SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
Of The Securities Exchange Act Of 1934
For the Fiscal Year Ended: December 31, 1995
Commission file number: 0-14263
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
(Name of Small Business Issuer in its Charter)
State of Minnesota 41-1511293
(State or other Jurisdiction of (I.R.S. Employer)
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
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 past 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
Check if disclosure of delinquent filers in response to Rule 405
of Regulation S-B is not contained in this Form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The Issuer's revenues for year ended December 31, 1995 were
$450,567.
As of February 29, 1996, there were 7,092.128 Units of limited
partnership interest in the registrant outstanding and owned by
nonaffiliates of the registrant, which Units had an aggregate
market value (based solely on the price at which they were sold
since there is no ready market for such Units) of $7,092,128.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant has not incorporated any documents by reference
into this report.
Transitional Small Business Disclosure Format:
Yes No [X]
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
AEI Real Estate Fund 85-A Limited Partnership (the
"Partnership" or the "Registrant") is a limited partnership which
was organized pursuant to the laws of the State of Minnesota on
April 15, 1985. The registrant is comprised of Net Lease
Management 85-A, Inc. (NLM) as Managing General Partner, Robert
P. Johnson as the Individual General Partner, and purchasers of
partnership units as Limited Partners. The Partnership offered
for sale up to $7,500,000 of limited partnership interests (the
"Units") (7,500 Units at $1,000 per Unit) pursuant to a
registration statement effective February 8, 1985. The
Partnership commenced operations on April15, 1985 when minimum
subscriptions of 1,300 Limited Partnership Units ($1,300,000)
were accepted. The Partnership's offering terminated June 20,
1985 when the maximum subscription limit of 7,500 Limited
Partnership Units ($7,500,000) was reached.
The Partnership was organized to acquire, initially on a
debt-free basis, existing and newly constructed commercial
properties located in the United States, to lease such properties
to tenants under triple net leases, to hold such properties and
to eventually sell such properties. From subscription proceeds,
the Partnership purchased eight properties, including partial
interests in two properties, totaling $6,103,065. The balance of
the subscription proceeds was applied to organization and
syndication costs, working capital reserves and distributions,
which represented a return of capital. The properties are all
commercial, single tenant buildings leased under triple net
leases.
The Partnership will hold its properties until the General
Partners determine that the sale or other disposition of the
properties is advantageous in view of the Partnership's
investment objectives. In deciding whether to sell properties,
the General Partners will consider factors such as potential
appreciation, net cash flow and income tax considerations. In
addition, certain lessees have been granted options to purchase
properties after a specified portion of the lease term has
elapsed. It is anticipated that the Partnership will sell its
properties within twelve years after acquisition. At any time
prior to selling the properties, the Partnership may mortgage one
or more of its properties in amounts not exceeding 50% of the
fair market value of the property.
Leases
Although there are variations in the specific terms of the
leases, the following is a summary of the general terms of the
Partnership's leases. The properties are leased to various
tenants under noncancelable triple net leases, which are
classified as operating leases. Under a triple net lease, the
lessee is responsible for all real estate taxes, insurance,
maintenance, repairs and operating expenses for the property.
The initial lease terms are for 5 to 20 years. The leases
provide for base annual rental payments, payable in monthly
installments, and contain rent clauses which entitle the
Partnership to receive additional rent in future years based on
stated rent increases or if gross receipts for the property
exceed certain specified amounts, among other conditions. The
leases provide for one to four five-year renewal options subject
to the same terms and conditions as the initial lease.
On September 23, 1993, the Partnership sold the
Fuddruckers restaurant in Milwaukee, Wisconsin to an unrelated
third party. The Partnership recognized net sale proceeds of
$993,568 which resulted in a net gain of $99,866. At the time of
sale, the cost and related accumulated depreciation of the
property was $1,121,252 and $227,550, respectively. The majority
of the net proceeds from this sale were distributed to the
Limited and General Partners in 1993.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
In February, 1994, the Partnership sold 4,899 square feet
of land from the Perkins property in Bozeman, Montana pursuant to
a Right of Way Agreement with the State of Montana Department of
Transportation. The Partnership received net sale proceeds of
$36,605 which resulted in a net gain of $5,641. The original
cost of the parcel of land was $30,964.
On September 19, 1994, the Partnership sold the remainder
of the Perkins' property to the lessee. The Partnership received
net sale proceeds of $1,227,101 which resulted in a net gain of
$632,338. At the time of sale, the cost and related accumulated
depreciation of the property was $796,901 and $202,138,
respectively. In February, 1995, the Managing General Partner
filed a proxy statement to propose an Amendment to the Limited
Partnership Agreement that would allow the Partnership to
reinvest the net proceeds in additional properties. The Amendment
passed with a majority of Units voting in favor of the Amendment.
On March 20, 1995, the Partnership sold the Hardee's
restaurant in Sierre Vista, Arizona to an unrelated third party.
The Partnership received net sales proceeds of $296,020, which
resulted in a net loss of $166,000, which was recognized in 1994.
On July 19, 1995, the Partnership sold the Fair Muffler in
Ashwaubenon, Wisconsin to the lessee. The Partnership received
net sale proceeds of $299,874, which resulted in a net gain of
$130,181. At the time of sale, the cost and related accumulated
depreciation of the property was $230,134 and $60,441,
respectively.
