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: June 30, 1996
Commission file number: 0-16555
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1571166
(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 XVI LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of June 30, 1996 and December 31, 1995
Statements for the Periods ended June 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 XVI LIMITED PARTNERSHIP
BALANCE SHEET
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,492,815 $ 1,873,834
Receivables 44,714 54,661
----------- -----------
Total Current Assets 1,537,529 1,928,495
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 3,557,678 3,537,198
Buildings and Equipment 6,947,545 6,966,837
Property Acquisition Costs 0 14,813
Accumulated Depreciation (2,104,336) (2,274,424)
----------- -----------
8,400,887 8,244,424
Land Held for Resale 253,747 0
----------- -----------
Net Investments in Real Estate 8,654,634 8,244,424
----------- -----------
Total Assets $10,192,163 $10,172,919
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 93,385 $ 153,644
Distributions Payable 190,569 190,172
Deferred Income 30,758 22,212
----------- -----------
Total Current Liabilities 314,712 366,028
----------- -----------
DEFERRED INCOME - Net of Current Portion 233,087 244,193
PARTNERS' CAPITAL (DEFICIT):
General Partners (32,754) (33,570)
Limited Partners, $1,000 Unit value;
15,000 Units authorized and issued;
14,108 Units outstanding 9,677,118 9,596,268
----------- -----------
Total Partners' Capital 9,644,364 9,562,698
----------- -----------
Total Liabilities and Partners' Capital $10,192,163 $10,172,919
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Second Quarter Ended Six Months Ended
6/30/96 6/30/95 6/30/96 6/30/95
INCOME:
Rent $ 228,362 $ 279,612 $ 513,452 $ 547,199
Investment Income 16,473 14,795 40,765 27,634
--------- --------- --------- ---------
Total Income 244,835 294,407 554,217 574,833
--------- --------- --------- ---------
EXPENSES:
Partnership Administration-
Affiliates 40,045 52,182 104,070 117,337
Partnership Administration
and Property Management -
Unrelated Parties 42,039 23,724 85,450 29,070
Interest 0 4,299 0 8,743
Depreciation 73,132 82,198 143,478 164,396
--------- --------- --------- ---------
Total Expenses 155,216 162,403 332,998 319,546
--------- --------- --------- ---------
OPERATING INCOME 89,619 132,004 221,219 255,287
GAIN (ADJUSTMENT) ON SALE
OF REAL ESTATE (2,306) 0 284,690 0
--------- --------- --------- ---------
NET INCOME $ 87,313 $ 132,004 $ 505,909 $ 255,287
========= ========= ========= =========
NET INCOME ALLOCATED:
General Partners $ 873 $ 1,320 $ 5,059 $ 2,553
Limited Partners 86,440 130,684 500,850 252,734
--------- --------- --------- ---------
$ 87,313 $ 132,004 $ 505,909 $ 255,287
========= ========= ========= =========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(14,108 and 14,226 weighted average
Units outstanding in 1996 and 1995,
respectively) $ 6.13 $ 9.19 $ 35.50 $ 17.77
========= ========= ========= =========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 505,909 $ 255,287
Adjustments to Reconcile Net Income
To Net Cash Provided by Operating Activities:
Depreciation 143,478 164,396
Gain on Sale of Real Estate (284,690) 0
Decrease in Receivables 9,947 19,365
Decrease in Payable to
AEI Fund Management, Inc. (60,259) (56,804)
Decrease in Contract Payable 0 (59,766)
Increase (Decrease) in Deferred Income (2,560) 4,108
----------- -----------
Total Adjustments (194,084) 71,299
----------- -----------
Net Cash Provided By
Operating Activities 311,825 326,586
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (1,320,742) 0
Proceeds from Sale of Real Estate 1,051,744 0
----------- -----------
Net Cash Used For
Investing Activities (268,998) 0
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Distributions Payable 397 94,918
Distributions to Partners (424,243) (509,761)
----------- -----------
Net Cash Used For
Financing Activities (423,846) (414,843)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (381,019) (88,257)
CASH AND CASH EQUIVALENTS, beginning of period 1,873,834 882,790
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,492,815 $ 794,533
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest Paid During the Year $ 0 $ 2,144
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED JUNE 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (32,717) $ 9,680,797 $ 9,648,080 14,225.70
Distributions (5,098) (504,663) (509,761)
Net Income 2,553 252,734 255,287
--------- ----------- ----------- ----------
BALANCE, June 30, 1995 $ (35,262) $ 9,428,868 $ 9,393,606 14,225.70
========= =========== =========== ==========
BALANCE, December 31, 1995 $ (33,570) $ 9,596,268 $ 9,562,698 14,107.70
Distributions (4,243) (420,000) (424,243)
Net Income 5,059 500,850 505,909
--------- ----------- ----------- ----------
BALANCE, June 30, 1996 $ (32,754) $ 9,677,118 $ 9,644,364 14,107.70
========= =========== =========== ==========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
JUNE 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 XVI Limited Partnership (Partnership)
was formed to acquire and lease commercial properties to
operating tenants. The Partnership's operations are managed
by AEI Fund Management XVI, 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 February 6, 1987 when minimum
subscriptions of 2,000 Limited Partnership Units
($2,000,000) were accepted. The Partnership's offering
terminated on November 6, 1987 when the maximum subscription
limit of 15,000 Limited Partnership Units ($15,000,000) was
reached.
