and 10% to the General Partners. Distributions to the Limited Partners will be made pro rata by Units. For tax purposes, profits from operations, other than profits attributable to the sale, exchange, financing, refinancing or other disposition of the Partnership's 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 the Partnership's property will be allocated in accordance with the Partnership Agreement as follows: (i) first, to those partners with deficit balances in their capital accounts in an amount equal to the sum of such deficit balances; (ii) second, 99% to the Limited Partners and 1% to the General Partners until the aggregate balance in the Limited Partners' capital accounts equals the sum of the Limited Partners' Adjusted Capital Contributions plus an amount equal to 10% of their Adjusted Capital Contributions per annum, cumulative but not compounded, to the extent not previously allocated; (iii) third, the balance of any remaining gain will then be allocated 90% to the Limited Partners and 10% to the General Partners. Losses will be allocated 98% to the Limited Partners and 2% to the General Partners. The General Partners are not required to currently fund a deficit capital balance. Upon liquidation of the Partnership or withdrawal by a General Partner, the General Partners will contribute to the Partnership an amount equal to the lesser of the deficit balances in their capital accounts or 1% of total Limited Partners' and General Partners' capital contributions. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - The Partnership leases its properties to various tenants through triple net leases, which are classified as operating leases. Under a triple net lease, the lessee is responsible for all real estate taxes, insurance, maintenance, repairs and operating expenses of the property. The initial Lease terms are 20 years except for the Caribou Coffee , which is 18 years, and the Media Play retail store discussed below. The Leases contain renewal options which may extend the Lease term an additional 10 years for the Arby's and Caribou Coffee store, an additional 15 years for the Denny's and Champps Americana restaurants and 25 years for the Garden Ridge retail store. The Leases contain rent clauses which entitle the Partnership to receive additional rent in future years based on stated rent increases. Certain lessees have been granted options to purchase the property. Depending on the lease, the purchase price is either determined by a formula, or is the greater of the fair market value of the property or the amount determined by a formula. In all cases, if the option were to be exercised by the lessee, the purchase price would be greater than the original cost of the property. The Partnership's properties are all commercial, single- tenant buildings. The cost of the property and related accumulated depreciation at March 31, 1998 are as follows: Buildings and Accumulated Property Land Equipment Total Depreciation Arby's, Montgomery, AL $ 328,310 $ 425,794 $ 754,104 $ 48,257 Media Play, Apple Valley, MN 239,690 594,170 833,860 91,357 Garden Ridge, Pineville, NC 1,181,253 2,463,138 3,644,391 197,051 Champps Americana, Columbus, OH 300,666 592,134 892,800 42,193 Denny's, Covington, LA 532,844 772,104 1,304,948 36,604 Caribou Coffee, Charlotte, NC 705,394 605,204 1,310,598 17,332 Champps Americana, San Antonio, TX 1,127,016 1,706,341 2,833,357 23,403 Champps Americana, Schaumburg, IL 959,278 1,297,184 2,256,462 14,426 Champps Americana, Livonia, MI 1,074,384 0 1,074,384 0 ---------- ---------- ----------- ---------- $6,448,835 $8,456,069 $14,904,904 $ 470,623 ========== ========== =========== ========== On December 21, 1995, the Partnership purchased a 34.0% interest in a Media Play retail store in Apple Valley, Minnesota for $1,414,060. The property was leased to The Musicland Group, Inc. (MGI) under a Lease Agreement with a primary term of 18 years and annual rental payments of $139,587. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) In December, 1996, the Partnership and MGI reached an agreement in which MGI would buy out and terminate the Lease Agreement by making a payment of $800,000, which was equal to approximately two years' rent. The Partnership's share of such payment was $272,000. Under the Agreement, MGI remained in possession of the property and performed all of its obligations under the net lease agreement through January 31, 1997 at which time it vacated the property and made it available for re-let to another tenant. MGI was responsible for all maintenance and management costs of the property through January 31, 1997 after which date the Partnership became responsible for its share of expenses associated with the property until it is re-let or sold. A specialist in commercial property leasing has been retained to locate a new tenant for the property. As of December 31, 1997, based on an analysis of market conditions in the area, it was determined the fair value of the Partnership's interest in the Media Play was approximately $748,000. In the fourth quarter of 1997, a charge to operations for real estate impairment of $580,200 was recognized, which is the difference between the book value at December 31, 1997 of $1,328,200 and the estimated market value of $748,000. The charge was recorded against the cost of the land, building and equipment. On March 14, 1997, the Partnership purchased a parcel of land in San Antonio, Texas for $1,032,299. The land is leased to Champps Americana, Inc. (Champps) under a Lease Agreement with a primary term of 20 years and annual rental payments of $83,451. Effective September 9, 1997, the annual rent was increased to $128,156. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to Champps for the construction of a Champps Americana restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 7.0%. Effective September 9, 1997, the interest rate was increased to 10.75%. On December 23, 1997, after the development was completed, the Lease Agreement was amended to require annual rental payments of $296,023. Total acquisition costs, including the cost of the land, were $2,833,357. On March 19, 1997, the Partnership purchased a Denny's restaurant in Covington, Louisiana for $1,304,949. The property is leased to Huntington Restaurants Group, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of $141,243. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) On April 21, 1997, the Partnership purchased a 49.6% interest in a parcel of land in Schaumburg, Illinois for $876,387. The land is leased to Champps under a Lease Agreement with a primary term of 20 years and annual rental payments of $66,906. Effective October 17, 1997, the annual rent was increased to $102,749. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to Champps for the construction of a Champps Americana restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 7.0%. Effective October 17, 1997, the interest rate was increased to 10.75%. On December 31, 1997, after the development was completed, the Lease Agreement was amended to require annual rental payments of $236,479. The Partnership's share of the total acquisition costs, including the cost of the land, was $2,256,462. The remaining interests in the property are owned by AEI Net Lease Income & Growth Fund XX Limited Partnership and Net Lease Income & Growth Fund 84-A Limited Partnership, affiliates of the Partnership. On July 8, 1997, the Partnership purchased a parcel of land in Livonia, Michigan for $1,074,384. The land is leased to Champps under a Lease Agreement with a primary term of 20 years and annual rental payments of $75,207. Effective January 3, 1998, the annual rent was increased to $115,496. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership will advance funds to Champps for the construction of a Champps Americana restaurant on the site. Through March 31, 1998, the Partnership had advanced $2,051,667 for the construction of the property and was charging interest on the advances at a rate of 7.0%. Effective January 3, 1998, the interest rate was increased to 10.75%. The total purchase price, including the cost of the land, will be approximately $3,970,000. After the construction is complete, the Lease Agreement will be amended to require annual rental payments of approximately $427,000. On July 31, 1997, the Partnership purchased a 93.1% interest in a Caribou Coffee store in Charlotte, North Carolina for $1,310,598. The property is leased to Caribou Coffee Company, Inc. under a Lease Agreement with a primary term of 18 years and annual rental payments of $146,438. The remaining interest in the property is owned by AEI Institutional Net Lease Fund '93 Limited Partnership, an affiliate of the Partnership. Through March 31, 1998, the Partnership sold 34.3363% of its interest in the Champps Americana restaurant in Columbus, Ohio, in five separate transactions to unrelated third parties. The Partnership received total net sale proceeds of $1,156,453 which resulted in a total net gain of $276,488. The total cost and related accumulated depreciation of the interests sold was $916,080 and $36,115, respectively. For the three months ended March 31, 1998, the net gain was $169,937. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) During the first three months of 1998, the Partnership distributed $133,053 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 $5.53 per Limited Partnership Unit. The remaining net sale proceeds will either be reinvested in additional properties or distributed to the Partners in the future. The Partnership has incurred net costs of $452,990 relating to the review of potential property acquisitions. Of these costs, $359,605 have been capitalized and allocated to land, building and equipment. The remaining costs of $93,385 have been capitalized and will be allocated to property acquisitions in future periods. (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 three months ended March 31, 1998 and 1997, the Partnership recognized rental income of $380,054 and $184,159, respectively. During the same periods, the Partnership also earned $72,433 and $165,451, respectively, in investment income from subscriptions proceeds which were invested in short-term money market accounts, commercial paper and federal agency notes. This investment income constituted 16 % and 47%, respectively, of total income for the periods. The percentage of total income represented by investment income declines as subscription proceeds are invested in properties. Musicland Group, Inc. (MGI), the