On August 28, 1995, the Partnership sold the Hardee's
restaurant in Wayne, Nebraska to the lessee. The Partnership
received net sales proceeds of $474,530 which resulted in a net
gain of $150,989. At the time of sale, the cost and related
accumulated depreciation of the property was $447,944 and
$124,403, respectively.
On December 21, 1995, the Partnership purchased an
Applebee's restaurant in Harlingen, Texas for $1,393,470. The
property is leased to Renaissant Development Corporation under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $156,000.
On February 14, 1996, the Partnership purchased an 80%
interest in a Tractor Supply Company store in Maryville,
Tennessee. The purchase price was approximately $850,000. The
property is leased to Tractor Supply Company under a Lease
Agreement with a primary term of 14 years and annual rental
payments of $90,300. The remaining interest in the property was
purchased by AEI Real Estate Fund XV Limited Partnership, an
affiliate of the Partnership.
Major Tenants
During 1995, four of the Partnership's lessees each
contributed more than ten percent of the Partnership's total
rental revenue. The major tenants in aggregate contributed 91%
of the Partnership's total rental revenue in 1995. It is
anticipated that, based on the minimum rental payments required
under the leases, each major tenant will continue to contribute
more than ten percent of the Partnership's total rental revenue
in 1996 and future years. The only exception is Harwayne, Inc.
will not continue to be a major tenant since the Hardee's in
Wayne, Nebraska was sold in 1995. Any failure of these major
tenants or business concepts could materially affect the
Partnership's net income and cash distributions.
ITEM 1. DESCRIPTION OF BUSINESS. (Continued)
Competition
The Partnership is a minor factor in the commercial real
estate business. There are numerous entities engaged in the
commercial real estate business which have greater financial
resources than the Partnership. At the time the Partnership
elects to dispose of its properties, the Partnership will be in
competition with other persons and entities to find buyers for
its properties.
Employees
The Partnership has no direct employees. Management
services are performed for the Partnership by AEI Fund
Management, Inc., an affiliate of AFM.
ITEM 2. DESCRIPTION OF PROPERTIES.
Investment Objectives
The Partnership's investment objectives were to acquire
existing or newly-developed commercial properties throughout the
United States that offer the potential for (i) preservation and
protection of the Partnership's capital; (ii) partially tax-
deferred cash distributions from operations which may increase
through rent participation clauses or mandated rent increases;
and (iii) long-term capital gains through appreciation in value
of the Partnership's properties realized upon sale. The
Partnership does not have a policy, and there is no limitation,
as to the amount or percentage of assets that may be invested in
any one property. However, to the extent possible, the General
Partners attempt to diversify the type and location of the
Partnership's properties.
Description of Properties
The Partnership's properties are all commercial, single
tenant buildings. All the properties were acquired on a debt-
free basis and are leased to various tenants under noncancelable
triple net leases, which are classified as operating leases. The
Partnership holds an undivided fee simple interest in the
properties. At any time prior to selling the properties, the
Partnership may mortgage one or more of its properties in amounts
not exceeding 50% of the fair market value of the property.
The Partnership's properties are subject to the general
competitive conditions incident to the ownership of single tenant
investment real estate. Since each property is leased under a
long-term lease, there is little competition until the
Partnership decides to sell the property. At this time, the
Partnership will be competing with other real estate owners, on
both a national and local level, in attempting to find buyers for
the properties. In the event of a tenant default, the
Partnership would be competing with other real estate owners, who
have property vacancies, to attract a new tenant to lease the
property. The Partnership's tenants operate in industries that
are very competitive and can be affected by factors such as
changes in regional or local economies, seasonality and changes
in consumer preference.
ITEM 2. DESCRIPTION OF PROPERTIES. (Continued)
The following table is a summary of the properties that
the Partnership acquired and owned as of December 31, 1995.
Total Property
Purchase Acquisition Annual Lease
Property Date Costs Lessee Payment
Chi-Chi's Restaurant
St. Paul, MN Chi-Chi's
(45%) 12/13/85 $ 795,861 Midwest, Inc. $ 58,990
Jack-In-The-Box Restaurant Carl Karcher
Ft. Worth, TX 12/19/85 $1,005,586 Enterprises, Inc. $ 135,582
Hops Grill & Bar Restaurant Hops of Palm
Palm Harbor, FL 3/21/86 $1,094,373 Harbor, Inc. $ 76,404
Applebee's Restaurant Renaissant
Harlingen, TX 12/21/95 $1,393,470 Development Corp. $ 156,400
The property listed above with a partial ownership
percentage is owned with an affiliate of the Partnership. Net
Lease Income & Growth Fund 84-A Limited Partnership owns the
remaining interest in the Chi-Chi's restaurant in St. Paul,
Minnesota.
Each Partnership owns a separate, undivided interest in
the properties. No specific agreement or commitment exists
between the Partnerships as to the management of their respective
interests in the properties, and the Partnership that holds more
than a 50% interest does not control decisions over the other
Partnership's interest.
The initial Lease terms are for 20 years, except for the
Palm Harbor property which is 5 years. The Leases have renewal
options which may extend the Lease term an additional 5 to 20
years.
