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, 1999
Commission file number: 0-14263
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified 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)
(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 REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1999 and December 31, 1998
Statements for the Periods ended September 30, 1999 and 1998:
Income
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 REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Unaudited)
ASSETS
1999 1998
CURRENT ASSETS:
Cash and Cash Equivalents $ 199,208 $ 2,572,249
Receivables 0 12,721
----------- -----------
Total Current Assets 199,208 2,584,970
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 1,899,582 1,367,380
Buildings and Equipment 3,360,494 1,808,008
Construction in Progress 0 16,981
Property Acquisition Costs 0 1,885
Accumulated Depreciation (772,856) (731,538)
----------- -----------
Net Investments in Real Estate 4,487,220 2,462,716
----------- -----------
Total Assets $ 4,686,428 $ 5,047,686
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 36,705 $ 36,593
Distributions Payable 90,723 94,365
----------- -----------
Total Current Liabilities 127,428 130,958
----------- -----------
PARTNERS' CAPITAL (DEFICIT):
General Partners (32,509) (28,931)
Limited Partners, $1,000 Unit value;
7,500 Units authorized and issued;
7,080 outstanding 4,591,509 4,945,659
----------- -----------
Total Partners' Capital 4,559,000 4,916,728
----------- -----------
Total Liabilities and Partners' Capital $ 4,686,428 $ 5,047,686
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/99 9/30/98 9/30/99 9/30/98
INCOME:
Rent $ 86,257 $ 130,745 $ 251,619 $ 399,962
Investment Income 25,755 4,099 80,280 8,079
--------- --------- --------- ---------
Total Income 112,012 134,844 331,899 408,041
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 23,751 21,101 74,164 71,058
Partnership Administration
and Property Management -
Unrelated Parties 2,187 1,631 13,766 10,860
Depreciation 14,742 25,263 41,318 77,143
--------- --------- --------- ---------
Total Expenses 40,680 47,995 129,248 159,061
--------- --------- --------- ---------
OPERATING INCOME 71,332 86,849 202,651 248,980
GAIN ON SALE OF REAL ESTATE 0 130,159 0 130,159
--------- --------- --------- ---------
NET INCOME $ 71,332 $ 217,008 $ 202,651 $ 379,139
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 713 $ 2,170 $ 2,026 $ 3,791
Limited Partners 70,619 214,838 200,625 375,348
--------- --------- --------- ---------
$ 71,332 $ 217,008 $ 202,651 $ 379,139
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(7,080 weighted average
Units outstanding in 1999
and 1998) $ 9.98 $ 30.35 $ 28.34 $ 53.02
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 202,651 $ 379,139
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 41,318 77,143
Gain of Sale of Real Estate 0 (130,159)
Decrease in Receivables 12,721 0
Increase in Payable to
AEI Fund Management, Inc. 112 34,883
Increase in Unearned Rent 0 10,045
----------- -----------
Total Adjustments 54,151 (8,088)
----------- -----------
Net Cash Provided By
Operating Activities 256,802 371,051
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (2,065,822) 0
Proceeds from Sale of Real Estate 0 421,539
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (2,065,822) 421,539
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable (3,642) 1,473
Distributions to Partners (560,379) (315,910)
----------- -----------
Net Cash Used For
Financing Activities (564,021) (314,437)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,373,041) 478,153
CASH AND CASH EQUIVALENTS, beginning of period 2,572,249 174,683
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 199,208 $ 652,836
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND 85-A 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, 1997 $(36,144) $ 4,231,634 $ 4,195,490 7,079.63
Distributions (3,159) (312,751) (315,910)
Net Income 3,791 375,348 379,139
--------- ----------- ----------- ----------
BALANCE, September 30, 1998 $(35,512) $ 4,294,231 $ 4,258,719 7,079.63
========= =========== =========== ==========
BALANCE, December 31, 1998 $(28,931) $ 4,945,659 $ 4,916,728 7,079.63
Distributions (5,604) (554,775) (560,379)
Net Income 2,026 200,625 202,651
--------- ----------- ----------- ----------
BALANCE, September 30, 1999 $(32,509) $ 4,591,509 $ 4,559,000 7,079.63
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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 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.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 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.