lessee of the Media Play retail store in Apple Valley, Minnesota experienced financial difficulties and was aggressively restructuring its organization. As part of the restructuring, the Partnership and MGI reached an agreement in December, 1996 in which MGI would buy out and terminate the Lease Agreement by making a payment of $800,000, which is equal to approximately two years' rent. The Partnership's share of such payment was $272,000. Under the Agreement, MGI remained in possession of the property and performed all of its obligations under the net lease agreement through January 31, 1997 at which time it vacated the property and made it available for re-let to another tenant. MGI was responsible for all maintenance and management costs of the property through January 31, 1997 after which date the Partnership became responsible for its share of expenses associated with the property until it is re-let or sold. A specialist in commercial property leasing has been retained to locate a new tenant for the property. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) As of December 31, 1997, based on an analysis of market conditions in the area, it was determined the fair value of the Partnership's interest in the Media Play was approximately $748,000. In the fourth quarter of 1997, a charge to operations for real estate impairment of $580,200 was recognized, which is the difference between the book value at December 31, 1997 of $1,328,200 and the estimated market value of $748,000. The charge was recorded against the cost of the land, building and equipment. During the three months ended March 31, 1998 and 1997, the Partnership paid Partnership administration expenses to affiliated parties of $66,660 and $51,705, respectively. These administration expenses include initial start-up costs and expenses associated with 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 $34,032 and $22,615, respectively. These expenses represent direct payments to third parties for legal and filing fees, direct administrative costs, outside audit and accounting costs, insurance and other property costs. The increase in these expenses in 1998, when compared to 1997, is the result of expenses incurred in 1998 related to the Media Play situation discussed above. The Partnership distributes all of its net income during the offering and acquisition phases, and if net income after deductions for depreciation is not sufficient to fund the distributions, the Partnership may distribute other available cash that constitutes capital for accounting purposes. As of March 31, 1998, the Partnership's cash distribution rate was 8.0% on an annualized basis. Distributions of Net Cash Flow to the General Partners are subordinated to the Limited Partners as required in the Partnership Agreement. As a result, 99% of distributions were allocated to Limited Partners and 1% to the General Partners. Since the Partnership has only recently purchased its real estate, 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. AEI Fund Management, Inc. (AEI) performs all management services for the Partnership. AEI is currently analyzing its computer hardware and software systems to determine what, if any, resources need to be dedicated regarding Year 2000 issues. The Partnership does not anticipate any significant operational impact or incurring material costs as a result of AEI becoming Year 2000 compliant. Liquidity and Capital Resources The Partnership's primary sources of cash will be proceeds from the sale of Units, investment income, rental income and proceeds from the sale of property. Its primary uses of cash will be investment in real properties, payment of expenses involved in the sale of units, the organization of the Partnership, the management of properties, the administration of the Partnership, and the payment of distributions. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) Until the offering of Units was completed, the Partnership's primary source of cash flow was from the sale of Limited Partnership Units. The Partnership offered for sale up to $24,000,000 of limited partnership interests (the "Units") (24,000 Units at $1,000 per Unit) pursuant to a registration statement effective February 1, 1995. From February 1, 1995 to April 14, 1995, the minimum number of Limited Partnership Units (1,500) needed to form the Partnership were sold and on April 14, 1995, a total of 2,937.444 Units ($2,937,444) were transferred into the Partnership. On January 31, 1997, the Partnership offering terminated when the maximum subscription limit of 24,000 Limited Partnership Units ($24,000,000) was reached. From subscription proceeds, the Partnership paid organization and syndication costs (which constitute a reduction of capital) of $3,277,000. Before the acquisition of properties, cash flow from operating activities is not significant. Net income, after adjustment for depreciation, is lower during the first few years of operations as administrative expenses remain high and a large amount of the Partnership's assets remain invested on a short- term basis in lower-yielding cash equivalents. Net income will become the largest component of cash flow from operating activities and the largest component of cash flow after the completion