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$15,000,000 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 XVI 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 XVI 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
$755,773 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 and the
Partnership amended the agreements for the Irving and
Mesquite locations to provide for WIM to make annual rental
payments of the greater of $60,000 or 5.5% of sales
beginning October 1, 1994. In December, 1995, the
Partnership took possession of the properties after WIM was
unable to perform under the terms of the Leases. The
properties are currently listed for sale or lease. While
the properties are being re-leased or sold, the Partnership
is responsible for the real estate taxes and other costs
required to maintain the properties.
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
$69,702. In 1994, the Partnership expensed $302,652 to
record this liability and administrative costs related to
the bankruptcy.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
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
$215,442 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 eighteen months with an annual rental
payment of $29,752. 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.
In July, 1996, the Partnership entered into an agreement to
sell the J.T. McCord's in Mesquite, Texas to an unrelated
third party. The sale price for the Partnership's interest
in the property will be approximately $367,500, which will
result in a net loss of approximately $61,000. The
Partnership anticipates the sale will close on August 30,
1996.
In March, 1995, the lessee of the Applebee's restaurant in
Columbia, South Carolina, exercised an option in the Lease
Agreement to purchase the property. On July 28, 1995, the
sale closed with the Partnership receiving net sale proceeds
of $990,453 which resulted in a net gain of $437,915. At
the time of sale, the cost and related accumulated
depreciation of the property was $723,823 and $171,285,
respectively.
On October 25, 1995, the Partnership sold two of the Jiffy
Lube Auto Care Centers to the lessee. The Partnership
recognized net sale proceeds of $322,443 for the Jiffy Lube
in Garland, Texas, which resulted in a net gain of $80,500.
At the time of sale, the cost and related accumulated
depreciation of the property was $301,884 and $59,941,
respectively. The Partnership recognized net sale proceeds
of $161,218 for the Jiffy Lube in Dallas, Texas, which
resulted in a net gain of $35,705. At the time of sale, the
cost and related accumulated depreciation of the property
was $154,781 and $29,268.
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 $665,692 which resulted in a net gain of $217,323. In
the second quarter of 1996, $2,306 of additional sale
expenses were recognized which resulted in a total net gain
of $215,017. 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 $583,653 and
$135,284, respectively.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
In January, 1996, the Cheddar's restaurant in Indianapolis,
Indiana was destroyed by a fire. The Partnership has
reached a preliminary agreement with the tenant and
insurance company which calls for termination of the Lease,
demolition of the building and payment to the Partnership of
$407,282 for the building and equipment and $49,688 for lost
rent. The property will not be rebuilt and the Partnership
listed the land for sale. The Partnership's cost and
related accumulated depreciation in the building and
equipment at March 31, 1996 was $496,967 and $178,282,
respectively. The settlement resulted in a net gain of
$88,207. The Partnership's cost of the land is $253,747.
During the first six months of 1996 and the year 1995, the
Partnership distributed $424,243 and $730,214 of the net
sale proceeds to the Limited and General Partners as part of
their regular quarterly distributions and to pay for the
redemption of Partnership Units. The distributions
represented a return of capital of $29.78 and $50.98 per
Limited Partnership Unit, respectively. The majority of the
remaining net proceeds will be reinvested in additional
properties.
In November, 1995, the Partnership entered into an Agreement
to purchase an Applebee's restaurant in Victoria, Texas.
The property was acquired on March 22, 1996 for $1,335,555.
The property is leased to Renaissant Development Corporation
under a Lease Agreement with a primary term of 20 years and
annual rental payments of approximately $151,000.
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
purchase price will be approximately $1,231,000. The
property will be leased to Caribou Coffee Company, Inc.
under a Lease Agreement with a primary term of 18 years and
annual rental payments of approximately $141,500.
The Partnership owns a 30.8078% interest in the Sizzler
restaurant in Cincinnati, Ohio. In January, 1994, the
Partnership closed the restaurant and listed it for sale or
lease. While the property is being re-leased or sold, the
Partnership is responsible for the real estate taxes and
other costs required to maintain the properties. No rent
was received in 1996 or 1995 from the property.
(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.
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(5) Deferred Income -
In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor, acquired the operations of the Fuddruckers
restaurants in St. Louis, Missouri and Omaha, Nebraska, and
assumed the lease obligations from the original lessee. As
part of the agreement, the Partnership amended the Leases to
reduce the base rent from $109,033 to $92,164 for the St.
Louis property and $167,699 to $145,081 for the Omaha
property. The Partnership could receive additional rent in
the future if 10% of gross receipts from the properties
exceed the base rent. In consideration for the lease
assumption and amendment, the Partnership received a lump
sum payment from the original lessee of $299,723. The lump
sum payment will be recognized as income over the remainder
of the Lease terms which expire January 31, 2008 and
November 30, 2007, using the straight line method. As of
June 30, 1996 and December 31, 1995, the Partnership had
recognized $44,424 and $33,318 of this payment as income.