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.
AEI REAL ESTATE FUND 85-A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
On July 31, 1998, the Partnership sold 9.1266% of its
interest in the Tractor Supply Company Store to an unrelated
third party. The Partnership received net sales proceeds of
$133,251 which resulted in a net gain of $44,686. At the
time of sale, the cost and related accumulated depreciation
of the interest sold was $95,494 and $6,929, respectively.
During the third and fourth quarters of 1998, the
Partnership sold 37.3518% of its interest in the Rio Bravo
restaurant, in four separate transactions, to unrelated
third parties. The Partnership received total net sale
proceeds of $585,789 which resulted in a total net gain of
$172,422. The total cost and related accumulated
depreciation of the interests sold was $660,597 and
$247,230, respectively. For the three months ended
September 30, 1998, the net gain was $85,473.
On December 30, 1998, the Partnership sold the Applebee's
restaurant in Harlingen, Texas to the lessee. The
Partnership received net sales proceeds of $1,858,837 which
resulted in a net gain of $580,055. At the time of sale,
the cost and related accumulated depreciation of the
property was $1,393,470 and $114,688, respectively.
In March, 1999, the Partnership distributed $252,525 of the
net sale proceeds to the Limited and General Partners which
represented a return of capital of $35.31 per Limited
Partnership Unit. The majority of the remaining proceeds
were reinvested in additional property.
On December 17, 1998, the Partnership purchased a 60%
interest in a parcel of land in Hudsonville, Michigan for
$198,600. The land is leased to RTM Mid-America, Inc. (RTM)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $16,881. 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 variable rate. On September 3, 1999,
after the development was completed, the Lease Agreement was
amended to require annual rental payments of $42,456. The
Partnership's share of the total acquisition costs,
including the cost of the land was $666,755. The remaining
interest in the property is owned by Net Lease Income &
Growth Fund 84-A Limited Partnership, an affiliate of the
Partnership.
On September 28, 1999, the Partnership purchased a Marie
Callender's restaurant in Gresham, Oregon for $1,616,533.
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 $152,000.
(4) Payable to AEI Fund Management -
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, 1999 and 1998, the
Partnership recognized rental income of $251,619 and $399,962,
respectively. During the same periods, the Partnership earned
investment income of $80,280 and $8,079, respectively. In 1999,
rental income decreased mainly as a result of the property sales
discussed below. This decrease in rental income was partially
offset by rent received from two property acquisitions in 1998
and 1999 and additional investment income earned on the net
proceeds from the property sales.
During the nine months ended September 30, 1999 and 1998,
the Partnership paid Partnership administration expenses to
affiliated parties of $74,164 and $71,058, 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 $13,766 and $10,860, 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, 1999, the Partnership's annualized
cash distribution rate was 6.50%, 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.
The Year 2000 issue is the result of computer systems that
use two digits rather than four to define the applicable year,
which may prevent such systems from accurately processing dates
ending in the Year 2000 and beyond. This could result in
computer system failures or disruption of operations, including,
but not limited to, an inability to process transactions, to send
or receive electronic data, or to engage in routine business
activities.
AEI Fund Management, Inc. (AEI) performs all management
services for the Partnership. In 1998, AEI completed an
assessment of its computer hardware and software systems and has
replaced or upgraded certain computer hardware and software using
the assistance of outside vendors. AEI has received written
assurance from the equipment and software manufacturers as to
Year 2000 compliance. The costs associated with Year 2000
compliance have not been, and are not expected to be, material.
The Partnership intends to monitor and communicate with
tenants regarding Year 2000 compliance, although there can be no
assurance that the systems of the various tenants will be Year
2000 compliant.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Liquidity and Capital Resources
During the nine months ended September 30, 1999, the
Partnership's cash balances decreased $2,373,041 as a result of
cash used to purchase additional properties and distributions
made in excess of cash generated from operating activities. Net
cash provided by operating activities decreased from $371,051 in
1998 to $256,802 in 1999 mainly as a result of a decrease in
total income in 1999.
