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, 1998
Commission file number: 333-5604
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1848181
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(651) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1998 and December 31, 1997
Statements for the Periods ended September 30, 1998 and 1997:
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
<PAGE>
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
ASSETS
1998 1997
CURRENT ASSETS:
Cash and Cash Equivalents $10,150,301 $ 5,808,792
Receivables 24,977 0
----------- -----------
Total Current Assets 10,175,278 5,808,792
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 720,747 295,020
Buildings and Equipment 373,124 373,124
Construction in Progress 85,368 0
Property Acquisition Costs 353,744 93,860
Accumulated Depreciation (12,686) (668)
----------- -----------
Net Investments in Real Estate 1,520,297 761,336
----------- -----------
Total Assets $11,695,575 $ 6,570,128
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 152,986 $ 161,446
Distributions Payable 228,024 100,335
Unearned Rent 5,637 0
----------- -----------
Total Current Liabilities 386,647 261,781
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (15,997) (4,970)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized; 13,948 and
7,656 Units issued and outstanding in
1998 and 1997, respectively 11,324,925 6,313,317
----------- -----------
Total Partners' Capital 11,308,928 6,308,347
----------- -----------
Total Liabilities and Partners' Capital $11,695,575 $ 6,570,128
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
INCOME:
Rent $ 39,918 $ 0 $ 74,463 $ 0
Investment Income 118,024 34,835 315,280 49,053
--------- --------- --------- ---------
Total Income 157,942 34,835 389,743 49,053
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 50,591 42,707 158,561 92,272
Partnership Administration
and Property Management -
Unrelated Parties 1,020 164 12,056 249
Depreciation 4,006 0 12,018 0
--------- --------- --------- ---------
Total Expenses 55,617 42,871 182,635 92,521
--------- --------- --------- ---------
NET INCOME (LOSS) $ 102,325 $ (8,036) $ 207,108 $ (43,468)
========= ========= ========= =========
NET INCOME (LOSS) ALLOCATED:
General Partners $ 3,069 $ (81) $ 6,213 $ (435)
Limited Partners 99,256 (7,955) 200,895 (43,033)
--------- --------- --------- ---------
$ 102,325 $ (8,036) $ 207,108 $ (43,468)
========= ========= ========= =========
NET INCOME (LOSS) PER
LIMITED PARTNERSHIP UNIT
(12,894, 3,024, 10,665 and
2,545 weighted average Units
outstanding for the periods,
respectively) $ 7.70 $ (2.63) $ 18.84 $ (16.91)
========= ========= ========= ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 207,108 $ (43,468)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 12,018 0
Increase in Receivables (24,977) 0
Increase (Decrease) in Payable
to AEI Fund Management, Inc. (8,460) 92,036
Increase in Unearned Rent 5,637 0
----------- -----------
Total Adjustments (15,782) 92,036
----------- -----------
Net Cash Provided By
Operating Activities 191,326 48,568
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (770,979) (54,895)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Partners 6,292,182 4,596,787
Organization and Syndication Costs (924,018) (689,518)
Increase in Distributions Payable 127,689 50,705
Distributions to Partners (574,691) (74,504)
----------- -----------
Net Cash Provided By
Financing Activities 4,921,162 3,883,470
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,341,509 3,877,143
CASH AND CASH EQUIVALENTS, beginning of period 5,808,792 943
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $10,150,301 $ 3,878,086
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1996 $ 643 $ 0 $ 643 0
Capital Contributions 0 4,596,787 4,596,787 4,596.79
Organization and
Syndication Costs (60) (689,458) (689,518)
Distributions (1,181) (73,323) (74,504)
Net Loss (435) (43,033) (43,468)
--------- ----------- ----------- --------
BALANCE, September 30, 1997 $ (1,033) $ 3,790,973 $ 3,789,940 4,596.79
========= =========== =========== ========
BALANCE, December 31, 1997 $ (4,970) $ 6,313,317 $ 6,308,347 7,656.00
Capital Contributions 0 6,292,182 6,292,182 6,292.18
Organization and
Syndication Costs 0 (924,018) (924,018)
Distributions (17,240) (557,451) (574,691)
Net Income 6,213 200,895 207,108
--------- ----------- ----------- ---------
BALANCE, September 30, 1998 $(15,997) $11,324,925 $11,308,928 13,948.18
========= =========== =========== =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 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 XXII Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XXI, Inc.
(AFM), the Managing General Partner 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 May 1, 1997 when minimum subscriptions of
1,500 Limited Partnership Units ($1,500,000) were accepted.
At September 30, 1998, 13,948.177 Units ($13,948,177) 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 9,
1999.
During the operation of the Partnership, any Net Cash Flow,
as defined, which the General Partners determine to
distribute will be distributed 97% to the Limited Partners
and 3% to the General Partners. Distributions to Limited
Partners will be made pro rata by Units.
Any Net Proceeds of Sale, as defined, from the sale or
financing of 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 9% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) any
remaining balance will be distributed 90% to the Limited
Partners and 10% to the General Partners. Distributions to
the Limited Partners will be made pro rata by Units.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
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 9% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% to the General Partners.
Losses will be allocated 98% to the Limited Partners and 2%
to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
(3) Investments in Real Estate -
The Partnership will lease its properties to various tenants
through triple net leases, which are or will be 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 15 years for the TGI FridayOs
restaurant and 20 years for the Champps Americana
restaurant. The leases contain renewal options which may
extend the Lease term an additional 10 years for the TGI
FridayOs restaurant and 15 years for the Champps Americana
restaurant. The Leases contain rent clauses which entitle
the Partnership to receive additional rent in future years
based on stated rent increases.