of the acquisition phase. The Partnership Agreement requires that all proceeds from the sale of Units be invested or committed to investment in properties by the later of two years after the date of the Prospectus or six months after termination of the offer and sale of Units. While the Partnership is purchasing properties, cash flow from investing activities (investment in real property) will remain negative and will constitute the principal use of the Partnership's available cash flow. On March 14, 1997, the Partnership purchased a parcel of land in San Antonio, Texas for $1,032,299. The land is leased to Champps Americana, Inc. (Champps) under a Lease Agreement with a primary term of 20 years and annual rental payments of $83,451. Effective September 9, 1997, the annual rent was increased to $128,156. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to Champps for the construction of a Champps Americana restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 7.0%. Effective September 9, 1997, the interest rate was increased to 10.75%. On December 23, 1997, after the development was completed, the Lease Agreement was amended to require annual rental payments of $296,023. Total acquisition costs, including the cost of the land, were $2,833,357. On March 19, 1997, the Partnership purchased a Denny's restaurant in Covington, Louisiana for $1,304,949. The property is leased to Huntington Restaurants Group, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of $141,243. On April 21, 1997, the Partnership purchased a 49.6% interest in a parcel of land in Schaumburg, Illinois for $876,387. The land is leased to Champps under a Lease Agreement with a primary term of 20 years and annual rental payments of $66,906. Effective October 17, 1997, the annual rent was increased to $102,749. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership advanced funds to Champps for the construction of a Champps Americana restaurant on the site. Initially, the Partnership charged interest on the advances at a rate of 7.0%. Effective October 17, 1997, the interest rate was increased to 10.75%. On December 31, 1997, after the development was completed, the Lease Agreement was amended to require annual rental payments of $236,479. The Partnership's share of the total acquisition costs, including the cost of the land, was $2,256,462. The remaining interests in the property are owned by AEI Net Lease Income & Growth Fund XX Limited Partnership and Net Lease Income & Growth Fund 84-A Limited Partnership, affiliates of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) On July 8, 1997, the Partnership purchased a parcel of land in Livonia, Michigan for $1,074,384. The land is leased to Champps under a Lease Agreement with a primary term of 20 years and annual rental payments of $75,207. Effective January 3, 1998, the annual rent was increased to $115,496. Simultaneously with the purchase of the land, the Partnership entered into a Development Financing Agreement under which the Partnership will advance funds to Champps for the construction of a Champps Americana restaurant on the site. Through March 31, 1998, the Partnership had advanced $2,051,667 for the construction of the property and was charging interest on the advances at a rate of 7.0%. Effective January 3, 1998, the interest rate was increased to 10.75%. The total purchase price, including the cost of the land, will be approximately $3,970,000. After the construction is complete, the Lease Agreement will be amended to require annual rental payments of approximately $427,000. On July 31, 1997, the Partnership purchased a 93.1% interest in a Caribou Coffee store in Charlotte, North Carolina for $1,310,598. The property is leased to Caribou Coffee Company, Inc. under a Lease Agreement with a primary term of 18 years and annual rental payments of $146,438. The remaining interest in the property is owned by AEI Institutional Net Lease Fund '93 Limited Partnership, an affiliate of the Partnership. Through March 31, 1998, the Partnership sold 34.3363% of its interest in the Champps Americana restaurant in Columbus, Ohio, in five separate transactions to unrelated third parties. The Partnership received total net sale proceeds of $1,156,453 which resulted in a total net gain of $276,488. The total cost and related accumulated depreciation of the interests sold was $916,080 and $36,115, respectively. For the three months ended March 31, 1998, the net gain was $169,937. During the first three months of 1998, the Partnership distributed $133,053 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 $5.53 per Limited Partnership Unit. The remaining net sale proceeds will either be reinvested in additional properties or distributed to the Partners in the future. After completion of the acquisition phase, 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. The redemption payments generally are funded with cash that would normally be paid as part of the regular quarterly distributions. As a result, total distributions and distributions payable have fluctuated from year to year due to cash used to fund redemption payments. 