SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: September 30, 1996
Commission file number: 0-14089
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Delaware 93-0926134
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90
days.
Yes [X] No
Transitional Small Business Disclosure Format:
Yes No [X]
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1996 and December 31, 1995
Statements for the Periods ended September 30, 1996 and 1995:
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 XV LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,029,139 $ 609,623
Receivables 3,939 36,412
----------- -----------
Total Current Assets 1,033,078 646,035
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 1,757,210 1,489,902
Buildings and Equipment 4,106,357 3,707,369
Construction Advances 0 867,945
Property Acquisition Costs 0 20,433
Accumulated Depreciation (1,270,784)
(1,278,079)
----------- -----------
Net Investments in Real Estate 4,592,783 4,807,570
----------- -----------
Total Assets $ 5,625,861 $ 5,453,605
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 25,596 $ 29,450
Distributions Payable 241,707 109,176
Deferred Income 50,209 15,480
----------- -----------
Total Current Liabilities 317,512 154,106
----------- -----------
DEFERRED INCOME - Net of Current Portion 159,967 171,577
PARTNERS' CAPITAL (DEFICIT):
General Partners (11,977) (12,182)
Limited Partners, $1,000 Unit value;
7,500 Units authorized and issued;
7,364 outstanding 5,160,359 5,140,104
----------- -----------
Total Partners' Capital 5,148,382 5,127,922
----------- -----------
Total Liabilities and Partners' Capital $ 5,625,861 $ 5,453,605
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
INCOME:
Rent $ 166,028 $ 152,485 $ 521,273 $ 445,241
Investment Income 12,573 23,318 31,452 70,394
--------- --------- --------- ---------
Total Income 178,601 175,803 552,725 515,635
--------- --------- --------- ---------
EXPENSES:
Partnership Administration -
Affiliates 26,991 26,956 77,148 90,961
Partnership Administration
and Property Management -
Unrelated Parties 3,277 2,987 14,927 25,305
Interest 0 937 0 2,984
Depreciation 41,705 38,219 127,505 114,659
--------- --------- --------- ---------
Total Expenses 71,973 69,099 219,580 233,909
--------- --------- --------- ---------
OPERATING INCOME 106,628 106,704 333,145 281,726
GAIN ON SALE OF REAL ESTATE 0 0 198,111 0
--------- --------- --------- ---------
NET INCOME $ 106,628 $ 106,704 $ 531,256 $ 281,726
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 1,066 $ 1,067 $ 5,313 $ 2,817
Limited Partners 105,562 105,637 525,943 278,909
--------- --------- --------- ---------
$ 106,628 $ 106,704 $ 531,256 $ 281,726
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(7,375 and 7,379 weighted
average Units outstanding in
1996 and 1995, respectively) $ 14.31 $ 14.32 $ 71.31 $ 37.80
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 531,256 $ 281,726
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 127,505 114,659
Gain on Sale of Real Estate (198,111) 0
Decrease in Receivables 32,473 12,161
Decrease in Payable to
AEI Fund Management, Inc. (3,854) (29,617)
Increase in Contract Payable 0 (12,298)
Increase in Deferred Income 23,119 11,063
----------- -----------
Total Adjustments (18,868) 95,968
----------- -----------
Net Cash Provided By
Operating Activities 512,388 377,694
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (359,459) (360,263)
Proceeds from Sale of Real Estate 644,852 0
----------- -----------
Net Cash Provided By (Used For)
Investing Activities 285,393 (360,263)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Distributions Payable 132,531 (37,836)
Distributions to Partners (510,796) (398,119)
----------- -----------
Net Cash Used For
Financing Activities (378,265) (435,955)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 419,516 (418,524)
CASH AND CASH EQUIVALENTS, beginning of period 609,623 1,608,136
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,029,139 $ 1,189,612
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid During the Period $ 0 $ 478
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (11,006) $ 5,256,551 $ 5,245,545 7,378.55
Distributions (3,980) (394,139) (398,119)
Net Income 2,817 278,909 281,726
---------- ----------- ----------- ----------
BALANCE, September 30, 1995 $ (12,169) $ 5,141,321 $ 5,129,152 7,378.55
========== =========== =========== ==========