Pursuant to the Lease Agreements, the tenants are required
to provide proof of adequate insurance coverage on the properties
they occupy. The General Partners believe the properties are
adequately covered by insurance and consider the properties to be
well-maintained and sufficient for the Partnership's operations.
For tax purposes, the Partnership's properties are
depreciated under the either the Accelerated Cost Recovery System
(ACRS) or the Modified Accelerated Cost Recovery System (MACRS),
depending on the date when it was placed in service. The largest
depreciable component of a property is the building which is
depreciated, using the straight-line method, over either 19 years
(ACRS) or 31.5 years or 40 years (MACRS). The remaining
depreciable components of a property are personal property and
land improvements which are depreciated, using an accelerated
method, over 5 and 15 years, respectively. Since the Partnership
has tax-exempt Partners, the Partnership is subject to the rules
of Section 168(h)(6) of the Internal Revenue Code which requires
a percentage of the properties' depreciable components to be
depreciated over longer lives using the straight-line method. In
general the federal tax basis of the properties for tax
depreciation purposes is the same as the basis for book
depreciation purposes.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND
RELATED SECURITY HOLDER MATTERS.
As of December 31, 1995, there were 691 holders of record
of the registrant's Limited Partnership Units. There is no other
class of security outstanding or authorized. The registrant's
Units are not a traded security in any market. However, the
Partnership may purchase Units from Limited Partners who have
tendered their Units to the Partnership. Such Units may be
acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
originally sold and in no event, obligated to purchase Units if
such purchase would impair the capital or operation of the
Partnership.
During 1995, five Limited Partners redeemed a total of 18
Partnership Units for $9,104 in accordance with the Partnership
Agreement. In prior years, a total of forty-one Limited Partners
redeemed 375.37 Partnership Units for $293,724. The redemptions
increase the remaining Limited Partners' ownership interest in
the Partnership.
Cash distributions of $4,622 and $3,600 were made to the
General Partners and $448,505 and $351,005 were made to the
Limited Partners in 1995 and 1994, respectively. The
distributions were made on a quarterly basis and represent Net
Cash Flow, as defined, except as discussed below. These
distributions should not be compared with dividends paid on
capital stock by corporations.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $160,676 of proceeds from
property sales in 1995. The distributions reduced the Limited
Partners' Adjusted Capital Contributions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
The Partnership's rental income is derived from long-term,
triple net lease agreements on the Partnership's properties. For
the years ended December 31, 1995 and 1994, the Partnership
recognized rental income of $341,114 and $471,795, respectively.
During the same periods, the Partnership earned investment income
of $109,453 and $27,903, respectively. In 1995, rental income
decreased mainly as the result of the property sales discussed
below. The decrease in rental income was partially offset by
additional investment income earned on the net proceeds from the
property sales.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
During the years ended December 31, 1995 and 1994, the
Partnership paid Partnership administration expenses to
affiliated parties of $95,867 and $100,887, 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 periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $58,511 and $30,686, 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. The increase
in these expenses in 1995, when compared to 1994, is due to a
$45,000 payment made to the original lessee of the Sierra Vista
property. The payment was a reimbursement for a portion of the
legal fees the lessee incurred in obtaining a judgment of
$390,000 against the sublessee in favor of the Partnership in
1992. The reimbursement was contingent upon the sale of the
property which was completed in March, 1995. The increase in
expenses as a result of this payment was partially offset by a
decrease in property costs as the result of the sale of the
property early in 1995.
As of December 31, 1995, the Partnership's annualized cash
distribution rate was 5.85%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners were subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants, due to inflation and real sales growth, will result
in an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
Liquidity and Capital Resources
During 1995, the Partnership's cash balances decreased
$414,339 mainly as the result of reinvesting sale proceeds in
additional property as discussed below. Net cash provided by
operating activities decreased from $376,854 in 1994 to $296,730
in 1995. In 1995, net cash income before depreciation, when
compared to 1994, decreased by approximately $72,000. The
decrease was due to a reduction in rental income, as a result of
property sales, which was partially offset by additional
investment income earned on the net sale proceeds.
In 1994, net cash provided by investing activities was
$1,326,668, mostly as the result of the sale of the Perkins
restaurant. In 1995, net cash used for investing activities was
$325,379. The Partnership received proceeds from the sale of
three properties. This cash flow was offset by cash invested in
a new property.
In February, 1994, the Partnership sold 4,899 square feet
of land from the Perkins property in Bozeman, Montana pursuant to
a Right of Way Agreement with the State of Montana Department of
Transportation. The Partnership received net sale proceeds of
$36,605 which resulted in a net gain of $5,641. The original
cost of the parcel of land was $30,964.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
On September 19, 1994, the Partnership sold the remainder
of the Perkins' property to the lessee. The Partnership received
net sale proceeds of $1,227,101 which resulted in a net gain of
$632,338. At the time of sale, the cost and related accumulated
depreciation of the property was $796,901 and $202,138,
respectively. In February, 1995, the Managing General Partner
filed a proxy statement to propose an Amendment to the Limited
Partnership Agreement that would allow the Partnership to
reinvest the net proceeds in additional properties. The Amendment
passed with a majority of Units voting in favor of the Amendment.