The Partnership's properties are commercial, single-tenant
buildings. The cost of the property and related accumulated
depreciation at September 30, 1998 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
TGI Friday's
Greensburg, PA $ 295,020 $ 373,124 $ 668,144 $ 12,686
Champps Americana
Centerville, OH 425,727 0 425,727 0
----------- ----------- ----------- ----------
$ 720,747 $ 373,124 $ 1,093,871 $ 12,686
=========== =========== =========== ==========
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
On December 10, 1997, the Partnership purchased a 40.0%
interest in a TGI Friday's restaurant in Greensburg,
Pennsylvania for $668,144. The property is leased to Ohio
Valley Bistros, Inc. under a Lease Agreement with a primary
term of 15 years and annual rental payments of $67,650. The
remaining interest in the property was purchased by AEI Real
Estate Fund XVII Limited Partnership, an affiliate of the
Partnership.
On June 29, 1998, the Partnership purchased a parcel of land
in Centerville, Ohio for $1,850,988. On August 28, 1998,
the Partnership assigned, for diversification purposes, 77%
of its interest in the property to three affiliated
partnerships. The land is leased to Americana Dining
Corporation (ADC) under a Lease Agreement with a primary
term of 20 years and annual rental payments of $29,801.
Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership will advance funds to ADC for
the construction of a Champps Americana restaurant on the
site. Through September 30, 1998, the Partnership had
advanced $85,368 for the construction of the property and
was charging interest on the advances at a rate of 7.0%.
The Partnership's share of the total purchase price,
including the cost of the land, will be approximately
$974,000. After the construction is complete, the Lease
Agreement will be amended to require annual rental payments
of approximately $100,000. The remaining interests in the
property are owned by AEI Real Estate Fund XVII Limited
Partnership, AEI Real Estate Fund XVIII Limited Partnership
and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
In October, 1998, the Partnership entered into an agreement
to purchase a Hollywood Video store in Saraland, Alabama.
The purchase price will be approximately $1,300,000. The
property will be leased to Hollywood Entertainment
Corporation under a Lease Agreement with a primary term of
15 years and annual rental payments of approximately
$129,600.
The Partnership has incurred net costs of $361,888 relating
to the review of potential property acquisitions. Of these
costs, $8,144 have been capitalized and allocated to land,
building and equipment. The remaining costs of $353,744
have been capitalized and will be allocated to properties
acquired subsequent to September 30, 1998.
(4) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 1998, the
Partnership recognized rental income of $74,463. During the same
period, the Partnership also earned $315,280 in investment income
from subscription proceeds which were invested in short-term
money market accounts. This investment income constituted 81% of
total income. The percentage of total income represented by
investment income declines as subscription proceeds are invested
in properties.
During the nine months ended September 30, 1998 and 1997,
the Partnership paid Partnership administration expenses to
affiliated parties of $158,561 and $92,272, 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 period, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $12,056 and $249, 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, 1998, the Partnership's cash
distribution rate was 7.0% on an annualized basis. Pursuant to
the Partnership Agreement, distributions of Net Cash Flow were
allocated 97% to the Limited Partners and 3% 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 may 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 are from
proceeds from the sale of Units, investment income, rental income
and proceeds from the sale of property. Its primary uses of cash
are investment in real properties, payment of expenses involved
in the sale of units, the organization of the Partnership, the
acquisition of properties, 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 such 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.
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
January 10, 1997. From January 10, 1997 to May 1, 1997, the
minimum number of Limited Partnership Units (1,500) needed to
form the Partnership were sold and on May 1, 1997, a total of
1,629.201 Units ($1,629,201) were transferred into the
Partnership. Through September 30, 1998, the Partnership raised
a total of $13,948,177 from the sale of 13,948.177 Units. The
Managing General Partner has extended the offering of Units to
the earlier of completion of sale of all Units or January 9,
1999. From subscription proceeds, the Partnership paid
organization and syndication costs (which constitute a reduction
of capital) of $2,072,418.
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 December 10, 1997, the Partnership purchased a 40.0%
interest in a TGI Friday's restaurant in Greensburg, Pennsylvania
for $668,144. The property is leased to Ohio Valley Bistros,
Inc. under a Lease Agreement with a primary term of 15 years and
annual rental payments of $67,650. The remaining interest in the
property was purchased by AEI Real Estate Fund XVII Limited
Partnership, an affiliate of the Partnership.
On June 29, 1998, the Partnership purchased a parcel of
land in Centerville, Ohio for $1,850,988. On August 28, 1998,
the Partnership assigned, for diversification purposes, 77% of
its interest in the property to three affiliated partnerships.
The land is leased to Americana Dining Corporation (ADC) under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $29,801. Simultaneously with the purchase of the
land, the Partnership entered into a Development Financing
Agreement under which the Partnership will advance funds to ADC
for the construction of a Champps Americana restaurant on the
site. Through September 30, 1998, the Partnership had advanced
$85,368 for the construction of the property and was charging
interest on the advances at a rate of 7.0%. The Partnership's
share of the total purchase price, including the cost of the
land, will be approximately $974,000. After the construction is
complete, the Lease Agreement will be amended to require annual
rental payments of approximately $100,000. The remaining
interests in the property are owned by AEI Real Estate Fund XVII
Limited Partnership, AEI Real Estate Fund XVIII Limited
Partnership and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In October, 1998, the Partnership entered into an
agreement to purchase a Hollywood Video store in Saraland,
Alabama. The purchase price will be approximately $1,300,000.
The property will be leased to Hollywood Entertainment
Corporation under a Lease Agreement with a primary term of 15
years and annual rental payments of approximately $129,600.
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.
Beginning in 1998, 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.
