-----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, CutSzD+7JqQHo6K+h5eevRqEsEKO7bOMnYRQoXJaioAN0Zs9sYGL9wZlNxSb6WS8 yeB8CIsqG+qCiOoly/qC9w== 0000931755-96-000006.txt : 19961115 0000931755-96-000006.hdr.sgml : 19961115 ACCESSION NUMBER: 0000931755-96-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 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: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-85076 FILM NUMBER: 96662268 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: September 30, 1996 Commission file number: 33-85076C 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 September 30, 1996 and December 31, 1995 Statements for the Periods ended September 30, 1996 and 1995: Operations 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 SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 (Unaudited) ASSETS 1996 1995 CURRENT ASSETS: Cash and Cash Equivalents $ 8,559,764 $ 8,367,460 Receivables 40,069 15,311 ----------- ----------- Total Current Assets 8,599,833 8,382,771 ----------- ----------- INVESTMENTS IN REAL ESTATE: Land 2,508,478 751,086 Buildings and Equipment 5,012,344 1,417,078 Construction Advances 1,204,480 0 Property Acquisition Costs 155,060 17,905 Accumulated Depreciation (108,757) (11,687) ----------- ----------- Net Investments in Real Estate 8,771,605 2,174,382 ----------- ----------- Total Assets $17,371,438 $10,557,153 =========== =========== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Payable to AEI Fund Management, Inc. $ 138,257 $ 70,805 Distributions Payable 378,000 199,829 Unearned Rent 31,998 0 ----------- ----------- Total Current Liabilities 548,255 270,634 ----------- ----------- PARTNERS' CAPITAL (DEFICIT): General Partners (10,334) (4,832) Limited Partners, $1,000 Unit value; 24,000 Units authorized; 20,493 and 12,290 Units issued and outstanding in 1996 and 1995, respectively 16,833,517 10,291,351 ----------- ----------- Total Partners' Capital 16,823,183 10,286,519 ----------- ----------- Total Liabilities and Partners' Capital $17,371,438 $10,557,153 =========== =========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP STATEMENT OF OPERATIONS FOR THE PERIODS ENDED SEPTEMBER 30 (Unaudited) Three Months Ended Nine Months Ended 9/30/96 9/30/95 9/30/96 9/30/95 INCOME: Rent $ 168,116 $ 19,453 $ 377,035 $ 26,146 Investment Income 126,602 68,897 348,538 104,555 ----------- ----------- ----------- ----------- Total Income 294,718 88,350 725,573 130,701 ----------- ----------- ----------- ----------- EXPENSES: Partnership Administration- Affiliates 80,814 37,237 187,609 91,035 Partnership Administration and Property Management - Unrelated Parties 2,664 1,570 19,651 4,073 Depreciation 43,360 3,545 97,070 4,726 ----------- ----------- ----------- ----------- Total Expenses 126,838 42,352 304,330 99,834 ---------- ----------- ----------- ----------- NET INCOME $ 167,880 $ 45,998 $ 421,243 $ 30,867 ========== =========== =========== =========== NET INCOME ALLOCATED: General Partners $ 1,678 $ 460 $ 4,212 $ 309 Limited Partners 166,202 45,538 417,031 30,558 ----------- ----------- ----------- ----------- $ 167,880 $ 45,998 $ 421,243 $ 30,867 =========== =========== =========== =========== NET INCOME PER LIMITED PARTNERSHIP UNIT (18,870, 6,570, 16,084 and 5,197 weighted average Units outstanding for the periods, respectively) $ 8.81 $ 6.93 $ 25.93 $ 5.88 =========== =========== =========== ========== 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 SEPTEMBER 30 (Unaudited) 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 421,243 $ 30,867 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 97,070 4,726 Increase in Receivables (24,758) (13,389) Increase in Payable to AEI Fund Management, Inc. 67,452 49,786 Increase in Unearned Rent 31,998 0 ----------- ----------- Total Adjustments 171,762 41,123 ----------- ----------- Net Cash Provided By Operating Activities 593,005 71,990 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Investments in Real Estate (6,694,293) (800,134) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Capital Contributions from Limited Partners 8,202,697 9,009,987 Organization and Syndication Costs (1,115,818) (1,284,748) Increase in Distributions Payable 178,171 52,521 Distributions to Partners (971,458) (191,803) ----------- ----------- Net Cash Provided By Financing Activities 6,293,592 7,585,957 ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 192,304 6,857,813 CASH AND CASH EQUIVALENTS, beginning of period 8,367,460 986 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 8,559,764 $ 6,858,799 =========== =========== 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 SEPTEMBER 30 (Unaudited) Limited Partnership General Limited Units Partners Partners Total Outstanding BALANCE, December 31, 1994 $ (1,915) $ 0 $ (1,915) Capital Contributions 0 9,009,987 9,009,987 9,009.99 Organization and Syndication Costs (60) (1,284,688) (1,284,748) Distributions (1,918) (189,885) (191,803) Net Income 309 30,558 30,867 --------- ----------- ----------- ---------- BALANCE, September 30, 1995 $ (3,584) $ 7,565,972 $ 7,562,388 9,009.99 ========= =========== =========== ========== BALANCE, December 31, 1995 $ (4,832) $10,291,351 $10,286,519 12,289.81 Capital Contributions 0 8,202,697 8,202,697 8,202.69 Organization and Syndication Costs 0 (1,115,818) (1,115,818) Distributions (9,714) (961,744) (971,458) Net Income 4,212 417,031 421,243 --------- ----------- ----------- ---------- BALANCE, September 30, 1996 $ (10,334) $16,833,517 $16,823,183 20,492.50 ========= =========== =========== ========== The accompanying Notes to Financial Statements