On March 20, 1995, the Partnership sold the Hardee's
restaurant in Sierre Vista, Arizona to an unrelated third party.
The Partnership received net sales proceeds of $296,020, which
resulted in a net loss of $166,000, which was recognized in 1994.
On July 19, 1995, the Partnership sold the Fair Muffler in
Ashwaubenon, Wisconsin to the lessee. The Partnership received
net sale proceeds of $299,874, which resulted in a net gain of
$130,181. At the time of sale, the cost and related accumulated
depreciation of the property was $230,134 and $60,441,
respectively.
On August 28, 1995, the Partnership sold the Hardee's
restaurant in Wayne, Nebraska to the lessee. The Partnership
received net sales proceeds of $474,530 which resulted in a net
gain of $150,989. At the time of sale, the cost and related
accumulated depreciation of the property was $447,944 and
$124,403, respectively.
During 1995, the Partnership distributed $162,299 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 $22.59 per Limited Partnership Unit. The majority
of the remaining net proceeds were reinvested in additional
properties.
On December 21, 1995, the Partnership purchased an
Applebee's restaurant in Harlingen, Texas for $1,393,470. The
property is leased to Renaissant Development Corporation under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $156,000.
On February 14, 1996, the Partnership purchased an 80%
interest in a Tractor Supply Company store in Maryville,
Tennessee. The purchase price was approximately $850,000. The
property is leased to Tractor Supply Company under a Lease
Agreement with a primary term of 14 years and annual rental
payments of $90,300. The remaining interest in the property was
purchased by AEI Real Estate Fund XV Limited Partnership, an
affiliate of the Partnership.
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 in the fourth quarter of each
year. In 1995, distributions increased, when compared to 1994,
mainly due to an additional distribution of net sale proceeds of
approximately $75,000 in December, 1995.
The Partnership may purchase Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the total number of Units
originally sold and in no event, obligated to purchase Units if
such purchase would impair the capital or operation of the
Partnership.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS. (Continued)
During 1995, five Limited Partners redeemed a total of 18
Partnership Units for $9,104 in accordance with the Partnership
Agreement. The Partnership acquired these Units using Net Cash
Flow from operations. In prior years, a total of forty-one
Limited Partners redeemed 375.37 Partnership Units for $293,724.
The redemptions increase the remaining Limited Partners'
ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
ITEM 7. FINANCIAL STATEMENTS.
See accompanying index to financial statements.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet as of December 31, 1995 and 1994
Statements for the Years Ended December 31, 1995 and 1994:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Partners:
AEI Real Estate Fund 85-A Limited Partnership
St. Paul, Minnesota
We have audited the accompanying balance sheet of AEI REAL
ESTATE FUND 85-A LIMITED PARTNERSHIP (a Minnesota limited
partnership) as of December 31, 1995 and 1994 and the related
statements of income, cash flows and changes in partners' capital
for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of AEI Real Estate Fund 85-A Limited Partnership as of
December31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Minneapolis, Minnesota /s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.
February 6, 1996 Certified Public Accountants
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31
ASSETS
1995 1994
CURRENT ASSETS:
Cash $ 1,017,632 $ 1,431,971
Receivables 8,514 6,490
----------- -----------
Total Current Assets 1,026,146 1,438,461
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 1,723,603 1,668,370
Buildings and Equipment 2,565,687 2,319,578
Property Acquisition Costs 2,333 0
Accumulated Depreciation (792,710) (999,232)
----------- -----------
Net Investments in Real Estate 3,498,913 2,988,716
----------- -----------
Total Assets $ 4,525,059 $ 4,427,177
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 26,857 $ 24,292
Distributions Payable 160,298 83,757
----------- -----------
Total Current Liabilities 187,155 108,049
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (34,720) (34,908)
Limited Partners, $1,000 Unit value;
7,500 Units authorized and issued;
7,107 and 7,125 outstanding in 1995
and 1994, respectively 4,372,624 4,354,036
----------- -----------
Total Partners' Capital 4,337,904 4,319,128
----------- -----------
Total Liabilities and Partners' Capital $ 4,525,059 $ 4,427,177
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 3l
1995 1994
INCOME:
Rent $ 341,114 $ 471,795
Investment Income 109,453 27,903
----------- -----------
Total Income 450,567 499,698
----------- -----------
EXPENSES:
Partnership Administration - Affiliates 95,867 100,887
Partnership Administration and Property
Management - Unrelated Parties 58,511 30,686
Depreciation 96,352 129,461
----------- -----------
Total Expenses 250,730 261,034
----------- -----------
OPERATING INCOME 199,837 238,664
GAIN ON SALE OF REAL ESTATE 281,170 471,979
----------- -----------
NET INCOME $ 481,007 $ 710,643
=========== ===========
NET INCOME ALLOCATED:
General Partners $ 4,810 $ 7,106
Limited Partners 476,197 703,537
----------- -----------
$ 481,007 $ 710,643
=========== ===========
NET INCOME PER LIMITED PARTNERSHIP UNIT
(7,120 and 7,132 weighted average Units outstanding
in 1995 and 1994, respectively) $ 66.88 $ 98.65
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 481,007 $ 710,643
Adjustments To Reconcile Net Income
To Net Cash Provided By Operating Activities:
Depreciation 96,352 129,461
Gain on Sale of Real Estate (281,170) (471,979)
Increase in Receivables (2,024) (575)
Increase in Payable to
AEI Fund Management, Inc. 2,565 9,304
----------- -----------