BALANCE, December 31, 1995 $ (12,182) $ 5,140,104 $ 5,127,922 7,363.55
Distributions (5,108) (505,688) (510,796)
Net Income 5,313 525,943 531,256
---------- ----------- ----------- ----------
BALANCE, September 30, 1996 $ (11,977) $ 5,160,359 $ 5,148,382 7,363.55
========== =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and
reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of
operations for the interim period, on a basis consistent with
the annual audited statements. The adjustments made to these
condensed statements consist only of normal recurring
adjustments. Certain information, accounting policies, and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations, although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and the summary of significant
accounting policies and notes thereto included in the
Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Real Estate Fund XV Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management 86-A, Inc. (AFM), the Managing
General Partner of the Partnership. Robert P. Johnson, the
President and sole shareholder of AFM, serves as the
Individual General Partner of the Partnership. An affiliate
of AFM, AEI Fund Management, Inc., performs the
administrative and operating functions for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on October 3, 1986 when minimum
subscriptions of 1,300 Limited Partnership Units
($1,300,000) were accepted. The Partnership offering
terminated on December 30, 1986 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 XV 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 XV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate -
In 1995, the Partnership elected early adoption of the
Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." This standard requires the
Partnership to compare the carrying amount of its properties
to the estimated future cash flows expected to result from
the property and its eventual disposition. If the sum of
the expected future cash flows is less than the carrying
amount of the property, the Statement requires the
Partnership to recognize an impairment loss by the amount by
which the carrying amount of the property exceeds the fair
value of the property. Adoption of this Statement is not
expected to have a material effect on the Partnership's
financial statements.
In May, 1990, Flagship, Inc. (Flagship), the lessee of the
J.T. McCord's properties, filed for reorganization, after
occupying the properties for approximately five years. In
March, 1993, the Partnership, along with affiliated
Partnerships which also own J.T. McCord's properties, filed
its own plan of reorganization (the "Plan") with the Court.
That Plan provided for an assignee of the Partnerships (a
replacement tenant) to purchase the assets of Flagship and
operate the restaurants with financial assistance from the
Partnerships. This Plan was expected to allow the
Partnerships to avoid closing these properties, allow
operations to continue uninterrupted, and avoid further
costly litigation with Flagship and its creditors. The Plan
was confirmed by the Court and the creditors April 16, 1993
and became effective July 20, 1993.
To entice the assignee, WIM, Inc. (WIM) to operate the
restaurants and enter into the Lease Agreements, the
Partnership provided funds to renovate the restaurants and
paid for operating expenses. The Partnership's share of
renovation and operating expenses during this period was
$230,226 which was expensed in the fourth quarter of 1994.
However, WIM was not able to operate the properties
profitably and was unable to make rental payments as
provided in the Lease Agreements. To reduce expenses and
minimize the losses produced by these properties, the Waco
restaurant was closed and listed for sale or lease.
As part of the Plan, the Partnerships, which own these
properties, were responsible for an annual payment to the
Creditors Trust of approximately $110,000 for the next five
years. The Partnership's share of the annual payment was
$16,465. In 1994, the Partnership expensed $71,520 to
record this liability and administrative costs related to
the bankruptcy.
In 1995, the Partnership negotiated a settlement, with the
trustee, for a lump sum payment of the minimum amount due
over the remaining term of the Plan for release of the
Partnership and WIM from any other financial obligations and
reporting requirements to the trustee. The settlement of
$50,891 was completed in the fourth quarter of 1995.
