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, 2000
Commission file number: 24003
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, 2000 and December 31, 1999 3
Statements for the Periods ended September 30, 2000 and 1999:
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, 2000 AND DECEMBER 31, 1999
ASSETS
2000 1999
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,268,117 $ 247,401
Receivables 23,152 0
----------- -----------
Total Current Assets 1,291,269 247,401
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 5,011,005 4,981,547
Buildings and Equipment 7,487,286 8,382,000
Construction in Progress 113,657 0
Accumulated Depreciation (397,584) (201,635)
----------- -----------
Net Investments in Real Estate 12,214,364 13,161,912
----------- -----------
Total Assets $13,505,633 $13,409,313
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 29,990 $ 14,979
Distributions Payable 402,672 256,847
Unearned Rent 35,626 0
----------- -----------
Total Current Liabilities 468,288 271,826
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (36,509) (38,746)
Limited Partners, $1,000 Unit Value;
24,000 Units authorized; 16,917 Units issued;
16,657 and 16,799 Units outstanding in 2000
and 1999, respectively 13,073,854 13,176,233
----------- -----------
Total Partners' Capital 13,037,345 13,137,487
----------- -----------
Total Liabilities and Partners' Capital $13,505,633 $13,409,313
=========== ===========
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
9/30/00 9/30/99 9/30/00 9/30/99
INCOME:
Rent $277,210 $231,138 $848,902 $410,376
Investment Income 27,904 44,905 59,672 268,716
-------- -------- -------- --------
Total Income 305,114 276,043 908,574 679,092
-------- -------- -------- --------
EXPENSES:
Partnership Administration -
Affiliates 45,252 40,511 123,290 125,014
Partnership Administration
and Property Management -
Unrelated Parties 4,349 5,790 21,568 17,948
Depreciation 75,313 64,862 239,278 96,558
-------- -------- -------- --------
Total Expenses 124,914 111,163 384,136 239,520
-------- -------- -------- --------
OPERATING INCOME 180,200 164,880 524,438 439,572
GAIN ON SALE OF REAL ESTATE 29,748 0 357,720 0
-------- -------- -------- --------
NET INCOME $209,948 $164,880 $882,158 $439,572
======== ======== ======== ========
NET INCOME ALLOCATED:
General Partners $ 6,299 $ 4,946 $ 26,465 $ 13,187
Limited Partners 203,649 159,934 855,693 426,385
-------- -------- -------- --------
$209,948 $164,880 $882,158 $439,572
======== ======== ======== ========
NET INCOME (LOSS) PER
LIMITED PARTNERSHIP UNIT
16,657, 16,808, 16,755 and
16,769 weighted average
Units outstanding for the
periods, respectively) $ 12.23 $ 9.52 $ 51.07 $ 25.43
======== ======== ======== ========
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)
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 882,158 $ 439,572
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 239,278 96,558
Gain on Sale of Real Estate (357,720) 0
(Increase) Decrease in Receivables (23,152) 46,634
Increase (Decrease) in Payable
to AEI Fund Management, Inc. 15,011 (126,122)
Increase in Unearned Rent 35,626 30,047
----------- -----------
Total Adjustments (90,957) 47,117
----------- -----------
Net Cash Provided By
Operating Activities 791,201 486,689
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,411,006) (10,301,472)
Proceeds from Sale of Real Estate 2,476,996 0
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 1,065,990 (10,301,472)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contributions from Limited Partners 0 972,059
Organization and Syndication Costs 0 (143,785)
Increase in Distributions Payable 145,825 89,161
Distributions to Partners (864,907) (842,647)
Redemption Payments (117,393) (89,929)
----------- -----------
Net Cash Used For
Financing Activities (836,475) (15,141)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 1,020,716 (9,829,924)
CASH AND CASH EQUIVALENTS, beginning of period 247,401 10,206,442
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,268,117 $ 376,518
=========== ===========
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, 1998 $(21,135) $12,917,288 $12,896,153 15,945.16
Capital Contributions 0 972,059 972,059 972.06
Organization and
Syndication Costs 0 (143,785) (143,785)
Redemptions (2,698) (87,231) (89,929) (109.04)
Distributions (25,279) (817,368) (842,647)
Net Income 13,187 426,385 439,572
-------- ----------- ----------- ----------
BALANCE, September 30, 1999 $(35,925) $13,267,348 $13,231,423 16,808.18
======== =========== =========== ==========
BALANCE, December 31, 1999 $(38,746) $13,176,233 $13,137,487 16,808.18
Distributions (20,706) (844,201) (864,907)
Redemption Payments (3,522) (113,871) (117,393) (150.86)
Net Income 26,465 855,693 882,158
-------- ----------- ----------- ----------
BALANCE, September 30, 2000 $(36,509) $13,073,854 $13,037,345 16,657.32
======== =========== =========== ==========
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, 2000
(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. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner and an affiliate of AFM, AEI Fund
Management, Inc. (AEI), performs the administrative and
operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on May 1, 1997 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The offering terminated January
9, 1999 when the extended offering period expired. The
Partnership received subscriptions for 16,917.222 Limited
Partnership Units ($16,917,222).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$16,917,222 and $1,000, respectively. During operations,
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 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
SEPTEMBER 30, 2000
(Continued)
(2) Organization - (Continued)
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of 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 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 -
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.