Total Adjustments (184,277) (333,789)
----------- -----------
Net Cash Provided By
Operating Activities 296,730 376,854
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,395,803) 0
Proceeds from Sale of Real Estate 1,070,424 1,263,706
Collection of Long-Term Note Receivable 0 62,962
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (325,379) 1,326,668
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable 76,541 (10,883)
Distributions to Partners (453,035) (354,550)
Redemption Payments (9,196) (5,496)
----------- -----------
Net Cash Used For
Financing Activities (385,690) (370,929)
----------- -----------
NET INCREASE (DECREASE) IN CASH (414,339) 1,332,593
CASH, beginning of period 1,431,971 99,378
----------- -----------
CASH, end of period $ 1,017,632 $ 1,431,971
=========== ===========
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1993 $ (38,414) $ 4,006,945 $ 3,968,531 7,134.38
Distributions (3,545) (351,005) (354,550)
Redemption Payments (55) (5,441) (5,496) (9.75)
Net Income 7,106 703,537 710,643
----------- ----------- ----------- ----------
BALANCE, December 31, 1994 (34,908) 4,354,036 4,319,128 7,124.63
Distributions (4,530) (448,505) (453,035)
Redemption Payments (92) (9,104) (9,196) (18.00)
Net Income 4,810 476,197 481,007
----------- ----------- ----------- ----------
BALANCE, December 31, 1995 $ (34,720) $ 4,372,624 $ 4,337,904 7,106.63
=========== =========== =========== ==========
The accompanying notes to financial statements are an integral
part of this statement.
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) Organization -
AEI Real Estate Fund 85-A Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by Net Lease Management 85-A, Inc. (NLM), the Managing
General Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of NLM, serves as the
Individual General Partner of the Partnership. An affiliate
of NLM, 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 April 15, 1985 when minimum
subscriptions of 1,300 Limited Partnership Units
($1,300,000) were accepted. The Partnership's offering
terminated on June 20, 1985 when the maximum subscription
limit of 7,500 Limited Partnership Units ($7,500,000) was
reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$7,500,000 and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
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 6% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) next, 99% to
the Limited Partners and 1% to the General Partners until
the Limited Partners receive an amount equal to 14% of their
Adjusted Capital Contribution per annum, cumulative but not
compounded, to the extent not previously distributed; (iii)
next, to the General Partners until cumulative distributions
to the General Partners under Items (ii) and (iii) equal 15%
of cumulative distributions to all Partners under Items (ii)
and (iii). Any remaining balance will be distributed 85% to
the Limited Partners and 15% to the General Partners.
Distributions to the Limited Partners will be made pro rata
by Units.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(1) 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 90% to the Limited Partners and 10% to the General
Partners. In the event no Net Cash Flow is distributed to
the Limited Partners, 90% of each item of Partnership
income, gain or credit for each respective year shall be
allocated to the Limited Partners, and 10% of each such item
shall be allocated to the General Partners. Net losses from
operations will be allocated 98% to the Limited Partners and
2% 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 14% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, to the
General Partners until cumulative allocations to the General
Partners equal 15% of cumulative allocations. Any remaining
balance will be allocated 85% to the Limited Partners and
15% 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.
(2) Summary of Significant Accounting Policies -
Financial Statement Presentation
The accounts of the Partnership are maintained on the
accrual basis of accounting for both federal income tax
purposes and financial reporting purposes.
Accounting Estimates
Management uses estimates and assumptions in preparing
these financial statements in accordance with generally
accepted accounting principles. Those estimates and
assumptions may affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.
Actual results could differ from those estimates.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(2) Summary of Significant Accounting Policies - (Continued)
Given that the Partnership has had limited success in its
efforts to lease or dispose of certain properties, it is
reasonably possible that the Partnership's estimate that
it will recover the carrying amount of these properties
from future operations or sales will change in the near
term.
Cash Concentrations of Credit Risk
At times throughout the year, the Partnership's cash
deposited in financial institutions may exceed FDIC
insurance limits.
Income Taxes
The income or loss of the Partnership for federal income
tax reporting purposes is includable in the income tax
returns of the partners. Accordingly, no recognition has
been given to income taxes in the accompanying financial
statements.
The tax return, the qualification of the Partnership as
such for tax purposes, and the amount of distributable
Partnership income or loss are subject to examination by
federal and state taxing authorities. If such an
examination results in changes with respect to the
Partnership qualification or in changes to distributable
Partnership income or loss, the taxable income of the
partners would be adjusted accordingly.
Real Estate
The Partnership's real estate is leased under long-term
triple net leases classified as operating leases. The
Partnership recognizes rental revenue on the accrual
basis according to the terms of the individual leases.
For leases which contain cost of living increases, the
increases are recognized in the year in which they are
effective.