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In June 1995, the Partnership re-leased the Waco property to
Tex-Mex Cocina of Waco, L.C. The Lease Agreement has a
primary term of two years with an annual rental payment of
$24,248. The Partnership could also receive additional rent
if gross receipts from the property exceed certain specified
amounts. The Lease contains renewal options which may
extend the lease term an additional 10 years. The property
is now operated as a Zapata's Cantina & Cafe. While the
property was being re-leased, the Partnership was
responsible for the real estate taxes and other costs
required to maintain the property.
In June, 1994, the lessee of the Applebee's restaurant in
Hilton Head, South Carolina, exercised an option in the
Lease Agreement to purchase the property. On July 29, 1994,
the sale closed with the Partnership receiving net sale
proceeds of $1,667,500 which resulted in a net gain of
$662,561. At the time of sale, the cost and related
accumulated depreciation of the property was $1,212,379 and
$207,530, respectively.
During 1995 and 1994, the Partnership distributed $290,248
of these net proceeds to the Limited and General Partners as
part of their regular quarterly distributions, which
represented a return of capital of $38.94 per Limited
Partnership Unit, respectively. The majority of the
remaining proceeds were reinvested in two properties during
the first quarter of 1996.
On January 10, 1996, the Partnership purchased a Denny's
restaurant in Greenville, Texas. The purchase price was
$1,028,432. The property is leased to Huntington
Restaurants Group, Inc. under a Lease Agreement with a
primary term of 20 years and annual rental payments of
$113,625. Through December 31, 1995, the Partnership had
advanced $867,945 for the construction of the property and
was charging interest on the Note at the rate of 8%.
On February 14, 1996, the Partnership purchased a 20%
interest in a Tractor Supply Company store in Maryville,
Tennessee. The purchase price was $219,405. The property
is leased to Tractor Supply Company under a Lease Agreement
with a primary term of 14 years and annual rental payments
of $22,575. The remaining interest in the property was
purchased by AEI Real Estate Fund 85-A Limited Partnership,
an affiliate of the Partnership.
In July 1995, the lessee of the Super 8 motel in Hot
Springs, Arkansas, exercised an option in the Lease
Agreement to purchase the property. On March 29, 1996, the
sale closed with the Partnership receiving net sale proceeds
of $665,691 which resulted in a net gain of $216,645. The
Partnership recognized $18,534 of this gain in 1995 due to
nonrefundable deposits received from the purchaser. At the
time of sale, the cost and related accumulated depreciation
of the property was $581,541 and $134,800, respectively.
In September, 1996, the Partnership distributed $127,273 of
the net proceeds as an additional distribution to the
Limited and General Partners, which represented a return of
capital of $17.11 per Limited Partnership Unit,
respectively. The majority of the remaining proceeds will
be reinvested in an additional property.
AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(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.
(5) Deferred Income -
In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor, acquired the operations of the Fuddruckers
restaurant in St. Louis, Missouri, and assumed the lease
obligations from the original lessee. As part of the
agreement, the Partnership amended the Lease to reduce the
base rent from $163,550 to $138,246. The Partnership could
receive additional rent in the future if 10% of gross
receipts from the property exceed the base rent. In
consideration for the lease assumption and amendment, the
Partnership received a lump sum payment from the original
lessee of $210,277. The lump sum payment will be recognized
as income over the remainder of the Lease term, which
expires January 31, 2008, using the straight line method.
As of September 30, 1996 and December 31, 1995, the
Partnership had recognized $34,830 and $23,220,
respectively, of this payment as income. At September 30,
1996, the remaining deferred income of $34,729 was prepaid
rent related to certain other Partnership properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 1996 and 1995, the
Partnership recognized rental income of $521,273 and $445,241,
respectively. During the same periods, the Partnership earned
investment income of $31,452 and $70,394, respectively. In 1996,
rental income increased as a result of the reinvestment of net
sale proceeds in additional properties and the re-leasing of the
Waco property, as discussed below. The increase in rental income
was partially offset by a decrease in investment income earned on
the proceeds prior to the purchase of the additional properties.