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. During 1997, three Limited Partners redeemed a total of 171.1 Partnership Units for $154,021 in accordance with the Partnership Agreement. The Partnership acquired these Units using Net Cash Flow from operations. The redemptions increase the remaining Limited Partners' ownership interest in the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) Until capital is invested in properties, the Partnership will remain liquid. At March 31, 1998, $2,364,902 or 12% of the Partnership's assets were in cash or cash equivalents (including accrued interest receivable). After completion of property acquisitions, the Partnership will attempt to maintain a cash reserve of only approximately 1% of subscription proceeds. Because properties are purchased for cash and leased under triple- net leases, this is considered adequate to satisfy most contingencies. Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 The foregoing Management's Discussion and Analysis contains various "forward looking statements" within the meaning of federal securities laws which represent management's expectations or beliefs concerning future events, including statements regarding anticipated application of cash, expected returns from rental income, growth in revenue, taxation levels, the sufficiency of cash to meet operating expenses, rates of distribution, and other matters. These, and other forward looking statements made by the Partnership, must be evaluated in the context of a number of factors that may affect the Partnership's financial condition and results of operations, including the following: Market and economic conditions which affect the value of the properties the Partnership owns and the cash from rental income such properties generate; the federal income tax consequences of rental income, deductions, gain on sales and other items and the affects of these consequences for investors; resolution by the General Partners of conflicts with which they may be confronted; the success of the General Partners of locating properties with favorable risk return characteristics; the effect of tenant defaults; and the condition of the industries in which the tenants of properties owned by the Partnership operate. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Partnership is a party or of which the Partnership's property is subject. ITEM 2. CHANGES IN SECURITIES None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. PART II - OTHER INFORMATION (Continued) ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits - Description 10.1 Purchase Agreement dated March 24, 1998 between the Partnership and Carlos W. Appleton and Mary V. Appleton relating to the property at 161 E. Campus View Boulevard, Columbus, Ohio. 27 Financial Data Schedule for period ended March 31, 1998. 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: May 12, 1998 AEI Income & Growth Fund XXI Limited Partnership By: AEI Fund Management XXI, Inc. Its: Managing General Partner By: /s/ Robert P Johnson Robert P. Johnson President (Principal Executive Officer) By: /s/ Mark E Larson Mark E. Larson Chief Financial Officer (Principal Accounting Officer) EX-10.1 2 PURCHASE AGREEMENT Champps Restaurant - Columbus, OH This AGREEMENT, entered into effective as of the 24 of March,1998. l. Parties. Seller is AEI Income & Growth Fund XXI Limited Partnership which owns an undivided 39.6673% interest in the fee title to that certain real property legally described in the attached Exhibit "A" (the "Entire Property") Buyer is Carlos W. Appleton and Mary V. Appleton, Joint Tenants With Rights of Survivorship ("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 6.2036 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) When this agreement is executed, Buyer will pay $5,000 to Seller (which shall be deposited into escrow according to the terms hereof) (the "First Payment"). The First Payment will be credited against the purchase price when and if escrow closes and the sale is completed. (b) Buyer will deposit the balance of the purchase price, $245,000 (the "Second Payment") into escrow in sufficient time to allow escrow to close on the closing date. 5. Closing Date. Escrow shall close on or before March 31, 1998. 6. Due Diligence. Buyer will have until the expiration of the tenth 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) Copies 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) Copies 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 tenant financial statements as may have been provided most recently to Seller by the Tenant and/or Guarantors. Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH It is a contingency upon Seller's obligations hereunder that two (2) copies of Co-Tenancy Agreement in the form attached hereto duly executed by Buyer and AEI Real Estate Fund XVIII Limited Partnership and dated on 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, via first class mail, 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 this Agreement is not cancelled as set forth above, the First Payment shall be non-refundable unless Seller shall default hereunder. 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) shall be returned its First Payment, and Buyer 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 make the Second Payment, Seller shall be entitled to retain the First Payment and Buyer irrevocably will be deemed to be in default under this Agreement. Seller may, at its option, retain the First Payment and 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 Second Payment is made when required, all of Buyer's conditions and contingencies will be deemed satisfied. 