At June 30, 1996, the remaining deferred income of $8,546
was prepaid rent related to certain other Partnership
properties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the six months ended June 30, 1996 and 1995, the
Partnership recognized rental income of $513,452 and $547,199,
respectively. During the same periods, the Partnership earned
investment income of $40,765 and $27,634, respectively. In 1996,
rental income decreased as a result of the property sales
discussed below and no rental income was recognized for the J.T.
McCord's properties in Irving and Mesquite, Texas. The decrease
in rental income was partially offset by rental income received
from re-leasing the property in Waco, Texas, rental income
received from the Applebee's in Victoria, Texas, rent increases
on five properties and additional investment income earned on the
net proceeds from property sales.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
To entice 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 $755,773, 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 and the
Partnership amended the agreements for the Irving and Mesquite
locations to provide for WIM to make annual rental payments of
the greater of $60,000 or 5.5% of sales beginning October 1,
1994. In December, 1995, the Partnership took possession of the
properties after WIM was unable to perform under the terms of the
Leases. The properties are currently listed for sale or lease.
While the properties are being re-leased or sold, the Partnership
is responsible for the real estate taxes and other costs required
to maintain the properties.
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
$69,702. In 1994, the Partnership expensed $302,652 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 $215,442 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 eighteen months with an annual rental payment of
$29,752. 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.
In July, 1996, the Partnership entered into an agreement
to sell the J.T. McCord's in Mesquite, Texas to an unrelated
third party. The sale price for the Partnership's interest in
the property will be approximately $367,500, which will result in
a net loss of approximately $61,000. The Partnership anticipates
the sale will close on August 30, 1996.
The Partnership owns a 30.8078% interest in the Sizzler
restaurant in Cincinnati, Ohio. In January, 1994, the
Partnership closed the restaurant and listed it for sale or
lease. While the property is being re-leased or sold, the
Partnership is responsible for the real estate taxes and other
costs required to maintain the properties. No rent was received
in 1996 or 1995 from the property.
In June, 1994, Fuddruckers, Inc., the restaurant concept's
franchisor, acquired the operations of the Fuddruckers
restaurants in St. Louis, Missouri and Omaha, Nebraska, and
assumed the lease obligations from the original lessee. As part
of the agreement, the Partnership amended the Leases to reduce
the base rent from $109,033 to $92,164 for the St. Louis property
and $167,699 to $145,081 for the Omaha property. The Partnership
could receive additional rent in the future if 10% of gross
receipts from the properties exceed the base rent. In
consideration for the lease assumption and amendment, the
Partnership received a lump sum payment from the original lessee
of $299,723. The lump sum payment will be recognized as income
over the remainder of the Lease terms which expire January 31,
2008 and November 30, 2007, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During the six months ended June 30, 1996 and 1995, the
Partnership paid partnership administration expenses to
affiliated parties of $104,070 and $117,337, 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 $85,450 and $29,070, respectively. The increase in
theses expenses in 1996, when compared to the same period in
1995, is due to costs related to the vacant J. T. McCord's
properties and Sizzler property. In addition, the 1995 amount
was reduced by $17,319 of insurance proceeds received as a result
of vandalism to the Sizzler restaurant.
As of June 30, 1996, the Partnership's annualized cash
distribution rate was 6.35%, 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
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 six months ended June 30, 1996, the
Partnership's cash balances decreased $381,019. Net cash
provided by operating activities decreased from $326,586 in 1995
to $312,083 in 1996 as a result of a decrease in rental income
and an increase in expenses in 1996.
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 six months ended June 30,
1996, the Partnership generated cash flow from the sale of real
estate, as discussed below, of $1,051,744. During the same
period, the Partnership expended $1,320,742 to invest in real
properties (inclusive of acquisition expenses) as the Partnership
reinvested the cash generated from the property sales.
In March, 1995, the lessee of the Applebee's restaurant in
Columbia, South Carolina, exercised an option in the Lease
Agreement to purchase the property. On July 28, 1995, the sale
closed with the Partnership receiving net sale proceeds of
$990,453 which resulted in a net gain of $437,915. At the time
of sale, the cost and related accumulated depreciation of the
property was $723,823 and $171,285, respectively.
On October 25, 1995, the Partnership sold two of the Jiffy
Lube Auto Care Centers to the lessee. The Partnership recognized
net sale proceeds of $322,443 for the Jiffy Lube in Garland,
Texas, which resulted in a net gain of $80,500. At the time of
sale, the cost and related accumulated depreciation of the
property was $301,884 and $59,941, respectively. The Partnership
recognized net sale proceeds of $161,218 for the Jiffy Lube in
Dallas, Texas, which resulted in a net gain of $35,705. At the
time of sale, the cost and related accumulated depreciation of
the property was $154,781 and $29,268.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
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 $665,692 which
resulted in a net gain of $217,323. In the second quarter of
1996, $2,306 of additional sale expenses were recognized which
resulted in a total net gain of $215,017. 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
$583,653 and $135,284, respectively.
In January, 1996, the Cheddar's restaurant in
Indianapolis, Indiana was destroyed by a fire. The Partnership
has reached a preliminary agreement with the tenant and insurance
company which calls for termination of the Lease, demolition of
the building and payment to the Partnership of $407,282 for the
building and equipment and $49,688 for lost rent. The property
will not be rebuilt and the Partnership listed the land for sale.