are an integral part of this statement. AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (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., 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. Under the terms of the Restated Limited Partnership Agreement, 24,000 Limited Partnership Units are available for subscription which, if fully subscribed, will result in contributed Limited Partners' capital of $24,000,000. The Partnership commenced operations on April 14, 1995 when minimum subscriptions of 1,500 Limited Partnership Units ($1,500,000) were accepted. At September 30, 1996, 20,492.503 Units ($20,492,503) were subscribed and accepted by the Partnership. The General Partners have contributed capital of $1,000. The Managing General Partner has extended the offering of Units to the earlier of completion of sale of all Units or January 31, 1997. 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 - In 1995, the Partnership elected early adoption of the Statement of Financial Accounting Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for Long- Lived Assets to be Disposed Of." This standard requires the Partnership to compare the carrying amount of its properties to the estimated future cash flows expected to result from the property and its eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the property, the Statement requires the Partnership to recognize an impairment loss by the amount by which the carrying amount of the property exceeds the fair value of the property. Adoption of this Statement is not expected to have a material effect on the Partnership's financial statements. The Partnership leases its properties to various tenants through non-cancelable 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 Media Play store which has a Lease term of 18 years. The Leases contain renewal options which may extend the Lease term an additional 10 years for the Arby's, an additional 15 years for Champp's Americana, an additional 20 years for the Media Play store and an additional 25 years for the Garden Ridge 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 September 30, 1996 are as follows: Buildings and Accumulated Property Land Equipment Total Depreciation Arby's Montgomery, AL $ 328,310 $ 425,794 $ 754,104 $ 22,709 Media Play Apple Valley, MN 422,776 991,284 1,414,060 33,278 Garden Ridge Pineville, NC 1,159,459 2,417,693 3,577,152 48,354 Champp's Americana Columbus, OH 597,933 1,177,573 1,775,506 4,416 ----------- ----------- ----------- ----------- $ 2,508,478 $ 5,012,344 $ 7,520,822 $ 108,757 =========== =========== =========== =========== AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (Continued) (3) Investments in Real Estate - (Continued) On March 28, 1996, the Partnership purchased a 40.75% interest in a Garden Ridge store in Pineville, North Carolina for $3,577,152. The property is leased to Garden Ridge, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of $383,973. The remaining interest in the property was purchased by AEI Net Lease Income & Growth Fund XIX Limited Partnership and AEI Net Lease Income & Growth Fund XX Limited Partnership, affiliates of the Partnership. On August 29, 1996, the Partnership purchased a 67.8% interest in a Champp's Americana restaurant in Columbus, Ohio for $1,775,506. The property is leased to Americana Dining Corporation under a Lease Agreement with a primary term of 20 years and annual rental payments of $191,259. The remaining interest in the property was purchased by AEI Real Estate Fund XVIII Limited Partnership, an affiliate of the Partnership. In August, 1996, the Partnership entered into an agreement to purchase a Denny's restaurant in Covington, Louisiana. The purchase price will be approximately $1,111,000. The property will be leased to Huntington Restaurants Group, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of approximately $125,000. Through September 30, 1996, the Partnership had advanced $560,485 for the construction of the property and was charging interest on the Note at the rate of 8.0%. In August, 1996, the Partnership entered into an agreement to purchase a 93.1% interest in a Caribou Coffee store in Charlotte, North Carolina. The purchase price will be approximately $1,274,000. The property will be leased to Caribou Coffee Company, Inc. under a Lease Agreement with a primary term of 18 years and annual rental payments of approximately $146,000. Through September 30, 1996, the Partnership had advanced $643,995 for the construction of the property and was charging interest on the Note at the rate of 7.0%. The Partnership has incurred net costs of $191,052 relating to the review of potential property acquisitions. Of these costs, $35,992 have been capitalized and allocated to land, building and equipment. The remaining costs of $155,060 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 The Partnership's rental income is derived from long-term, triple net lease agreements on the Partnership's properties. For the nine months ended September 30, 1996 and 1995, the Partnership recognized rental income of $377,035 and $26,146, respectively. During the same periods, the Partnership also earned $348,538 and $104,555, 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 48% and 80%, respectively, of total income for the period. The percentage of total income represented by investment income declines as subscription proceeds are invested in properties. The annual rent from the four properties acquired is $793,799. Since the properties are leased under a triple-net lease, the Partnership has not incurred, and does not expect to incur, expenses