7. Escrow. Escrow shall be opened by Seller and funds deposited in escrow 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 commitment 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; and other items of record disclosed to Buyer during the Review Period. Buyer shall be allowed ten (10) 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 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) Buyer's First Payment shall be returned and this Agreement shall be null and void and of no further force and effect. Pending correction of title, the payments hereunder required shall be postponed, but upon correction of title and within ten (10) days after written notice of correction to the Buyer, the parties shall perform this Agreement according to its terms. Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH 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, one-half of the escrow fees, and the cost of an update to the Survey in Sellers 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. (a) Seller represents and warrants as of this date that: (i) Except for the lease in existence between AEI Income & Growth Fund XXI Limited Partnership and AEI Real Estate Fund XVIII Limited Partnership and Americana Dining Corporation, dated August 29, 1996, Seller is not aware of any leases of the Property. The above referenced lease agreement also has a first right of refusal in favor of the Tenant as set forth in Article 34 of said lease agreement, which right shall apply to any attempted disposition of the Property by Buyer after this transaction. (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 set forth 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 Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH Buyer in violation of the terms hereof or the contemplated Co-Tenancy Agreement. 12. Disclosures. (a) To the best of Seller's knowledge: there are now, and at the Closing there will be, no material, physical or mechanical defects of the Property, including, without limitation, the plumbing, heating, air conditioning, ventilating, electrical systems, and 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. (b) To the best of Seller's knowledge: the use and operation of the Property now is, and at the time of Closing will be, 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. (c) Seller knows of no facts nor has Seller failed to disclose to Buyer any fact known to Seller which would prevent Buyer from using and operating the Property after the Closing in the manner in which the Property has been used and operated prior to the date of this Agreement. (d) To the best of Seller's knowledge: the Property is not, and as of the Closing will not be, in violation of any federal, state or local law, ordinance or regulations relating to industrial hygiene or to the environmental conditions on, under, or about the 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 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 Property either before or after the Closing Date, except such Hazardous Materials on or in connection with the Property arising out of Seller's gross negligence or intentional misconduct. (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 Property and such financial information on the Lessee and Guarantors of the Lease as Buyer or its advisors shall request, 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 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. 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, Seller makes no Warranty or representation, Express or Implied, or arising by operation of law, including, but not limited to, any warranty or 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. Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH 13. Closing. (a) Before the closing date, Seller will deposit into escrow an executed limited warranty deed conveying insurable title of the Property to Buyer, subject to the encumbrances contained in paragraph 8 above. (b) On or before the closing date, Buyer will deposit into escrow: the balance of 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 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 paid the First Payment, deposited the balance of the Second Payment for 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 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 Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH 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 should 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, the First Payment shall be immediately returned to Buyer (after execution by Buyer of such documents reasonably requested by Seller to evidence the termination hereof). 