The Partnership's cost and related accumulated depreciation in
the building and equipment at March 31, 1996 was $496,967 and
$178,282, respectively. The settlement resulted in a net gain of
$88,207. The Partnership's cost of the land is $253,747.
During the first six months of 1996 and the year 1995, the
Partnership distributed $424,243 and $730,214 of the net sale
proceeds to the Limited and General Partners as part of their
regular quarterly distributions and to pay for the redemption of
Partnership Units. The distributions represented a return of
capital of $29.78 and $50.98 per Limited Partnership Unit,
respectively. The majority of the remaining net proceeds will be
reinvested in additional properties.
In November, 1995, the Partnership entered into an
agreement to purchase an Applebee's restaurant in Victoria,
Texas. The property was acquired on March 22, 1996 for
$1,335,555. The property is leased to Renaissant Development
Corporation under a Lease Agreement with a primary term of 20
years and annual rental payments of approximately $151,000.
In August, 1996, the Partnership entered into an agreement
to purchase a Caribou Coffee store in Atlanta, Georgia. The
purchase price will be approximately $1,231,000. The property
will be leased to Caribou Coffee Company, Inc. under a Lease
Agreement with a primary term of 18 years and annual rental
payments of approximately $141,500.
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. The redemption payments generally are funded with cash
that would normally be paid as part of the regular quarterly
distributions. As a result, total distributions and
distributions payable have fluctuated from year to year due to
cash used to fund redemption payments. Effective October 1,
1995, the Partnership's distribution rate was reduced from 7% to
6%. As a result, distributions during the first six months of
1995 were higher when compared to the same period in 1996.
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
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
During 1995, twelve Limited Partners redeemed a total of
118 Partnership Units for $79,774 in accordance with the
Partnership Agreement. The Partnership acquired these Units
using proceeds from the Applebee's sale, which reduced the
Limited Partners' Adjusted Capital Contribution. In prior years,
a total of sixty-five Limited Partners redeemed 774.3 Partnership
Units for $635,881. 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Purchase Agreement dated
July 10, 1996, between the Partnership,
AEI Real Estate Fund XVII Limited
Partnership, and BW, Incorporated
relating to the property at 3808 Town
Crossing Boulevard, Mesquite, Texas.
27 Financial Data Schedule for period
ended June 30, 1996.
PART II - OTHER INFORMATION
(Continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (Continued)
b. Reports filed on Form 8-K - During the quarter ended June
30, 1996, the Partnership filed
a Form 8-K, dated March 22, 1996,
reporting the purchase of the
Applebee's restaurant in Victoria,
Texas.
During the quarter ended June 30,
1996, the Partnership filed a
Form 8-K, dated March 29, 1996,
reporting the disposition of the
Super 8 motel in Hot Springs,
Arkansas.
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: August 7, 1996 AEI Real Estate Fund XVI
Limited Partnership
By: AEI Fund Management XVI, 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)
PURCHASE AGREEMENT
3808 Towne Crossing Blvd.
Mesquite, TX
This AGREEMENT, entered into effective as of the 10 of July, 1996.
l. Parties. Seller is AEI Real Estate Fund XVI Limited
Partnership as to an undivided 35% interest, and AEI Real Estate
Fund XVII Limited Partnership as to an undivided 65% interest,
("Seller"). Seller holds an undivided 100% interest in the fee
title to that certain real property legally described in the
attached Exhibit "A" (the "Property"). Buyer is BW,
Incorporated, a Texas corporation, ("Buyer"). Seller wishes to
sell and Buyer wishes to buy the Property.
2. Property. The Property to be sold to Buyer in this transaction
is legally described on Exhibit A attached hereto, subject to all
easements, covenants, conditions, restrictions and agreements of
record ("Permitted Exceptions"). Additionally, Seller makes no
claim of the items of personalty listed on Exhibit A-1, but
Seller will provide Buyer with a Quit Claim Bill of Sale,
(without warranty of title of any kind) as to the items of
personalty listed on Exhibit A-1.
3. Purchase Price. The purchase price for this Property is
$1,050,000, based on the following terms:
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $25,000
to be deposited into Escrow (the "First Payment"), and
independent consideration of $50 which the parties have
bargained for and agreed upon as consideration for Seller's
execution and delivery of this agreement. The independent
consideration is independent of any other consideration and
is non-refundable and shall be retained by seller. The First
Payment will be credited against the purchase price when and
if escrow closes and the sale is completed. After the
expiration of the Review Period as defined in paragraph 6
below, the First Payment held for the account of Seller
shall become non-refundable.
(b) Balance of purchase price, $1,024,950, to be deposited
into escrow on or before the closing date.
5. Closing Date. Escrow shall close on or before August 30, 1996.
6. Due Diligence. Buyer will have until the expiration of the
forty-fifth day after delivery (the "Review Period") of each of
following items as set forth in 6(a) - (b), to be supplied by
Seller, to conduct all of its inspections and due diligence and
satisfy itself regarding each item, the Property, and this
transaction.