Until capital is invested in properties, the Partnership
will remain extremely liquid. At September 30, 1998, $10,151,553
or 87% 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:
<bullet> Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
<bullet> the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for investors;
<bullet> resolution by the General Partners of conflicts with
which they may be confronted;
<bullet> the success of the General Partners of locating
properties with favorable risk return characteristics;
<bullet> the effect of tenant defaults; and
<bullet> the condition of the industries in which the tenants of
properties owned by the Partnership operate.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5.OTHER INFORMATION
None.
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Assignment of the Development
Financing Agreement and Net Lease
Agreement dated August 27, 1998 between
the Partnership, AEI Real Estate Fund
XVII Limited Partnership, AEI Real Estate
Fund XVIII Limited Partnership, AEI
Income & Growth Fund XXI Limited
Partnership, and Americana Dining Corp.
relating to the property at 7880
Washington Village Drive, Centerville,
Ohio.
10.2 Purchase Agreement dated October 8,
1998 between AEI Fund Management and
Centurion Video Ltd. relating to the
property at 1097 Industrial Parkway,
Saraland, Alabama.
10.3 Assignment of Purchase Agreement
dated November 2, 1998 between the
Partnership and AEI Fund Management
relating to the property at 1097
Industrial Parkway, Saraland, Alabama.
27 Financial Data Schedule for period
ended September 30, 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: November 9, 1998 AEI Income & Growth Fund XXII
Limited Partnership
By: AEI Fund Management XXI, Inc.
Its: Managing General Partner
By: /s/ Robert P Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
ASSIGNMENT
OF
DEVELOPMENT FINANCING AND LEASING COMMITMENT
DEVELOPMENT FINANCING AGREEMENT
DEVELOPMENT FINANCING DISBURSEMENT AGREEMENT
NET LEASE AGREEMENT
AFFIDAVIT OF LESSEE AND GUARANTOR
GUARANTEE OF LEASE
GUARANTEE OF DEVELOPMENT FINANCING AGREEMENT
THIS ASSIGNMENT made and entered into this 27th day of
August, 1998, by and between AEI INCOME & GROWTH FUND XXII,
a Minnesota Limited Partnership, ("Assignor") and AEI INCOME
& GROWTH FUND XXI LIMITED PARTNERSHIP, a Minnesota limited
partnership, AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP,
a Minnesota limited partnership, AEI REAL ESTATE FUND XVII
LIMITED PARTNERSHIP, a Minnesota limited partnership
("Assignees");
WITNESSETH, that:
WHEREAS, on the 26th day of June, 1998, Assignor
entered into Development Financing And Leasing Commitment,
Development Financing Agreement, Development Financing
Disbursement Agreement, Affidavit Of Lessee And Guarantor,
Guarantee Of Lease, Guarantee Of Development Financing
Agreement ("the Agreements") for that certain property
located at 7880 Washinton Villiage DriveCenterville, OH
45459 (the "Property") with Americana Dining Corp., as
Seller/Lessee; and
WHEREAS, Assignor desires to assign an undivided
interest of its rights, title and interest in, to and under
the Agreements to the Assignees as hereinafter provided;
AEI INCOME & GROWTH FUND XXI LIMITED PARTNERSHIP 25.00%
AEI REAL ESTATE FUND XVIII LIMITED PARNTERSHIP 38.00%
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP 14.00%
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor maintains a twenty-three percent (23%)
right, title and interest in, to and under the
Agreements, to have and to hold the same unto its
successors and assigns;
2. Assignor assigns all of its rights, title and
interest in, to and under the Agreements to the
Assignees as noted above, to have and to hold the same
unto the Assignees, its successors and assigns;
3. Assignees hereby assumes all rights, promises,
covenants, conditions and obligations under the
Agreements to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Agreements from this day forward.
4. The Purchase Price paid by the Assignees
designated herein is equal to the prorata share of the
amounts funded as of the date of this Agreement.
All other terms and conditions of the Agreements shall
remain unchanged and continue in full force and effect.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
("Assignor")
BY: AEI FUND MANAGEMENT XXII, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI INCOME & GROWTH FUND XXI
LIMITED PARTNERSHIP ("Assignee")
BY: AEI FUND MANAGEMENT XXI, INC.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVIII LIMITED PARNERSHIP
("Assignee")
BY: AEI FUND MANAGEMENT XVIII, INC.
By:/s/ Robert P Johnson
Robert P. Johnson, its President
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP
("Assignee")
BY: AEI FUND MANAGEMENT XVII, INC.
By:/s/ Robert P Johnson
Robert P. Johnson, its President
PURCHASE AGREEMENT
CENTURION VIDEO LTD.
HOLLYWOOD VIDEO STORES
INDUSTRIAL BOULEVARD (HIGHWAY 158), SARALAND, ALABAMA,
AND
HIGHWAY 190, COVINGTON, LOUISIANA
This Purchase Agreement (the "Agreement") entered into
and effective as of the 8 day of October, 1998, by and
between Centurion Video Ltd. (the "Seller") and AEI Fund
Management, Inc., a Minnesota corporation, or its assigns
(the "Buyer").
1. Property. Seller holds an undivided 100% interest in
the fee title to that certain real property legally
described in the attached Exhibit "A" (the "Parcels").
Seller wishes to sell and Buyer wishes to purchase the
Parcels and all improvements thereon developed as Hollywood
Video stores (the "Improvements") on the Parcels (the
Parcels and the Improvements collectively, the "Property" or
"Properties").
2. Lease. The Properties are being sold subject to
existing Leases of the Properties by and between Seller, as
lessor, and Hollywood Entertainment Corporation, as lessee
(the "Lessee"), each dated December 15, 1997 (the " Lease"
or "Leases"). Buyer shall have the right to approve each
such Lease which approval shall include but shall not be
limited to an Opinion of Counsel from the State in which
each Property is located regarding the enforceability of the
Lease, to be obtained at Buyer's expense during the First
Contingency Period as hereinafter defined.