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 Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH 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. (b) If this escrow has not closed by March 31, 1998, 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: Attention: Robert P. Johnson AEI Income & Growth Fund XXI Limited Partnership 1300 Minnesota World Trade Center 30 E. 7th Street St. Paul, MN 55101 Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH If to Buyer: Carlos W. Appleton and Mary V. Appleton 101 Meadow Lane Abilene, TX 79602 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. IN WITNESS WHEREOF, the Seller and Buyer have executed this Agreement effective as of the day and year above first written. BUYER: CARLOS W. APPLETON AND MARY V. APPLETON, JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP By: /s/ Carlos W Appleton Carlos W. Appleton By:/s/ Mary V Appleton Mary V. Appleton WITNESS: (as to both signers) /s/ Charles E Erwin Charles E Erwin (Print Name) WITNESS: /s/ Virginia Crowe Virginia Crowe (Print Name) Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH SELLER: AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP a Minnesota limited partnership By: AEI Fund Management XXI Inc., its corporate general partner By: /s/ Robert P Johnson Robert P. Johnson, President WITNESS: /s/ Laura Steidl Laura Steidl (Print Name) WITNESS: /s/ Jacqueline F Abbe Jacqueline F Abbe (Print Name) Buyer Initial: /s/ CWA /s/ MVA Purhcase Agreement for Champps- Columbus, OH LEGAL DESCRIPTION Situated in the State of Ohio, County of Franklin, City of Columbus, being located in Section 2, Township 2, Range 18, United States Military Lands, and being part of a 43. 161 acre tract of land (Parcel No. 610-146452) conveyed to Forty- One Corporation (the Grantor), by deed of record in Official Record 15500 A-G, all references being to records in the Recorder's Office, Franklin County Ohio, and being more particularly described as follows: Beginning for reference at the intersection of North High Street (US 23) and East Campus View Boulevard (80.00 feet in width) as shown in Plat Book 60, Page 26: thence S 86 49' 53" E, along the centerline of said East Campus View Boulevard, a distance of 900.00 feet to a point of curvature, thence along the centerline of said East Campus View Boulevard, with a curve tot he left having a radius of 1350.00 feet, a chord bearing of N 89 27' 50" E, and a chord distance of 174.45 feet to the intersection with centerline of High Cross Boulevard (80.00 feet in width); thence S 1 53'32" E, along the centerline of said High cross Boulevard a distance of 74.72 feet to a point; thence N 88 06'28" E, a distance of 40.00 feet to an iron pin set in the easterly right of way line of said High Cross Boulevard, said point being the True Point of Beginning of herein described tract; thence along the easterly right of way line of said High Cross Boulevard, with a curve to the right, having a radius of 40.00 feet, a chord bearing of N 40 23'34" E, and a chord distance of 53.83 feet to an iron pin set in the southerly right of way line of said East Campus View Boulevard; thence along the southerly right of way line of said East Campus View Boulevard and the northerly line of herein described tract, with a curve to the left, having a radius of 1390.00 feet, a chord bearing of N 82 25'24" E, and a chord distance of 12.36 feet to an iron pin set; thence N 82 10' 07" E, along the southerly right of way line of said East Campus View boulevard and the northerly line of herein described tract, a distance of 209.28 feet to an iron pin set at the northeasterly corner of herein described tract; thence s 7 49' 49" E, along the easterly line of herein described tract, a distance of 312.60 feet to an iron pin set at the southeasterly corner of herein described tract; thence S 82 10'11" W, along the southerly line of herein described tract, a distance of 318.01 feet to an iron pin set in the easterly right of way line of said High Cross Boulevard at the southwesterly corner of herein described tract; thence along the easterly right of way line of said High Cross Boulevard and the westerly line of herein described tract, with a curve to the right, having a radius of 2960.00 feet, a chord bearing of N 9 21' 59" E, and a chord distance of 10/.64 feet to an iron pin set; thence N 9 28'10" E, along the easterly right of way line of said High Cross Boulevard and the westerly line of herein described tract a distance of 89.24 feet to an iron pin set; thence along the easterly right of way line of said High Cross Boulevard and the westerly line of herein described tract, with a curve to the left, having a radius of 390.00 feet, a chord bearing at N 3 47' 19" E, and a chord distance of 77.21 feet to an iron pin set; thence N 53' 32" W, along the easterly right of way line of said High Cross Boulevard and the westerly line of herein described tract a distance of 106/36 feet to the True Point of Beginning containing 2,005 acres, more or less, and subject to any rights of way, easements, and restrictions of record. The Basis of Bearing in this description is the centerline of East Campus View Boulevard, being S 86 49' 53" E, as shown in Plat Book 61, Page 79, Recorder's Office, Franklin County, Ohio. EX-27 3
5 0000931755 AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP 3-MOS DEC-31-1998 MAR-31-1998 2,328,791 0 72,704 0 0 2,401,495 17,049,956 (470,623) 18,980,828 588,815 0 0 0 0 18,392,013 18,980,828 0 452,487 0 193,513 0 0 0 428,911 0 428,911 0 0 0 428,911 17.82 17.82
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