(a) A title insurance commitment for an Owner's Title
insurance policy (see paragraph 8 below).
Buyer Initial: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
(b) Copy of the survey of the Property done concurrent with
Seller's acquisition of the Property.
Buyer acknowledges that the information provided and to be
provided by Seller with respect to the Property was obtained
from outside sources and Seller neither (a) has made
independent investigation or verification of such
information, or (b) makes any representations as to the
accuracy or completeness of such information. Seller is not
aware that such information is inaccurate or misleading.
At closing, Seller shall provide Buyer with an affidavit
under penalty of perjury, that Seller is not a "foreign
person".
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice by certified mail,
return receipt requested, or by personal delivery to Seller and
escrow holder before the expiration of the Review Period or
Inspection Period as defined in Section 16. Such notice shall be
deemed effective only upon receipt by Seller.
If Buyer cancels this Agreement as permitted under this
Section or Section 16, except for any escrow cancellation fees of
the escrowee which will be split equally between the Buyer and
Seller, and any liabilities under sections 15(a) of this
Agreement (which will survive), Buyer (after execution of such
documents reasonably requested by Seller to evidence the
termination hereof) shall be returned its First Payment, and
Buyer will have absolutely no rights, claims or interest of any
type in connection with the Property or this transaction,
regardless of any alleged conduct by Seller or anyone else.
7. Escrow. Escrow shall be opened by Seller and funds deposited
upon acceptance of this agreement. The Escrowee will be a
nationally recognized escrow company selected by Seller and
reasonably acceptable to Buyer. A copy of this Agreement will be
delivered to the escrow holder and will serve as escrow
instructions together with the escrow holder's standard
instructions and any additional instructions required by the
escrow holder to clarify its rights and duties. The parties
agree to sign these additional instructions of the Escrowee, if
any. If there is any conflict between these other instructions
and this Agreement, this Agreement will control. Escrow will be
opened upon acceptance of this Agreement by Seller.
8. Title. Closing will be conditioned on the commitment of a
nationally recognized title company selected by Seller and
acceptable to Buyer to issue an Owner's policy of title
insurance, dated as of the close of escrow, in an amount equal to
the purchase price, insuring that Buyer will own insurable title
to the Property subject only to: the title company's standard
exceptions; current real property taxes and assessments; survey
exceptions; and other items of record not affecting marketability
disclosed to Buyer during the Review Period ("Permitted
Exceptions").
Buyer shall be allowed ten (10) days after receipt of said
commitment for examination and the making of any objections to
marketability of
Buyer Initial:
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
exceptions to title thereto, said objections to be made in
writing or deemed waived. If any objections are so made, the
Seller shall be allowed sixty (60) days to make such title
marketable or cure Buyer's objections, or in the alternative to
obtain a commitment for insurable title insuring over Buyer's
objections. If Seller shall decide to make no efforts to make
title marketable, or is unable to make title marketable or obtain
insurable title, (after execution by Buyer of such documents
reasonably requested by Seller to evidence the termination
hereof) Buyer's First Payment shall be returned and this
agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this agreement according to its terms.
9. Closing Costs. Seller will pay the deed stamp taxes, if any,
and one-half of escrow fees attributable to the closing services
for this transaction, and any brokerage commissions payable to
The Forman Company only. Seller shall pay for the cost of
issuing the title commitment. Buyer will pay the cost of the
title insurance premium for an Owner's policy (if desired by
Buyer), all recording fees, one-half of the escrow fees, the
costs of a update to the Survey in Seller's possession (if an
update is required by Buyer). Each party will pay its own
attorneys' fees and costs to document and close this transaction.
10. Real Estate Taxes, Special Assessments and Prorations. Taxes
for the year of the Closing shall be prorated to the Date of
Closing. If the Closing shall occur before the tax rate is fixed
for the then current year, the appointment of taxes shall be upon
the basis of the tax rate for the preceding year applied to the
latest assessed valuation. Subsequent to the Closing, when the
tax rate is fixed for the year in which Closing occurs, Seller
and Buyer agree to adjust the proration of taxes and, if
necessary, to refund or pay (as the case may be) such sums as
shall be necessary to effect such adjustment. Seller agrees to
cooperate with Buyer in connection with any tax protest by Buyer,
but Seller shall not be required to expend any funds in
connection with such protest.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) The Property is vacant.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) It is not aware of any contracts affecting this
Property and potentially or actually binding on Buyer after
the closing date.
Buyer Initial: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
12. Disclosures.
(a) Seller and Buyer acknowledge and agree that Seller
acquired the Property through a sale/leaseback with a former
tenant. Seller has been an absentee landlord. Consequently,
Seller has little, if any, knowledge of the physical
characteristics of the Property.
Accordingly, except as otherwise specifically stated in the
Agreement, Seller hereby specifically disclaims any
warranty, guaranty, or representation, oral or written,
past, present, or future of, as to, or concerning (i) the
nature and condition of the Property, including, without
limitation, the water, soil, and geology, and the
suitability thereof and of the Property for any and all
activities and uses which Buyer may elect to conduct
thereon; (ii) except for the warranty of title contained in
the Deed to be delivered by Seller at the closing, the
nature and extent of any right of way, lease, possession,
lien, encumbrance, license, reservation, condition, or
otherwise, and (iii) the compliance of the Property or its
operation with any laws, ordinances, or regulations of any
government or other body.