3. Closing Date. The closing date on the Buyer's purchase
of the Properties shall take place fifteen (15) days after
the end of the First Contingency Period as herein defined,
subject to the Second Due Diligence Period. (the "Closing
Date").
4. Purchase Price. The purchase prices for the Properties
are as follows: Saraland, Alabama $1,332,305 and Covington,
Louisiana $1,291,105 (the "Purchase Prices"), which as a
contingency to Buyer's obligations hereunder must each be
supported by an MAI appraisal of the Property to be obtained
by Buyer as described in Article 8.03 hereof. If all
conditions precedent to Buyer's obligations to purchase have
been satisfied, Buyer shall deposit the Purchase Prices with
a title company acceptable to Buyer as described in Article
6 hereof (the "Closing Agent") on or before the Closing
Date.
Within five (5) business days of full execution of this
Agreement, Buyer will deposit $25,000 (the "Earnest Money")
for each Property in an escrow account with the Closing
Agent. The Earnest Money will be credited against the
Purchase Price paid by Buyer at closing when and if the
transaction contemplated herein closes and the sale is
completed.
The balance of the Purchase Prices shall be deposited
by Buyer into an escrow account with the Closing Agent on or
before the Closing Date. The Earnest Money is nonrefundable
following the expiration of the First Contingency Period as
set forth in paragraph 8.01.
On the Closing date Buyer shall receive an
overhead/supervision reimbursement for each property as
follows: Saraland, Alabama $38,805 and Covington, Louisiana
$37,605. The remaining Purchase Prices shall be disbursed
in accordance with this Agreement as designated herein.
5. Escrow. Escrow shall be opened by Seller with the
Closing Agent upon execution of this Agreement. A copy of
this Agreement will be delivered to the Closing Agent by
Seller and will serve as escrow instructions together with
any additional instructions required by Seller and/or Buyer
or their respective counsels. Seller and Buyer agree to
cooperate with the Closing Agent and sign any additional
instructions reasonably required by the Closing Agent to
close escrow. If there is any conflict between any other
instructions and this Agreement, this Agreement shall
control.
6. Title. Seller shall deliver to Buyer a commitment for
an ALTA Owner's Policy of Title Insurance (ALTA owner-most
recent edition), individually for each Property, issued by a
nationally recognized title insurance company acceptable to
Buyer (the "Title Company"), insuring marketable title in
the Properties, subject only to such matters as Buyer may
approve and contain such endorsements as Buyer may require,
including extended coverage and owner's comprehensive
coverage (the "Title Commitment" or "Title Commitments").
The Title Commitments shall show Seller as the present fee
owner of the Properties and show Buyer as the fee owner to
be insured.
The Title Commitments also shall include the following:
(a) an itemization of all outstanding and pending
special assessments and an itemization of taxes
affecting the Properties and the tax year to which
they relate;
(b) shall state whether taxes are current and if not,
show the amounts unpaid; and
(c) the tax parcel identification numbers and whether
the tax parcel includes property other than the
Properties to be purchased.
All easements, restrictions, documents and other items
affecting title shall be listed in Schedule "B" of each
Title Commitment. Copies of all instruments creating such
exceptions must be attached to each Title Commitment.
Buyer shall be allowed ten (10) business days after
receipt of the Title Commitments and copies of all
underlying documents or until the end of the First
Contingency Period, whichever is later to be consistent with
Article 8.01 hereof, for examination and the making of any
objections thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller
shall be allowed thirty (30) days to cure such objections 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 cure Buyer's objections, or is
unable to obtain insurable title within said thirty (30) day
period, this Agreement shall be null and void and of no
further force and effect and the Earnest Money shall be
returned in full to Buyer immediately and neither party
shall have any further duties or obligations to the other
hereunder
The Buyer shall also have ten (10) business days to
review and approve any easement, lien, hypothecation or
other encumbrance placed of record affecting the Properties
after the date of the Title Commitments. If necessary, the
Closing Date shall be extended by the number of days
necessary for the Buyer to have ten (10) business days to
review any such items. Such ten (10) business day review
period shall commence on the date the Buyer is provided with
a legible copy of the instrument creating such exception to
title. The Seller agrees to inform the Buyer of any item
executed by the Seller placed of record affecting the
Properties after the date of the Title Commitments. If any
objections are so made, the Seller shall be allowed thirty
(30) days to cure such objections 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 cure Buyer's objections, or is unable to obtain
insurable title within said thirty (30) day period, this
Agreement shall be null and void and of no further force and
effect and the Earnest Money shall be returned in full to
Buyer immediately and neither party shall have any further
duties or obligations to the other hereunder.
7. Site Inspection. Each property has been inspected and
approved by Buyer. Seller has agreed to reimburse Buyer
$1,500 for inspection costs. Such reimbursement is due and
payable, to Buyer, at the mutual execution of the Purchase
Agreement. This reimbursement is nonrefundable in the event
this transaction is terminated by either Seller or Buyer for
any reason.
8. Due Diligence and Contingency Periods.
8.01 First Due Diligence Documents and First Contingency
Period. Buyer shall have until the later of thirty (30)
days from the Date of the Purchase Agreement or until the
end of the tenth (10th) business day after the delivery of
all of the Seller provided First Due Diligence Documents
(the "First Contingency Period") to conduct all of its
inspections, due diligence and review to satisfy itself
regarding each item, the Properties and this transaction.