Effective December 25, 1998, the annual rent was increased
to $44,701. Simultaneously with the purchase of the land,
the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to ADC
for the construction of a Champps Americana restaurant on
the site. Initially, the Partnership charged interest on
the advances at a rate of 7.0%. Effective December 25,
1998, the interest rate was increased to 10.5%. On January
27, 1999, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$93,256. The Partnership's share of total acquisition
costs, including the cost of the land, was $924,843. 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.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Continued)
(3) Investments in Real Estate - (Continued)
On November 20, 1998, the Partnership purchased a parcel of
land in Homewood, Alabama for $696,000. The land is leased
to RTM Alabama, Inc. (RTM) under a Lease Agreement with a
primary term of 20 years and annual rental payments of
$46,980. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership advanced funds to RTM for the
construction of an Arby's restaurant on the site. The
Partnership charged interest on the advances at a rate of
6.75%. On July 9, 1999, after the development was
completed, the Lease Agreement was amended to require annual
rental payments of $87,135. Total acquisition costs,
including the cost of the land, were $1,392,592.
On November 25, 1998, the Partnership purchased a parcel of
land in Fort Wayne, Indiana for $470,000. The land is
leased to Tumbleweed, Inc. (TWI) under a Lease Agreement
with a primary term of 15 years and annual rental payments
of $39,950. Effective March 24, 1999, the annual rent was
increased to $48,175. Simultaneously with the purchase of
the land, the Partnership entered into a Development
Financing Agreement under which the Partnership advanced
funds to TWI for the construction of a Tumbleweed restaurant
on the site. Initially, the Partnership charged interest on
the advances at a rate of 8.5%. Effective March 24, 1999,
the interest rate was increased to 10.25%. On August 31,
1999, after the development was completed, the Lease
Agreement was amended to require annual rental payments of
$130,941. Total acquisition costs, including the cost of
the land, were $1,316,695.
On January 26, 1999, the Partnership purchased a Hollywood
Video store in Saraland, Alabama for $1,377,891. The
property is leased to Hollywood Entertainment Corp. under a
Lease Agreement with a primary term of 15 years and annual
rental payments of $129,617.
On July 14, 1999, the Partnership purchased four Children's
World daycare centers located in Abingdon, Maryland,
Houston, Texas, Pearland, Texas and DePere, Wisconsin. The
properties were purchased for $1,051,772, $892,219, $943,415
and $1,187,452, respectively. The properties are leased to
ARAMARK Educational Resources, Inc. under Lease Agreements
with primary terms of 15 years and annual rental payments of
$91,677, $79,093, $83,635 and $106,157, respectively.
On July 16, 1999, the Partnership purchased a Hollywood
Video store in Minot, North Dakota for $1,330,000. The
property is leased to Hollywood Entertainment Corporation
under a Lease Agreement with a primary term of 15 years and
annual rental payments of $129,168.
On August 26, 1999, the Partnership purchased a Hollywood
Video store in Muscle Shoals, Alabama for $1,340,627. The
property is leased to Hollywood Entertainment Corporation
under a Lease Agreement with a primary term of 15 years and
annual rental payments of $129,659.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Continued)
(3) Investments in Real Estate - (Continued)
On September 28, 1999, the Partnership purchased a 53%
interest in a Marie Callender's restaurant in Henderson,
Nevada for $937,897. The property is leased to Marie
Callender Pie Shops, Inc. under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$85,595. The remaining interest in the property was
purchased by AEI Net Lease Income & Growth Fund XIX Limited
Partnership, an affiliate of the Partnership.