(b) This Agreement is subject to an inspection contingency
as set forth in Section 16. Buyer acknowledges and agrees
that Buyer is not relying upon any representation or
warranties made by Seller or Seller's Agent.
(c) Buyer acknowledges that, having been given the
opportunity to inspect the Property, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided by Seller
except as set forth herein. Buyer further acknowledges that
the information provided and to be provided with respect to
the Property by Seller was obtained from a variety of
sources and Seller neither (a) has made independent
investigation or verification of such information, or (b)
makes any representation as to the accuracy or completeness
of such information. The sale of the Property as provided
for herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of the
Seller herein, except as otherwise specified herein, Seller
maker no Warranty or representation, express or implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
(d) BUYER AGREES THAT IT SHALL BE PURCHASING THE PROPERTY IN
ITS THEN PRESENT CONDITION, AS IS, WHERE IS, AND SELLER HAS
NO OBLIGATION TO CONSTRUCT OR REPAIR ANY IMPROVEMENTS
THEREON, OR TO PERFORM ANY OTHER ACT REGARDING THE PROPERTY.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ALSO
AGREES THAT SELL WILL HAVE NO LIABILITY OF ANY TYPE, DIRECT
OR INDIRECT, TO BUYER OR BUYER'S SUCCESSORS, ASSIGNS,
LENDERS OR AFFILIATES IN CONNECTION WITH ANY HAZARDOUS,
TOXIC, DANGEROUS, FLAMMABLE, EXPLOSIVE OR CHEMICAL
SUBSTANCES OF ANY TYPE
Buyer Initial: /s/ R.B. /s/ J. W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
(WHETHER OR NOT DEFINED AS SUCH UNDER ANY APPLICABLE LAWS)
ON OR IN CONNECTION WITH THE PROPERTY EITHER BEFORE OR AFTER
THE CLOSING DATE.
13. Closing.
(a) Before the closing date, Seller will deposit into escrow
an executed limited warranty deed subject to Permitted
Exceptions conveying insurable title of the Property to
Buyer, and a Quit Claim Bill of Sale to the items of
personalty listed on Exhibit A-1. At Closing, Seller shall
deliver to Buyer a standard Seller's Affidavit regarding
liens and judgments.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign and
deliver to the escrow holder any other documents reasonably
required by the escrow holder to close escrow.
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies (First, and if made, the
final Payments) heretofore paid by the Buyer. Seller shall
retain all remedies available to Seller at law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, performed
all of its other obligations and satisfied all conditions under
this Agreement, and unconditionally notifies Seller that it
stands ready to tender full performance, purchase the Property
and close escrow as per this Agreement. Provided, however, that
in no event shall Seller be liable for any punitive or
speculative damages arising out of any default by Seller
hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
Buyer Initial: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and
Buyer deems to be reasonable in order to consummate the
transactions contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Property Inspection and Environmental.
(a) Seller shall provide Buyer access to the Property from
time to time for the purpose of conducting inspections
thereof including mechanical, structural, electrical and
other physical inspections. Buyer has until forty-five (45)
days after the signing of the agreement by Seller to
complete such physical inspection (the "Inspection Period").
(b) Buyer shall indemnify, defend, and hold harmless Seller
from and against any and all losses, claims, causes of
action, liabilities, and costs to the extent caused by the
actions of Buyer, its agents, employees, contractors, or
invitees, during any such entry upon the Property. The
foregoing duty of indemnification shall include the duty to
pay all reasonable attorney's fees incurred by the Seller in
responding to or defending any such claims or proceedings.
(c) Buyer shall pay for any Phase I Environmental studies it
wants to be performed on the Property. If Buyer desires a
Phase I Environmental, Buyer shall obtain and review the
same within forty-five (45) days from the date this
agreement is signed by Seller. If the Phase I Environmental
report does not meet hazardous material standards as
required by the ruling state and Federal agencies, the Buyer
may terminate this Agreement within said forty-five (45) day
period and receive a full refund of the Earnest Money.
However, if Buyer terminates, Buyer prior to termination
will provide Seller with copies of all reports and test
results Buyer had performed on the Property.
17. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events
Buyer Initial: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
occurring subsequent to the date of this Agreement to the
extent that the cost of repair exceeds $20,000, this
Agreement shall become null and void, at Buyer's option
exercised, if at all, by written notice to Seller within ten
(10) days after Buyer has received written notice from
Seller of said destruction or damage. Seller, however,
shall have the right to adjust or settle any insured loss
until (i) all contingencies set forth in Paragraph 6 hereof
have been satisfied, or waived; and (ii) any period provided
for above in this Subparagraph 16a for Buyer to elect to
terminate this Agreement has expired or Buyer has, by
written notice to Seller, waived Buyer's right to terminate
this Agreement. If Buyer elects to proceed and to
consummate the purchase despite said damage or destruction,
there shall be no reduction in or abatement of the purchase
price, and Seller shall assign to Buyer the Seller's right,
title, and interest in and to all insurance proceeds
resulting from said damage or destruction to the extent that
the same are payable with respect to damage to the Property.