In May, 1990, Flagship, Inc. (Flagship), the lessee of the
J.T. McCord's property, filed for reorganization, after occupying
the property for approximately five years. In March, 1993, the
Partnership, along with affiliated Partnerships which own other
J.T. McCord's properties, filed its own plan of reorganization
(the "Plan") with the Court. That Plan provided for an assignee
of the Partnerships (a replacement tenant) to purchase the assets
of Flagship and operate the restaurants with financial assistance
from the Partnerships. This Plan was expected to allow the
Partnerships to avoid closing these properties, allow operations
to continue uninterrupted, and avoid further costly litigation
with Flagship and its creditors. The Plan was confirmed by the
Court and the creditors April 16, 1993 and became effective July
20, 1993.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
To entice the assignee, WIM, Inc. (WIM), to operate the
restaurants and enter into the Lease Agreements, the Partnership
provided funds to renovate the restaurants and paid for operating
expenses. The Partnership's share of renovation and operating
expenses during this period was $230,226, which was expensed in
the fourth quarter of 1994. However, WIM was not able to operate
the properties profitably and was unable to make rental payments
as provided in the Lease Agreements. To reduce expenses and
minimize the losses produced by the property, the Waco restaurant
was closed and listed for sale or lease.
As part of the Plan, the Partnerships, which own these
properties, were responsible for an annual payment to the
Creditors Trust of approximately $110,000 for the next five
years. The Partnership's share of the annual payment was
$16,465. In 1994, the Partnership expensed $71,520 to record
this liability and administrative costs related to the
bankruptcy.
In 1995, the Partnership negotiated a settlement, with the
trustee, for a lump sum payment of the minimum amount due over
the remaining term of the Plan for release of the Partnership and
WIM from any other financial obligations and reporting
requirements to the trustee. The settlement of $50,891 was
completed in the fourth quarter of 1995.
In June 1995, the Partnership re-leased the Waco property
to Tex-Mex Cocina of Waco, L.C. The Lease Agreement has a
primary term of two years with an annual rental payment of
$24,248. The Partnership could also receive additional rent if
gross receipts from the property exceed certain specified
amounts. The Lease contains renewal options which may extend the
lease term an additional 10 years. The property is now operated
as a Zapata's Cantina & Cafe. While the property was being re-
leased, the Partnership was responsible for the real estate taxes
and other costs required to maintain the property.
In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor, acquired the operations of the Fuddruckers restaurant
in St. Louis, Missouri, and assumed the lease obligations from
the original lessee. As part of the agreement, the Partnership
amended the Lease to reduce the base rent from the current annual
rent of $163,550 to $138,246. The Partnership could receive
additional rent in the future if 10% of gross receipts from the
property exceed the base rent. In consideration for the lease
assumption and amendment, the Partnership received a lump sum
payment from the original lessee of $210,277. The lump sum
payment will be recognized as income over the remainder of the
Lease term, which expires January 31, 2008, using the straight
line method. Fuddruckers, Inc. is owned by DAKA International,
which has a net worth in excess of $64 million, making it a much
higher credit lessee than the original lessee.
During the nine months ended September 30, 1996 and 1995,
the Partnership paid Partnership administration expenses to
affiliated parties of $77,148 and $90,961, 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 $14,927 and $25,305, 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 decrease
in these expenses in 1996, when compared to 1995, is mainly the
result of expenses incurred in 1995 prior to the resolution of
the J.T. McCord's situation discussed above.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
As of September 30, 1996, the Partnership's annualized
cash distribution rate was 7.0%, 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 the nine months ended September 30, 1996, the
Partnership's cash balances increased $419,516. Net cash
provided by operating activities increased from $377,694 in 1995
to $512,388 in 1996 as a result of an increase in revenue and a
reduction in expenses in 1996, and net timing differences in the
collection of payments from the lessees and the payment of
expenses.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. In the nine months ended September
30, 1996, the Partnership generated cash flow from the sale of
real estate, as discussed below, of $644,852. During the same
period, the Partnership expended $359,459 to invest in real
properties (inclusive of acquisition expenses) as the Partnership
continued to reinvest the cash generated from the property sales.