On September 28, 2000, the Partnership purchased a 40%
interest in a Children's World daycare center in Golden,
Colorado for $666,629. The property is leased to Children's
World Learning Centers, Inc. under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$66,344. The remaining interests in the property were
purchased by AEI Private Net Lease Millennium Fund Limited
Partnership and AEI Private Net Lease Fund 1998 Limited
Partnership, affiliates of the Partnership.
On May 8, 2000, the Partnership purchased a 48% interest in
a parcel of land in Austin, Texas for $652,800. The land is
leased to Razzoo's, Inc. (RI) under a Lease Agreement with a
primary term of 15 years and annual rental payments of
$55,488. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement
under which the Partnership will advance funds to RI for the
construction of a Razzoo's restaurant on the site. Through
September 30, 2000, the Partnership had advanced $113,657
for the construction of the property and was charging
interest on the advances at a rate of 8.5%. The
Partnership's share of the total purchase price, including
the cost of the land, will be approximately $1,646,000.
After the construction is complete, the Lease Agreement will
be amended to require annual rental payments of
approximately $160,500. The remaining interests in the
property are owned by AEI Real Estate Fund XV Limited
Partnership, AEI Real Estate Fund XVII Limited Partnership,
and AEI Net Lease Income & Growth Fund XIX Limited
Partnership, affiliates of the Partnership.
During the nine months ended September 30, 2000, the
Partnership sold 61.9344% of the Children's World in DePere,
Wisconsin in four separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $845,347, which resulted in a total net gain of $127,553.
The total cost and related accumulated depreciation of the
interests sold was $735,441 and $17,647, respectively.
During the nine months ended September 30, 2000, the
Partnership sold its interest in the Marie Callender's
restaurant in five separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,035,799, which resulted in a total net gain of
$108,736. The total cost and related accumulated
depreciation of the interests sold was $937,897 and $10,834,
respectively.
During the nine months ended September 30, 2000, the
Partnership sold 35.5084% of the Hollywood Video store in
Saraland, Alabama in three separate transactions to
unrelated third parties. The Partnership received total net
sale proceeds of $595,850, which resulted in a total net
gain of $121,431. The total cost and related accumulated
depreciation of the interests sold was $489,267 and $14,848,
respectively.
AEI INCOME & GROWTH FUND XXII LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Continued)
(3) Investments in Real Estate - (Continued)
During the first nine months of 2000, the Partnership
distributed $262,069 of the net sale proceeds to the Limited
and General Partners as part of their regular quarterly
distributions which represented a return of capital of
$15.54 per Limited Partnership Unit. The remaining net sale
proceeds will either be reinvested in additional property or
distributed to the Partners in the future.
(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, 2000 and 1999, the
Partnership recognized rental income of $848,902 and $410,376,
respectively. During the same periods, the Partnership earned
$59,672 and $268,716, respectively, in investment income from
subscription proceeds and property sales proceeds which were
invested in short-term money market accounts. This investment
income constituted 7% and 40%, respectively, 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, 2000 and 1999,
the Partnership paid Partnership administration expenses to
affiliated parties of $123,290 and $125,014, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same period, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $21,568 and $17,948, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs.
As of September 30, 2000, the Partnership's cash
distribution rate was 7.0% on an annualized basis. Pursuant to
the Partnership Agreement, distributions of Net Cash Flow and Net
Income 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.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Liquidity and Capital Resources
During the nine months ended September 30, 2000, the
Partnership's cash balances increased $1,020,716 mainly as a
result of cash generated from the sale of property, which was
partially offset by cash used to purchase property. Net cash
provided by operating activities increased from $486,689 in 1999
to $791,201 in 2000 as a result of an increase in income in 2000
and net timing differences in the collection of payments from the
lessees and the payment of expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. During the nine months ended
September 30, 2000 and 1999, the Partnership expended $1,411,006
and $10,301,472, respectively, to invest in real properties
(inclusive of acquisition expenses). During the nine months
ended September 30, 2000, the Partnership generated cash flow
from the sale of real estate of $2,476,996.
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. Effective December 25, 1998, the annual
rent was increased to $44,701. Simultaneously with the purchase
of the land, the Partnership entered into a Development Financing
Agreement under which the Partnership advanced funds to ADC for
the construction of a Champps Americana restaurant on the site.