If the cost of repair is less than $20,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds in relation to the
Property.
(b) If, prior to closing, the Property, or any part thereof,
is taken by eminent domain, this Agreement shall become null
and void, at Buyer's option. If Buyer elects to proceed and
to consummate the purchase despite said taking, there shall
be no reduction in, or abatement of, the purchase price, and
Seller shall assign to Buyer all the Seller's right, title,
and interest in and to any award made, or to be made, in the
condemnation proceeding in relation to the Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
18. Seller's and Buyer's Brokers. Howard Forman of The Forman
Company is the broker representing the Seller (and the Seller
only) in this transaction. The Buyer is not represented by a
broker in this transaction.
19. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the other matters described,
and it supersedes any other agreements or
Buyer Initial: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
understandings. Exhibits attached to this Agreement are
incorporated into this Agreement.
(b) If this escrow has not closed by August 30, 1996,
through no fault of Seller, Seller may either, at its
election, extend the closing date, exercise any remedy
available to it by law, including but not limited to
terminating this Agreement.
(c) Funds to be deposited or paid by Buyer will be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Real Estate Funds XVI & XVII Limited Partnerships
1300 Minnesota World Trade Center
30 E. 7th Street
St. Paul, MN 55101
If to Buyer:
BW, Incorporated
20 I-30
Rockwall, Texas 75087
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller along with the $25,000 First Payment,
which, if accepted, will be deposited in to escrow by Seller.
Seller has two (2) business days after receipt of the executed
offer and First Payment within which to accept this offer; if not
accepted by Seller, Seller shall immediately return the First
Payment to Buyer.
Buyer Inital: /s/ R.B. /s/ J.W.
Purchase Agreement for: 3808 Towne Crossing Blvd., Mesquite,
Texas
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER:
BW, Incorporated, a Texas corporation
By: /s/ Rickey Byrum By: /s/ Joseph Willis
Rickey Byrum Joseph Willis
Its: President Its: Vice President/Secretary
SELLER:
AEI REAL ESTATE FUND XVI LIMITED PARTNERSHIP, a Minnesota limited
partnership.
By: AEI Fund Management XVI, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
AEI REAL ESTATE FUND XVII LIMITED PARTNERSHIP, a Minnesota
limited partnership.
By: AEI Fund Management XVII, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
EXHIBIT "A"
Legal Description
Lot 2-A, Block B, TOWNE CROSSING, an Addition to the City of
Mesquite, Dallas County, Texas, according to the Plat recorded in
Volume 85051, Page 5143, Map Records, Dallas County, Texas.
QUOTATION/PROPOSAL
EXHIBIT A-1
AFFORDABLE EQUIPMENT CO. NO. 224
P.O. BOX 710094 DATE 1-22-96
DALLAS, TX 75371-0094 INQUIRY NO.
PHONE (214) 320-1085
FAX (214) 320-2377
INVENTORY AND VALUE OF EQUIPMENT AT CLOSED
TO: ESTIMATED DELIVERY
J T MC CORD'S RESTAURANT TERMS
MESQUITE, TEXAS
SALESMAN FOB FOLLOW UP DATE
Robert Roznovsky
QUANTITY DESCRIPTION
17 Booth openings w/tables
5 Booths 3/4 circle w/tables
56 Chairs, wood
12 Tables, 30x60
2 Tables, 30x40
6 Children booster chairs, wood
9 Fans, cealing
28 Pictures, various sizes
1 Picture, large
7 Hitachi TVs
1 Bicycle
1 Hitachi TV, large
1 Menu display board, lighted
2 Booths, 1/2 circle
9 Tables, wood, bar height
26 Bar stools, wood
12 Bar stools, wood, black
7 Booster chairs, plastic
1 Ice cream freezer, 2-door
1 SS drain board w/sink
1 SS ice chest 2"
1 SS cocktail station w/dump & blender station
1 SS sink, 3-comp, 10'L.
1 Bev Air, 27", work top refig.
1 Perlick mug froster, 2'L.
1 SS work table, 3'L.
1 Taylor margarita freezer, counter model
1 Back bar cooler, custom made
1 SS ice chest
1 Beverage Air, 27", work top refrig.
1 Bev Air mug froster, 3'L.
1 SS counter top covers, 25'L.
1 Long draw draft beer system, 2 station, 3-beer
1 Bar mix dispensers, 2-station
AFFORDABLE EQUIPMENT CO. NO. 225
P.O. BOX 710094 DATE
DALLAS, TX 75371-0094 INQUIRY NO.