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, 1998, the Partnership generated cash flow from the
sale of real estate of $421,539. During the nine months ended
September 30, 1999, the Partnership expended $2,065,822 to invest
in real properties (inclusive of acquisition expenses) as the
Partnership reinvested the cash generated from property sales.
On July 31, 1998, the Partnership sold 9.1266% of its
interest in the Tractor Supply Company Store to an unrelated
third party. The Partnership received net sales proceeds of
$133,251 which resulted in a net gain of $44,686. The total cost
and related accumulated depreciation of the interest sold was
$95,494 and $6,929, respectively.
During the third and fourth quarters of 1998, the
Partnership sold 37.3518% of its interest in the Rio Bravo
restaurant, in four separate transactions, to unrelated third
parties. The Partnership received total net sale proceeds of
$585,789 which resulted in a total net gain of $172,422. The
total cost and related accumulated depreciation of the interests
sold was $660,597 and $247,230, respectively. For the three
months ended September 30, 1998, the net gain was $85,473.
On December 30, 1998, the Partnership sold the Applebee's
restaurant in Harlingen, Texas to the lessee. The Partnership
received net sales proceeds of $1,858,837 which resulted in a net
gain of $580,055. At the time of sale, the cost and related
accumulated depreciation of the property was $1,393,470 and
$114,688, respectively.
In March, 1999, the Partnership distributed $252,525 of
the net sale proceeds to the Limited and General Partners which
represented a return of capital of $35.31 per Limited Partnership
Unit. The majority of the remaining proceeds were reinvested in
additional property.
On December 17, 1998, the Partnership purchased a 60%
interest in a parcel of land in Hudsonville, Michigan for
$198,600. The land is leased to RTM Mid-America, Inc. (RTM)
under a Lease Agreement with a primary term of 20 years and
annual rental payments of $16,881. 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 variable
rate. On September 3, 1999, after the development was completed,
the Lease Agreement was amended to require annual rental payments
of $42,456. The Partnership's share of the total acquisition
costs, including the cost of the land was $666,755. The
remaining interest in the property is owned by Net Lease Income &
Growth Fund 84-A Limited Partnership, an affiliate of the
Partnership.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On September 28, 1999, the Partnership purchased a Marie
Callender's restaurant in Gresham, Oregon for $1,616,533. 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 $152,000.
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. In the first nine
months of 1999, distributions were higher when compared to the
same period in 1998, due to the distribution of sale proceeds in
March, 1999.
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. 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.
During 1999 and 1998, the Partnership did not redeem any
Units from the Limited Partners. In prior years, a total of
fifty-three Limited Partners redeemed 420.37 Partnership Units
for $315,321. 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.
PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2.CHANGES IN SECURITIES
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5.OTHER INFORMATION
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Sale and Purchase Agreement and
Escrow Instructions dated June 2, 1999
between AEI Fund Management, Inc. and
Marie Callender Pie Shops, Inc. relating
to the property at 305 N.E. Burnside
Street, Gresham, Oregon (incorporated by
reference to Exhibit 10.1 of Form 10-QSB
filed with the Commission on July 30,
1999).
10.2 First Amendment to Sale and Purchase
Agreement and Escrow Instructions dated
July 8, 1999 between AEI Fund Management,
Inc. and Marie Callender Pie Shops, Inc.
relating to the property at 305 N.E.
Burnside Street, Gresham, Oregon
(incorporated by reference to Exhibit
10.2 of Form 10-QSB filed with the
Commission on July 30, 1999).
10.3 Assignment of Purchase and Sale
Agreement and Escrow Instructions dated
July 23, 1999 between the Partnership,
AEI Income & Growth Fund XXII Limited
Partnership and AEI Fund Management, Inc.
and Marie Callender Pie Shops, Inc.
relating to the property at 305 N.E.
Burnside Street, Gresham, Oregon
(incorporated by reference to Exhibit
10.3 of Form 10-QSB filed with the
Commission on July 30, 1999).