Initially, the Partnership charged interest on the advances at a
rate of 7.0%. Effective December 25, 1998, the interest rate was
increased to 10.5%. On January 27, 1999, after the development
was completed, the Lease Agreement was amended to require annual
rental payments of $93,256. The Partnership's share of total
acquisition costs, including the cost of the land, was $924,843.
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.
On November 20, 1998, the Partnership purchased a parcel
of land in Homewood, Alabama for $696,000. The land is leased to
RTM Alabama, Inc. (RTM) under a Lease Agreement with a primary
term of 20 years and annual rental payments of $46,980.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership advanced funds to RTM for the construction of an
Arby's restaurant on the site. The Partnership charged interest
on the advances at a rate of 6.75%. On July 9, 1999, after the
development was completed, the Lease Agreement was amended to
require annual rental payments of $87,135. Total acquisition
costs, including the cost of the land, were $1,392,592.
On November 25, 1998, the Partnership purchased a parcel
of land in Fort Wayne, Indiana for $470,000. The land is leased
to Tumbleweed, Inc. (TWI) under a Lease Agreement with a primary
term of 15 years and annual rental payments of $39,950.
Effective March 24, 1999, the annual rent was increased to
$48,175. Simultaneously with the purchase of the land, the
Partnership entered into a Development Financing Agreement under
which the Partnership advanced funds to TWI for the construction
of a Tumbleweed restaurant on the site. Initially, the
Partnership charged interest on the advances at a rate of 8.5%.
Effective March 24, 1999, the interest rate was increased to
10.25%. On August 31, 1999, after the development was completed,
the Lease Agreement was amended to require annual rental payments
of $130,941. Total acquisition costs, including the cost of the
land, were $1,316,695.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On January 26, 1999, the Partnership purchased a Hollywood
Video store in Saraland, Alabama for $1,377,891. The property is
leased to Hollywood Entertainment Corp. under a Lease Agreement
with a primary term of 15 years and annual rental payments of
$129,617.
On July 14, 1999, the Partnership purchased four
Children's World daycare centers located in Abingdon, Maryland,
Houston, Texas, Pearland, Texas and DePere, Wisconsin. The
properties were purchased for $1,051,772, $892,219, $943,415 and
$1,187,452, respectively. The properties are leased to ARAMARK
Educational Resources, Inc. under Lease Agreements with primary
terms of 15 years and annual rental payments of $91,677, $79,093,
$83,635 and $106,157, respectively.
On July 16, 1999, the Partnership purchased a Hollywood
Video store in Minot, North Dakota for $1,330,000. The property
is leased to Hollywood Entertainment Corporation under a Lease
Agreement with a primary term of 15 years and annual rental
payments of $129,168.
On August 26, 1999, the Partnership purchased a Hollywood
Video store in Muscle Shoals, Alabama for $1,340,627. The
property is leased to Hollywood Entertainment Corporation under a
Lease Agreement with a primary term of 15 years and annual rental
payments of $129,659.
On September 28, 1999, the Partnership purchased a 53%
interest in a Marie Callender's restaurant in Henderson, Nevada
for $937,897. The property is leased to Marie Callender Pie
Shops, Inc. under a Lease Agreement with a primary term of 15
years and annual rental payments of $85,595. The remaining
interest in the property was purchased by AEI Net Lease Income &
Growth Fund XIX Limited Partnership, an affiliate of the
Partnership.
On September 28, 2000, the Partnership purchased a 40%
interest in a Children's World daycare center in Golden, Colorado
for $666,629. The property is leased to Children's World
Learning Centers, Inc. under a Lease Agreement with a primary
term of 15 years and annual rental payments of $66,344. The
remaining interests in the property were purchased by AEI Private
Net Lease Millennium Fund Limited Partnership and AEI Private Net
Lease Fund 1998 Limited Partnership, affiliates of the
Partnership.
On May 8, 2000, the Partnership purchased a 48% interest
in a parcel of land in Austin, Texas for $652,800. The land is
leased to Razzoo's, Inc. (RI) under a Lease Agreement with a
primary term of 15 years and annual rental payments of $55,488.