associated with the operation or maintenance of property and the rental income represents the cash flow generated by the property to the Partnership. During the periods ended September 30, 1996 and 1995, the Partnership paid Partnership administration expenses to affiliated parties of $187,609 and $91,035, respectively. These administration expenses include initial start-up costs and expenses associated with processing distributions, reporting requirements and correspondence to the Limited Partners. The administrative expenses decrease after completion of the offering and acquisition phases of the Partnership's operations. During the same periods, the Partnership incurred Partnership administration and property management expenses from unrelated parties of $19,651 and $4,073, 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 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 September 30, 1996, 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. It is expected that increases in sales volumes of the tenants due to inflation and real sales growth, 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 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) The Partnership Agreement requires that no more than 15% of the proceeds from the sale of Units be applied to expenses involved in the sale of Units (including Commissions) and that such expenses, together with acquisition expenses, not exceed 20% of the proceeds from the sale of Units. As set forth under the caption "Estimated Use of Proceeds" of the Prospectus, the General Partners anticipate that 14% of such proceeds will be applied to cover organization and offering expenses if the maximum proceeds are obtained. To the extent organization and offering expenses actually incurred exceed 15% of proceeds, they are borne by the General Partners. 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. 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. During the offering of Units, the Partnership's primary source of cash flow will be 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. Through September 30, 1996, the Partnership raised a total of $20,492,503 from the sale of 20,492.503 Units. The Managing General Partner has extended the offering of Units to the earlier of completion of sale of all Units or January 31, 1997. From subscription proceeds, the Partnership incurred organization and syndication costs (which constitute a reduction of capital) of $2,831,471. On March 28, 1996, the Partnership purchased a 40.75% interest in a Garden Ridge store in Pineville, North Carolina for $3,577,152. The property is leased to Garden Ridge, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of $383,973. The remaining interest in the property was purchased by AEI Net Lease Income & Growth Fund XIX Limited Partnership and AEI Net Lease Income & Growth Fund XX Limited Partnership, affiliates of the Partnership. On August 29, 1996, the Partnership purchased a 67.8% interest in a Champp's Americana restaurant in Columbus, Ohio for $1,775,506. The property is leased to Americana Dining Corporation under a Lease Agreement with a primary term of 20 years and annual rental payments of $191,259. The remaining interest in the property was purchased by AEI Real Estate Fund XVIII Limited Partnership, an affiliate of the Partnership. In August, 1996, the Partnership entered into an agreement to purchase a Denny's restaurant in Covington, Louisiana. The purchase price will be approximately $1,111,000. The property will be leased to Huntington Restaurants Group, Inc. under a Lease Agreement with a primary term of 20 years and annual rental payments of approximately $125,000. Through September 30, 1996, the Partnership had advanced $560,485 for the construction of the property and was charging interest on the Note at the rate of 8.0%. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) In August, 1996, the Partnership entered into an agreement to purchase a 93.1% interest in a Caribou Coffee store in Charlotte, North Carolina. The purchase price will be approximately $1,274,000. The property will be leased to Caribou Coffee Company, Inc. under a Lease Agreement with a primary term of 18 years and annual rental payments of approximately $146,000. Through September 30, 1996, the Partnership had advanced $643,995 for the construction of the property and was charging interest on the Note at the rate of 7.0%. 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 Partnership may purchase 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. As of September 30, 1996, the Partnership has not acquired any Units from Limited Partners. Until capital is invested in properties, the Partnership will remain extremely liquid. At September 30, 1996, $8,574,833 or 49% 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. 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 - 27 Financial Data Schedule for period ended September 30, 1996. b. Reports filed on Form 8-K - During the quarter ended September 30, 1996, the Partnership filed a Form 8-K, dated September 12, 1996, reporting the acquisition of a 67.8% interest in the Champp's Americana restaurant in Columbus, Ohio. 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: November 13, 1996 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-27 2
5 0000931755 AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP 9-MOS DEC-31-1996 SEP-30-1996 8,559,764 0 40,069 0 0 8,599,833 8,880,362 (108,757) 17,371,438 548,255 0 0 0 0 16,823,183 17,371,438 0 725,573 0 304,330 0 0 0 421,243 0 421,243 0 0 0 421,243 25.93 25.93
-----END PRIVACY-ENHANCED MESSAGE-----