Due Diligence Documents, for each Property, are to be
delivered by Seller at Seller's expense unless specifically
designated herein to be obtained by Buyer as described
below:
(a) The Title Commitment, of current or recent date
and copies of all exceptions to title listed
therein;
(b) Existing ALTA As-Built survey of the Property,
dated after the completion of the present
improvements on the Property, with a reliance
letter from the surveyor to Buyer;
(c) Copies of the Lease and all amendments and
assignments thereto, Seller already provided;
(d) Phase I environmental assessment report prepared
by a company satisfactory to Buyer containing
evidence that the Property complies with all
federal, state and local environmental
regulations, to be of current date and certified
to Buyer. Seller and Buyer shall each pay one-
half the cost of updating existing reports and the
cost for Seller and Buyer each shall not exceed
$500 per property;
(e) Copies of the insurance certificates for Lessee
as required by the Lease;
(f) Final plans and specifications for the
Improvements;
(g) All documents Title Company deems necessary to
support the authority of the persons executing any
documents on behalf of the Seller or Lessee;
(h) Existing soils report;
(I) Permits and licenses issued or required for the
operation of the premises by Tenant, if any;
(j) Real estate tax statement;
(k) Certificate of Occupancy;
(l) MAI appraisal, stating the value of the Property
with the completed Improvements thereon to be of
current date and certified to Buyer and shall be
paid for and obtained by Buyer;
(m) Seller prepared AIA Certificate of Substantial
Completion executed by the general contractor and
Seller certifying, to Seller as of the completion
date of the Improvements, that the Improvements
have been completed in accordance with the plans
and specifications and the soils report for the
Property and comply with all applicable building,
zoning, energy, environmental laws and regulations
and the Americans with Disabilities Act; and
(n) Zoning compliance letter from the municipality or
county exercising land use control over the
Property in form and substance satisfactory to
Buyer, to be obtained by Buyer, to be of current
date and certified to Buyer.
(All of the above described documents (a) through (n)
are hereinafter collectively the "First Due Diligence
Documents").
Buyer may cancel this Agreement for any reason in its
sole discretion by delivering a cancellation notice, return
receipt requested, to Seller and Closing Agent prior to the
end of the First Contingency Period. All due diligence
documents, provided by Seller, are to be returned to Seller
and the Earnest Money shall be returned in full to Buyer
immediately and neither party shall have any further duties
or obligations to the other hereunder. Such notice shall be
deemed effective upon receipt by Seller.
8.02 Form of Closing Documents. Prior to the end of the
First Contingency Period, Seller and Buyer shall agree on
the form of the following documents, for each Property, to
be delivered to Buyer on the Closing Date by Seller as set
forth in Article 14 hereof:
(a) Special warranty deed;
(b) Seller's Affidavit;
(c) FIRPTA Affidavit;
(d) Assignment of the Lease;
(e) Assignment of warranties from the party or parties
constructing the Improvements on the Property;
(g) Seller prepared AIA Certificate of Substantial
Completion executed by the general contractor and
Seller, certifying, to Seller as of the completion
date of the Improvements, that the Improvements
have been completed in accordance with the plans
and specifications and the soils report for the
Property and comply with all applicable building,
zoning, energy, environmental laws and regulations
and the Americans with Disabilities Act;
(h) Estoppel from Lessee;
(I) Indemnity from Seller in favor of Buyer over
representations and warranties (including but not
limited to construction matters) for which the
Landlord is liable under the Lease;
(j) Any documentation modifying the Lease as may be
required by Buyer and agreed to between Buyer
and/or Seller and Tenant; and
(k) The Assignments of all warranties, and if such
warranties are not unassignable on their face,
the written consents of the assignments thereof by
the party giving the warranty from the party or
parties constructing the Improvements on the
Property.
In the event that Seller and Buyer, and where applicable,
Lessee, do not reach mutual agreement on the form of the
above described documents (a) through (k) prior to the end
of the First Contingency Period, this Agreement may be
terminated by either Seller or Buyer and the Earnest Money
shall be returned in full to the Buyer immediately and
neither party shall have any further duties or obligations
to the other hereunder.
8.03 Second Due Diligence Documents and Second Contingency
Period.
(A) As soon as available, but in any event no later than at
least ten (10) business days prior to the Closing Date (the
"Second Contingency Period"), Seller shall deliver to Buyer,
for each Property, the following items for review and
acceptance:
(1) Any documents or written summary of facts known to
Seller that materially change or render incomplete,
invalid, or inaccurate any of the First Due Diligence
Documents; and
(2) Seller to provide representation to Buyer that the
transaction contemplated herein does not represent
a fraudulent conveyance.
(All of the above described documents (1) through (2)
are hereinafter collectively the "Second Due Diligence
Documents").
Buyer shall have ten (10) business days to examine and
to accept all of the above-described Second Due
Diligence Documents. After Buyer's receipt and review
of the Second Due Diligence Documents, Buyer may cancel
this Agreement if any of the Second Due Diligence
Documents are not acceptable to Buyer, in its sole
discretion, by delivering a cancellation notice, as
provided herein, to Seller and Closing Agent prior to
the end of the Second Contingency Period. Such notice
shall be deemed effective upon receipt by Seller. If
Buyer so terminates this Agreement, the Earnest Money
shall be returned in full to Buyer immediately and
thereafter neither party shall have any further duties
or obligations to the other hereunder.
It shall be a condition precedent to BuyerOs
obligations to close hereunder that there have been no
material changes in any of the information reflected in the
First or Second Due Diligence Documents after the date of
such document and prior to closing.