Simultaneously with the purchase of the land, the Partnership
entered into a Development Financing Agreement under which the
Partnership will advance funds to RI for the construction of a
Razzoo's restaurant on the site. Through September 30, 2000, the
Partnership had advanced $113,657 for the construction of the
property and was charging interest on the advances at a rate of
8.5%. The Partnership's share of the total purchase price,
including the cost of the land, will be approximately $1,646,000.
After the construction is complete, the Lease Agreement will be
amended to require annual rental payments of approximately
$160,500. The remaining interests in the property are owned by
AEI Real Estate Fund XV Limited Partnership, AEI Real Estate Fund
XVII Limited Partnership, and AEI Net Lease Income & Growth Fund
XIX Limited Partnership, affiliates of the Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the nine months ended September 30, 2000, the
Partnership sold 61.9344% of the Children's World in DePere,
Wisconsin in four separate transactions to unrelated third
parties. The Partnership received total net sale proceeds of
$845,347, which resulted in a total net gain of $127,553. The
total cost and related accumulated depreciation of the interests
sold was $735,441 and $17,647, respectively.
During the nine months ended September 30, 2000, the
Partnership sold its interest in the Marie Callender's restaurant
in five separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,035,799, which
resulted in a total net gain of $108,736. The total cost and
related accumulated depreciation of the interests sold was
$937,897 and $10,834, respectively.
During the nine months ended September 30, 2000, the
Partnership sold 35.5084% of the Hollywood Video store in
Saraland, Alabama in three separate transactions to unrelated
third parties. The Partnership received total net sale proceeds
of $595,850, which resulted in a total net gain of $121,431. The
total cost and related accumulated depreciation of the interests
sold was $489,267 and $14,848, respectively.
During the first nine months of 2000, the Partnership
distributed $262,069 of the net sale proceeds to the Limited and
General Partners as part of their regular quarterly distributions
which represented a return of capital of $15.54 per Limited
Partnership Unit. The remaining net sale proceeds will either be
reinvested in additional property or distributed to the Partners
in the future.
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. Redemption payments
are paid to redeeming Partners on a semi-annual basis.
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.
On April 1, 2000, two Limited Partners redeemed a total of
9.67 Partnership Units for $7,099 in accordance with the
Partnership Agreement. On July 1, 2000, five Limited Partners
redeemed a total of 141.19 Partnership Units for $106,772. The
Partnership acquired these Units using Net Cash Flow from
operations. In 1999, four Limited Partners redeemed a total of
109.04 Partnership Units for $87,231. The redemptions increase
the remaining Limited Partners' ownership interest in the
Partnership.
The continuing rent payments from the properties, together
with cash generated from property sales, should be adequate to
fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Cautionary Statement for Purposes of the "Safe Harbor" Provisions
of the Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis
contains various "forward looking statements" within the meaning
of federal securities laws which represent management's
expectations or beliefs concerning future events, including
statements regarding anticipated application of cash, expected
returns from rental income, growth in revenue, taxation levels,
the sufficiency of cash to meet operating expenses, rates of
distribution, and other matters. These, and other forward
looking statements made by the Partnership, must be evaluated in
the context of a number of factors that may affect the
Partnership's financial condition and results of operations,
including the following:
Market and economic conditions which affect the value
of the properties the Partnership owns and the cash
from rental income such properties generate;
the federal income tax consequences of rental income,
deductions, gain on sales and other items and the
affects of these consequences for investors;
resolution by the General Partners of conflicts with
which they may be confronted;
the success of the General Partners of locating
properties with favorable risk return characteristics;
the effect of tenant defaults; and
the condition of the industries in which the tenants of
properties owned by the Partnership operate.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
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 -
Description
10.1 Purchase Agreement dated August 23,
2000 between the Partnership and Maricopa
Land & Cattle Company, Inc. relating to
the property at 1553 Arcadian Drive,
DePere, Wisconsin.
10.2 Property Co-Tenancy Ownership
Agreement dated September 12, 2000
between the Partnership and Maricopa Land
& Cattle Company, Inc. relating to the
property at 1553 Arcadian Drive, DePere,
Wisconsin.
10.3 Net Lease Agreement dated September
28, 2000 between the Partnership, AEI
Private Net Lease Millennium Fund Limited
Partnership, AEI Private Net Lease Fund
1998 Limited Partnership and Children's
World Learning Centers, Inc. relating to
the property at 18601 Eagle Ridge,
Golden, Colorado.
27 Financial Data Schedule for period
ended September 30, 2000.
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 7, 2000 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)