10.4 First Amendment to Net Lease
Agreement dated September 3, 1999 between
the Partnership, Net Lease Income &
Growth Fund 84-A Limited Partnership and
RTM, Mid-America, Inc. relating to the
property at 4633 32nd Avenue,
Hudsonville, Michigan (incorporated by
reference to Exhibit 10.2 of Form 8-K
filed with the Commission on September 9,
1999).
10.5 Second Amendment to Net Lease
Agreement dated September 3, 1999 between
the Partnership, Net Lease Income &
Growth Fund 84-A Limited Partnership and
RTM, Mid-America, Inc. relating to the
property at 4633 32nd Avenue,
Hudsonville, Michigan.
27 Financial Data Schedule for period
ended September 30, 1999.
b. Reports filed on Form 8-K -
During the quarter ended September
30, 1999, the Partnership filed a
Form 8-K dated September 9, 1999,
reporting the acquisition of the
Arby's restaurant in Hudsonville,
Michigan.
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 8, 1999 AEI Real Estate Fund 85-A
Limited Partnership
By: Net Lease Management 85-A, 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)
SECOND AMENDMENT TO NET LEASE AGREEMENT
THIS SECOND AMENDMENT TO NET LEASE AGREEMENT, made and
entered into effective as of the 3rd day of September, 1999, by
and between Net Lease Income & Growth Fund 84-A Limited
Partnership ("Fund 84-A" or "Lessor") and AEI Real Estate Fund 85-
A Limited Partnership ("85-A" or "Lessor")(hereinafter
collectively referred to as "Lessor"), and RTM Mid-America, Inc.
(hereinafter referred to as "Lessee");
WITNESSETH:
WHEREAS, Lessee and Lessor have entered into that certain
Net Lease Agreement dated December 17, 1998 (the "Lease")
providing for the lease of said real property and Building (said
real property and Building hereinafter referred to as the "Leased
Premises"), from Lessor upon the terms and conditions therein
provided in the Lease;
WHEREAS, Lessee and Lessor entered into that certain First
Amendment to Net Lease Agreement dated effective as of September
3, 1999, and the same did not correctly reflect the understanding
of the parties as to the terms thereof as mandated by the Net
Lease Agreement;
NOW, THEREFORE, in consideration of the Rents, terms,
covenants, conditions, and agreements hereinafter described to be
paid, kept, and performed by Lessee, including the completion of
the Building and other improvements constituting the Leased
Premises, Lessee and Lessor do hereby agree to amend the Lease as
follows:
1. Article 2(A) and (B) of the Lease shall henceforth read as
follows:
ARTICLE 2. TERM
(A) The term of this Lease ("Term") shall be Twenty (20)
consecutive "Lease Years", as hereinafter defined, commencing on
the date hereof, plus the period commencing December 17, 1998
("Occupancy Date") through the date hereof, with the contemplated
initial term hereof ending on September 30, 2019.
(B) The first full Lease Year shall commence on the date of
this First Amendment and continue through September 30, 2000.
2. Article 4(A) and (B) of the Lease shall henceforth read as
follows:
ARTICLE 4. RENT PAYMENTS
Rent Payable for the first Lease Year:
Lessee shall pay to Lessor a Base Rent of
$5,896.72 per month for the first six months of
the First Lease Year (plus the pro-rated portion
of the same monthly Rent for the period from
September 3, 1999, through September 30, 1999),
which amount shall be payable in advance on the
first day of each month in equal monthly
installments of $2,358.68 to Fund 84-A and
$3,538.02 to Fund 85-A. If the first day of the
first full Lease Year of the Lease Term is not the
first day of a calendar month, then the monthly
Rent payable for that partial month shall be a
prorated portion of the equal monthly installment
of Base Rent. For the second six months of the
First Lease Year, beginning April 1, 2000, Lessee
shall pay to Lessor a Base Rent of $8,164.70 per
month for the second six months of the First Lease
Year, which amount shall be payable in advance on
the first day of each month in equal monthly
installments of $3,265.88 to Fund 84-A and
$4,898.82 to Fund 85-A.