Real estate is recorded at the lower of cost or estimated
net realizable value. The Financial Accounting Standards
Board has issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" which is effective for the
Partnership's fiscal year ended December 31, 1996. The
Partnership regularly reviews the carrying value of its
properties and will reduce properties to their net
realizable value as needed. Adoption of Statement 121 is
not expected to have a material effect on the
Partnership's operations.
The Partnership has capitalized as Investments in Real
Estate certain costs incurred in the review and
acquisition of the properties. The costs were allocated
to the land, buildings and equipment.
The buildings and equipment of the Partnership are
depreciated using the straight-line method for financial
reporting purposes based on estimated useful lives of 30
years and 10 years respectively.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(3) Related Party Transactions -
In 1985, the Partnership acquired a 45% interest in the Chi-
Chi's Mexican Restaurante property. The remaining interest
in this property is owned by Net Lease Income & Growth Fund
84-A Limited Partnership, an affiliate of the Partnership.
Each Partnership owns a separate, undivided interest in the
property. No specific agreement or commitment exists
between the Partnerships as to the management of their
respective interests in the property, and the Partnership
that holds more than a 50% interest does not control
decisions over the other Partnership's interest. The
financial statements reflect only this Partnership's
percentage share of the property's land, building and
equipment, liabilities, revenues and expenses.
NLM and AEI received the following compensation and
reimbursements for costs and expenses from the Partnership:
Total Incurred by the Partnership
for the Years Ended December 3l
1995 1994
a. AEI and NLM are reimbursed for all costs
incurred in connection with managing the
Partnership's operations, maintaining the
Partnership's books and communicating
the results of operations to the Limited
Partners. $ 95,867 $ 100,887
======== =========
b. AEI and NLM are reimbursed for all direct
expenses they have paid on the Partnership's
behalf to third parties. These expenses
included printing costs, interest, legal and
filing fees, direct administrative costs,
outside audit and accounting costs, taxes, $ 58,511 $ 30,686
insurance and other porperty costs. ======== =========
c. AEI is reimbursed for all property acquisition
costs incurred by it in acquiring properties on
behalf of the Partnership. The amounts are net
of financing and commitment fees and expense
reimbursements received by the Partnership from
the lessees in the amount of $6,750 for 1995. $ 2,333 $ 0
======== =========
The payable to AEI Fund Management, Inc. represents the
balance due for the services described in 3a, b and c. This
balance is non-interest bearing and unsecured and is to be
paid in the normal course of business.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate -
The Partnership leases its properties to various tenants
through noncancelable triple net leases, which have been
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 for 20 years,
except for the Palm Harbor property which is 5 years. The
Leases have renewal options which may extend the Lease term
an additional 5 to 20 years. The Leases contain clauses
which entitle the Partnership to receive additional rent in
future years, based on stated rent increases or if gross
receipts for the property exceed certain specified amounts,
among other conditions.
The Partnership's properties are all commercial, single-
tenant buildings. The Chi-Chi's was constructed in 1984 and
acquired in 1985. The Jack-In-The-Box was completed and
acquired in 1985. The Palm Harbor property was completed
and acquired in 1986. The Applebee's in Harlingen, Texas
was completed and acquired in 1995. There have been no
costs capitalized as improvements subsequent to the
acquisitions.
The cost of the properties and the related accumulated
depreciation at December 31, 1995 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Chi-Chi's, St. Paul, MN $ 289,776 $ 506,085 $ 795,861 $ 263,979
Jack-In-The-Box,
Fort Worth, TX 498,862 506,724 1,005,586 240,548
Hops Grill and Bar,
Palm Harbor, FL 484,570 609,803 1,094,373 286,612
Applebee's, Harlingen, TX 450,395 943,075 1,393,470 1,571
----------- ----------- ----------- -----------
$ 1,723,603 $ 2,565,687 $ 4,289,290 $ 792,710
=========== =========== =========== ===========
In February, 1994, the Partnership sold 4,899 square feet of
land from the Perkins property in Bozeman, Montana pursuant
to a Right of Way Agreement with the State of Montana
Department of Transportation. The Partnership received net
sale proceeds of $36,605 which resulted in a net gain of
$5,641. The original cost of the parcel of land was
$30,964.
On September 19, 1994, the Partnership sold the remainder of
the Perkins' property to the lessee. The Partnership
received net sale proceeds of $1,227,101 which resulted in a
net gain of $632,338. At the time of sale, the cost and
related accumulated depreciation of the property was
$796,901 and $202,138, respectively. In February, 1995, the
Managing General Partner filed a proxy statement to propose
an Amendment to the Limited Partnership Agreement that would
allow the Partnership to reinvest the net proceeds in
additional properties. The Amendment passed with a majority
of Units voting in favor of the Amendment.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(4) Investments in Real Estate - (Continued)
On March 20, 1995, the Partnership sold the Hardee's
restaurant in Sierra Vista, Arizona to an unrelated third
party. The Partnership received net sales proceeds of
$296,020, which resulted in a net loss of $166,000, which
was recognized in 1994.
On July 19, 1995, the Partnership sold the Fair Muffler in
Ashwaubenon, Wisconsin to the lessee. The Partnership
received net sale proceeds of $299,874, which resulted in a
net gain of $130,181. At the time of sale, the cost and
related accumulated depreciation of the property was
$230,134 and $60,441, respectively.