Until this Agreement is terminated or the Closing has
occurred, Seller shall deliver to Buyer any documentation
that comes in Seller's possession that modifies any of the
First or Second Due Diligence Documents, including the
Lease, or could render any of the First or Second Due
Diligence Documents materially inaccurate, incomplete or
invalid. Buyer shall, in any event, have five (5) business
days before the Closing Date to review any such document
and, if necessary, the Closing Date shall be extended by the
number of days necessary for Buyer to have five (5) business
days to review any such document or documents.
9. Closing Costs. Seller shall pay all costs of
closing, including, but not limited to, the owner's title
insurance commitment and policy, recording fees, escrow
fees, any brokerage fees to American Asset Advisors and the
costs of updating and certifying all Due Diligence Documents
unless otherwise designated herein to be paid by Buyer.
Each party will pay its own attorneys' fees to close this
transaction. Buyer is to pay any transfer fees or mortgage
registration taxes resulting from its recording of a
mortgage or deed of trust on any of the Properties. Seller
and Buyer shall each pay one-half the cost of updating the
existing Phase I environmental reports limited to each party
paying up to $500 per property.
10. Real Estate Taxes and Assessments. Seller represents
to Buyer that to the best of its knowledge, all real estate
taxes and installments of special assessments due and
payable on or before the Closing Date have been or will be
paid in full as of the Closing Date. It is understood
between Seller and Buyer that all unpaid levied and pending
special assessments are paid by the Lessee and shall be the
responsibility of the Lessee under the Lease after the
Closing Date.
In the event Lessee does not pay any special
assessments or real estate taxes that are the responsibility
of the Lessee under the Lease, Seller and Buyer agree to
each pay its prorata share of said assessments or taxes as
of the Closing Date.
11. Prorations. The Buyer and the Seller, as of the Closing
Date, shall prorate: (i) all rent due under the Leases, (ii)
ad valorem taxes, personal property taxes, charges or
assignments affecting the Properties (on a calendar year
basis), (iii) utility charges, including charges for water,
gas, electricity, and sewer, if any, (iv) other expenses
relating to the Properties which have accrued but not paid
as of the Closing Date, based upon the most current
ascertainable tax bill and other relevant billing
information, including any charges arising under any of the
encumbrances to the Property. To the extent that
information for any such proration is not available on the
Closing Date or if the actual amount of such taxes, charges
or expenses differs from the amount used in the prorations
at closing, then the parties shall make any adjustments
necessary so that the prorations at closing are adjusted
based upon the actual amount of such taxes, charges or
expenses. The parties agree to make such reprorations as
soon as possible after the actual amount of real estate
taxes, charges or expenses prorated at closing becomes
available.
12. Seller's Representations and Warranties. For each
Property, Seller represents and warrants as of this date and
to the best of Seller's actual knowledge that:
(a) Except for this Agreement and the Lease between
Seller and Hollywood Entertainment Corporation, it
is not aware of any other agreements or leases
with respect to the Property.
(B) Seller 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 hereunder.
(C) Seller does not have any actions or proceedings
pending, which would materially affect the
Property or Lessee, except matters fully covered
by insurance.
(D) The consummation of the transactions contemplated
hereunder, and the performance of this Agreement
and the delivery of the special warranty deed to
Buyer, will not result in any breach of, or
constitute a default under, any instrument to
which Seller is a party or by which Seller may be
bound or affected.
(E) All of Seller's covenants, agreements, and
representations made herein, and in any and all
documents which may be delivered pursuant hereto,
shall survive the delivery to Buyer of the special
warranty deed and other documents furnished in
accordance with this Agreement, for a period of
one (1) year and the provision hereof shall
continue to inure to BuyerOs benefit and its
successors and assigns.
(F) The Property is in good condition, substantially
undamaged by fire and other hazards, and has not
been made the subject of any condemnation
proceeding.
(G) The use and operation of the Property now is in
full compliance with applicable local, state and
federal laws, ordinances, regulations and
requirements.
(H) These Seller's representations and warranties
deemed to be true and correct as of the Closing
Date and shall survive the closing, for a period
of one (1) year.
(I) Seller has not caused or permitted any, and to
Seller's actual knowledge, the Property is not 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
Seller's actual 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.
(J) The transaction contemplated herein does not
represent a fraudulent conveyance.
13. Buyer's Representations and Warranties. Buyer
represents and warrants to Seller that:
(a) 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 hereunder.
(B) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of
the transaction contemplated hereunder will
violate or be in conflict with any agreement or
instrument to which Buyer is a party or by which
Buyer is bound.
(C) These Buyer's representations and warranties
deemed to be true and correct as of the Closing
Date and shall survive the closing.
14. Closing.
(a) Three (3) days prior to the Closing Date, with
simultaneous copy to Buyer, Seller will deposit into escrow
with the Closing Agent the following documents, for each
Property:
(1) A Special warranty deed conveying insurable title
to the Property to Buyer, in form and substance as
agreed to between Seller and Buyer during the
First Contingency Period;
(2) Estoppel letter from Lessee, in form and substance
as agreed to between Seller and Buyer during the
First Contingency Period;
(3) Affidavit of Seller, in form and substance as
agreed to between Seller and Buyer during the
First Contingency Period;
(4) FIRPTA Affidavit, in form and substance as agreed
to between Seller and Buyer during the First
Contingency Period;
(5) Assignment of Lease, in form and substance as
agreed to between Seller and Buyer during the
First Contingency Period;
(6) Any documentation modifying the Lease as may be
required by Buyer and agreed to between Buyer
and/or Seller and Lessee during the First
Contingency Period;
(7) Assignments of all warranties (and the written
consents of the assignments thereof by the party
giving the warranty) from the party or parties
constructing the Improvements on the Property;
(8) Original insurance policy of Lessee as required by
the Lease;
(9) Copy of the final unconditional Certificate of
Occupancy for the Property authorizing LesseeOs
use and occupancy of the Property;
(10) Certificate of Completion executed by the project
architect, general contractor and the Seller, in
form and substance as agreed to between the Seller
and Buyer prior to the end of the First
Contingency Period;
(11) A down-dated title commitment for an owner's
title insurance policy, reflecting only permitted
exceptions approved by Buyer during the First
Contingency Period and including all endorsements
required by Buyer, with all Schedule C
requirements, if any, removed;
(12) Copies of any and all certificates, permits,
licenses and other authorizations of any
governmental body or authority which are necessary
to permit the use and occupancy of the
Improvements;
(13) Project cost statement, signed by Seller,
itemizing, at a minimum, the following costs:
land acquisition, building construction and site
work;
(14) Seller indemnification from Seller to Buyer for
Landlord's representations and warranties in the
Lease, for a period of one (1) year from
Commencement Date of each Lease; and
(15) The original Lease and any Amendments thereto,
executed by all parties.