Annual Rent Payable for the second Lease
Year: Lessee shall pay to Lessor an annual Base
Rent of $97,976.34, which amount shall be payable
in advance on the first day of each month in equal
monthly installments of $3,265.88 to Fund 84-A and
$4,898.82 to Fund 85-A.
3. All other terms and conditions of the Lease shall remain in
full force and effect.
4. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, Lessor and Lessee have respectively signed
and sealed this Lease as of the day and year first above written.
LESSEE: RTM Mid-America, Inc.,
By:/s/ P G Skinner
Its:Senior Vice President
By: /s/ Robert S. Stallings
Its: VP Asst. Secretary
STATE OF GEORGIA)
)SS.
COUNTY OF FULTON)
The foregoing instrument was acknowledged before me this
28th day of September 1999, by Philip G Skinner and Robert S
Stallings, as SVP and VP Asst. Secy of RTM Mid-America, Inc. on
behalf of said company.
/s/ Jacqueline M Stubbs
Notary Public
[notary seal]
[Remainder of page intentionally left blank]
LESSOR: NET LEASE INCOME & GROWTH FUND 84-A
LIMITED PARTNERSHIP
By: Net Lease Management 84-A, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 5th
day of October, 1999, by Robert P Johnson, the President of Net
Lease Management 84-A, Inc., a Minnesota corporation, corporate
general partner of Net Lease Income & Growth Fund 84-A Limited
Partnership, on behalf of said limited partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
LESSOR: AEI REAL ESTATE FUND 85-A
LIMITED PARTNERSHIP
By: Net Lease Management 85-A, Inc.
By: /s/ Robert P Johnson
Robert P. Johnson, President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 5th
day of October, 1999, by Robert P Johnson, the President of Net
Lease Management 85-A, Inc., a Minnesota corporation, corporate
general partner of AEI Real Estate Fund 85-A Limited Partnership,
on behalf of said limited partnership.
/s/ Barbara J Kochevar
Notary Public
[notary seal]
FINAL CALCULATION OF RENT
FINAL FUNDING DATE: September 3, 1999
RTM MID-AMERICA, Inc.
Hudsonville, MI
September 3, 1999
Rent during 1st six months:
$1,102,000.00 TOTAL RTM PROJECT COST
x 6.421115% rental rate
= $70,760.69 annual rent
Payable to FUND 84-A 40.00% = $28,304.28
Payable to FUND 85-A 60.00% = $42,456.41
---------
$70,760.69
INITIAL MONTHLY RENT: $70,760.69 annual rent/12 Mos = $5,896.72
per month
Payable to FUND 84-A 40.00% = $2,358.69
Payable to FUND 85-A 60.00% = $3,538.03
--------
$5,896.72
RENT DUE AUGUST 27, 1999 $5,896.72/31 days x 5 days = $951.08
Payable to FUND 84-A 40.00% = $380.43
Payable to FUND 85-A 60.00% = $570.65
------
$951.08
OWNERSHIP INTERESTS AT DEVELOPMENT FINANCING CLOSING:
FUND XXII = 100.00%
FINAL CALCULATION OF RENT 2ND SIX MONTHS AND 2ND YEAR
MID AMERICA INC
HUDSONVILLE, MI
2nd Six months and Seconds Lease Year:
$1,102,000.00 TOTAL RTM PROJECT COST
x 8.890775% rental rate
= $97,976.34 annual rent
Payable to FUND 84-A 40.00% = $39,190.54
Payable to FUND 85-A 60.00% = $58,785.80
---------
$97,976.34
INITIAL MONTHLY RENT: $97,976.34 annual rent/12 Mos =$8,164.70 per month
Payable to FUND 84-A 40.00% = $3,265.88
Payable to FUND 85-A 60.00% = $4,898.82
--------
$8,164.70
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000759641
<NAME> AEI REAL ESTATE FUND 85-A LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 199,208
<SECURITIES> 0
<RECEIVABLES> 0
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0
0
<COMMON> 0
<OTHER-SE> 4,559,000
<TOTAL-LIABILITY-AND-EQUITY> 4,686,428
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<EPS-DILUTED> 28.34
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