On August 28, 1995, the Partnership sold the Hardee's
restaurant in Wayne, Nebraska to the lessee. The
Partnership received net sales proceeds of $474,530 which
resulted in a net gain of $150,989. At the time of sale,
the cost and related accumulated depreciation of the
property was $447,944 and $124,403, respectively.
During 1995, the Partnership distributed $162,299 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 $22.59 per Limited Partnership Unit.
The majority of the remaining net proceeds were reinvested
in additional properties.
On December 21, 1995, the Partnership purchased an
Applebee's restaurant in Harlingen, Texas for $1,393,470.
The property is leased to Renaissant Development Corporation
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $156,400.
On February 14, 1996, the Partnership purchased an 80%
interest in a Tractor Supply Company store in Maryville,
Tennessee. The purchase price was approximately $850,000.
The property is leased to Tractor Supply Company under a
Lease Agreement with a primary term of 14 years and annual
rental payments of $90,300. The remaining interest in the
property was purchased by AEI Real Estate Fund XV Limited
Partnership, an affiliate of the Partnership. The
Partnership has incurred net costs of $2,333 related to the
acquisition of the property. The costs have been
capitalized and will be allocated to land, building and
equipment.
The minimum future rentals on the non-cancelable Leases for
years subsequent to December 31, 1995 are as follows:
1996 $ 370,930
1997 318,722
1998 291,982
1999 304,494
2000 304,494
Thereafter 3,809,280
----------
$ 5,399,902
==========
In 1995 and 1994, the Partnership recognized contingent
rents of $66,971 and $95,974, respectively.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(5) Major Tenants -
The following schedule presents rent revenue from individual
tenants, or affiliated groups of tenants, who each
contributed more than ten percent of the Partnership's total
rent revenue for the years ended December 31:
1995 1994
Tenants Industry
Carl Karcher
Enterprises, Inc. Restaurant $ 135,582 $ 136,024
Gallatin Cakes, Inc. Restaurant N/A 98,834
Hops of Palm Harbor, Inc. Restaurant 75,192 71,612
Harwayne, Inc. Restaurant 42,212 64,093
Chi-Chi's Midwest, Inc. Restaurant 58,990 62,781
--------- ---------
Aggregate rent revenue of major tenants $ 311,976 $ 433,344
========= =========
Aggregate rent revenue of major tenants as
a percentage of total rent revenue 91% 92%
========= =========
(6) Partners' Capital-
Cash distributions of $4,622 and $3,600 were made to the
General Partners and $448,505 and $351,005 were made to the
Limited Partners in 1995 and 1994, respectively. The
Limited Partners' distributions represent $62.99 and $49.22
per Limited Partnership Unit outstanding using 7,120 and
7,132 weighted average Units in 1995 and 1994, respectively.
The distributions represent $62.99 and $49.22 per Unit of
Net Income in 1995 and 1994, respectively.
As part of the Limited Partner distributions discussed
above, the Partnership distributed $160,676 of proceeds from
property sales in 1995. The distributions reduced the
Limited Partners' Adjusted Capital Contributions.
Distributions of Net Cash Flow to the General Partners
during 1995 and 1994 were subordinated to the Limited
Partners as required in the Partnership Agreement. As a
result, 99% of distributions and income were allocated to
the Limited Partners and 1% to the General Partners.
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 total
number of Units originally sold and in no event, obligated
to purchase Units if such purchase would impair the capital
or operation of the Partnership.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(6) Partners' Capital- (Continued)
During 1995, five Limited Partners redeemed a total of 18
Partnership Units for $9,104 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In 1994, four Limited
Partners redeemed a total of 9.75 Partnership Units for
$5,441. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
After the effect of redemptions and the return of capital
from the sale of property, the Adjusted Capital
Contribution, as defined in the Partnership Agreement, is
$903.10 per original $1,000 invested.
(7) Income Taxes -
The following is a reconciliation of net income for
financial reporting purposes to income reported for federal
income tax purposes for the years ended December 31:
1995 1994
Net Income For Financial
Reporting Purposes $ 481,007 $ 710,643
Depreciation for Tax Purposes
Under Depreciation For Financial
Reporting Purposes 15,396 20,037
Net Gain on Sale of Real Estate for Tax
Purposes Over (Under) Gain for Financial
Reporting Purposes (77,556) 222,685
--------- ---------
Taxable Income to Partners $ 418,847 $ 953,365
========= =========
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(7) Income Taxes - (Continued)
The following is a reconciliation of Partners' capital for
financial reporting purposes to Partners' capital reported
for federal income tax purposes for the years ended
December 31:
1995 1994
Partners' Capital For
Financial Reporting Purposes $ 4,337,904 $ 4,319,128
Depreciation For Tax Purposes Over
Depreciation For Financial
Reporting Purposes (358,621) (374,017)
Capitalized Start-Up Costs
Under Section 195 363,592 363,592
Amortization of Start-Up and
Organization Costs (389,641) (389,641)
Property Expenses for Tax Purposes
Under Expenses for Financial
Reporting Purposes 7,999 7,999
Net Gain on Sale of Real Estate for Tax
Purposes Over Gain for Financial
Reporting Purposes 225,910 303,466
Organization and Syndication Costs
Treated as Reduction of Capital
For Financial Reporting Purposes 1,004,427 1,004,427
----------- -----------
Partners' Capital For
Tax Reporting Purposes $ 5,191,570 $ 5,234,954
=========== ===========
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
(8) Fair Value of Financial Instruments -
The estimated fair values of the financial instruments, none
of which are held for trading purposes, are as follows at
December 31, 1995:
1995
Carrying Fair
Amount Value
Cash $1,017,632 $1,017,632
The carrying value of cash approximates fair value.