(B) On or before the Closing Date, Buyer will deposit the
Purchase Price with the Closing Agent;
(c) Both parties will sign and deliver to the Closing Agent
any other documents reasonably required by the Closing Agent
and/or the Title Company.
15. Termination. This Agreement may be terminated prior to
closing at Buyer's option and the Earnest Money returned to
Buyer in full immediately in the event of any of the
following occurrences:
(a) Seller fails to comply with any of the terms
hereof;
(b) A default exists in any material financial
obligation of Seller or Lessee;
(c) Any representation made or contained in any
submission from Seller or Lessee, or in the Due
Diligence Documents, proves to be untrue,
substantially false or misleading at any time
prior to the Closing Date;
(d) There has been a material adverse change in the
financial condition of Lessee or there shall be a
material action, suit or proceeding pending or
threatened against Seller which affects SellerOs
ability to perform under this Agreement or against
Lessee which affects Lessee's ability to perform
under the Lease;
(e) Any bankruptcy, reorganization, insolvency,
withdrawal, or similar proceeding is instituted by
or against Seller or Lessee;
(f) Seller or Lessee shall be dissolved, liquidated or
wound up; and
(g) Notice given by Buyer pursuant to any right of
termination herein.
16. Damages, Destruction and Eminent Domain. If, prior to
the Closing Date, any one of the Properties, 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, this Agreement shall become
null and void, at Buyer's option, exercised by written
notice to Seller within ten (10) business 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 (a) all contingencies set
forth in Article 8 hereof have been satisfied, or waived;
and (b) any period provided for above in Article 8 hereof
for Buyer to elect to terminate this Agreement has expired
or Buyer has, by written notice to Seller, waived BuyerOs
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 respective Purchase Price, and Seller shall assign to
Buyer the Seller's right, title and interest in and to all
insurance proceeds 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 the Lessee.
If prior to closing, any one of the Properties, 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 all
the Seller's right, title and interest in and to any award
made, or to be made, in the condemnation proceeding pro-
rata, subject to rights of the Lessee.
In the event that this Agreement is terminated by Buyer
as provided above, the Earnest Money shall be returned to
Buyer immediately after execution by Buyer of such documents
reasonably requested by Seller to evidence the termination
hereof.
17. Notices. 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: Centurion Video Ltd.
C/O Centurion Development Corp.
5031 - F West WT Harris Boulevard
Charlotte, North Carolina 28269
Attention: Jeff Wakeman
Phone No.: (704) 598-0056 x11
If to Buyer: AEI Fund Management, Inc.
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, Minnesota 55101
Attention: Robert P. Johnson
Phone No.: (612) 227-7333
Notice shall be deemed received 48 hours after proper
deposit in U.S. Mail, or 24 hours after proper deposit with
a nationally recognized overnight courier.
18. 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 Properties and the other matters
described, and it supersedes any other agreement or
understandings. Exhibits attached to this Agreement are
incorporated into this Agreement.
b. If the transaction contemplated hereunder does not close
by the Closing Date, through no fault of Buyer, Buyer may
either, at it election, extend the Closing Date, exercise
any remedy available to it by law, or terminate this
Agreement and receive its Earnest Money back in full
immediately.
c. This Agreement shall be assignable by Buyer, at its
option, in whole or in part, in such manner as Buyer may
determine, to an affiliate of affiliates of Buyer.
d. The Buyer and Seller each warrant to the other that
American Asset Advisors is the only party which either has
dealt with which would result in a claim for a commission.
Seller acknowledges that Seller is solely responsible for
any claim of commission that American Assets Advisors may
have concerning this transaction.
e. Seller and Buyer agree that it is Seller's
responsibility to continue liability under the Leases with
regard to any Landlord warranty of construction through the
first anniversary date of the Leases. For each Property,
Seller will provide, in a form acceptable to Buyer, an
indemnification of warranty of construction. For each
Lease, Seller will further assist Buyer in obtaining an
Estoppel from the Tenant.
Buyer is submitting this offer by signing a copy of
this Agreement and delivering it to Seller. Seller has
until October 12, 1998 within which time to accept this
offer by signing and returning this Agreement to Buyer.
When executed by both parties, this Agreement will be a
binding agreement for valid and sufficient consideration
which will bind and benefit Seller, Buyer and their
respective successors and assigns.
The remainder of this page has been intentionally left
blank.
IN WITNESS WHEREOF, Seller and Buyer have executed
this Agreement effective as of the day and year above first
written.
SELLER:
CENTURION VIDEO LTD. Attest:
By: Centurion Development Corp.
