Equity Method Investments

9 Months Ended

Sep. 30, 2015

Significant Accounting Policies [Text Block]

(4) Equity Method Investments –

In the fourth quarter of 2013, the Partnership decided to sell its 20% interest in the CarMax Auto Superstore in Lithia Springs, Georgia. At December 31, 2013, the property was classified as Real Estate Held for Sale with a carrying value of $1,508,930. The remaining interests in the property were owned by three affiliated entities, AEI Income & Growth Fund 24 LLC, AEI Income & Growth Fund 25 LLC and AEI Private Net Lease Millennium Fund Limited Partnership. On March 7, 2014, to facilitate the sale of the property, the Partnership and affiliated entities contributed their respective interests in the property via a limited liability company to CM Lithia Springs DST (“CMLS”), a Delaware statutory trust (“DST”), in exchange for Class B ownership interests in CMLS. In addition, a small amount of cash was contributed for working capital. A DST is a recognized mechanism for selling property to investors who are looking for replacement real estate to complete like-kind exchanges under Section 1031 of the Internal Revenue Code. As investors purchased Class A ownership interests in CMLS, the proceeds received were used to redeem, on a one-for-one basis, the Class B ownership interests of the Partnership and affiliated entities. From March 13, 2014 to July 25, 2014, CMLS sold 100% of its Class A ownership interests to investors and redeemed 100% of the Class B ownership interests from the Partnership and affiliated entities. As of December 31, 2014, the Partnership had no ongoing interest in CMLS.

On August 29, 2014, to facilitate the sale of its 63% interest in the Tractor Supply Company store in Rapid City, South Dakota, the Partnership contributed the property via a limited liability company to AEI Net Lease Portfolio DST (“ANLP”) in exchange for 16.95% of the Class B ownership interests in ANLP. The remaining interest in the property, owned by an affiliated entity, along with two other properties owned by two other affiliated entities, were also contributed to ANLP in exchange for 83.05% of the Class B ownership interests in ANLP. In addition, cash was contributed for working capital. From September 5, 2014 to October 30, 2014, ANLP sold 100% of its Class A ownership interests to investors and redeemed 100% of the Class B ownership interests from the Partnership and affiliated entities. As of December 31, 2014, the Partnership had no ongoing interest in ANLP.

The investments in CMLS and ANLP were recorded using the equity method of accounting in the accompanying financial statements. Under the equity method, the investments were stated at cost and adjusted for the Partnership’s share of net income or losses and reduced by proceeds received from the sale of the Class B ownership interests of the DSTs as well as distributions from net rental income. During 2014, the investment balances consisted of the following:

Activity Through September 30, 2014:		CMLS		ANLP		Total
Real Estate Contributed (at carrying value)	$	1,508,930	$	1,681,698	$	3,190,628
Cash Contributed		12,169		25,319		37,488
Net Income – Rental Activity		32,956		9,148		42,104
Net Income – Gain on Sale of Real Estate		579,036		249,219		828,255
Distributions from Net Rental Income		(32,956)		(9,148)		(42,104)
Proceeds from Sale of Class B Interests		(2,087,044)		(973,952)		(3,060,996)
Equity Method Investments at September 30, 2014		13,091		982,284		995,375

Activity After September 30, 2014:
Net Income – Rental Activity		9		2,602		2,611
Net Income – Gain on Sale of Real Estate		11,781		260,690		272,471
Distributions from Net Rental Income		(9)		(2,602)		(2,611)
Proceeds from Sale of Class B Interests		(24,872)		(1,242,974)		(1,267,846)
Equity Method Investments at December 31, 2014	$	0	$	0	$	0