In June, 1994, the lessee of the Applebee's restaurant in
Hilton Head, South Carolina, exercised an option in the Lease
Agreement to purchase the property. On July 29, 1994, the sale
closed with the Partnership receiving net sale proceeds of
$1,667,500 which resulted in a net gain of $662,561. At the time
of sale, the cost and related accumulated depreciation of the
property was $1,212,379 and $207,530, respectively.
During 1995 and 1994, the Partnership distributed $290,248
of these net proceeds to the Limited and General Partners as part
of their regular quarterly distributions, which represented a
return of capital of $38.94 per Limited Partnership Unit,
respectively. The majority of the remaining proceeds were
reinvested in two properties during the first quarter of 1996.
On January 10, 1996, the Partnership purchased a Denny's
restaurant in Greenville, Texas. The purchase price was
$1,028,432. The property is leased to Huntington Restaurants
Group, Inc. under a Lease Agreement with a primary term of 20
years and annual rental payments of $113,625. Through December
31, 1995, the Partnership had advanced $867,945 for the
construction of the property and was charging interest on the
Note at the rate of 8%.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On February 14, 1996, the Partnership purchased a 20%
interest in a Tractor Supply Company Store in Maryville,
Tennessee. The purchase price was $219,405. The property is
leased to Tractor Supply Company under a Lease Agreement with a
primary term of 14 years and annual rental payments of $22,575.
The remaining interest in the property was purchased by AEI Real
Estate Fund 85-A Limited Partnership, an affiliate of the
Partnership.
In July 1995, the lessee of the Super 8 motel in Hot
Springs, Arkansas, exercised an option in the Lease Agreement to
purchase the property. On March 29, 1996, the sale closed with
the Partnership receiving net sale proceeds of $665,691 which
resulted in a net gain of $216,645. The Partnership recognized
$18,534 of this gain in 1995 due to nonrefundable deposits
received from the purchaser. At the time of sale, the cost and
related accumulated depreciation of the property was $581,541 and
$134,800, respectively.
In September, 1996, the Partnership distributed $127,273
of the net proceeds as an additional distribution to the Limited
and General Partners, which represented a return of capital of
$17.11 per Limited Partnership Unit, respectively. The majority
of the remaining proceeds will be reinvested in an additional
property.
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 1996, distributions were higher than in 1995 as a
result of the distribution of net sale proceeds in September,
1996.
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
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
On October 1, 1996, one Limited Partner redeemed a total
of 10 Partnership Units for $5,702 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, a total of
eighteen Limited partners redeemed 136.5 Partnership Units for
$101,139. The redemptions increase the remaining Limited
Partners' ownership 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.
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.
PART II - OTHER INFORMATION
(Continued)
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
27 Financial Data Schedule for period
ended September 30, 1996.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: November 13, 1996 AEI Real Estate Fund XV
Limited Partnership
By: AEI Fund Management 86-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)
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<CIK> 0000793631
<NAME> AEI REAL ESTATE FUND XV LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,029,139
<SECURITIES> 0
<RECEIVABLES> 3,939
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,033,078
<PP&E> 5,863,567
<DEPRECIATION> (1,270,784)
<TOTAL-ASSETS> 5,625,861
<CURRENT-LIABILITIES> 317,512
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,148,382
<TOTAL-LIABILITY-AND-EQUITY> 5,625,861
<SALES> 0
<TOTAL-REVENUES> 552,725
<CGS> 0
<TOTAL-COSTS> 219,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 531,256
<INCOME-TAX> 0
<INCOME-CONTINUING> 531,256
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<EXTRAORDINARY> 0
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