Its: General Partner
By: /s/ Jeffery R Wakeman /s/ Marva Reddington
Its: President Marva Reddington
Print Name
BUYER:
AEI FUND MANAGEMENT, INC. Attest:
By: /s/ Robert P Johnson /s/ Barbara J Kochevar
Robert P. Johnson, its President Barbara J Kochevar
Print Name
EXHIBIT "A"
Legal Description of the Parcel
SARALAND, ALABAMA
Lot 1 of Wal*Mart Square, according to a plat thereof as
recorded in Map Book 70, Page 25 of the Probate Court
Records, Mobile County, Alabama
COVINGTON, LOUISIANA
PARCEL NO. 2-1
Beginning at a point along Vendor's southerly property line,
which point is also along the easterly existing right of way
of La-US 190 Business and which if point were extended would
intersect project centerline at highway Survey Stateion
210+39.90 and where there is a 1/2 inch iron pipe; thence
proceed North 09 degrees 56' 52" East a distance of 154.76
feet to a point and corner where there is a 1/2 inch iron
pipe which point is along the Vendor's notherly p roperty
line, which line intersects project centerline at highway
Survey Station 211+95.68;thence proceed North 55 degrees 58'
38" East a distance of 20.94 feet to a point and corner;
thence proceed along the arc of a curve having radius of
1,328.24 feet (the chord which bears South 09 degrees 12'
37" West a distance of 153.75 feet) an arc distance of
153.84 feet to a point and corner which point is along
Vendor's southerly property line, which if point were
extended would intersect project centerline at Highway
Survey Station 211+01.83 and which point is 62 feet from
project centerline; thence proceed South 57 degrees 33' 28"
West a distance of 23.09 feet to a point of beginning and
containing a net required area of 2,720.6 square feet.
All being a portion of the same property acquired by Mose
and Joyce Ellis by Act recorded March 20, 1974, COB 725,
Page 724 in the records of ST. Tammany parish, Louisian,
less and except conveyed by Mose and Joyce Ellis (Parcel No.
2-1) on or about March, 1998.
EXHIBIT "B"
FINANCIAL DOCUMENTATION REQUIREMENTS
Prior to closing, the following must be received
and approved by AEI, along with those items
specified more fully in the Purchase Agreement:
I. Representation, satisfactory to Buyer, that
the sale of the Parcel does not constitute a
fraudulent conveyance.
II. Itemized budget of total project cost for the
property to be purchased.
Items I & II above must be signed by an authorized officer
of Seller certifying to the accuracy thereof. The
certification language must read as follows:
"The undersigned hereby certifies and warrants
that the information contained in these
documents is true and correct, understands that
AEI is relying upon such information as an
inducement for entering into a purchase
transaction with the undersigned, and expressly
represents that AEI may have reliance upon such
information."
ASSIGNMENT
OF
PURCHASE AGREEMENT
THIS ASSIGNMENT made and entered into this 2nd day of
November, 1998, by and between AEI FUND MANAGEMENT, INC., a
Minnesota corporation, ("Assignor") and AEI INCOME & GROWTH
FUND XXII LIMITED PARTNERSHIP for the property located at
1097 Industrial Parkway, Saraland Alabama, AND AEI PRIVATE
NET LEASE FUND 1998 LIMITED PARTNERSHIP for the property
located at 1180 Business Highway #190, Covington, Louisiana
("Assignees");
WITNESSETH, that:
WHEREAS, on the 8th day of October, 1998, Assignor
entered into a Purchase Agreement ("Agreement") for that
certain property located at 1097 Industrial Parkway,
Saraland, Alabama and 1180 Business Highway #190, Covington,
Louisiana (the "Properties") with Centurion Video LTD., as
Seller/Lessee; and
WHEREAS, Assignor desires to assign all of its rights,
title and interest in, to and under the Agreement to
Assignees as hereinafter provided;
NOW, THEREFORE, for One Dollar ($1.00) and other good
and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed between the parties as
follows:
1. Assignor assigns all of its rights, title and
interest in, to and under the Agreement with respect to
the Saraland, AL property to AEI Income & Growth Fund
XXII Limited Partnership, to have and to hold the same
unto the Assignee, its successors and assigns;
2. Assignor assigns all of its rights, title and
interest in, to and under the Agreement with respect to
the Covington, LA property to AEI Private Net Lease
Fund 1998 Limited Partnership, to have and to hold the
same unto the Assignee, its successors and assigns;
3. Assignees hereby assume all rights, promises,
covenants, conditions and obligations under the
Agreement to be performed by the Assignor thereunder,
and agrees to be bound for all of the obligations of
Assignor under the Agreement as it pertains to the
property identified as to be acquired by each Assignee.
All other terms and conditions of the Agreement shall remain
unchanged and continue in full force and effect.
AEI FUND MANAGEMENT, INC.
("Assignor")
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
("Assignee" for Saraland, AL property)
BY: AEI Fund Management XXI, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
AEI PRIVATE NET LEASE FUND 1998 LIMITED PARTNERSHIP
("Assignee" for Covington, LA property)
BY: AEI Fund Management XVIII, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, its President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001023458
<NAME> AEI INCOME & GROWTH FUND XXII LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,150,301
<SECURITIES> 0
<RECEIVABLES> 24,977
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,175,278
<PP&E> 1,532,983
<DEPRECIATION> (12,686)
<TOTAL-ASSETS> 11,695,575
<CURRENT-LIABILITIES> 386,647
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,308,928
<TOTAL-LIABILITY-AND-EQUITY> 11,695,575
<SALES> 0
<TOTAL-REVENUES> 389,743
<CGS> 0
<TOTAL-COSTS> 182,635
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 207,108
<INCOME-TAX> 0
<INCOME-CONTINUING> 207,108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 207,108
<EPS-PRIMARY> 18.84
<EPS-DILUTED> 18.84
</TABLE>