PAGE NO. 2
INVENTORY OF CLOSED RESTAURANT
TO: ESTIMATED DELIVERY
J T MC CORD'S TERMS
MESQUITE, TEXAS
SALESMAN FOB FOLLOW UP DATE
QUANTITY DESCRIPTION
1 Lot Beer pitchers
1 Lot Glasses
1 Heat lamp, 2-bulb
1 Cash register, computer
20 Computer boards, remote
1 Jukebox, vending
1 Dart Video game, vending
1 Wet mop sign
1 Ash tray can
5 Waitress stands
1 Cecilware, coffee brewer, 3-pot
1 Carafe, insulated
1 Silver holder
1 Cecialware, tea-brewer-w/3 pots
1 Post mix soda system, 5 valve, refrigerated
1 SS work top waitress station, 13'L.
1 Metro wire wall shelf, 12"x13'
1 SS work top ice storage bin, 5'
1 Bev Air, 2-glass door refrigerator
1 Lot SS pans
1 SS table, 3'
1 Bus cart
1 Lot Coffee cups
1 SS Dessert work station, 8'
1 Panisonic micro wave
2 SS wall shelves
Well warmer, 2-drawer
SS chef counter pick up station
SS hand sink
SS table, 3'
SS wall shelf, 8'
SS Soil dish table, dish washer
SS Clean dish table, " "
SS Wall shelf
SS table, 3'
AFFORDABLE EQUIPMENT CO. NO. 226
P.O. BOX 710094 DATE
DALLAS, TX 75371-0094 INQUIRY NO.
PAGE NO. 3
INVENTORY OF CLOSED RESTAURANT
TO: ESTIMATED DELIVERY
J T MC CORD'S TERMS
MESQUITE, TEXAS
SALESMAN FOB FOLLOW UP DATE
QUANTITY DESCRIPTION
1 Pan rack, 1/2 size
1 SS hand sink
2 Scotsman cubers, 2400 lbs. Cap., & 1000 lb.cap.
1 Metro shelves, 24x72x4 tier
1 Moble bun rack rack
1 U S Range gas griddle, 6' W/ 2-burners & stand
1 SS Vent-A-hood, 7', class 1, w/fire system
1 Pan rack, 1/2 size
1 SS Vent-A-hood, class-1, 8', W/fire system
3 Picto gas fryers, 50 lb cap.
2 Lang elect. Cheese melters, 3'ea.
1 McCall refrigerator w/4-1/2 doors
1 SS work table, 10' w/1-hot & 3-cold wells
1 Toastwell elect. griddle
1 SS hand sink
1 Wolf gas char broiler 3', w/stand
1 Traulsen refrigerated equipment stand, 78"
Wolf stove, 2-burner
US Range gas griddle, 3'
SS stand 20x30
McCall refrigerator w/4-1/2 doors
SS Vent-A-Hood, 7', class 1, w/fire system
SS micro wave wall shelf
Metal dry storage shelves, 10'x24"x4 tier
New age can rack
Shelves for beverage boxes & Co2 tanks
Sink, mop dump
Plastic trash receptacles
Trash bins
Fryer, gas, 35 lb. Cap.
Traulsen refrigerator, 2-door, roll-in, 6'
SS Work tables w/SS under shelf & 5" splash
SS Wall shelf, 5'
Pot rack, double, 5' wall mount
Groen, steam kettle, elect., 20 gal. W/stand
AFFORDABLE EQUIPMENT CO. NO. 227
P.O. BOX 710094 DATE
DALLAS, TX 75371-0094 INQUIRY NO.
PAGE NO. 4
INVENTORY OF CLOSED RESTAURANT
TO: ESTIMATED DELIVERY
J T MC CORD'S TERMS
MESQUITE, TEXAS
SALESMAN FOB FOLLOW UP DATE
QUANTITY DESCRIPTION
1 Wolf elect. Convection oven, full size w/stand
1 SS Vent-A-Hood, class 2, 7'
2 Metro shelves, 24x48x4 tier
1 Metro shelve, 24x72x4 tier
1 SS sink, 2-comp., 6'
2 SS Eduland, knife holders
1 Ss hand sink
1 Metro shelf, 24x48x4 tier
1 Metro shelf, 24x60x4 tier
1 Mars air screen, 4'
1 Fly trap, electric
9 Soda pumps
1 Dunnage rack, 5'
1 Walk-in cooler-freezer combo w/shelving
Cooler, 13'x11'x7.5'
Freezer,, 13'x10'x7.5'
1 Bun pan rack, full size
2 Plastic shelves, 18x48x5
2 File cabinets, 4 drawer each
3 Booth openings
6 Booth openings
3 Tables, 4x30
14 Chairs, wood
1 Table, wood, 5x30
1 Change machine, vending
2 Pen ball game machine
3 Video game machines, vending
25 Pictures
1 Gum vending machine, vending
1 Candy vending machine, counter model
1 Gum ball vending machine, large
TOTAL
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000804127
<NAME> AEI REAL ESTATE FUND XVI LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,492,815
<SECURITIES> 0
<RECEIVABLES> 44,714
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,537,529
<PP&E> 10,758,970
<DEPRECIATION> (2,104,336)
<TOTAL-ASSETS> 10,192,163
<CURRENT-LIABILITIES> 314,712
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,644,364
<TOTAL-LIABILITY-AND-EQUITY> 10,192,163
<SALES> 0
<TOTAL-REVENUES> 554,217
<CGS> 0
<TOTAL-COSTS> 332,998
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 505,909
<INCOME-TAX> 0
<INCOME-CONTINUING> 505,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 505,909
<EPS-PRIMARY> 35.50
<EPS-DILUTED> 35.50
</TABLE>
