Real Estate Investments

12 Months Ended

Dec. 31, 2023

(4) Real Estate Investments –

The Partnership leases its properties to tenants under net leases, classified as operating leases. Under a net lease, the tenant is responsible for real estate taxes, insurance, maintenance, repairs and operating expenses for the property. For some leases, the Partnership is responsible for repairs to the structural components of the building, the roof, and the parking lot. At the time the properties were acquired, the remaining primary lease terms varied from 10 to 18 years. The leases provide the tenants with two to four five-year renewal options subject to the same terms and conditions as the primary term. The leases for the Best Buy store in Eau Claire, Wisconsin and Jared Jewelry store in Auburn Hills, Michigan were extended to end on January 19, 2028 and December 31, 2029, respectively.

The Partnership's properties are commercial, single-tenant buildings. The Jared Jewelry store in Auburn Hills, Michigan was constructed in 1999 and acquired in 2005. The Best Buy store in Eau Claire, Wisconsin was constructed in 1990, renovated in 1997 and acquired in 2008. The Dollar Tree store in Cincinnati, Ohio was constructed in 2015 and acquired in 2016. The Advance Auto store in Chelsea, Alabama was constructed in 2006 and acquired in 2021. The Memorial Hospital in Diamondhead, Mississippi was constructed in 2008 and acquired in 2022. There have been no costs capitalized as improvements subsequent to the acquisitions.

The cost of the properties not held for sale and related accumulated depreciation at December 31, 2023 are as follows:


Property	Land		Buildings		Total		Accumulated Depreciation

Jared Jewelry, Auburn Hills, MI	$	280,993	$	1,185,055	$	1,466,048	$	898,649
Best Buy, Eau Claire, WI		2,068,739		4,988,357		7,057,096		1,915,949
Dollar Tree, Cincinnati, OH		355,000		1,250,270		1,605,270		395,926
Advance Auto, Chelsea, AL		420,654		1,226,345		1,646,999		128,767
Memorial Hospital, Diamondhead, MS		322,410		1,175,588		1,497,998		82,292
	$	3,447,796	$	9,825,615	$	13,273,411	$	3,421,583

For the years ended December 31, 2023 and 2022, the Partnership recognized depreciation expense of $393,025 and $348,206, respectively.

The following schedule presents the cost and related accumulated amortization of acquired lease intangibles not held for sale at December 31:


		2023				2022
		Cost		Accumulated Amortization		Cost		Accumulated Amortization
Acquired Intangible Lease Assets (in-place lease intangibles with a weighted average life of 49 and 61 months, respectively)	$	864,490	$	387,375	$	864,490	$	268,098

Acquired Below-Market Lease Intangibles (weighted average life of 25 and 37 months, respectively)	$	80,404	$	63,513	$	80,404	$	55,405

For the years ended December 31, 2023 and 2022, the value of in-place lease intangibles amortized to expense was $119,277 and $91,464, and the increase to rental income for below-market leases was $8,108, respectively. For lease intangibles not held for sale as of December 31, 2023, the estimated amortization expense is $119,277 for each of the next two succeeding years, $92,930 for the year ended December 31, 2026, $83,514 for the year ended December 31, 2027 and $15,362 for the year ended December 31, 2028. The estimated increase to rental income for below-market leases is $8,108 for each of the next two succeeding years and $675 for the year ended December 31, 2026.

In July 2021, the Partnership entered into an agreement with the tenant of the Jared Jewelry store in Hanover, Maryland to extend the lease term seven years to end on January 31, 2029. As part of the agreement, the annual rent will decrease from $224,340 to $167,500 effective February 1, 2022.

In December 2021, the Partnership entered into an agreement to sell its 50% interest in the Jared Jewelry store in Hanover, Maryland to an unrelated third party. On February 14, 2022, the sale closed with the Partnership receiving net proceeds of $2,450,634, which resulted in a net gain of $1,268,078. At the time of sale, the cost and related accumulated depreciation was $1,989,135 and $806,579, respectively.

On March 22, 2022, the Partnership purchased a 40% interest of the Memorial Hospital property in Diamondhead, Mississippi for $1,610,422. The Partnership allocated $114,052 of the purchase price to Acquired Lease Assets, representing in-place intangibles. The property is leased to Memorial Hospital at Gulfport, Incorporated under a lease agreement with a remaining primary term of 5.3 years (as of date of purchase) and annual rent of $100,320, scheduled to increase annually at 2%.

On May 11, 2022, the Partnership purchased an additional 46% interest in the Best Buy store in Eau Claire, Wisconsin for $3,726,043 from AEI Income & Growth Fund 26 LLC, an affiliate of the Partnership. The purchase price of the property was based upon the property’s fair market value as determined by an independent third party, commercial property appraiser. The property interest became available because AEI Income & Growth Fund 26 LLC was in the process of liquidating its property portfolio. The Partnership now owns 100% interest in the property. The Partnership allocated $306,653 of the purchase price to Acquired Intangible Lease Assets, representing in-place lease intangibles. The annual rent for the additional 46% interest that was purchased is $240,432.

For properties owned as of December 31, 2023, the minimum future rent payments required by the leases are as follows:

2024	$	991,773
2025		993,878
2026		874,806
2027		810,512
2028		243,590
Thereafter		408,060
	$	4,322,619

There were no contingent rents recognized in 2023 and 2022.