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
The registrant is a limited partnership and has no
officers, directors, or direct employees. The General Partners
of the registrant are Robert P. Johnson and NLM. The General
Partners manage and control the Partnership's affairs and have
general responsibility and the ultimate authority in all matters
affecting the Partnership's business. The director and officers
of NLM are as follows:
Robert P. Johnson, age 51, is Chief Executive Officer,
President and Director and has held these positions since the
formation of NLM in November, 1984, and has been elected to
continue in these positions until March, 1997. From 1970 to the
present, he has been employed exclusively in the investment
industry, specializing in tax-advantaged limited partnership
investments. In that capacity, he has been involved in the
development, analysis, marketing and management of public and
private investment programs investing in net lease properties as
well as public and private investment programs investing in
energy development. Since 1971, Mr. Johnson has been the
president, a director and a registered principal of AEI
Incorporated, which is registered with the Securities and
Exchange Commission as a securities broker-dealer, is a member of
the National Association of Securities Dealers, Inc. (NASD) and
is a member of the Security Investors Protection Corporation
(SIPC). Mr. Johnson has been president, a director and the
principal shareholder of AEI Fund Management, Inc., a real estate
management company founded by him, since 1978. Mr. Johnson is
currently a general partner or principal of the general partner
in fifteen other limited partnerships.
Mark E. Larson, age 43, is Executive Vice President,
Treasurer and Chief Financial Officer and has been elected to
continue in these positions until March, 1997. Mr. Larson has
been Treasurer and Executive Vice President since December, 1987
and Chief Financial Officer since January, 1990. In January,
1993, Mr. Larson was elected to serve as Secretary of NLM and
will continue to serve until March, 1997. Mr. Larson has been
employed by AEI Fund Management, Inc. and affiliated entities
since 1985. From 1979 to 1985, Mr. Larson was with Apache
Corporation as manager of Program Accounting responsible for the
accounting and reports for approximately 45 public partnerships.
Mr. Larson is responsible for supervising the accounting
functions of NLM and the registrant.
ITEM 10. EXECUTIVE COMPENSATION.
The General Partner and affiliates are reimbursed at cost
for all services performed on behalf of the registrant and for
all third party expenses paid on behalf of the registrant. The
cost for services performed on behalf of the registrant is actual
time spent performing such services plus an overhead burden.
These services include organizing the registrant and arranging
for the offer and sale of Units, reviewing properties for
acquisition and rendering administrative and management services.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
NLM, the Managing General Partner of the registrant, and
Robert P. Johnson, its Individual General Partner, contributed
$1,000 in total for their interest in the registrant. See Item 1
for a discussion of their share of the registrant's profits and
losses. During 1990, NLM purchased fourteen and one-half Limited
Partnership Units (less than 1% of the Units outstanding) from
certain Limited Partners.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The registrant, NLM and its affiliates have common
management and utilize the same facilities. As a result, certain
administrative expenses are allocated among these related
entities. All of such activities and any other transactions
involving the affiliates of the General Partner of the registrant
are governed by, and are conducted in conformity with, the
limitations set forth in the Limited Partnership Agreement of the
registrant. Reference is made to Note 3 on Page 19, and is
incorporated herein by reference, for details of Related Party
Transactions.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K AND 8-K/A.
A. Exhibits -
Description
27 Financial Data Schedule
for year ended December 31, 1995.
B. Reports on Form 8-K and 8-K/A - None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AEI REAL ESTATE FUND 85-A
Limited Partnership
By: Net Lease Management 85-A, Inc.
Its Managing General Partner
March 21, 1996 By: /s/ Robert P. Johnson
Robert P. Johnson, President and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Name Title Date
/s/ Robert P. Johnson President (Principal Executive Officer) March 21, 1996
Robert P. Johnson and Sole Director of Managing General
Partner
/s/ Mark E. Larson Executive Vice President, Treasurer March 21, 1996
Mark E. Larson and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000759641
<NAME> AEI REAL ESTATE FUND 85-A LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,017,632
<SECURITIES> 0
<RECEIVABLES> 8,514
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,026,146
<PP&E> 4,291,623
<DEPRECIATION> (792,710)
<TOTAL-ASSETS> 4,525,059
<CURRENT-LIABILITIES> 187,155
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,337,904
<TOTAL-LIABILITY-AND-EQUITY> 4,525,059
<SALES> 0
<TOTAL-REVENUES> 450,567
<CGS> 0
<TOTAL-COSTS> 250,730
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 481,007
<INCOME-TAX> 0
<INCOME-CONTINUING> 481,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 481,007
<EPS-PRIMARY> 66.88
<EPS-DILUTED> 66.88
</TABLE>
